Taggert J. Brooks, PhDAssociate Professor of Economics

University of Wisconsin-La Crosse

La Crosse Area Economic Forum

The views expressed today might be my

own, but they do not necessarily reflect

the views of my host, my employer, or my

parents.

Disclaimer:

Troubled

Asset

Relief

Program

Dynamic Government Intervention

Banks:

Solvency or

Liquidity Issues?

TARP:

$700 Billion of which

$384.6 Billion allocated

The Stimulus…

Obama’s Wager

StimulusEffectiveness

Size

Long Run Consequences

State Budgets

Spending Cuts and Furloughs…

New Furnace

Tax Credits offset Increased Costs

-1.0

0.0

1.0

2.0

3.0

4.0

2009 2011 2013 2015 2017 2019

High and Low Estimates of ARRA impact on Real GDP

-8.0

-6.0

-4.0

-2.0

0.0

2.0

2009 2011 2013 2015 2017 2019

Real GDP Relative to Potential

Baseline

ARRA

Look, we enter the government essentially in

a hotel that is on fire. We’re throwing people

from the windows into the pool to save their

lives and this is the evaluation of the Olympic

diving committee: Well, the splash was too

big.

The Lost Decade

Long Term Consequences

Increase in publicly held debt.

0.0

15.0

30.0

45.0

60.0

75.0

90.0

1969 1979 1989 1999 2009 2019

US Debt to GDP Ratio

Baseline

CBO

Obama

Budget

0.0

20.0

40.0

60.0

80.0

100.0

120.0

1940 1955 1970 1985 2000 2015

US Debt to GDP Ratio

Baseline

CBO

Obama

Budget

0 50 100 150 200

JapanGreece

ItalyBelgiumPortugalHungary

United KingdomAustriaFrance

NetherlandsPolandIceland

United StatesTurkey

GermanySweden

SpainDenmark

FinlandKorea

CanadaIreland

Czech RepublicSlovak Republic

MexicoSwitzerland

New ZealandNorway

LuxembourgAustralia

2008 Debt to GDP Ratio for OECD

“Either cuts in spending or increases in taxes

will be necessary to stabilize the fiscal

situation,”

“The Federal Reserve will not monetize the

debt.”

Inflation

Is not the worry. Overly aggressive

monetary policy is…

Long Term Fiscal Problems

Medicare and Social Security.

Green Shoots?