Paced by housing and energy, the U.S. recovery is likely to accelerate this year and budget deficit projections have declined as well. ¬†Unfortunately the European economy remains stagnant though there is some evidence that stimulative policies are gaining traction in Japan. ¬†Around the world the idea of “austerity” is fiercely debated. ¬†This all makes a reconsideration of the principles that should guide fiscal policy opportune. This requires recognizing that policies need to be set in light of economic circumstances.