Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Senate only passes a quarter of Obama's $266 billion stimulus
Congress is starting to lose its enthusiasm for failing stimulus plans. Washington Post staff writer Lisa Montgomery reports (Election-year deficit fears stall Obama stimulus plan) that the Senate just recessed after only passing a quarter of President Obama's latest $266 billion stimulus plan:
Meanwhile, in a recent Wall Street Journal commentary (U.S. Debt and the Greece Analogy) former Fed Chairman Alan Greenspan predicted that our continued deficit spending will eventually cause a rapid rise in the interest rate that the United States government must pay.
Such a rise would make the budget deficits grow, requiring even more borrowing, causing higher interest rates, perhaps producing a vicious cycle that could cause a dollar crash and a U.S. government default.
It is hard to blow up the economic tire without patching the trade deficit leak. As Congress pumps up aggregate demand with stimulus plans, the trade deficit lets it out. The most recent reports show the trade deficits growing and the economy stagnating.
In a recent commentary (New Balances will Threaten Global Recovery), the Peterson Institute's Fred Bergsten predicted that the growing trade deficits will continue to require economic stimuli in order to prevent recession. He wrote:
Not only is the strategy of pumping up the economy without patching the trade deficit leak not working, it is risking disaster. There is an obvious solution that WTO-compliant Import Certificates makes possible: PATCH THE LEAK!
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