Tag Archives: deficit

Trump’s Tax Cut Will Worsen the Current Account Deficit

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January 19, 2018 —  President Trump and the Republicans succeeded last month in passing their big tax cut.  It may not have many of the desirable attributes of true tax reform (equity, efficiency, bi-partisanship, revenue-neutrality, or cyclical timing); but it is major legislation, as promised.  What about that other major Trump promise, to cut the US trade deficit?  The tax cut is virtually certain to raise the budget deficit and in turn to raise – not lower – the current account deficit.  Call it the Return of the Infamous Twin Deficits.  As when Ronald Reagan cut taxes in 1981-83 or when George W. Bush cut taxes in 2001 and 2003. read more

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Does Debt Matter?

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“Does Debt Matter?” is the question posed by The International Economy to 20 commentators:
“The recent scrutiny of the popularized version of the Rogoff-Reinhart thesis (that growth plummets when debt exceeds 90 percent of GDP) makes clear there are no simple formulas for determining the risks in the level of a nation’s debt. …Can a realistic guide be fashioned for determining whether a nation’s debt has reached a danger zone? Or are countries from here on expected to pursue fiscal reforms only if and when a crisis sets in?” read more

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