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'Fiscal Therapy' takes a critical look at how and why the U.S. has run up its debt so high in the last four decades, what other countries have done to dig themselves out of this level of red ink, and what needs to be done now if the U.S. is to avoid bankruptcy in the 2050s and beyond.

" Keeping the economy strong will require addressing two distinct but related problems. Steadily rising federal debt makes it harder to grow our economy, boost our living standards, respond to wars or recessions, address social needs, and maintain our role as a global leader. At the same time, we have let critical investments lag and left many people behind even as overall prosperity has grown. In Fiscal Therapy, William Gale, a leading authority on how federal tax and budget policy affects the economy, provides a trenchant discussion of the challenges posed by the imbalances between spending and revenue. America is facing a gradual decline as debt accumulates and delay raises the costs of action. But there is hope: fiscal responsibility aligns with both conservative and liberal goals and citizens of all stripes can support the notion of making life better for our children and grandchildren. Gale provides a plan to make the economy and nation stronger, one that controls entitlement spending but preserves and enhances their anti-poverty and social insurance roles, increases public investments on human and physical capital, and raises and reforms taxes to pay for government services in a fair and efficient way. What is needed, he argues, is to balance today's needs against tomorrow's obligations. We face significant fiscal challenges but, if we are wise enough to seize our opportunities, we can strengthen our economy, increase opportunity, reduce inequality, and build better lives for our children and grandchildren. We do not have to kill popular programs or starve government. Indeed, one main goal of fiscal reform is to maintain the vital functions that government provides. We need to act responsibly, pay for the government we want, and shape that government in ways that serve us best. "--

Federal credit subsidies are one of the largest areas of government activity. However, the Unified Budget treats lending in a highly misleading manner, and federal credit management is inconsistent and deceptive. These oversights have contributed to both the rapid rise of federal lending and the financial crises facing several credit agencies during recent years. Credit reform is a vital issue both to protect the government's huge financial stake and to ensure the success of credit programs.This paper critiques previous proposals for credit reform–each suffering from major implementation problems–and suggests an alternative. The Hybrid Plan combines aspects of earlier proposals and eliminates several disadvantages of each. One could implement the Hybrid Plan under current conditions, but it also is consistent with further improvement in federal credit management.