A clearinghouse for commentary on supply-side economics.
Friday, July 2, 2010
The WSJhas a must-read editorial warning congressional Republicans to focus on restoring growth rather than fighting deficits.
What CBO's latest apocalyptic report doesn't stress is what we'd call the more important deficit in its forecast: the growth deficit. CBO predicts an annual rate of GDP growth of 2.2%. Yet since 1959 the U.S. economy has grown at an average rate of 3%, and during the 1980s and 1990s it was closer to 3.5%. The compounding effect of restoring this faster pace of growth would mean far more net national wealth and would certainly make debt repayment easier.
Even Mr. Obama's current spending level of 25% of GDP would be more manageable if the slow economic recovery weren't keeping tax revenue at unusual lows. In 2007, the economy threw off revenue of 18.5% of GDP. That fell to 14.8% in 2009 and may not be too much higher this year. The point is that there is no hope of balancing the federal budget without a return to higher levels of economic growth.
On The Kudlow Report, Art Laffer discusses gold, the dollar, and the economy.
The WSJ’s Kimberley A. Strassell doubts free trade is making a come back.
On MSNBC, The Washington Examiner’s Tim Carney suggests that Republicans blocking unemployment benefits is bad politics.
Paul Krugman continues to worry about reduced spending.
At NRO's Corner, Samuel R. Staley sees a lost decade coming.
My view is, with the Dow stuck at 10,000 and gold having quintupled since 2001, we've already lost this decade.