A Current Burden of Deficit Financing

Source: American Institute for Economic Research
by Donald J Boudreaux

“My late Nobel-laureate colleague James Buchanan made many important contributions. Among the most significant is his proof, first offered in 1958, that Adam Smith and other classical economists were correct to argue that government projects that are funded with debt are ultimately paid for by the future citizens whose taxes must be raised (or whose government benefits must be reduced) to get the funds necessary for repayment. … With deficit financing, today’s citizens-taxpayers impose costs on tomorrow’s citizens-taxpayers. … Yet those of us who today explain that deficit-financed government projects are paid for by tomorrow’s citizens-taxpayers too often lose sight of a real burden that deficit financing does often impose on today’s citizens-taxpayers. This burden is excessive growth of government that harms the current generation.” (10/11/21)