Publication Date

Spring 2012

Degree Type

Master's Project

Degree Name

Master of Arts (MA)

Department

Economics

Abstract

In this paper, I have outlined the underlying factors that led to budget surpluses in the post- Keynesian era, specifically focusing on the United States during fiscal years 1998 to 2001. During this period, Mr. William Jefferson "Bill" Clinton was the president of the United States. Prior to these budget surplus years, the United States ran budget surpluses during 1969. This paper presents the history and analysis of incentives of different actors in a political economy and relates that to various budget related legislative and economic events that took place prior and during 1998 to 2001 period, primarily focusing on the actions of the Congress, the President, and reactions of the citizens (voters). President Clinton along with his party went above and beyond the basic fundamentals of Public Choice theory and successfully lifted the nation suffering from structural deficits. In doing so, the Democratic Party suffered significant political losses. In a democracy, it is the citizens who elect their representatives; therefore they are responsible for maintaining their nations financial strength. Returning to the pre-Keynesian precepts is the solution for getting rid of the current nation's debt, which has accumulated to an enormous amount of 103.3% of nation’s GDP. It is the responsibility of the voters to give politicians the incentives to return to the pre-Keynesian precepts of fiscal conservatism.

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