The Congressional Budget Office is out with its new deficit projections for 2016 and they are now saying that the deficit is going to grow substantially this year.
WASHINGTON, Jan 19 (Reuters) - The U.S. budget deficit will grow sharply to $544 billion in 2016 after six years of declines, largely because of permanent tax breaks that Congress passed late last year, the Congressional Budget Office said on Tuesday. Read more.
This is what I said several times and most recently, about a week ago here.
So the question is, what are all those "deficit is too small" folks/economists going to say now? They've been wrong for 5 years, looking at the shrinking deficit. They won't change their tune, I bet. They'll stick with their stubborn ideology and just keep saying it's "still too small."
We were right the entire time here at MNE. Matt Franko, myself, looking at flows, topline gov't spending, price setting currency markets by exporters etc, and none of this, getting harder to get nonsense.
This is the place to be. By the way, the budget projections were already in my new report, Fiscal Trend Trader. Front page. Even before the CBO released its report
@Mike (or Matt),
ReplyDelete"So the question is, what are all those "deficit is too small" folks/economists going to say now? They've been wrong for 5 years, looking at the shrinking deficit. They won't change their tune, I bet. They'll stick with their stubborn ideology and just keep saying it's "still too small.""
I don't understand. It just got bigger. What's the beef?
I'm really not sure about the semantics of this argument. The 'deficit is too small' argument is a counter to those who say it is too big.
ReplyDeleteThe actual operational suggestion is for government to spend more or tax less. Getting hung up on the semantic counter without acknowledging the operational suggestions is a mistake. It's the same thing as top-line government spending, and analysing the multiplier flow - just said in a different way for a different audience.
As we know the deficit just is what it is. It's the real transaction sequence induced by government investment that is the key driver.
M,
ReplyDeleteAs Neil says correctly here:
" It's the real transaction sequence induced by government investment that is the key driver."
Then "the deficit!" is not a quantitative measure of that...
So when we see people (who imo should know better) keep banging on about "the deficit is too small!" then as technocrats it simply pisses some of us off...
"Then "the deficit!" is not a quantitative measure of that..."
ReplyDeleteAnd you actually believe "that" will occur without deficit spending? Or, the probability of "that" doesn't increase with more deficit spending?
I'm not sure if that is more an economic, government operations, or political lack of insight... or all of the above.
bob,
ReplyDeleteIts like you are pointing a heat gun at an electric motor trying to get it to run faster because you noticed one time it got warmer when you saw it speed up... I'm not the one lacking insight in this scenario... keep reading your economics books...