Outgoing Fed President warns on Trump tax cut largesse

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.”

The comments echo recent remarks from Fed Chair Janet Yellen, who said in November that escalating public debt and deficits “should keep people awake at night.”

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.

Here’s more:

“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!

Comments

  1. GunnamattaMEMBER

    The tax cuts have done the neoliberals job. Just take a look at all the Republican members of Congress retiring at the end of this term. This is the uber point of neoliberalism – from here the neolibs just need to defend against whoever is trying to clean up the mess (and that will take a generation).

    • Problem for the Republicans is they can’t find quality candidates to replace those running off with the loot. There was an article in the Guardian yesterday, that I can’t find, where the New York State GOP (Trump’s home state) is struggling to field candidates as all the “credible” front runners have quit the nomination race leaving the GOP to dust off some bucktooth red neck as a potential candidate. Hazard a guess but reckon the smarter one’s either don’t want to be associated with Trump or know the game is up or both.

      • game is up.
        hey, they can try slashing their “defense” budget. Isn’t it around $600bn p/a.

    • It’s a double-win for republicans because they’ve given their mates a handout at the expense of everyone else, and they’ve locked in a worsening budget position for a couple decades. The only way out for a government of any stripe will be to slash costs. So they’ve achievd their goal of enriching the 1% as well as reducing the size of government.

      Add to that the fact that Trump and Co are taking a wrecking ball to the firmament of many government departments, as well as the credibility of the presidency, and you can see that the damage already done will take a generation to undo.

      Now most of these problems existed pre-Trump, but he’s managed to steer the ship so strongly in one direction that remedies from the left side are increasingly not viable.

      • Particularly in the US, the political right is stuffed full of people who believe we are on the cusp of Rapture, and are doing everything in their power to hasten it along, hoping that they’ll come out on top afterwards.

        Eight years of Trump would be less of wrecking ball and more of a Pearl Harbour.

  2. Strewth!
    “the recently passed tax cuts pose an ominous threat down the road.” But all the loose monetary policy and previous deficits are all GOOD??? Yeah right!!!!
    Now these Trump tax cuts, without offsetting expenditure cuts, are baloney….but..
    So Dudley presides over the New York Fed which has, for multi-decades, run a monetary policy that absolutely guarantees a National private sector massive deficit. In addition he has been happy to fund all the Govt deficits over those multi-decades. Now he has the hide to complain because Trump is adding a bit to the deficit – a bit that is miniscule compared to all the Public and Private deficits that Dudley has already encouraged and funded.
    What a bloody hypocrite of the first order…..and is he being hailed as a hero around MB just because he says something anti-Trump???????

    “The comments echo recent remarks from Fed Chair Janet Yellen, who said in November that escalating public debt and deficits “should keep people awake at night.”

    Same thing applies to Yellen!!! What a complete bunch of hypocrites. They all should be gaoled (at a minimum)

    • The are being goaled. Approx 30-40 highly corrupt members of the GOP are going down. That is what you are seeing. The MB take on anything America is so woefully uninformed, it is amusing. The article about the new book, for example, no idea whatsoever. MB says good read, here is Glenn Greenwald’s take on it – https://twitter.com/ggreenwald/status/948973914436317186?ref_src=twsrc%5Etfw .

      The fact that MB cannot tell information from garbage on US domestic is impressive.

      As another example, do a google news search of the recent appearance at a football game by Trump: https://www.google.com.au/search?client=ubuntu&hs=9hV&channel=fs&dcr=0&biw=1317&bih=952&tbm=nws&ei=vQdYWvGEMMyk0ATmyK-wDg&q=trump+football&oq=trump+football&gs_l=psy-ab.3…2899.3273.0.3481.2.2.0.0.0.0.173.339.0j2.2.0….0…1c.1.64.psy-ab..0.0.0….0.cJLX47QcvCw

      You can see that every single article is anti Trump / what a retard. Now go watch the video on youtube of the same appearance. What do you see? https://www.youtube.com/watch?v=7W1ZVAK0CAg&feature=youtu.be

      MB relies on these exact same sources for its information – i.e. they have no idea.

      Red america is reasserting empire. Blue america is getting kicked in the nuts for screwing over red america for decades. What exactly do you think net neutrality was about? What do you think the tax bill was about? For my money, Hilary and Obama will probably hang for their crimes, along with large numbers of their cronies.

      And what did I tell you about rates. Here is the funny part, rates will go up in the US, and the US economy will boom anyways. Not so much the rest of the world, but what exactly do you think ‘america first’ means? SOTU is going to be exciting at the end of this month.

      • Hmm maybe they all cheered coz he’s POTUS and that’s what they do
        Got any articles re: 30-40 high level GOP going down?>

      • Blue america is getting kicked in the nuts for screwing over red america for decades.

        The real tragedy are the people who genuinely think this is true.

        “Blue America” has held power for half the last forty years, on top of which most of the screwing over of “Red America” has been done by its leaders, who have been driving wage suppression, high unemployment and destruction of public services, public infrastructure and the social contract since the ’70s.

      • Of course my comment is being moderated.

        Also, every conservative knows that no place is safe for us anymore. The government will turf you, the universities will throw you out, corporations will shadow ban you.

        A funny stat i read was the most ‘red’ department, i.e. the us dep of defense, voted 84% for clinton. Stuff like education was 99.9999%. Men are routinely discriminated against, every millennial knows this – feel free to look up the James Damore class action against Google. Unless you fit into the leftist caste system. Systematic discrimination is a dangerous thing, it generally leads to civil war.

        Personally, I’m done. And most of the right feels the same way. You treat us like animals, but your precious progressive cult state relies on well, us, to make everything work. Because outside of virtue signaling, and general cultural degeneracy, what use exactly is the left? The MSM is mostly liars and incompetent hacks who think opinion === journalism, Hollywood (http://www.crazydaysandnights.net/ – for notes on pedos/rapists) is done, the universities are completely useless and teach nothing, and god help you if you are a conservative and have to deal with the judiciary. How many of Obama’s EO’s did the 9th circuit block exactly?

        Best of luck keeping the infrastructure of society working. And the best part, all we have to do is not participate. Feel free to look up ‘enjoy the decline’.

      • @drsmithy – do me a favor, don’t engage with me. seriously, i have exactly 0 interest in your opinion.

        Who has benefited most over the last 40 years, people who vote red, or people who vote blue? People in the heartland or people in NY, SF and other progressive zones? Yeah – thought so.

        Your precious left betrayed workers in favor of globalists on a colossal scale, and all you can think about is your own virtue signaling. Pathetic.

      • Who has benefited most over the last 40 years, people who vote red, or people who vote blue?

        People who were rich.

        Your problem is an inability to think outside the politicised box you have created. Every thought, every idea, every concept, every action, every objective is first, foremost and typically, exclusively, evaluated based on its political “side” and then accepted or dismissed from that. “Compromise” is practically a curse word.

        You are the kind of person that helps Rupert Murdoch sleep easy.

      • Good rant T. The red and blue America bit is pretty much copied exactly here. Sydney/Melbourne with other capital city centres vs the rest. Rural Australia has been absolutely crucified for 60 years while the citiy elites made themselves rich. At first they protected urban manufacturing but when it suited to destroy it in the intersts of the city consumer well it had to go as well!! Yet they all sit around and tell us how damned clever they are! Sydney and Melbourne are just parasites.

    • Yup, Obama’s Treasury Secretary Jack Lew managed to run up a cool $2 trillion of budget deficits on his short watch and yet he’s been sounding the alarm of late on the negative budget effects of the Republican tax ‘reform’.

      It seems telling blatant lies and being a general hypocrite really has no consequences any more.

  3. 90 billion or so in Share buybacks announced since tax cut passed. Adding to the 4 Trillion by some estimates of share buybacks since the GFC. Just means the C Suite will not have to borrow as much to execute share buy backs to bump the share price to hit their bonus hurdles…..

    • The view that the share market is an indicator of a healthy and successful real economy is something that needs to be destroyed in order for any progress to be made.

  4. It’s *only* gone up .5tn under Trump.

    Uge, but still half Obama’s long term average.

    https://treasurydirect.gov/NP/debt/search?startMonth=01&startDay=20&startYear=2017&endMonth=01&endDay=20&endYear=2018

    20,492,919,204,874.46 – 19,947,304,555,212.49 = 545,614,649,661.97

    https://treasurydirect.gov/NP/debt/search?startMonth=01&startDay=20&startYear=2009&endMonth=01&endDay=20&endYear=2017

    19,947,304,555,212.49 – 10,626,877,048,913.08 = 9,320,427,506,299.41 / 8 = 1,165,053,438,287.42

    With the enormous cuts to the UN and other externalities, it’s plausible that if he keeps slashing and burning with the delicacy of a woodchipper, he’ll actually achieve a balanced budget at the lower tax rate. Murica first.

    It’s hard to tell if the TIME artists secretly support him based on this:

    https://i.redd.it/r7uvl8ui2g901.jpg

    It’s brilliant!