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G-T doesn't include transfer payments so if G-T is shrinking, and govt provides direct Transfers to the non-govt to consume and perhaps save (a little), the deficit can be seen as shrinking while the economy can be humming along thru govt transfer's direct support of C by the non-govt...
Let taxes fall where they may and let ex post G-T fall where it may who cares?
It's the G that is important plus the Transfer Payments (which no economist even accounts for btw) that directly support C by the non-govt (consumption) that are more important than ex post G-T imo...
Govt SPENDS FIRST and THEN collects the taxes... its the "SPENDS FIRST" that matters...
5 comments:
G-T doesn't include transfer payments so if G-T is shrinking, and govt
provides direct Transfers to the non-govt to consume and perhaps save (a little), the deficit can be seen as shrinking while the economy can be humming along thru govt transfer's direct support of C by the non-govt...
Let taxes fall where they may and let ex post G-T fall where it may who cares?
It's the G that is important plus the Transfer Payments (which no economist even accounts for btw) that directly support C by the non-govt (consumption) that are more important than ex post G-T imo...
Govt SPENDS FIRST and THEN collects the taxes... its the "SPENDS FIRST" that matters...
rsp,
Warren said have a nice weekend. That's about all I like about his outlook. The placebo effect of the fed seems to be gone.
G-T doesn't include transfer payments
It does, because T is taxes net of transfers - transfers are negative taxes.
Jose,
Is that not 'net taxes'?
Rsp
Matt,
Precisely.
Higher transfers are equivalent to lower net taxes - and higher deficits.
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