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Payroll tax debate signifies wider crisis: Ferguson

Tuesday, December 20, 2011 - 04:19

Dec. 19 - Niall Ferguson, Harvard professor and author of ''Civilization: The West and the Rest,'' says the payroll tax cut debate in the United States signifies a wider crisis in public finance.

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If government seems to have gotten global. As the US congress grapples with fiscal policy an EU finance leaders try to settle differences over bilateral loans to the -- and that. Johnny is -- to take a look at the costs of dysfunctional governments in the west. Is Harvard professor Neil Ferguson he's also the author of civilization. The west and the rest. Your book you explore whether that torch is passing after the rise of western powers. -- function EC in Europe and that's a sure sign of decline for western power. What it's certainly did Simpson move some underlying problems does -- -- -- role for the better part of 500 years. It was west of those on both sides of the Atlantic who could see a that they have the best economic system that they develop best political system and so forth. -- those claims have said increasingly -- in off time. I think from historians vantage point we are living through the end of western primacy Weston ascendancy. And it's it's really two things that are work here on the one hand the rest of the world has been catching up. Countries like China India Brazil have been improving their institutions. He might say west -- them but at the same time. I think this is perhaps the more important for a moment the developed economies of the west have been getting less food both economically. A politically like I would see this is an institutional story it's primarily about. Institutions and how they work and what with senior government is is part of a wider crisis of western institutions now. Let's pull out what we're seeing in the US government right now congress is deeply divided over a relatively small cut in payroll taxes. Series is that how does that play out and how does that signify what you're talking about. Well let's mole issue itself is no big deal but it's part of a wider picture. And the picture is all a failure on the part of both parties in congress. To recognize the seriousness. All of the US fiscal position -- the Congressional Budget Office. Is there to tell legislators. When there's a problem and it has been telling them that there's a problem for use them. If you look at the CBO's projections. It does two scenarios. But one of which is actually the more probable scenario of the CBO says that become the alternative fiscal scenario. Projection and it shows an explosion of public access. -- deficits as far as the eye can see if the CBO has to be believed the US federal government will never again rob a balanced budget in -- and our lifetimes but and our children's lifetimes and our grandchildren as much of which is a truly astonishing -- And yet. Legislators in Washington refused to get serious about these issues. There was an attempt some of the so called super committee to arrive at some kind of ten year plan to reduce the deficit but it failed miserably. And each time a politician tries to get serious about this. Think of poll -- -- efforts earlier this year to get President Obama to focus on the budget. It seems to get kicked into the long grass. Not the most recent question whether or not a return to the old level of payroll tax should happen our -- two months' time. Is kind of inconsequential because. Any decision about tax policy which showed relax for two months is good to have precisely zero macro economic. Benefit. So this whole story of stimulus or lack of stimulus austerity -- stimulus is really irrelevant here nobody responds to stimulus that is going to be taken away. After just two months I think this is part of a wider crisis a public finance. In the United States and it reflects the way in which polarized nation in congress is making it impossible to reach decisions. About policies that could back. -- the nation. That the the way in which the cost of Medicare is projected to spiral out of all control should frighten his soul and yet the politicians are capable of -- Grasping these metals and getting serious about fiscal reform.

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Payroll tax debate signifies wider crisis: Ferguson

Tuesday, December 20, 2011 - 04:19