ABSTRACT
The effects of the institutional separation of taxation and expenditure decisions, as well as their psychological separation in the minds of many citizens and political decision makers, produces a tendency toward unbalanced budgets.125
In the 44 years from 1950 to 1993 the US government passed 40 unbalanced budgets, although this was mostly in a time of substantial economic growth. The United States was not alone: during that same time period the government of the United Kingdom passed 42 unbalanced budgets and Italy and Ireland had a deficit in every year. Even the fiscally prudent government of Germany passed unbalanced budgets for 30 years.126 Thus it need not be economic crises that create fiscal deficits in government; the very nature of the decision-making process that separates revenue and expenditure decisions may contribute to that outcome. This is compounded by the political fact that it is much more acceptable to spend money on constituents than it is to tax them.
