August 20, 2012 at 09:59 AM EDT
My comments on my Jan 2003 ten year outlook
>    >    Posted By Warren Mosler on January 15, 2003 at 13:04:00: >    >   Here’s what’s being set up. >    >   1. Bush tax stuff is way too small to turn the economy. >    >   2. Over the next 24 months the economy weakens as the deficit grinds its way to the usual >   5% of gdp or more [...]

>   
>    Posted By Warren Mosler on January 15, 2003 at 13:04:00:
>   
>   Here’s what’s being set up.
>   
>   1. Bush tax stuff is way too small to turn the economy.
>   
>   2. Over the next 24 months the economy weakens as the deficit grinds its way to the usual
>   5% of gdp or more – $500 billion + – mainly through falling revenue as unemployment
>   rises, corporate earnings wither, etc.
>   

A month or so after this was written I met with Andy Card, Bush’s chief of staff, and told him much the same. He got it and they took immediate action to increase spending and cut taxes. It was shortly after that meeting that Bush was asked about the deficit and said he doesn’t look at numbers on pieces of paper, he looks at jobs, and did all he could to make the deficit as large as possible. It got up to 200 billion for Q3 or about 800 billion annually; enough to turn the economy enough to not lose the election.

>   
>   3. Hillary Clinton wins the Presidency by a landslide promising to increase taxes on the
>   rich to assist the poor and balance the budget.
>   

I forget why she didn’t run and/or lost to Kerry?

>   
>   4. After the innaguration the program gets passed while the federal deficit remains around
>   $600 billion.
>   
>   5. The economy recovers as it always does after a couple of years of 5%+ deficits restore
>   non govt net financial assets/savings/aggregate demand.
>   

This is pretty much what happened under Bush.

>   
>   6. Once again the Clintons ‘prove’ balancing the budget is good for the economy and win
>   two terms.
>   
>   7. Half way into her 2nd term the strong economy drives the budget into surplus further
>   proving Clintonomics.
>   

This happened under Bush as the strong economy driving by private credit expansion took the deficit down to 1% of GDP by mid 2006. Unfortunately the expansion included the sub prime fraud which was seriously unsustainable.

>   
>   8. The next president is Hillary’s VP who gets the votes counted in his favor this time.
>   
>   9. This next president gets clobbered with another economic downturn caused by the
>   previous surplus, and the federal budget goes into deficit.
>   

It happened during the last few months of the Bush administration. And Obama did get clobbered by it.

>   
>   This time they aren’t ‘fooled’ by Bush style tax cuts anymore, and try instead to again raise
>   taxes on the rich to assist the poor and balance the budget, but they do it too soon, before
>   the deficit is large enough to turn the economy, and it gets much worse.
>   

My timing was far from perfect, but not terrible for a 10 year forecast?
Any other 10 year forecasts from back then on record?

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