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Tuesday, November 21, 2017
CNS' Jeffrey Forgets There Was A Recession, Makes Dumb Spending Claim
Topic: editor in chief Terry Jeffrey writes a lot about economic stuff. Perhaps he shouldn't, if his Nov. 14 article is any indication:

If Congress had frozen federal spending at the level it reached in fiscal 2008, the last full fiscal year before President Barack Obama was inaugurated, the federal government would have had a balanced budget from fiscal 2014 onward based on the actual revenues the federal government collected under the existing tax laws in those years.

However, rather than freeze federal spending after 2008, Congress permitted it to rise by $998 billion—or 33.5 percent.

Um, remember the recession that hit the U.S. during fiscal 2008? Jeffrey doesn't seem to -- he makes no reference to it in his article. He does, however, allude to recession-related things while complaining about the spending that has been associated with it:

But federal spending increased dramatically after fiscal 2008, jumping to $3,517,677,000,000 in fiscal 2009, driven in part by the Troubled Asset Relief Program (TARP), which Obama voted for in the Senate and President George W. Bush signed in October 2008, and by the American Recovery and Reinvestment Act stimulus bill, which Obama signed in February 2009.


In fiscal 2009 through 2012, federal revenues fell short of the $2,523,991,000,000 the federal government took in during fiscal 2008. But in fiscal 2013, federal revenues climbed to $2,775,105,000,000; then, in fiscal 2014, they climbed to $3,021,491,000,000.

Why was there a TARP and a recovery act? Because there was a recession. Why did federal revenues drop between 2008 and 2013? Recession. Why did federal revenues increase above 2008 levels in fiscal 2013 and 2014? In part because of TARP and the recovery act.

Since Jeffrey is ignoring the existence of the recession, he also ignores that his hypothesis has a huge hole in it: If federal spending didn't increase in response to the recession -- as Jeffrey seems to have wanted to happen, and which runs counter to generally accepted economic theory -- it's likely that the economy would not have recovered enough to increase revenues starting in 2013.

In short, there are consequences to not increasing spending during a recession, and Jeffrey makes sure not to examine any of them in order to stay resolutely on point and completely divorced from the last decade of economic reality: "Had federal spending been frozen at the fiscal 2008 level through fiscal 2017, the federal government would have run a surplus of $332 billion in the last fiscal year."

Such fantasy-based analysis will not help CNS with maintaining any sense of credibiility.

Posted by Terry K. at 12:57 AM EST

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