Mick Mulvaney, call your office.
It wasn’t too long ago that President Trump said he would eliminate the nation’s debt in eight years, and during the Obama Administration Speaker Ryan argued to cut spending because the debt will soon “grow to catastrophic levels.” But that was then. Today, the New York Times reports that experts are warning that President Trump and Congressional Republicans are pursuing “exactly the wrong fiscal policy at the wrong time.” Key points here:
“Republicans are pouring government stimulus into a steadily strengthening economy, adding economic fuel at a moment when unemployment is at a 16-year low and wages are beginning to rise, a combination that is stoking fears of higher inflation and ballooning budget deficits.”
“Fears that the extra economic boost could spark faster inflation and prompt the Federal Reserve to accelerate the pace of interest rate increases appear to be at least partially driving the stock sell-off that has rattled markets over the past several days. Higher interest rates would raise federal borrowing costs as the United States continues to borrow heavily — the national debt has topped $20 trillion and annual deficits are creeping up toward $1 trillion. Treasury officials said last week that the United States will need to borrow $441 billion in privately held debt this quarter, the largest sum since 2010, when the economy was emerging from the worst downturn since the Great Depression.”
“‘This is exactly the wrong fiscal policy at the wrong time,’ said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget. ‘We should be bringing down the debt and ensuring we have room for stimulus during downturns. Instead we are overheating the economy and selling out the future. It’s shortsighted and foolhardy.’”
“‘We have a growing economy, the labor market’s tight, we don’t have a lot of idle resources,’ said Matthew Mitchell, the director of the Project for the Study of American Capitalism at the Mercatus Center at George Mason University. ‘Basically, the very best argument for Keynesian economics doesn’t apply now. So it really is the time to be austere.’”
“‘In a world of deficit discipline,’ Ethan S. Harris, the head of global economics at Bank of America Merrill Lynch wrote in a research note on Tuesday, ‘the U.S. stands out in terms of its deteriorating deficit.’”
“The Republican tax law’s $1.5 trillion deficit-financed price tag over the next decade is front-loaded. It will reduce federal revenue by $416 billion over this year and next, before accounting for additional economic growth, the Joint Committee on Taxation estimates. Many corporations are showing evidence of that in their quarterly earnings releases, as companies like JPMorgan Chase & Company and Verizon project billions of dollars in tax savings in 2018.”
“Fears that the extra economic boost could spark faster inflation and prompt the Federal Reserve to accelerate the pace of interest rate increases appear to be at least partially driving the stock sell-off that has rattled markets over the past several days. Higher interest rates would raise federal borrowing costs as the United States continues to borrow heavily — the national debt has topped $20 trillion and annual deficits are creeping up toward $1 trillion. Treasury officials said last week that the United States will need to borrow $441 billion in privately held debt this quarter, the largest sum since 2010, when the economy was emerging from the worst downturn since the Great Depression.”
“‘This is exactly the wrong fiscal policy at the wrong time,’ said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget. ‘We should be bringing down the debt and ensuring we have room for stimulus during downturns. Instead we are overheating the economy and selling out the future. It’s shortsighted and foolhardy.’”
“‘We have a growing economy, the labor market’s tight, we don’t have a lot of idle resources,’ said Matthew Mitchell, the director of the Project for the Study of American Capitalism at the Mercatus Center at George Mason University. ‘Basically, the very best argument for Keynesian economics doesn’t apply now. So it really is the time to be austere.’”
“‘In a world of deficit discipline,’ Ethan S. Harris, the head of global economics at Bank of America Merrill Lynch wrote in a research note on Tuesday, ‘the U.S. stands out in terms of its deteriorating deficit.’”
“The Republican tax law’s $1.5 trillion deficit-financed price tag over the next decade is front-loaded. It will reduce federal revenue by $416 billion over this year and next, before accounting for additional economic growth, the Joint Committee on Taxation estimates. Many corporations are showing evidence of that in their quarterly earnings releases, as companies like JPMorgan Chase & Company and Verizon project billions of dollars in tax savings in 2018.”