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Morici: "Democrats will stubbornly argue the economic recovery will collapse if the deficit is cut by any more than $100bn"
Howard Richman, 2/15/2011

In a commentary that appeared this morning (Budget demagoguery; White House says deficit in current year to spike to $1.65trn - - the largest dollar amount ever) University of Maryland economist Peter Morici explains one of the reasons why Congress and the President are only proposing paltry cuts in the federal budget. He writes:

Democrats will stubbornly argue the economic recovery will collapse if the deficit is cut by any more than $100bn, and Republicans will offer to privatize Medicaid and Medicare, as if vouchers and private spending accounts will help the nation’s poor and elderly obtain lower drug and hospital rates than can the government.

Republicans should be cutting budget deficits and trade deficits at the same time. Cutting budget deficits would slow the economy, but cutting trade deficits would speed it up. The scaled tariff to balance trade would bring in several hundred billion dollars in government revenue the first year and revive the economy at the same time.

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  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

    Journal of Economic Literature:

  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

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  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]