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How does the financial social safety net come into play and how does it affect intergenerational tax burdens?

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How does the financial social safety net come into play and how does it affect intergenerational tax burdens?

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There are two principal issues in managing the safety net. One is detecting and avoiding insolvency – by forcing loss-making to recapitalize institutions before they become insolvent. The second is to develop and execute a reasonable program for resolving insolvencies that are not detected in time. Within this second set of concerns is the problem of crisis management. Crisis management generates income transfers from low-income to high-income taxpayers as well as some nasty intergenerational effects. What saddens me is the government’s claim that the U.S. has done a great job in resolving its financial problems. The safety net has been expanded substantially and huge uncertainty exists about what the tax structure is going to be going forward. Safety-net growth subsidizes loans to overly risky activities at the expense of safe and sure investments and on the other side of the market expanding the safety net fosters a reluctance by business and households to invest in safe and sure pro

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