Two Graphs That Tell An Important Story About The Recovery and Causes Of Projected Budget Deficits

This post contains two graphs that tell a story. The first graph shows that price markups over unit labor costs have risen dramatically since 2000. The margin fell briefly at the onset of recession but it has risen during the recovery. Corporations are doing much better during this period than labor. That is reflected in the rise in stock prices. The other graph shows the contributions of various sources to projected budget deficits. One factor stands out above all of the rest. The Bush tax cuts, if extended, are the largest single source of projected deficits. Most of the deficit hawks favor the extension of the largest factor in the determination of the deficits. They are not really concerned about deficit reduction. They want to pay for the tax cuts by reductions in government spending on social services.