Lessons from Japan for America's Budget Warriors

With Wednesday’s Federal Open Market Committee (FOMC) statement on the horizon, and Japanese Prime Minister Shinzo Abe’s pushing to print more money and enact an ambitious stimulus program, American Enterprise Institute (AEI) economist John Makin has released his latest economic outlook which examines lessons from Japan’s past for current American policymakers.

Is the United States on the precipice of a lost decade?

Makin argues that Japan’s experience with debt, deficits, and deflation can teach the United States important lessons: use monetary policy to avoid deflation, aim for gradual deficit reduction, close tax loopholes to lower the marginal tax rate, and reduce the budget deficit.

What should US policy makers do?
1.    Don’t obsess about deficits (as Makin has explained they are, unfortunately, sustainable)
2.    Enact tax and entitlement reforms now
3.    Cut spending later

Click here to read the full report.

Contact MediaServices@aei.org (202.862.5829) to set up an interview. 

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About the Author

 

John H.
Makin
  • John H. Makin is a resident scholar at the American Enterprise Institute (AEI) where he studies the US economy, monetary policy, financial markets, corporate taxation and banking. He also studies and writes frequently about Japanese, Chinese and European economic issues.

    Makin has served as a consultant to the US Treasury Department, the Congressional Budget Office, and the International Monetary Fund. He spent twenty years on Wall Street as the chief economist, and later as a principal of Caxton Associates a trading and investment firm. Earlier, Makin taught economics at various universities including the University of Virginia. He has also been a scholar at the Bank of Japan, the Federal Reserve Bank of San Francisco, the Federal Bank of Chicago, and the National Bureau of Economic Research. A prolific writer, Makin is the author of numerous books and articles on financial, monetary, and fiscal policy. Makin also writes AEI's monthly Economic Outlook which pairs insightful research with current economic topics.

    Makin received his doctorate and master’s degree in economics from University of Chicago, and bachelor’s degree in economics from Trinity College.


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  • Phone: 202-862-5828
    Email: jmakin@aei.org
  • Assistant Info

    Name: Brittany Pineros
    Phone: 202-862-5926
    Email: brittany.pineros@aei.org

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