Word: feldstein
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That concern was shared by Martin Feldstein, chairman of the President's Council of Economic Advisers and a guest at last week's meeting. Said he: "This recovery is very different from past upturns. The fact that more and more people are assuming that the Government will borrow $200 billion or more annually for the next three or four years is bound to keep interest rates and the dollar's exchange rate high. While the economy will most likely continue to grow through the next couple of years, the deficit is undoubtedly increasing the risk that...
...process, they helped push the value of the dollar to new peaks on international exchange markets. Since 1980 it has surged 55% against the West German mark and 102% against the French franc. The rapid rise has made many American exports prohibitively expensive on world markets. As a result, Feldstein said, the U.S. merchandise trade deficit is likely to hit a record $60 billion to $70 billion this year, and may pass the $100 billion mark...
...substantial drop in interest rates and the dollar's exchange rate will not come, Feldstein said, unless Congress moves to pare the federal deficit. TIME'S economists agreed, however, that with an election year coming up, few politicians would be willing to lead a drive to slash spending or raise taxes. Predictably, the House voted last week to authorize an additional $1.6 billion for ten education and health programs in an effort to reverse some spending cuts made early in the Reagan Administration. House Speaker Tip O'Neill declared that any tax-hike initiative would have...
...Feldstein argued at the TIME meeting that the White House had already laid out a plan to deal with the deficit in its January budget message and wanted to work with Congress. In addition to spending reductions, the President's proposal called for immediate enactment of contingency taxes that would start in fiscal 1986 and reduce that year's projected deficit by $46 billion. Feldstein said that if legislation were quickly passed ensuring that future deficits would come down, the financial markets would be reassured and interest rates would fall...
...gargantuan budget deficits will put an end to the upswing after only a further modest drop in unemployment. Says Mondale: "I am deeply worried that the current economic recovery cannot be sustained" in an era of "outsized deficits." Such misgivings are by no means confined to Democrats. Murray Weidenbaum, Feldstein's predecessor as Reagan's chief economic adviser, voices "latent concern" that because of deficits "inflation will hover in the background and future increases in employment will not be significant...