In just a few short years, federal budget deficits and the national debt rose from obscurity to become America’s newest obsession. Unfortunately, while interest in the issue has grown, rigid ideology and an increasingly vitriolic and entrenched public dialogue have crowded out thoughtful discourse, preventing even basic education on budgets, the deficit, and the role of government.

Fiscal Therapy is an antidote to the demagoguery and half-truths. It explains the scope and nature of the deficit problem facing the United States and offers sensible, balanced, workable solutions in clear language, drawing on national history, the experiences of other countries, and economic analysis. According to William G. Gale, senior fellow at the Brookings Institution and codirector of the Urban-Brookings Tax Policy Center, what is at stake in solving the deficit problem is the social contract that governs how Americans interact with their government.

Restructuring government and balancing the long-term budget are monumental tasks. While Americans need not and should not abandon their fundamental values, the required actions will be profound. No country makes such changes easily or quickly, but failure to act will ultimately guarantee long-term economic ruin.

Gale proposes a set of policies to restore fiscal balance through shared sacrifice. His proposal would restructure taxes and spending programs, cut overall government outlays, raise revenues, and put the economy and the budget on sound footing.

Contents 1. Introduction

2. How We Got Here

3. Where We’re Heading

4. Why the Deficit Is a Problem?

5. Fixing the Problem

America’s Fiscal Constitution: Its Triumph and Collapse (PublicAffairs, April 1, 2014) tells the remarkable story of federal leaders who imposed clear limits on the use of federal debt. For almost two centuries those limits allowed the federal government to borrow for only four purposes. That traditional fiscal constitution collapsed in 2001, when federal elected officials broke the traditional link between federal tax and spending policies. For the first time in history, the federal government cut taxes during war, funded permanent new programs entirely with debt, and became dependent on foreign creditors.
With insights gained from original scholarship and an unusual breadth of experience in finance and government, Bill White distills practical lessons from the nation’s five previous spikes in debt. America’s Fiscal Constitution is an entertaining and objective guide for people trying to make sense of the current and most dangerous debt crisis.