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View Diary: Warning: Swallowing the President's Bitter Pills May Cause Harsh Austerity (246 comments)

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  •  It's not in the interests of the country (8+ / 0-)

    No deficit cutting is in the interests of the country with the kind of output gap we have. Nor is it in the interests of the country to manage fiscal policy from the viewpoint of deficit reduction. It may be in our interests to cut some spending like defense spending, to get rid of some programs that son't work, and to raise taxes on the wealthy for reasons of justice and fairness. But if we do that we need to spend more on other programs to produce a higher deficit than we have now; one that makes up for demand leakage to savings and our trade deficit. In any event a deficit plan to be implemented over many years is stupidity because the context of fiscal policy is always changing and highly unpredictable. Economic projections are unreliable and the deficit one ought to run in any given year depends on savings desires and import desires and since the government has no solvency problems should be allowed to float freely. See here and here for some ideas that haven't penetrated wither this Administration or the progressive blogosphere.

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