Benn Steil


A graphical take on geoeconomic issues, with links to the news and expert commentary.

The Payroll Tax Cut and U.S. GDP Growth

by the Center for Geoeconomic Studies Tuesday, December 27, 2011

Breaking Down 2011 U.S. GDP Growth

U.S. annualized real GDP growth of 1.2% through Q3 2011 was driven by personal consumption, accounting for 91% of it.  Yet only 44% of personal consumption growth was driven by higher incomes.  The other 56% was accounted for by unsustainable items: a decline in savings (36%) and the payroll tax cut (20%).  The latter will expire in two months time unless Congress acts to extend it again. Read more »

Does “More Europe” Mean More Pro-Cyclical Fiscal Policy?

by the Center for Geoeconomic Studies Wednesday, December 7, 2011

Europe's Pro-Cyclical Fiscal Policy

“It is time for a breakthrough to a new Europe,” German Chancellor Angela Merkel said on November 9th.  “That will mean more Europe, not less.” Merkel wants a stronger fiscal union with strict controls on eurozone national budgets.  Yet to date EU fiscal policy, such as it is, has meant ill-considered pro-cyclical spending programs – as shown in the graphic above.  Greece was and is a large recipient of EU transfers, yet those transfers collapsed by 1.3% of Gross Domestic Product (GDP) after it was forced to cut back on its contributions to EU-subsidized projects in an effort to slash government spending.  This additional fiscal squeeze hurt growth; Greek GDP fell an annual average of 3.5% in 2009 and 2010.

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