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Dissecting House Speaker Ryan’s remarks on deficits and spending

“In 1968, when tax revenue was 17 percent of GDP, mandatory spending was 6.4 percent; in 1978 and 1988, tax revenue was about 17.5 percent and mandatory spending was about 9.6 percent” reports washingtonpost.com. So the practical effect is that the $1 trillion deficit moved up two years.Here, Ryan says that tax revenue will continue to rise despite the tax cuts. Source: washingtonpost.com Share This:

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Dissecting Paul Ryan’s remarks on deficits and spending

“In 1968, when tax revenue was 17 percent of GDP, mandatory spending was 6.4 percent; in 1978 and 1988, tax revenue was about 17.5 percent and mandatory spending was about 9.6 percent” reports washingtonpost.com. So the practical effect is that the $1 trillion deficit moved up two years.Here, Ryan says that tax revenue will continue to rise despite the tax cuts. Source: washingtonpost.com Share This:

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Trump risks opening a two-front trade war with China and Mexico just when we need them the most

“In addition to the wrongheaded notion that all trade deficits are equal, and equally bad, the president is opening this two-front trade war with China and Mexico just when we need them most” writes Tim Rue for cnbc.com. But instead of using established institutions, such as the World Trade Organization, to help resolve these differences amicably, Trump has pre-emptively launched a trade war with China. Whether the defeat happened at Waterloo or Stalingrad, fighting a two-front war has always proved disastrous.That only serves to exacerbate, needlessly, the risk of a…

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Measuring trade flows is tricky. Good trade policy, however, is pretty straightforward.

“As Canadian trade representatives were quick to underscore, the U.S. data reveals a trade surplus with Canada” writes Jared Bernstein for washingtonpost.com. What’s surprising, however, is that the Canadian data reveals the opposite.Do the same with the Canadian data: Canada’s domestic exports to the United States were $266 billion.Thus, the Canadian data will show more exports flowing our way than will the U.S. data.This dust-up starts with Trump complaining to Canadian Prime Minister Justin Trudeau about the U.S. trade deficit with Canada. Source: washingtonpost.com Share This:

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Pete Peterson, the financier who funded several groups that advocated for lowering the federal debt, died Tuesday.

“Pete Peterson, the financier who funded several groups that advocated for lowering the federal debt, died Tuesday” writes Jin Lee Bloomberg for washingtonexaminer.com. In addition to an illustrious Wall Street career in which he co-founded the private equity group Blackstone, Peterson helped finance several fiscally conservative groups that have proved highly influential in Washington. He’d go on to head the investment bank Lehman Bros. before entering private equity and amassing a personal fortune that made him a billionaire.Peterson also was a director for the Committee for a Responsible Federal Budget,…

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U.S. February budget report shows first signs of wider deficits to come

“Since the passage of the Trump tax cuts late last year, the 10-year benchmark yithaeld has gained 41.5 basis points from 2.468%” writes Senior Economics Reporter for marketwatch.com. The Trump White House has forecast a $833 billion budget deficit for this year that ends Sept. 30, up from $666 billion in the prior year.Big picture: The decrease in withholding during the month is the earliest sign of the effect of the Trump tax cut, analysts said. Source: marketwatch.com Share This:

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Krugman: Trade War, What Is It Good For? Absolutely Nothing

“A cycle of retaliation would shrink overall world trade, making the world as a whole, America very much included, poorer” writes Paul Krugman for nytimes.com. And it’s starting to look like we have a trade policy crisis on our hands.It’s all about who sells more: if we run a trade surplus we win, if we run a trade deficit, we lose: This is, of course, nonsense.But the case for worrying about trade deficits, like the case for running budget deficits, has largely evaporated now that unemployment is back to 4…

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News Oil 

Alaska, other oil states fight budget deficits for fiscal year 2019

“The state’s proposed capital budget for fiscal 2019 is $150 million, down from nearly $2 billion in fiscal 2013, a drop of more than 90 percent” writes Midwest Communications Inc for 95kqds.com. However, Fitch said on Jan. 25 that while oil prices and production have edged higher, states seem to be tempering their revenue and price forecasts.Oklahoma’s challenges stem from a combination of low oil prices and extensive one-time actions from the legislature, said Marcy Block, an analyst at Fitch Ratings.NEW YORK (Reuters) – More than three years after the…

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News Regulators 

Here’s what ‘twin deficits’ mean for the dollar and the Fed

“Why is the dollar so weak even as Treasury yields are on the rise?” writes Deputy Markets Editor for marketwatch.com. At nearly 6% of GDP, that’s an already significant level for the twin deficit.The story is converging on the idea that the combination of a weak dollar and rising U.S. yields is because foreign savers have been spooked by the possibility of a sharply wider twin deficit.Higher yields would be expected to make the dollar more attractive relative to other currencies.That doesn’t mean the dollar is in for a plunge,…

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Krugman: Trump’s Twin Deficits

“And two things happened at more or less the same time: for the first time ever, the U.S. began running large peacetime full-employment budget deficits, and we began running large, sustained trade deficits” writes Paul Krugman for nytimes.com. At the time, Martin Feldstein famously linked the two, calling them “twin deficits.” While this oversimplified matters – in the late 1990s we ran both budget surpluses and trade deficits, thanks to booming investment – the logic made sense.OK, I’m not quite sure which external debt number he’s referring to.Now the always…

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