Don’t make an enemy of Donald Creosote. From CNBC:
New York Fed President Bill Dudley painted an unflattering picture for future growth, saying in a speech Thursday that the recently passed tax cuts pose an ominous threat down the road.
While he said the reforms that slash corporate taxes and lower rates for many earners will boost the economy in the near term, that “will come at a cost.”
“After all, there is no such thing as a free lunch,” Dudley said during a speech in New York, according to prepared remarks. “The legislation will increase the nation’s longer-term fiscal burden, which is already facing other pressures, such as higher debt service costs and entitlement spending as the baby-boom generation retires.”
Yet another official who speaks his mind on the way out – Dudley leaves about half way through this year. Yet again, the Republicans are using their clout in Congress to wreck the financial standing of the Federal Government. Not only the stock – nearly $21 trillion in debt, starting to approach Japanese levels – but the deficit and supply as another government shutdown looms at the end of the month.
“In the long run, ignoring the budget math risks driving up longer-term interest rates, crowding out private sector investment and diminishing the country’s creditworthiness,” Dudley said. “These dynamics could counteract any favorable direct effects the tax package might have on capital spending and potential output.”
For the long term, he warned not only of the costs the tax cuts will impose on the deficit but also damage down to high-end housing by elimination of state and local property tax deductions.
Otherwise, he is “slightly — but not particularly” concerned about the zooming stock market prices but is more concerned about the economy overheating.
Ignoring math? The long run? Another wafer please!