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Neil Irwin (NY Times, Big Deficits)

Feb 14, 2018|

Transcript - Not for consumer use. Robot overlords only. Will not be accurate.

Budget deficits are going to be running about a trillion dollars a year and eighteen and nineteen the end of austerity is here and we're joined by Neil Irwin for conversation about that very topic and you are welcome to the show. So I was pretty surprised to look at the president's budget and see what it does in terms of the deficit trillion dollar deficits. Usually if a Republican administration tends to be more conservative and tighten the belt doesn't. Does and loosened the bills. You know I'm not structure that is actually you know if you go back to to the early two thousands of the Bush Administration that these tax cuts in 2001 to 2003 they did have Medicare prescription benefit that they didn't pay for we have seen this pattern before where Republicans. Talk a lot about deficits and and producing them when they're when they're out of power when they come and power there tends to be. You know suddenly get turned so bad it's ordinance cut taxes. They can maintain spending levels. Do we we have seen this movie before but it is striking how quickly just turned happened. You know back in 2010 Republicans won congress insisted on on on most of the budget control act. There's the hole. Debt crisis and and that led to. Released several years of cutting federal spending on things other than Social Security Medicare. What do you think this means in terms of growth in our economy GDP for 20182019. What are you hearing from projections. From economists that you respect. You know that these look like they're going to be pretty strong growth years in the next couple of years you know it's it's almost hard. If you think that there rejecting about an extra half a trillion dollars into the economy through tax cuts and and that the spending bill that was agreed to with Democrats such as last week. Yeah it would be very hard to inject an extra half a trillion dollars into the economy. And not get some growth effect to not person more economic activity I think there's every reason to think this'll be a pretty good year growth between eighteen in the public when he sank as well. Question what happened is that you know what point does this. In these steps are to crowd out other kind of economic activity at what point does. You know industry tries to link surprised that desperate risk that's been near term immediate term. Let's I was gonna ask you about inflation mean the number we got this morning at 830. You know if you annualized it it's over 3% that's going to be a little bit hotter than what the Fed would like to see. Yet authority or cost you 2% inflation now they have been below that for pursue several years growth or five years broke. So you know if we create back toward that 2% inflation that's actually kind of a win and that's getting back to where we where is that wants to be at least. The question is do we overshoot do we get into environment where. You know it has become his running so hot spit that. Reid is get bit up so people are getting higher incomes which is great. But also that speed into broader inflation broader rights prices along types to worry about completion to go back to meet summer 2008 to ten years. But we could end up back in the world pretty soon and that's a world where the Federal Reserve probably is reading interest rates trying to slowed on the economy. Pull down. At what point is that. Cost of the debt service were Rick what 21 trillion dollar deficit now. Yet be. You know oaks so right now interest you still quite low lights were standard so the actual. About the US government's paying in debt service in interest payments every year it actually fairly low to share of the economy compared to compared over the have been. Decades past me and I think the question is what they you know you both to the interchange sort of have. Higher total debt that's the conjecture were on barring some big change. And city you know most likely higher interest rate usually when you have more vanish insurance you have more economic growth. Also higher interest rates. So that burden of of governments and payments on on that service. It looks like it could arise how right to help art as a rise how much of that squeeze out other kinds of priorities government the government might have been done where the numbers settle budgets especially if I'm yours. Got a strong economy rate yet growth. Arguably and that 3% range wouldn't this be good time to deal with the entitlement problems related to social security and Medicare. It could take into Garcia. A real. Reluctance on the part of the Democrats you know it was one thing if 22. Deal with kind of locker balances and Social Security spending for example. In kind of bipartisan way when when you collectors a lot of good state then and you get to make a deal. I think if you're if you're Democrat you're you know you don't want to Republicans be able to cut taxes on primarily on business and and opinion that it excuses pretext that. To cut social spending so I don't get very fertile environment right now the so little trust between the trop administration and congressional Democrats. You know Mike Republicans train go it alone and do something on entitlements. You know you never know but but that would be receiving if they wanna be reluctant when he eighteen but actually deter would fertile environment that kind of deal making. Morgan Neill thank you pressure time we appreciate. You Neil Irwin New York Times talking to us about. The end of fiscal austerity.