Employment in manufacturing may be estimated to be rising, but output seems to be trending sideways through 2nd quarter.
Figure 1: Log real manufacturing output in Minnesota (blue) and in Wisconsin (red), normalized to 2011Q1=0. NBER defined recession dates shaded gray. Vertical dashed line at 2013Q1 indicates beginning of Wisconsin Manufacturing and Agriculture Credit (MAC). Source: BEA, accessed 12/3/2017, NBER, and author’s calculations.
Signs are the putative Republican “deficit hawks” are about to sign away whatever integrity they had. What are the implications for the deficit going forward, keeping in mind the fact we are near or at full employment.
Figure 1: Federal budget balance without automatic stabilizers, as a share of potential GDP (blue), and Federal budget balance as share of actual GDP (red), and baseline forecast Federal budget balance from June CBO forecast (pink), and alternative under Senate budget bill (teal), both as share of projected GDP. NBER defined recession dates shaded gray. Source: CBO, Budget and Economic Outlook: An Update (June 2017), and CBO, Cost Estimate (November 2017), NBER, and author’s calculations.
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The Senate parliamentarian ruled the trigger to prevent a revenue shortfall as unacceptable, thereby temporarily stymieing the bill.
And GDP is only averaging a paltry 0.8% above baseline level over 10 year period, given these massive, regressive tax cuts. Revenue effects:
Source: JCT (November 30, 2017).
My stint in the Executive Office of the President as a senior economist spanned the last months of the Clinton Administration and the first months of the G.W. Bush Administration. In the first months of 2001, we knew massive tax cuts were coming; we weren’t so sure that we’d be in a long term ground war on the Asian continent.
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The Joint Committee on Taxation (JCT) has evaluated the distributional impact of the Senate’s plan. CBPP has graphically depicted the impact on households, adjusting the JCT figures to account for the provisions regarding estate taxes:
Source: CBPP.
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Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version appeared in Project Syndicate.
As noted in this earlier post, the distributional consequences of the House Tax Cuts and Jobs Act should include the spending cuts. According to CBO, there will be a $25 billion cut to Medicare unless independent legislation is passed. From TPM:
…automatic cuts spring into action anytime Congress passes a bill that balloons the federal deficit, as the tax bill would. The approximately $136 billion in cuts spurred by the GOP tax bill would hit a number of government programs—including farm subsidies and the Border Patrol—but would cut most deeply into Medicare. Medicaid, Social Security, and food stamps are protected.
The Wisconsin Department of Workforce Development (DWD) today released new employment data for October. Manufacturing employment surged in the establishment data, but the contemporaneously released additional three months of data from the Quarterly Census of Employment and Wages (QCEW) (through June) suggests slower manufacturing growth.
Here’s a metaphorical picture:
Source: AP/Jacquelyn Martin via Garber.
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