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The Budget and the Deficit: An Opportunity Wasted

It all seemed clear a year ago, run up large budget deficits to make up for the huge private demand in the recession. And, when the economy recovers, switch to deficit reduction, to prevent nervous bond markets from pushing up interest rates. President, Barak Obama and his economic team wasted no time putting this into action and signing into law a two-year stimulus package that would “save or create” about 3.5m jobs. But an unexpected bad performance in unemployment rate and added economic weakness landed Obama in a uncomfortable spot. Even though the problem is obvious, the solution however is not.

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