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Larry Kudlow on Budget & Economy

 

 


FactCheck: No, deficit is increasing with Trump tax cuts

In June 2018, Kudlow asserted that the tax cut was generating such growth that "it's throwing off enormous amount[s] of new tax revenues", and "the deficit, which was one of the other criticisms, is coming down--and it's coming down rapidly". Both assertions were incorrect. Since the tax cut was enacted, federal tax receipts increased 1.9% on a year-on-year basis, while they increased 4.0% during the comparable period in 2017. By the same method, the federal budget deficit increased 37.8% while it increased 16.4% during the comparable period in 2017. Kudlow later asserted he was referring to future deficits, although every credible budget forecast indicates increasing deficits in coming years, made worse by the Trump tax cut if not offset by major spending cuts. Barring such spending cuts, the CBO projected the tax cut would add $1.27 trillion in deficits over the next decade.
Source: Wikipedia.com Fact-Check on 2018 Trump Cabinet members , Dec 31, 2018

The massive federal stimulus of 2009-10 did not work

We need a pro-growth, supply-side fix. The current economic recovery is sub-par. In fact, at roughly 2% average real growth over the past five years, it's the slowest rebound since World War II.

A few brief observations: First, the massive federal stimulus of 2009-10 did not work. There were no so-called fiscal multipliers. And far too much debt was accumulated for no good reason. Second, substantial overregulation has continuously hobbled the recovery. Tax rates have gone up across-the-board. The Dodd-Frank financial regulation has not solved Too Big to Fail, but it has contributed to an abnormally slow increase in C&I loans, particularly in the middle market.

I do applaud the slowdown in federal spending, which has dropped from over 24 percent of GDP to below 21 percent. At least this gives the private sector more room to breathe. Large-scale budget reductions in 2011 and 2013 did not crash the economy or the moderate jobs recovery, as my Keynesian friends widely predicted.

Source: National Review, "Recovery: 5 Years", by Lawrence Kudlow , Jul 15, 2014

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Page last updated: Feb 28, 2019