Benn Steil

Geo-Graphics

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

Tax Expenditures and the Budget Deficit

by Benn Steil and Dinah Walker Wednesday, August 15, 2012
Tax Expenditures

“Tax expenditures” are an opaque form of government spending that operates through the tax code – instead of the government making direct payments to individuals or institutions, tax credits are issued.  In total, they cost the U.S. government about $1.1 trillion annually – roughly equivalent to the country’s enormous budget deficit. Read more »

Benchmarking the Fed’s Dual-Mandate Performance

by the Center for Geoeconomic Studies Thursday, August 2, 2012
The Dual Mandate

The Fed has a dual mandate to pursue price stability and maximum employment.  How should these be defined?  In January, the Fed set itself a long-run inflation target of 2%, while in June the midpoint of Fed board members’ and Reserve Bank presidents’ long-run unemployment predictions was 5.6%.  Our figure above shows actual inflation and unemployment performance relative to these targets going back to 2002.  What stands out is the divergence that opens up, particularly on the unemployment front, after Lehman Brothers failed in September 2008.  The sum of the deviations reached its peak in July 2009, as shown in the small box in the upper left of the figure.  Though it has since declined fairly steadily, it is still well above zero – zero being a benchmark for fulfilling the combined mandate.  This suggests that the Fed’s doves should continue to hold the upper hand. Read more »