$1 trillion deficits and near-zero rates. The worst way to enter a recession

[IronLionZion]

https://www.cnn.com/2020/03/18/business/recession-deficit-federal-reserve-coronavirus/index.html

New York (CNN Business)Washington rushed to pump the American economy with emergency-style medicine in recent years -- even though there was no emergency in sight.

Now, there really is a national emergency. And there's a growing realization that Washington blew through a chunk of its recession-fighting ammo long before it was needed.
In 2019, unemployment was sitting at a 50-year low. Consumer spending was strong. The housing market was finally flourishing. And the stock market had never been higher.

Yet policymakers decided to inject costly stimulus into what was already the longest economic expansion in American history. The Federal Reserve, seeking to counter damage caused by the US-China trade war, fired off three of its remaining nine interest rate cuts in 2019.
Worse, Congress and the White House borrowed heavily to pay for spending surges and tax cuts to juice growth. None of it lived up to the hype.

Now the bill is still coming due. The federal deficit topped $1 trillion in 2019, long before the coronavirus outbreak struck.
"You're supposed to have dry powder for the next crisis," said Kristina Hooper, chief global market strategist at Invesco. "When the history books are written, the government will certainly be faulted for taking on too much debt. The Fed will be faulted for maintaining ultra-accommodative rates."

Kudos to Joe and Bernie for wanting to inherit this hot mess and try to fix it without much ammo left from the Fed or Treasury. I don't envy our next president.

[Clash City Rocker]

1. Undoing Trump's billlionaire tax cut would help

[Igel]

5. A few years back

the deficit was projected to hit $1 trillion next year and be not far from it this year.

That was the OMB's prediction pre-Trump. Reason #1, growth in entitlement spending, mostly because of more people eligible, but also cost increases. Reason #2, interest on the national debt. We've done nothing to limit either.

We've added (3) decreased revenue for this year because of Trump, but for other years by rolling back a tax increase and abolishing another tax before it was implemented. And (4), for all the "Trump's cut the budget" the discretionary funding keeps increasing. Even his CDC cuts were fiction, and we cite them like we quote Gandalf; his proposals were DOA, Congress rewrote the budget so the CDC funding had a net increase over inflation.

[bronxiteforever]

2. Kick and recommend.

“The massive 2017 tax cuts, which primarily helped wealthy taxpayers and big corporations, provided a small, temporary boost to economic growth, but they and the subsequent feeding frenzy of spending increases approved by the Republican Congress have left us with a $1-trillion federal deficit even before the economic effects of the coronavirus epidemic ripple through the economy. Most economists agree recoveries are times to fill the federal coffers and crises or recessions are the time to spend the money. But there’s little room for the huge fiscal stimulus some economists say is needed to fight this crisis. “

https://www.marketwatch.com/story/a-feckless-fed-huge-deficits-and-poisonous-politics-bring-us-to-a-crisis-2020-03-16

[duforsure]

3. The tax scam cuts for the wealthy needs to be reversed at once, or Democrats need to tell them

When they soon regain power they'll have even greater tax increases if they won't do it right now. Then publicize it, a lot. The American people will help that happen gladly.

[IronLionZion]

4. A necessary but unpopular step

as things get bad enough, the people who are hurting the most will likely support measures to have the rich pay their fair share after riding high for so long. I don't envy the president who has to get votes for it through Congress but Obama somehow managed some of this early in his term so Biden knows how it's done.