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A deficit is still a deficit. Under our current economic situation, any deficit is unacceptable. We should be paying off the debt. Not adding to it.
The Dwindling Deficit
http://krugman.blogs.nytimes.com/201...gman&seid=autoBad news for Dr. Evil fans: the days of a ONE TRILLION DOLLAR deficit are over. In fact, the deficit is falling fast.
Some readers may recall the ridicule heaped on the people at the Center on Budget and Policy Priorities when they produced estimates suggesting that any notion of a debt/deficit crisis was all wrong. It’s turning out, however, that they were probably overestimating debt growth. The deficit is fading, and debt as a medium-term (meaning up to 10 years) issue has largely gone away.
This is not good news — or not unambiguously good news, at any rate. A deficit falling to probably less than 5 percent of GDP this year and well below that next year is MUCH TOO LOW for an economy whose private sector is still engaged in a vicious circle of deleveraging.
Oh, by the way, it is now 26 months since Bowles and Simpson predicted a US fiscal crisis within two years.
Not only is this year's deficit on track to be significantly smaller than year's, to the tune of about $200 billion, it's also on pace to be even better than optimistic projections from February. , we even ran a surplus in April. All told, the U.S. federal deficit will be about $600 billion smaller than it was in President Obama's first year in office, making this the fastest deficit reduction Americans have seen since World War II.
Time to put the pedal to the deficit metal and crank up this economy....but lets raise wages too..
A deficit is still a deficit. Under our current economic situation, any deficit is unacceptable. We should be paying off the debt. Not adding to it.
austerity, cutting govt spending, in a down period of unstable capitialism is a disaster, proven repeatedly.
eg
Economists See Deficit Emphasis as Impeding Recovery
The nation’s unemployment rate would probably be nearly a point lower, roughly 6.5 percent, and economic growth almost two points higher this year if Washington had not cut spending and raised taxes as it has since 2011, according to private-sector and government economists.
After two years in which President Obama and Republicans in Congress have fought to a draw over their clashing approaches to job creation and budget deficits, the consensus about the result is clear: Immediate deficit reduction is a drag on full economic recovery.
http://mobile.nytimes.com/2013/05/09...?from=homepage
deficit reduction is a 1% strategy for themselves AFTER they have received $Ts in tax cuts, not a strategy for the 99%.
I don't see how anyone can take krugman serious.
he's been more right than Repug/VRWC economists whining about deficits, stimulus, hyper-inflation, etc, etc.
Trying to connect some dots here. Is this a result of extremely low Fed rates?
Sorry, poorly stated question. Are low Fed rates a contributor to this reduction?
Not sure how anyone can argue for austerity at this point. Europe tried it, and their economic situation and deficit situation got worse.
The shrinking deficit was a result of both higher tax receipts and lower government spending. Government receipts climbed 6.4 percent year-over-year as the economy grew stronger and certain tax breaks expired. Corporate income taxes were a “major contributor” to the rise in overall receipts, the administration report said, climbing to $242 billion, from $181 billion in 2011.
Moreover, outlays dropped $61 billion year-over-year because of falling military spending on Afghanistan and Iraq, tapering stimulus spending and the strengthening economy. “The largest decreases relative to the prior year came from the Department of Defense, unemployment insurance and Medicaid,” the report said.
http://www.nytimes.com/2012/10/13/bu...-trillion.html
Well, this is pretty good news.
Yeah, I read the OP. It didn't answer my question either.
Isn't this just the result of the payroll tax holiday being allowed to lapse? If not all, at least a good chunk of it I'd think.
In any event, good news.
U.S. Medicine Spending Shows Rare Dip In 2012
http://www.nationalmemo.com/ims-us-m...e-dip-in-2012/
BigPharma has been trying frantically, and often succeeding, to extend their patents that expired recently or soon. generics for Medicare/Medicaid reduce spending.
you don't want an answer, so why do you ask?
Got to have some impact for sure.
Drug spending falls for first time in 6 decades
An explosion of cheap generic subs utes for widely used prescription drugs last year helped drive the first decline in pharmaceutical spending in the U.S. in nearly six decades.
Drug makers often lament what they call the patent cliff, which is when patent protections on their drugs expire and cheap subs utes come to market. For pharmaceutical companies, it cuts into sales and forces prices down.
But their loss is the consumer's gain, according to a report being released Thursday by a leading pharmaceutical research group.
Pharmacy shelves are being stocked with less-expensive generic versions of top-selling drugs such as Lipitor and Plavix, offering savings to consumers, employers and health insurers, according to the report by IMS Ins ute for Healthcare Informatics.
The rise of generics cut the nation's tab for prescription medications 1% in 2012 to $325.8 billion — the first decline since IMS began tracking the data in 1957. Adjusted for inflation and population growth, the decline was 3.5%. That means average spending per person was $898 last year, down $33 from 2011.
"The largest driver of this slowdown," said IMS research director Michael Kleinrock, was the "unprecedented cluster of very popular and effective medicines losing patent protections and facing generic compe ion at the same time.
"We've often called it the 'patent dividend' for the health system and for patients," Kleinrock said.
Consumers this year will see new generic medications at the pharmacy as a number of patents are set to expire.
http://touch.latimes.com/#section/17.../p2p-75832251/
Repugs will block any bill that attempts to overturn their rule forbidding the govt to negotiate prices down, as other countries do.
No recovery for U.S. government workers
Federal government jobs fell by 4,200 in February, the fifth month in a row those jobs have been zapped from the economy. And, thanks to the automatic budget cuts, it's going to get worse.
In contrast to gains in the private sector, a total of 33,000 federal worker jobs have been lost since January 2012 -- and that does not include jobs at the Postal Service, which is in the midst of a crisis of its own.
"These job losses are a preview of the effects of sequestration, because it's already taken place in some agencies and will likely continue with more spending reductions," said Stephen Fuller, director of the Center for Regional Analysis at George Mason University.
The wane in federal jobs is due largely to workers leaving federal agencies facing about $1.2 trillion in budget cuts over the next 10 years, Fuller said. Federal agencies have been freezing jobs as workers retire or leave for the private sector.
On top of that, February ushered in a massive layoff of federal workers on short-term contracts at the Defense Department. Those losses will continue through April, according to agency memos.
On March 1, $85 billion of forced federal budget cuts, dubbed sequestration, kicked in, promising further federal job losses, economists say.
"I would expect to continue to see erosion in federal worker jobs, as disgruntled workers decide to bail for the private sector and federal agencies are told not to backfill jobs," Fuller said.
Federal spending and hiring has been on a downward slope. In 2011, federal dollars spent on both defense and non-defense contracts fell for the first time in 31 years.
http://money.cnn.com/2013/03/08/news...obs/index.html
If you can borrow money at 2%, but use that cash to make a return of 5%, would you do it?
“Fiscal tightening is hurting,” Ian Shepherdson, chief economist of Pantheon Macroeconomic Advisors, wrote to clients recently. The investment bank Jefferies wrote of “ongoing fiscal mismanagement” in its midyear report on Tuesday, and noted that while the recovery and expansion would be four years old next month, reduced government spending “has detracted from growth in five of past seven quarters.”The Federal Open Market Committee, which sets policy for the central bank, noted signs of improvement in the private sector last week in a statement. “But fiscal policy is restraining economic growth,” it added, echoing public comments that Ben S. Bernanke, the Fed chairman, has made for months. In April, the International Monetary Fund said the United States would achieve further growth “in the face of a very strong, indeed overly strong, fiscal consolidation.”The “prioritization” proposal first arose in 2011 from among the most conservative House Republicans, those who were driving hardest against the White House on raising the debt ceiling and expressing unconcern about default, but it has now become mainstream in the House ranks.
Economists and financial analysts generally dismiss the idea as unworkable if not dangerous, and count on Democrats to block it. Gregory Daco, a senior principal economist at IHS Global Insight, said the Republicans’ proposal was the kind that caused his clients to ignore the fiscal policy out of Washington, and rely instead on the Fed to buttress the recovery.
“Whenever I talk to our customers or clients, they sort of brush off everything that’s related to fiscal policy,” Mr. Daco said. “The view is, ‘Oh, it doesn’t matter.’ That’s what I hear a lot."
He noted that the economy was much stronger than Europe’s largely because the United States initially opted for stimulus measures and allowed deficits to increase when the recession and financial crisis hit five years ago. European governments pursued austerity policies to cut their debts, further stalling economic activity and in turn inflating deficits..”
Sure... it's all Krugman.
Quite frankly, if the GOP in congress got off their asses and opted for infrastructure spending, our economy would be humming along.
The problem with that... is that would give the Democrats a chance to say that Obama's policies worked for the next presidential election in 2016. I think that the present group of rabid ideologues would do just that, i.e. directly harm the economy just to the Democrats, because that fits rather well with just about every other policy they put forward.
The Republicans are putting party before the common good, and deserve to be relagated to a regional noisemaker. Let the grown ups handle things.
"I think that the present group of rabid ideologues would do just that, i.e. directly harm the economy just to the Democrats, because that fits rather well with just about every other policy they put forward."
think?
I AM ABSOLUTELY SURE.
How much more evidence do you need to quit "thinking" about the destroy-govt, post-policy obstructionist Repugs?
boutons_deux MUST BE jOHN eDWARDS SPOKEPERSON.
Still didn't get an answer.
If you can borrow money at 2%, but use that cash to make a return of 5%, would you do it?
and of course govt investment returns much higher than 5% and not only to the "investors", but the 99%.
Destroying the Lair of the Budget-Balancing Cretins
Even though our debt burden is relatively large, because interest rates are extremely low, the interest burden is not. In fact, relative to the size of the economy it is near post-war lows. It is at post-war lows if we subtract the $80 billion in interest refunded to the Treasury each year by the Federal Reserve Board.
While this burden is projected to rise somewhat when interest rates return to a more normal level, even in a decade the interest burden is not projected to be back to its early 1990s level. In short, there is absolutely no horror story in this picture.
The deficit hawks have used dishonest fear-mongering to prevent the country from taking the steps needed to get the economy back to full employment. These people have enormous economic and political power. As a result they may be able to keep their austerity policies in place. But we have to recognize, this is about making the rich richer, not helping our children and grandchildren.
http://www.cepr.net/index.php/op-eds...epr+%28CEPR%29
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