From Macroeconomic Advisers “The impact of sunset of tax cuts on GDP, employment, inflation & interest rates”, released today:
Category Archives: deficits
A Comment on Keith Hennessey’s Deficit Defense
In this post, Keith Hennessey takes issue with President Obama’s assertion there were spiraling deficits during the President G.W. Bush years. He presents this graph.
Who’s buying all that debt?
I’ve been taking a look at what happened to the demand for U.S. Treasury bills and bonds as a result of the financial crisis. Here’s a summary of some of the data that I found interesting.
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?”)
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.
Cyclically Adjusted Budget Balance, Updated
The CBO has just released new estimates of the cyclically adjusted, or structural, budget balance (link here). They’ve also given the series a new name, and some new tweaks. First, observation — the cyclically adjusted deficit is substantially smaller than the actual in 09Q4.
Inflation, taxation, and the underground economy
University of Maryland Professor Boragan Aruoba (of the Aruoba-Diebold-Scotti Business Conditions Index fame) has an interesting new paper that offers another perspective on the challenges facing Europe.
The European bailout
As Europe and the IMF announce close to a trillion dollar rescue package, Megan McArdle asks, what’s the benefit to the countries providing the funding? Here are my thoughts.
Interest rates spike up
How scary is it?
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.