How should a government spend a budget surplus? In
California, the Californian government put some of its surplus in a “rainy-day
fund” in 2014. The following year, the German government made plans to use any
surplus in 2016 “to increase investment instead of repaying debt.”[1]
This means the government “could spend more to support the German economy and
that of its neighbors.”[2]
Undoubtedly, the E.U. economy would benefit, especially if the U.S. dollar were
to continue to appreciate against the euro. However, the decision not to use
even a portion of the anticipated surplus to pay down some of the government
debt is problematic.
The full essay is at “German
Budget Surplus.”
1. Andrea
Thomas, “Berlin Moves to Spend Now, Save Later,” The Wall Street Journal, March 14-15, 2015.
2. Ibid.
