I gave this presentation the other day and figured folks in these parts might “enjoy” the slides. Pretty self-contained, but here’s a slight bit of annotation:
Slide 3: I wrote about this here as well.
Slide 4: references the CDSH position, introduced here.
Slide 6: An awfully compelling picture, IMHO, of the speed of recent deficit reduction. I know some look at this slide and are aghast by “deficit mountain” as it were, but I boldly assert that the question is not whether the deficit was too high; it is “did it go up enough—temporarily—to adequately offset the demand contraction?
Interestingly, in many talks in recent years, people totally get that point. And yes, there’s a selection bias—they’re coming to hear me talk. But I’m quite certain that’s not the whole story. It’s also the case that the average person doesn’t assume that public borrowing in the interest of offsetting the economic pain of recession is a bad thing.
BTW, of the six percentage points in deficit reduction from 2009 to 2013 (the def/GDP ratio fell from 10% to 4%) 63% came from lower spending; the rest from higher revenues. Note that not all of that is policy driven—spending falls and revenues rise even with no policy changes as the economy recovers.
Slide 7: From GS researchers, who tell us that fiscal drag has been relatively large in 2013, mostly from the premature expiration of the payroll tax break. Anyway, diminished fiscal drag is one reason most forecasters expect the economy to grow faster next year.
Slide 9: I tried to get a little creative here, just grabbing a bunch of headlines from the buzzfeed link.
Slide 10: The safety net was a lot more effective than people realize. My CBPP colleagues have been blogging on this.
Slide 11: Self-explanatory, but note the first bullet: Separate fact from ideology: fiscal policy works, dysfunction doesn’t.
During Q&A, someone asked me how we can do that—re-direct the debate back on the road to factville. Other than “that’s what I and many others spend most of our waking hours doing,” I didn’t have much of a response.