Economic Recovery Measures

Saving For a Rainy Day

As the East Coast and other communities affected by superstorm Sandy begin the work of rebuilding and assisting those who need help, the CRFB and Fix the Debt teams are keeping everyone in our thoughts. Just as there are preparedness lessons we can learn from Sandy, there are very important takeways for the federal budget too.

AIG Drives TARP Estimate Lower

The CBO has released its newest estimate of the Troubled Asset Relief Program (TARP), showing that it would cost taxpayers a total of $24 billion. This is $8 billion lower than their last estimate done in March.

QE3 Is on the Way

After months of speculation and anticipation, the Federal Open Market Committee decided to undertake a third round of quantitative easing. The centerpiece of QE will be the purchase of more mortgage-backed securities at a pace of $40 billion per month.

Treasury Winds Down TARP Support of AIG

As the Troubled Assets Relief Program (TARP) continues to wind down, the biggest programs remaining are the support of GM and AIG. The latest estimate of TARP from CBO projected the two programs would cost $41 billion combined, larger than the $32 billion overall cost projection for TARP. That means the remaining elements of TARP have been a net gain for taxpayers.

It's Not Free Money

Paul Krugman and other advocates of more federal stimulus spending cite today’s extremely low real interest rates, near zero or negative, as reason to borrow and spend this "free money." As Jared Bernstein, another stimulus advocate, points out, though, the notion of free federal debt is a fallacy.

How Might the Fiscal Cliff Play Out?

This week’s The Economist offers another analysis of the end-of-year fiscal cliff of tax increases and spending cuts that the United States faces under current law. The article also explores how "the election will determine whether a nasty dose of austerity can be avoided."

When It Comes to Deficit Reduction, Timing Matters

The news that Britain has entered into a double-dip recession touched off a fierce debate last week over the role of austerity in the country's downturn.

Chairman Bernanke Addresses the Fiscal Cliff

Federal Reserve chairman Ben Bernanke held a press conference yesterday following the conclusion of the Federal Open Market Committee meeting. Questions spanned a variety of topics including the Fed's current monetary policy stance, the economic outlook, the possible threat posed by European troubles, and Fed transparency. But one question did come up about the fiscal cliff and how the Fed would react if no action were taken. Here are his remarks:

No Tax Cuts Without Offsets

The House is set to move forward on legislation that would enact a tax cut for small businesses. The Small Business Tax Cut Act (HR 9) allows small businesses (businesses with less than 500 employees) to temporarily deduct 20 percent of their domestic business income in 2012 up to 50 percent of employee wages. JCT has estimated that the bill would cost $46 billion, with almost all of that coming in the next few years.

Economics of the Fiscal Cliff

Our recent paper on the fiscal cliff details the short-term or longer-term economic problems that the country will face if lawmakers either allow everything in the fiscal cliff to occur as scheduled or if they decide to extend it all. This blog will look farther into the potential short-term impacts, attempting to quantify what the cliff's 2013 effects would do to the economy.

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