The History and Theory of the U.S. National Debt

Sample Syllabus for Upper Division or Graduate Level Reading Seminar

This seminar seeks to familiarize students with the political and economic history of the U.S. national debt. The course begins by surveying the economic and historical literature on sovereign debt and debt-related matters. It then examines the ways in which the U.S. government has problematized and sought to address the national debt and deficit since the 1970s. It concludes by taking a look at the ways in which other countries have dealt with their debts and considers whether current concerns about the U.S. national debt are overblown.

Books:

David W. Brady and Craig Volden, Revolving Gridlock: Politics and Policy from Carter to Clinton (Westview, 1998)

W. Carl Biven, Jimmy Carter's Economy: Policy in an Age of Limits (University of North Carolina, 2002)

William R. Cline, The United States as a Debtor Nation (Institute for International Economics and Center for Global Development, 2005)

Keimei Kaizuka, Anne O. Krueger, eds., Tackling Japan's Fiscal Challenges: Strategies to Cope with High Public Debt and Population Aging (IMF, 2006)

Iwan Morgan, The Age of Deficits: Presidents and Unbalanced Budgets from Jimmy Carter to George W. Bush (Kansas, 2009)

Carmen M. Reinhart & Kenneth S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton, 2009)

James D. Savage, Balanced Budgets and American Politics (Cornell, 1988)

David A. Stockman, The Triumph of Politics: Why the Reagan Revolution Failed (HarperCollins, 1986)

Harrie Verbon and Frans van Winden, eds., The Political Economy of Government Debt (North Holland, 1993)

Margaret Weir, ed., The Social Divide: Political Parties and the Future of Activist Government (Brookings, 1998)

Joseph White and Aaron Wildavsky, The Deficit and the Public Interest: The Search for Responsible Budgeting in the 1980s (University of California, 1989)

Robert E. Wood, From Marshall Plan to Debt Crisis: Foreign Aid and Development Choices in the World Economy (University of California, 1986)

Julian Zelizer, On Capitol Hill: The Struggle to Reform Congress and Its Consequences, 1948-2000 (Cambridge, 2004)

Week One - Debt and World History

What is sovereign debt, and why is it important?

Reading: Carmen M. Reinhart & Kenneth S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton, 2009), xxv-xlv, 1-20, 49-67, 86-100; Ben van Velthoven, Harrie Verbon and Frans van Winden, "The Political Economy of Government Debt: A Survey," in Verbon and van Winden, eds., The Political Economy of Government Debt (North Holland, 1993), 3-36.

Week Two - Debt and American History

How have the size and composition of the U.S. national debt, and the ways in which Americans have thought about the nation's public finances, changed over time?

Reading: James D. Savage, Balanced Budgets and American Politics (Cornell, 1988).

Week Three - The Emergence of the Contemporary Fiscal Paradigm

What factors led the U.S. government to start running chronic deficits in the 1970s? How did people at the time view this development?

Reading: Iwan Morgan, The Age of Deficits: Presidents and Unbalanced Budgets from Jimmy Carter to George W. Bush (Kansas, 2009), 41-75; W. Carl Biven, Jimmy Carter's Economy: Policy in an Age of Limits (University of North Carolina, 2002), 185-264.

Week Four - The Reform of Congressional Budgeting

What were the causes and consequences of Congress' efforts to reform the federal budget process?

Julian Zelizer, On Capitol Hill: The Struggle to Reform Congress and Its Consequences, 1948-2000 (Cambridge, 2004), 1-14, 156-205, 233-262; Eric Patashnik, "Congress and the Budget Since 1974," in The American Congress, ed. Julian Zelizer, 668-686; Mark S. Kamlet and David C. Mowery, "The First Decade of the Congressional Budget Act: Legislative Imitation and Adaptation in Budgeting," Policy Sciences 18:4 (1985): 313-334; Philip G. Joyce, "Congressional Budget Reform: The Unanticipated Implications for Federal Policy Making," Public Administration Review 56:4 (1996): 317-325.

Week Five - Reagan and the Age of Deficits

What were the causes and consequences of the large federal deficits of the Reagan years?

Reading: David A. Stockman, The Triumph of Politics: Why the Reagan Revolution Failed (HarperCollins, 1986); Morgan, The Age of Deficits, 76-121; Joseph White and Aaron Wildavsky, The Deficit and the Public Interest: The Search for Responsible Budgeting in the 1980s (University of California, 1989), 1-17, 183-284, 506-530.

Week Six - George H.W. Bush: Budgetary Politics at a Crossroads

How did George H.W. Bush Confront Reagan's Fiscal Legacy? What were the short and long-term effects of his efforts to balance the budget?

Morgan, The Age of Deficits, 122-157; David W. Brady and Craig Volden, Revolving Gridlock: Politics and Policy from Carter to Clinton (Westview, 1998), 43-99.

Week Seven - Bill Clinton and the Mixed Legacies of the 1990s

Why did Bill Clinton make reducing the federal budget deficit a centerpiece of his agenda? What factors led to the creation of budget surpluses during his presidency?

Reading: Morgan, The Age of Deficits, 158-205; Alan J. Auerbach, "Federal Budget Rules: The U.S. Experience," NBER Working Paper 14228, August 2008, 1-32; Paul Pierson, "The Deficit and the Politics of Domestic Reform," in Margaret Weir, ed., The Social Divide: Political Parties and the Future of Activist Government (Brookings, 1998), 126-178.

Week Eight - George W. Bush and the Crisis of American Budgeting

Why were the budget surpluses achieved in the last years of the twentieth century so quickly and thoroughly undone during the tenure of George W. Bush?

Irene Rubin, "The Great Unraveling: Federal Budgeting, 1997-2006," Public Administration Review 67:4 (2007): 608-617; G. William Hoagland, "A Comment on "The Great Unraveling: Federal Budgeting, 1998-2006," Public Administration Review 67:4 (2007): 618-623.

Week Nine - Global Examples and Counterexamples

How has the history of U.S. national finance compare to the historical experience of other nations?

Reading: Robert E. Wood, From Marshall Plan to Debt Crisis: Foreign Aid and Development Choices in the World Economy (University of California, 1986), 189-311; Keimei Kaizuka, Anne O. Krueger, eds., Tackling Japan's Fiscal Challenges: Strategies to Cope with High Public Debt and Population Aging (IMF, 2006), 1-21, 181-203.

Week Ten - The Current Debate

Is the national debt a cause for concern, or are worries about chronic budget deficits and the U.S.' mounting national debt overblown?

Reading: William R. Cline, The United States as a Debtor Nation (Institute for International Economics and Center for Global Development, 2005); James K. Galbraith, "Why the Fiscal Commission Does Not Serve the American People," Statement to the Commission on Deficit Reduction, June 30, 2010 (http://www.newdeal20.org/wp-content/uploads/2010/06/deficitcommissionrv.pdf); Daniel W. Drezner, "Bad Debts: Assessing China's Financial Influence in Great Power Politics," International Security 34:2 (2009): 6-46.