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Monday, October 19, 2015

'Ornithology: What is a ''Deficit Hawk''?'

Bill McBride at Calculated Risk wonders how "deficit hawk" is defined:

Ornithology: What is a "deficit hawk"?, by Bill McBride, Calculated Risk: Nick Timiraos wrote yesterday in the WSJ: Debt, Growth Concerns Rain on Deficit Parade...
I'd like to see the definition of a "deficit hawk"!
I'd think a true deficit hawk would be truly concerned about, uh, the deficit. So they'd support both tax increases1 and spending cuts to reduce the deficit. They'd oppose policies that increase the deficit (like the Bush tax cuts, and the war in Iraq). They'd also be concerned about policies that led to the financial crisis and a deep recession - since the deficit increases during a recession.

Maybe I'm talking my own position since I opposed the Bush tax cuts (that created a structural deficit). I opposed the Iraq war. I frequently talked to regulators about lax lending in real estate (and posted some of those discussion on this blog in 2005) that led directly to the financial crisis and large deficits. And I support both intelligent tax increases and spending cuts.

Unfortunately, my experience is that most people who claims to be "deficit hawks", are really pushing a different agenda.  I wish Timiraos would provide a few examples of deficit hawks!
Also the "red ink set to rise later this decade" is expected in increase the deficit from 2.5% of GDP to about 3.1% in 2020.
1 Note: Some people like to focus on "growth" to reduce the deficit, and they tend to focus on tax cuts to boost growth. However, all data and research shows that at the current marginal rates, tax cuts do not pay for themselves and lead to much larger deficits.

    Posted by on Monday, October 19, 2015 at 11:00 AM in Budget Deficit, Economics, Politics | Permalink  Comments (41)


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