Yellen and other economists say tax cuts are blowing up the budget

[TomCADem]

Source: CNBC

Last year's aggressive tax cuts are at the heart of a worsening budget situation that will see deficits surge in the years ahead, according to an op-ed by former Fed Chair Janet Yellen and others.

The essay, published in Sunday's Washington Post, rebuts a study from Stanford University's Hoover Institution that blamed entitlement spending for the nation's worsening financial picture.

However, Yellen and a team of other economists reject the notion that Social Security, Medicare, Medicaid and veterans' benefits are the prime culprit. Instead, they insist, the main problem is that Congress passed a tax cut bill at precisely the wrong time.

"As we focus on the long-run fiscal situation, our goal should be to put the debt on a declining path as a share of the economy. That will require running smaller deficits in strong economic periods — such as the present — to offset the larger deficits that are needed in recessions to restore demand and avoid deeper crises," the group wrote. "Last year's Tax Cuts and Jobs Act turned that economic logic on its head."

Read more: https://www.cnbc.com/2018/04/09/yellen-and-other-economists-say-tax-cuts-are-blowing-up-the-budget-not-entitlements.html

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You can see why Trump was never going to renominate her for the Fed.

[quartz007]

1. National debt$20,000,000,000,000++ and counting

I thought I was a over spender. Rump beats me soundly!

[Beartracks]

2. "Who needs economists when wishful thinking and trickle-down fantasy will do?"

[bucolic_frolic]

3. You destroy a country by destroying its currency

Inflation will eat the US dollar alive. Gasoline 1960 19 cents. Gasoline 2018 $2.69. Gasoline 2025 $5.59? $6?

[iluvtennis]

10. Exactly the trend (unfortunately)

[dalton99a]

13. +1

[Igel]

4. They argue different things.

The projections before the tax cut passed were for increasing deficits.

Take that as the baseline, and the reason for the increases over projections is the budget cuts. In June 2017 the prediction was a trillion dollar deficit by 2022; we're pitching a fit because the tax cuts have moved it to 2020.

But that's baseline and not "budget deficit increases" because it's built into the projection. It's not the increase from $550 to $850 billion that's the real problem; the real problem is the smaller increase from $850 to $1000 billion, because that *wasn't* projected.

Notice "put the debt on a declining path as a share of the economy." Not reduce it in actual dollar terms, but in percentage terms. This is sharply at odds with the usual interpretation of Obama's "lower the deficit" in good times; I suspect the interpretation was wrong and that Obama's intended meaning was as Yellen's. A $500 billion a year deficit is "declining" if the economy grows so that as a percentage of GDP $500 billion is less and less.

[sakabatou]

5. No one should've been surprised

[wishstar]

6. No doubt she's glad to no longer be Fed Chair esp. after stocks began tanking on day she left

[Doodley]

7. When times are good, you pay down debts or put money aside for rainy days. 101 of good housekeeping

[elmac]

8. but but but the economy is yuge! yuge!

[joshdawg]

9. republicans don't give a shit about the budget,

as long as the rich get richer.

[MarcA]

11. Starve the Government Then Give it to the Billionaires

because government does not work. This has been a deliberate
plan by the enemies of the people for three decades at least.

[Sherman A1]

12. Precisely

They have been working at this for a very long time, chipping away at things where they can and making full scale assaults when possible.

[KPN]

15. Actually in terms of effective actions,

4+ decades. But it has always been their plan. They just weren't able to achieve it much from the 30s through the 60s.

[KPN]

14. Oh, not to worry says the orange shit throwing

monkey in the WH, we'll just file for bankruptcy.