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Home Publications Blogs Beat the Press It's Not a Fiscal Crisis!

It's Not a Fiscal Crisis!

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Friday, 28 December 2012 06:42

Let's see, if Congress does nothing then the budget deficit will fall by around $600 billion to a bit more than 2 percent of GDP. How is this a "fiscal crisis?" Of course it's not a fiscal crisis.

It is an austerity bomb. If the higher taxes and reduced pace of spending are left in place over the course of the year (not the first 2 weeks in January), then GDP growth will slow and the economy will likely fall back into recession.

Please explain why the NYT still doesn't have this straight after covering the issue endlessly for the last three months?

Comments (1)Add Comment
Professor Brad DeLong Gets It Right
written by Robert Salzberg, December 28, 2012 7:48
Here's a link to great analysis about the austerity bomb:

http://www.project-syndicate.org/commentary/what-comes-after-the-fiscal-cliff-by-j--bradford-delong?wpisrc=nl_wonk


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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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