The U.S. deficit outlook March 2010

For years, economists have debated the wisdom of increasing government spending during recessions. On the one hand, increased spending adds to budget deficits, but on the other, increased spending can stimulate the economy during a downturn, thus speeding recovery. Deficits topped $1.4 trillion in the latest recession—which raises two questions: "How big is 'too big' in terms of spending?" and "What are the long-term consequences?" The March 2010 Newsletter offers some insights into this timely topic.