Since 2008, we’ve had the largest macroeconomic “stimulus” since World War II, but the slowest economic recovery. The government’s stimulus has been much larger than just the $800 billion spending bill passed in 2009. In Keynesian theory, the stimulus has included a total of almost $5 trillion of federal deficit spending since 2008. Despite that colossal stimulus, we’ve had a horrible jobs market and very sluggish growth.
Everyone agrees that it’s rather stupid for a federal funding dispute to idle about 70,000 workers on airport-related construction. Just as absurd, there have been 20 stop-gap funding bills passed for the FAA since 2007. News stories are digging into the political disputes surrounding the FAA, but they aren’t addressing the root problem.
Centrist and liberal columnists are lamenting the lack of tax increases in the debt deal. But the hollowness of the deal itself provides a good justification for Republicans to oppose all tax increases in such bipartisan deals.
The Washington Post reports that spending cuts in the budget deal threaten to slow the economy. The article quotes a number of economists who seem to harbor a rather extreme Keynesian bias in their thinking.
Republicans and Democrats have come together on a “historic” budget deal that cuts federal spending by more than $2 trillion over 10 years. The Washington Post’s lead story calls the cuts “sharp” and “severe.”
However, the budget deal doesn’t cut federal spending at all.
House Speaker John Boehner has revised his budget plan in response to an unfavorable analysis by the CBO. The CBO has examined Boehner’s new plan and finds that it would cut spending by $917 billion over 10 years. Of the total, only $761 billion would be cuts to programs. The rest of the savings would be from reduced interest costs.
The USPS is proposing to close 3,700 post office locations across the country, as mail volume falls and the agency is losing billions of dollars.
House Speaker John Boehner is scrambling to revise his budget plan after the CBO found that it would only cut spending by $850 billion, not the $1.2 trillion promised.
I testified to the Senate Finance Committee today regarding federal spending and debt.
Here are some of the points I made:
The “Gang of Six” senators has released an outline of budget reforms that would supposedly reduce deficits by $3.7 trillion over 10 years. Revenues would rise by at least $1 trillion, while spending would be theoretically trimmed by various procedural mechanisms. The plan promises to “strengthen the safety net,” “maintain investments,” and “maintain the basic structure” of Medicare and Medicaid, which doesn’t sound very reform-minded to me.