Posted by WARREN MOSLER on May 26th, 2011
No actual evidence, but my point remains that if the executive branch can cut spending they don’t like simply by not spending what’s authorized by Congress, they can take the pressure off demands for other spending cuts.
Also, again conjecture on my part, the QE and zero rate ‘tax’ (reduced interest income) may be what’s keeping a lid on growth here much like what’s happened to Japan for nearly 20 years.
As previously discussed, with 0 rates seems to me taxes can be quite a bit lower for any given size govt (larger deficit) without being ‘inflationary’. Unfortunately our fearless leaders are all going the other way.
May 26 (Reuters) — Surging gasoline prices and sharp cutbacks in government spending caused the economy to grow only weakly in the first three months of the year. Consumer spending slowed even more than previously estimated.
The Commerce Department says the overall economy grew at an annual rate of 1.8 percent in the January-March quarter.
That was the same as the government’s first estimate a month ago. Consumer spending grew at just half the rate of the previous quarter. And a surge in imports widened the U.S. trade deficit.
Many economists believe the economy is growing only slightly better in the current April-June quarter. Consumers remain squeezed by gas prices near $4 a gallon and renewed threats from Europe’s debt crisis.