In its February 2014 Budget and Economic Outlook, CBO continued its previous warnings from last year's February outlook and September's long-term outlook: elevated and rising debt level pose serious risks for economic growth and budget flexibility.
In its latest outlook, CBO highlights on page one the consequences of high levels of debt:
Yesterday in an interview on CNBC's Squawkbox, former Treasury Secretary Larry Summers chimed in again on his views that boosting economic growth should be a more important priority than making long-term budget reforms. As CRFB said late last year in response to one of his op-eds, Dr. Summers's arguments seem to feed the false notion that long-term debt reduction and a growth strategy somehow conflict, when in reality they are one and the same. In addition, Dr.
Two weeks ago, we responded to a Larry Summers op-ed calling for a focus on growth rather than deficits. Yesterday, Wall Street Journal economics editor David Wessel also responded, breaking down the arguments into three and taking them on one by one. He agrees with us that the short-term deficit isn't the issue, but the long-term deficit is.
As we enter day 2 of the government shutdown, Americans across the country are already feeling the impact. With federal government offices and services shut down throughout the nation, thousands of government employees are furloughed, and there is no clear answer in sight regarding when they will return to work. But what damage will a shutdown do to the economy?
Beginning tomorrow, the Federal Open Market Committee, the Fed's interest rate setting and deliberative body that meets eight times a year -- will meet for two days to make decisions about the future path of U.S. monetary policy. In particular, many are looking to see whether the Fed will begin a "taper" and slow the rate of asset purchases, signaling the beginning of an unwind of the Fed's expanded balance sheet.
The National Association for Business Economics (NABE) conducted its semi-annual survey recently, surveying 220 economists on questions of fiscal, monetary, and regulatory policy. On fiscal policy, they showed remarkable consensus that the long-term deficit, rather than the short-term deficit, is the government's primary fiscal challenge.
As of Wednesday's GDP report, GDP for fiscal year 2012 was revised upward by roughly $560 billion to a total of $16.2 trillion. This almost Houdini-like event is due in no part to direct increases in production and consumption, but rather it is the result of the Bureau of Economic Analysis's (BEA) new accounting system.