Alan Blinder is a well known economist, but we think he might be having problems with his public policy role at Princeton, and maybe needs a little rethink on some econ, too..
We say that because he wrote an op-ed in the Jan. 31 edition of the Wall Street Journal that shows he might be getting a little long in the tooth.
He doesn’t seem to understand that the current federal deficit that we’re going to all pay for next year came about for some odd reasons, not necessarily related to classic micro- or macroeconomics.
We’re going to run a deficit t next year because we cut taxes more than we cut spending. So we have another deficit.
We had to cut taxes as a nation to avoid losing more jobs overseas (corporations add capacity and jobs in low tax locales). The Donald’s worthies are doing a good job of cutting spending, but they’ve got some big obstacles.
Mad Dog is getting the Pentagon to dance faster, but we seem to have inherited some low intensity conflicts from prior folks that will make cutting difficult. Spending is capped, but it’s hard to rearrange stuff inside the caps.
Nikki Haley has threatened to cut our contribution to the UN by $280 million, not chump change. She’s also recommended eliminating aid to countries and agencies that don’t like us. Both are great. Do it yesterday.
Betsy DeVos (education) and Gregg Pruitt (EPA) are trying to disestablish their agencies. Mick Mulvaney’s already folded the CFPB into somewhere else and cut staff.
The one big entitlement that can probably be cut is social security and medicare, by changing eligibility requirements, so let’s put that on the table.
The one point that Blinder could have objected to was the infrastucture spending by Trump, although it’s not clear how stimulative it’s going to be, since there are at least road trust funds at the federal level, and the states are supposed to step up on roads in their states. So, the jury will be out on this one for the time being.
So, Alan, it sounds like this column needs a redo. Actually, we think next year’s deficit should be less than this year’s ($600 billion), and the deficits should go down from there. You read it here first (we think)