posted by jmog
Spending as % GDP has gone down each of the last 2 years. Actual spending has gone up, but compared to GDP is has not.
You have always been a proponent of spending whatever it takes, only recently (probably to fit your narrative) have you been just as "happy" with tax cuts bringing in "less revenue".
Since Spending as a percent GDP has gone down it kind of debunks your Keynesian philosophy no matter how you try to move the goal posts to act like you are all for tax cuts all the sudden since it is "deficit creating". You never cared about deficits, that part is true, but you were always on the "just spend more money regardless of the deficit" you never cared about cutting taxes until Trump did it and it has worked.
The key is the deficit as a percentage of gdp - tax cuts financed by deficits that spur aggregate demand are just as much Keynesian policy as direct gov't purchases financed by deficits. (Not all deficit spending is equal but it is all better than austerity. Some deficit financed fiscal stimulus is more effective than others but it is all "Keynesian." For example, I support the deficit financed TCJA but payroll tax cuts would have been even more effective IMHO):
And you're right in one sense - the Keynesian tax cuts were large enough to give enough a jolt to GDP that the huge surge in real federal discretionary spending (e.g. Trump's big government bail out of farmers, the military expenditure build-up, etc.) did not keep pace with the increase in GDP:
If it weren't for Trump's idiotic trade war and increasing taxes via tariffs that reduce the positive effects of the TCJA we'd be doing even better.
Re the claim that I am only for deficits caused by tax cuts now - that's simply false. Go back and re-read through the archive. I've always said "increase the deficit" - whether through spending or tax cuts. For example, I've always considered payroll tax cuts to be a better option than increasing direct spending - all things being equal. Consider these posts from April of 2013 (6 years ago) from the archive:
In a monetary economy with a fiat currency and free-floating exchange rates and interest rates at the zero bound when there is a current account deficit, it is desirable for the government to to put more of the sovereign currency into the economy whether through more direct government purchases or tax rebates or tax cuts or central bank asset purchases to the point where it matches or is greater than the desire of the non-government sector to save/pay down private debt.
In fact, more government spending/injection of U.S. dollars into the hands of ordinary American's through expansionary fiscal policy...i.e. huge tax rebates, tax reductions or large government purchases of goods and services actually only has good consequences when the private sector is trying to save.
"Trump did it and it worked" - indeed, Trump has vindicated these posts from 2013 and is really a post-Keynesian on fiscal policy (Traditional Keynesians would be calling for deficit reduction at this point - a mistake in my view) - wanting to run huge deficits even in good times which in my view is necessary for countries that run huge trade/current account deficits. And, he's calling for the fed to CUT rates. Yay!
If we can get passed the damage done to America's reputation around the world and get through the next few years without some crisis resulting from Trump's idiocy like a war with Iran or Venezuela - thank God for this experiment that is Donald J. Trump. He has shown beyond doubt that we can run the kind of deficits I've said we can run even in a good economy and we still aren't blowing past the Fed's inflation target and interest rates on treasuries have not soared into oblivion like they naysayers claimed. And, he's proven beyond doubt the complete fraud that deficit-hawkery is and was in the Republican party. Through it all, the Dems might finally be waking up (slowly but surely) that they too can run fiscal policy the same way or even better rather than being fooled into trying to prove that "dEmz ArE MoaR F1sCallY RuhSponS1bull"