Avoiding the simplistic, re: tax cuts and spending

[cthulu2016]

10. And...

The usual benefit cited for reducing the deficit is that it will reduce interest rates by reducing overall demand for borrowing, and that the reduction in interest rates is stimulative.

And that is true... in some conditions.

But since our current interest rates cannot be reduced below zero and private borrowing is way down those arguments do not apply to current conditions.

If fiscal policy takes a chunk out of the economy today it cannot be offset by lower interest rates. The yeild on our 10-year treasuries right now is about 1.8%. It can't plausibly go much lower than that. The Fed overnight rate is frozen at 0%.

It is never good to have universal economic policies (Like the republican universal cure-all of cutting taxes). Everything is dependent on the real-world environment.

What Clinton did (deficit reduction) was right in 1993.

What Obama has done so far (big deficits) has been right for 2009-2012.