In 1989 the federal government spent $1197 billion, a mind-boggling sum that is almost impossible to visualize. Since there were 248. 8 million people living in the United States in that year, the government spent an average of $4811 for every man, woman, and child in the nation. For a hypothetical family of four, federal spending in 1989 amounted to an average of$19,244. To put this sum in perspective, the money income of an American family averaged $35,270 in the same year. To finance spending $1197 billion, the government collected taxes from American citizens and residents in an amount of $1047 billion. Because of a shortfall between what it spent and what it took in taxes, the government had to borrow $150 billion, partly from individuals, but mostly from banks, insurance companies, and foreigners. How, where, and on whom did the federal government spend all this money? Since federal spending in 1989 totaled 23 cents in comparison to every dollar spent for the buying of goods and services, finding an answer to this question is not a trivial matter. Spending by Washington reaches into every nook and cranny of the economy, touching the lives and fortunes of almost everyone in the nation. Thus, answers to these questions are of more than academic interest.

A situation in economics that is little short of scandalous is the almost total neglect by mainstream economics of the importance of power in economic affairs. Power in this context means the ability to bend market forces in one's favor, influencing and shaping key economic variables such as prices, wages, and other income determinants. As John Kenneth Galbraith as tutely observes: a dominant fact in economic life is the desire of people everywhere and in all circumstances to get control over their personal lives and their incomes-to escape from the "tyranny of the market. " Power is the means to this end. Ever since Adam Smith, economists have been fascinated by and lavish in their praise for the workings of the market. All modern textbooks are built around Smithian ideas about markets and the way the "invisible hand" works through competition for society's better ment. Yet one can search nearly in vain through leading texts, under graduate and graduate alike, for any reference to market or economic power. This is the situation in spite of the fact that the drive for power, the urge to get control over one's income, permeates the economy as much as does competition. This is a scandal For a discipline that claims for itself the mantle of a science-one which wants to be accorded the same respect given the natural sciences-it is almost incomprehensible that it should ignore a major force at work in the real economic world."

In 1989 the federal government spent $1197 billion, a mind-boggling sum that is almost impossible to visualize. Since there were 248. 8 million people living in the United States in that year, the government spent an average of $4811 for every man, woman, and child in the nation. For a hypothetical family of four, federal spending in 1989 amounted to an average of$19,244. To put this sum in perspective, the money income of an American family averaged $35,270 in the same year. To finance spending $1197 billion, the government collected taxes from American citizens and residents in an amount of $1047 billion. Because of a shortfall between what it spent and what it took in taxes, the government had to borrow $150 billion, partly from individuals, but mostly from banks, insurance companies, and foreigners. How, where, and on whom did the federal government spend all this money? Since federal spending in 1989 totaled 23 cents in comparison to every dollar spent for the buying of goods and services, finding an answer to this question is not a trivial matter. Spending by Washington reaches into every nook and cranny of the economy, touching the lives and fortunes of almost everyone in the nation. Thus, answers to these questions are of more than academic interest.

A situation in economics that is little short of scandalous is the almost total neglect by mainstream economics of the importance of power in economic affairs. Power in this context means the ability to bend market forces in one's favor, influencing and shaping key economic variables such as prices, wages, and other income determinants. As John Kenneth Galbraith as tutely observes: a dominant fact in economic life is the desire of people everywhere and in all circumstances to get control over their personal lives and their incomes-to escape from the "tyranny of the market. " Power is the means to this end. Ever since Adam Smith, economists have been fascinated by and lavish in their praise for the workings of the market. All modern textbooks are built around Smithian ideas about markets and the way the "invisible hand" works through competition for society's better ment. Yet one can search nearly in vain through leading texts, under graduate and graduate alike, for any reference to market or economic power. This is the situation in spite of the fact that the drive for power, the urge to get control over one's income, permeates the economy as much as does competition. This is a scandal For a discipline that claims for itself the mantle of a science-one which wants to be accorded the same respect given the natural sciences-it is almost incomprehensible that it should ignore a major force at work in the real economic world."

For more than thirty years, Wallace C. Peterson has stuck to his guns on two fronts: first that the best way to understand the macroeconomy is to master the Keynesian analytic framework and, second, that too much mathematics spoils the student's appreciation of basic macroeconomic concepts. Through the Keynesian framework, Professor Peterson has shown students how to interpret the macroeconomy and how to understand alternative economic perspectives.

TEMPO Report. Research Memorandum RM 59TMP-95.

The year 1973 marked a turning point, as Peterson makes clear in this carefully documented book. When several key economic indicators changed course, the "silent depression set in, resulting in problems for the shrinking middle class, the poor, and the American family." Peterson calls for strong medicine and closes with proposals for health care, education, and the tax system that will help speed the economy's recovery.