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To eliminate this demand deficit as quickly as possible, the Bush tax cuts on top earners should be repealed right away, freeing money for more effective use.
Right now our economy does not need less "federal deficit," it needs less "demand deficit".
Recessions and depressions don't generally happen because there are too few goods and services available, but because there is a demand deficit -- there is too little economic demand.
If they don't have increased buying power -- if all of the income growth goes to the top 2% -- then a demand deficit will inevitably develop that will lead to a recession -- or depression.
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Once again there are likely to be tensions between Berlin, which continues to demand deficits be reduced to below 3% and reforms are made to labour laws, and Paris and Rome, which believe Europe needs growth and investment in large-scale infrastructure projects.
Americans are about to find out what happens when an entire political party demands deficit reduction at all costs, because those costs will be enormous.
WASHINGTON — Early in Bill Clinton's presidency, his populist advisers saw their spending plans crash into resistance from Wall Street, which demanded deficit-cutting austerity.
It remained unclear just how far Mr. Obama would go in picking a fight with a Republican-controlled House of Representatives, where Tea Party supporters have demanded deficit-reduction measures and balked at compromising with the president on offsetting revenue increases, like raising taxes on the rich.
"Because major disposals have reduced Tata Steel's creditworthiness, the pension trustees should demand higher deficit contributions, so the total annual cash contribution could easily go up.
The government's answer has been to prop up demand with deficit spending; over the past few years Japan has been frantically building bridges to nowhere and roads it doesn't need.
John Ralfe, a pension consultant, said: "Because major disposals have reduced Tata Steel's creditworthiness, the pension trustees should demand higher deficit contributions, so the total annual cash contribution could easily go up.
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