The Blog of the Frances Perkins Center

Real cause of the deficit

In Uncategorized on March 8, 2010 at 7:45 am
Tax Revenue Chart

Here's a snapshot of the effect of unemployment and recession on the federal budget.

This graph is from “What Caused The Budget Deficit? Not What You Think! ” by L. Randall Wray and Yeva Nersisyan. The blog post that this graph accompanies explains that “Decreasing taxes coupled with increased transfer payments have automatically pushed the budget into a larger deficit, notwithstanding the flat consumption expenditures. These automatic stabilizers and not the bailouts or much-belated and smaller-than-needed stimulus are the reason why the economy hasn’t been in a freefall á la the Great Depression.”

[Thanks to Susan Feiner for the link.]

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