Category Archives: deficits

A Specter is Haunting America

…The specter of fiscal mindlessness

I’m just back from two weeks in Europe. During that time, growth indicators have signaled a slowdown [0] in the midst of a massive negative output gap [1], while a substantial bloc in the Congress refuses to think in a sensible fashion about fiscal policy. This point is most forcefully illustrated by the inability of the Senate to move forward on extending unemployment insurance. (It makes me wonder if some were asking the question, “Are there no poorhouses?”)

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Inflation or deflation?

For the last year and a half my assessment has been that the near-term pressures on the U.S. economy were deflationary, while long-term fundamentals involve significant inflation risks. It’s time for a look at the data that have come in over the last 6 months, and time to say that I still see things exactly the same way.

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CBO Scoring of HR3590 plus Reconciliation Legislation

The CBO and the Congressional Joint Committee on Taxation have just released its scoring of “budgetary effects of the reconciliation proposal, in combination with the effects of H.R. 3590, the Patient Protection and Affordable Care Act (PPACA), as passed by the Senate”. The link to the document is here. The CBO/JCT estimated reduction in the deficit over FY2010-2019 is $119 billion. A comparison of the impact on the budget balance against previous reconciliation measures is presented in Figure 1, below.

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