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Reforming Subsidies in the Federal Budget
Author(s) -
Dever Jr. Patrick
Publication year - 2008
Publication title -
politics and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.259
H-Index - 23
eISSN - 1747-1346
pISSN - 1555-5623
DOI - 10.1111/j.1747-1346.2008.00138.x
Subject(s) - subsidy , taxpayer , government (linguistics) , public economics , federal budget , politics , welfare , business , economics , socioeconomic status , economic policy , finance , market economy , political science , macroeconomics , fiscal year , linguistics , philosophy , law , population , demography , sociology
The U.S. government spent approximately $52.52 billion in subsidies in 2006, yet many of these subsidies actually reduce social welfare because of a lack of information and political lobbying by influential interest groups and coalitions. Through detailed analysis of economic markets, this report illustrates the economic effects of both proper and improper subsidies and proposes the creation of an independent Subsidy Review Board (SRB). This two‐tiered board with offices representing different sectors of the U.S. economy would evaluate subsidies at the industrial and national level under the specific economic criteria established in this report. This proposal would eliminate information asymmetry problems because the information costs of evaluating subsidies would be shifted away from time‐constrained politicians to the SRB, staffed with economists whose sole responsibility is to evaluate these subsidies. Furthermore, an independent board would not be as susceptible to political or socioeconomic pressures as individual legislators. A reformation of the federal subsidy process would eliminate billions of dollars from the federal budget each year and direct better allocation of the remaining taxpayer funds.