October 20, 2000. Bob begins with the reasonable point that in a highemployment economy, budget surpluses could curb inflation and cool the Federal Reserve's ardor for higher interest rates.
Little inflation is in sight.
Extreme humility in this vein is warranted. For decades fiscal policy has labored under the delusion that unemployment could never fall beneath 6 percent without igniting inflation. The foregone benefits of lower unemployment are an unnoticed social-policy catastrophe of the 1980s and early 1990s. We now observe the blessings of tight labor markets in chronically depressed communities. Bob asserts, without explanation, that lower public debt will help sustain long-term growth.