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Jeremy Gerst and Daniel Wilson:
Fiscal Crises of the States: Causes and Consequences: [T]he impact of state fiscal crises on the overall economy will likely be more modest. Projected 2010 state budget gaps account for only about 1% of national GDP. The combined state budget gaps from 2009 through 2012... total less than the estimated cost of the 2009 federal stimulus package...
Let's give the microphone to Rex Nutting:
CBO fights back at stimulus critics: The $800 billion federal stimulus bill has boosted employment by 1 million to 2.1 million and helped the economy grow about 1.5% to 3.5% larger than it would have without the stimulus, the nonpartisan Congressional Budget Office said Tuesday...
Let's say that the net effect of state fiscal contraction has been 90% of the effect of the ARRA 2009 federal stimulus package. Then state fiscal contraction has:
To call those effects "modest" seems rather... interesting. I would call them "large"--especially as they are avoidable and should have been avoided.
And I don't get why this, from Gerst and Wilson, is "more important":
Most importantly, even though the shock to state finances has been unprecedentedly large, it was predictable given the severity of the recession. As such, Federal Reserve and private forecasters generally incorporated the negative impact of state and local budgets into their macroeconomic models. Many forecasters are projecting moderate GDP growth over the next few years. These forecasts have already built in a modest drag on growth arising from state and local fiscal strains...
Yes, state fiscal contraction is built into the forecast. That's why the forecast looks so depressing:
Let's turn the microphone over to CBO Director Doug Elmendorf, for there is no man alive who is more anxious to balance the U.S. budget in the appropriate--that is, the long--run:
Testimony: There is no intrinsic contradiction between providing additional fiscal stimulus today, while the unemployment rate is high and many factories and offices are underused, and imposing fiscal restraint several years from now, when output and employment will probably be close to their potential...
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Comments Department of "Huh?!": Fifty Herbert Hoovers WatchJeremy Gerst and Daniel Wilson:
Fiscal Crises of the States: Causes and Consequences: [T]he impact of state fiscal crises on the overall economy will likely be more modest. Projected 2010 state budget gaps account for only about 1% of national GDP. The combined state budget gaps from 2009 through 2012... total less than the estimated cost of the 2009 federal stimulus package...
Let's give the microphone to Rex Nutting:
CBO fights back at stimulus critics: The $800 billion federal stimulus bill has boosted employment by 1 million to 2.1 million and helped the economy grow about 1.5% to 3.5% larger than it would have without the stimulus, the nonpartisan Congressional Budget Office said Tuesday...
Let's say that the net effect of state fiscal contraction has been 90% of the effect of the ARRA 2009 federal stimulus package. Then state fiscal contraction has:
reduced employment by between 0.9 and 1.9 million shrunk the economy by between 1.3% and 3.1%To call those effects "modest" seems rather... interesting. I would call them "large"--especially as they are avoidable and should have been avoided.
And I don't get why this, from Gerst and Wilson, is "more important":
Most importantly, even though the shock to state finances has been unprecedentedly large, it was predictable given the severity of the recession. As such, Federal Reserve and private forecasters generally incorporated the negative impact of state and local budgets into their macroeconomic models. Many forecasters are projecting moderate GDP growth over the next few years. These forecasts have already built in a modest drag on growth arising from state and local fiscal strains...
Yes, state fiscal contraction is built into the forecast. That's why the forecast looks so depressing:
Let's turn the microphone over to CBO Director Doug Elmendorf, for there is no man alive who is more anxious to balance the U.S. budget in the appropriate--that is, the long--run:
Testimony: There is no intrinsic contradiction between providing additional fiscal stimulus today, while the unemployment rate is high and many factories and offices are underused, and imposing fiscal restraint several years from now, when output and employment will probably be close to their potential...
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