A fiscal rule is any pre specified mechanism that constrains spending or the deficit.

The political right calls for more rapid deficit reduction by cutting spending.

Stimulus spending, the deficit hawks favorite bogeyman, did not cause most of the increased deficits and debt, which are the result of automatic stabilizers the tax cuts and spending increases that automatically accompany economic fluctuations.

If the presidential promise to reduce the fiscal deficit was really a commitment to cut spending and raise taxes, we could see today s dangerous deficit trajectory be reversed.

Overspending countries are now retrenching, owing to the need to reduce their private and public spending, to import less, and to reduce their external deficits and deleverage.

If consumers go on a spending binge, we expect the world's central banks to raise interest rates to cool off construction spending and free up the resources needed to prevent shortage inducing inflation.

Fifth, the higher the unemployment rate goes, the wider budget deficits will become, as automatic stabilizers reduce revenue and increase spending (for example, on unemployment benefits).

The most important measures required cutting budget deficits, often at the cost of lowering public expenditures.

A substantial part of the increased deficit will be due to a wide range of new government spending.

Cutting expenditures on the Iraq war and increasing expenditures on education can simultaneously increase output in the short and long run and reduce the deficit.

If Congress mandates expenditures that exceed revenues, there will be a deficit, and that deficit has to be financed.

That will prolong excessive government spending, and deficit targets will not be met on a sustained basis.

Even after a year of excruciating spending cuts, the budget deficit still exceeds 10 of GDP.

And negotiations are under way to cut spending more and raise taxes in order to reduce further the fiscal deficits projected for 2011 and later years.

Their leaders in Congress are already declaring that they will slash public spending in order to begin reducing the deficit.

Whenever an economy goes into recession, deficits appear, as tax revenues fall faster than expenditures.

Fourth, the re leveraging of the public sector through large fiscal deficits and debt accumulation risks crowding out a recovery in private sector spending.

We can apply this reasoning to the United States unsustainable fiscal deficit. As is well known, closing this deficit requires less spending or more taxes.

It would be best if a credible consolidation program could be phased in gradually but consolidation needs to proceed nonetheless and primarily by controlling spending.

As is well known, closing this deficit requires less spending or more taxes.

Deficits are convenient for politicians as they hide and delay the true tax cost of spending.

With a V shaped recovery, however, this expenditure fell again, reducing the deficit rapidly.

If they take their fiscal deficits (and a potential monetization of these deficits) seriously and raise taxes, reduce spending, and mop up excess liquidity, they could undermine the already weak recovery.

Technically, reducing a deficit is a straightforward matter one must either cut expenditures or raise taxes.

The old orthodoxy held that one had to cut the deficit raise taxes or cut expenditures to restore confidence.

Indeed, critics argue that raising public investment conflicts with the drive to reduce deficits, and warn of higher interest rates on the back of further spending.

It makes it easier to eliminate budget deficits, and it makes it possible to increase education spending and to fund training schemes for the long term unemployed.

That is what is happening in today s effort, in country after country, to slash spending and bring down budget deficits.

Spending, especially on investments in education, technology, and infrastructure, can actually lead to lower long term deficits.

In contrast to monetary policy, the US president does have a powerful and direct impact on future fiscal deficits. If the presidential promise to reduce the fiscal deficit was really a commitment to cut spending and raise taxes, we could see today s dangerous deficit trajectory be reversed.

A slump, after all, is defined by a deficiency in total spending. To try to cure it by spending less is like trying to cure a sick person by bleeding.

That means ending trade deficits that drain spending and jobs, and restoring the link between wages and productivity.

The task is made more complex by the large number of legislators who insist that the deficit should be reduced by spending cuts alone.

The US has reached the practical limits of reliance on short term stimulus spending, and will need to start cutting the budget deficit and fostering alternative pathways to growth.

Successful consolidation generally relies on spending cuts rather than tax increases indeed, at a ratio of five or six to one.

When weak aggregate demand causes the economy to operate far below its potential, cuts in government spending enlarge the jobs deficit.

Some argue that fiscal consolidation by gradual permanent reductions in spending would be expansionary for high debt countries, as occurred in some historical episodes.

Now public spending is on the increase again, and record peacetime deficits of 10 or more of GDP stretch ahead for years.

What are the likely costs and benefits of stimulus versus consolidation? And what is the best combination of spending cuts and tax hikes?

They also believe that the government deficit drives up inflation and interest rates, thereby crowding out other spending by consumers and firms.

In small, open economies, higher deficits are unlikely to sustain domestic output, because most additional expenditure goes toward imports.

The defense share of R D in the European Union and Japan has been and remains markedly lower less than 10 in the EU and less than 5 in Japan in 2009 (no comparable data are available for China and South Korea). Over the next decade, sizeable cuts in defense spending as part of overall deficit reduction could mean a significant reduction in R D investment in the US.

Labour s model of the economy implies maintaining the deficit for as long as needed, and even increasing government spending if the recovery appears to be flagging. But Labour is too afraid of the markets to say so openly.

Financial sector deficit hawks said that governments should focus on eliminating deficits, preferably by cutting back on expenditures.

But if France is to be taken seriously by the rest of Europe, Sarkozy will have to deliver more than just growth and jobs.