You don’t need that quick a recovery. The fact that there’s no additional stimulus packages in the pipeline combined with the payback of most of the tarp money alone will cause a dramatic increase in very short term revenue and decrease in short term spending compared with the 2009 year of crises.

The unemployment projection is not indicating they don’t project unemployment returning to a ‘normal’ baseline of 6% until 2015 so it’s not exactly a fantastically optimistic forecast IMO.

Yes, the Democrats realistically embrace horrible policies and and espouse them, while the GOP at least have to admit to their constituents that they are doing the wrong thing and often pay for it at the polls.

Speaking of rhetoric gap, you still haven’t clarrified if by ‘freezing the stimulus’ you mean raising payroll taxes on people or freezing a realtively small number of construction projects. Upon what do you base your hypothesis that Republican failures at the poll are due to their lack of follow through on launching an entitlement jihad?

Actually I’m arguing that the Democrats have a realistic outlook for gov’t, entitlements and taxes while the Republicans like to strike a pose of the above while being anything but.

Hmm. I think one of the GMU bloggers noted the “rhetoric gap” is larger than the “policy gap” which is unfortunately true.

Yes, the Democrats realistically embrace horrible policies and and espouse them, while the GOP at least have to admit to their constituents that they are doing the wrong thing and often pay for it at the polls. You’re convincing me more and more why nobody should pretend to be a Democrat.

tax rates

Oh, I missed that. thanks.

Actually I’m arguing that the Democrats have a realistic outlook for gov’t, entitlements and taxes while the Republicans like to strike a pose of the above while being anything but. Kinda like the Bride who insists on the white dress while unknowingly ending up on several editions of ‘Girls Gone Wild’ tapes.

You’re off your rocker. The gap between revenue and expenditure is about twice as large for Obama than any other gap in the two.

The max. gap is clearly an outlayer caused by the combination of the stimulus, bailouts driving up spending and economic collapse driving down tax revenue. The normal gap is what is between the two lines for the 2010+ period. Of course projections will change but right now that is the best projection of Obama’s policies assuming they are frozen right now and not changed.

I also notice the “tax” chart. How do they figure personal “social insurance” taxes at 5%.

These aren’t tax rates but revenue raised as a % of GDP.

Obama beats even Bush in terms of lower taxes. In terms of spending it is true we are at a higher spending level than Bush or Clinton but interestingly Reagan was even higher.

You’re off your rocker. The gap between revenue and expenditure is about twice as large for Obama than any other gap in the two.

Are you arguing that the Democratic dream is small government, elimination of entitlements, and the minimal tax footprint?

I suggest reviewing the revenues/outlays chart on the homepage of http://www.cbo.gov/. The difference between the two lines represents the deficit. Long story short, if you like deficits Republican admins are the way to go. In terms of taxing (aka revenues), Obama beats even Bush in terms of lower taxes. In terms of spending it is true we are at a higher spending level than Bush or Clinton but interestingly Reagan was even higher.

So much for cheap slogans in relation to truth.

The Iraq War would only have been helpful in the Keynesian sense if the economy was not at full employment. During recessions, the spending essentially is mopping up unemployed recourses putting them to some use. Of course opportunity cost is at play. If you think Iraq did nothing useful for us then it would have made more sense to put 100,000 young men and lots of heavy equipment to work, say, rebuilding New Orleans after Katrina (assuming we didn’t have full employment).

During periods of full employment, gov’t spending crowds out private spending which is essentially what classical economics would say. Under that condition the Iraq War as spending would have to be compared to the marginal spending the private sector would have done with that money (as also the drug benefit and other spending). Hence Keynes called his theory the ‘General Theory’. Like Einstein’s Relativity, the neoclassical theory was right under the special conditions of full employment as Newton’s theory is correct in the special conditions of relatively small masses and relative speeds closer to 0 than light.

Physician heal thyself. And it isn’t nihilistic to point out that exactly the same cuts have been tried and rescinded before.

No but its pretty nihilistic or fatalistic to demand that cuts be made but then insist cuts can’t be made because they will all be rescinded. As for the prediction that all major cuts will be rescinded, I don’t buy it. Look at raising the retirement age to 67. That’s a major cut yet no serious movement is afoot to rescind it nor do I expect one.

That would be true if I supported GOP entitlement expansion

We don’t care what you supported. In comparing Democrats to Republicans you have to use the actual record. Not the record in imaginary land where Mark ran the GOP since 1988.

Let’s see, why would borrowing money in a global credit crunch not make sense. Oh, I don’t know, perhaps because it will strain credit? But more the the point, I have not said it is “bad.”

This is the ‘crowd out’ argument which is essentially a neoclassical not Austrian idea. The neoclassical school has people as hyperrational economic agents, making minute adjustments to their spending not only based on the prices they see but also by gov’t policies they see. For example, you linked to a guy a while ago who argued that expanding unemployment benefits did not help employment because, supposedly, employed people would lower their spending to compensate for the increased taxes they expect will result in the future. The Austrians rightly mock this idea of people not just acting in a self interest way but acting as though they were perfect calculating machines with infinite knowledge.

Anyway, if such a thing was happening the result would be higher interest rates as private lending to the gov’t left less and less money available for business and personal lending. We haven’t seen that. In fact we’ve seen the opposite. What is happening is not a shortage of money to loan but a fear to put that money anywhere that is not hyper-safe. Hence the sampede to gov’t bonds. During normal times a Fed running the printing presses and the gov’t borrowing lots of money would lead to the opposite.

Kicking it is not the best way to get back to laminar behavior. Predictability is exactly what the Administration was and is veering from with their large motions and suggestions of other large actions

This would make sense if complex systems always hovered around with only slight changes in their status, hence no dramatic action would ever be needed or advised. If you’re driving west on a big highway the system is highly complex (see how much work it is taking to make robot drivers) but for the most part undramatic. You have some acceleration, some braking and a few graceful lane changes. But that doesn’t mean you may never need radical action to maintain stability. If, for example, you suddenly see a lunatic driver going the opposite direction heading at you head on with a dozen cops chasing him you need to make a hard change (or less dramatically if you see a truck suddenly jacknife closing off 3 out of 5 lanes and you’re heading at them at 70 you need quick action)…. Lesson here is complexity doesn’t always call for timid actions.

No, it could do harm if the Keynesians aren’t 100% correct. Evidence for that, also none that I’ve seen.

Explain how, please.

Truly? OK, say the stimulus is neutral. Not harmful nor helpful. Then spending $3/4 trillion in a recession on a neutral cause seems harmful. JA and many on the left argue that the Iraq war was harmful and one of the first things they point to is the cost. Appropriating (borrowing) that 3/4 trillion is a harmful act. It needs to be balanced by good. Keynesian economic theory says it is good, but if it is less good than expected (not 100% but, you know, less than that) then pretty quickly the harm is going to outweigh the good.

Basically you and Megan have spent a lot of effort making nihilism respectable.

Ah, the “perceptive” nihilism charge. Odd how nihilism is cropping up all over on left/progressive sites. You claim that I am a partisan hack. Physician heal thyself. And it isn’t nihilistic to point out that exactly the same cuts have been tried and rescinded before.

In arguing whether or not Dems are the party of unfunded entitlement spending, you should consider that Republicas are the ones who enacted major entitlement spending without even a fig leaf effort to fund it.

That would be true if I supported GOP entitlement expansion. Alas, I didn’t and don’t. It’s strange that the a big reason the GOP is dissatisfaction with their big spending and fiscal recklessness (see for example the tea party meetings a large part of which was dissatisfaction with both parties but much if not most of the tea party people came from the dissatisfied right).

No its not. I’ll ask again by what mechanism do you deem stimulus spending to be destructive. If you can’t write coherently about economics then don’t write at all.

Let’s see, why would borrowing money in a global credit crunch not make sense. Oh, I don’t know, perhaps because it will strain credit? But more the the point, I have not said it is “bad.” I have said intentional actions to alter the economy rarely work. The economy is a large complex system of which most if not many parts are not in equilibrium. Chaotic non-equilibrium systems generically do not respond as you would expect. Furthermore, again by analogy to dynamical systems, what is desired from the economy in general is something approaching regularity and “laminar” like flows. Kicking it is not the best way to get back to laminar behavior. Predictability is exactly what the Administration was and is veering from with their large motions and suggestions of other large actions.

The other side has been doing this service for you for months now on this blog,

No you haven’t. You’ve been largely appealing to authority to explain the stimulus.

You keep shifting back and forth here. Most of the talk about programs (including your posts on stimulus not working because of ‘red tape’ by construction permits, EPA statements etc.) involve only a small fraction of the stimulus. Taking that and seeking out ‘wasteful’ projects in ‘what hasn’t been spent’ is unlikely to yield much more than a few tens of billion at best.

If by ‘what hasn’t been spent’ you are talking about the whole stimulus then you are also asking for payroll tax cuts that haven’t been enjoyed yet, unemployment extension benefits that haven’t been collected etc. That will yield a larger number, possibly half as of today. Since you have spent so much time spinning on Obama’s dishonesty you should be honest enough to tell your readers that by ‘spending cut’ you mean raising their payroll taxes….if that’s what you mean. If by spending cut you mean slashing some road and other construction projects, then clearly Obama’s freeze trumps anything you can reasonably expect to cut from the stimulus.

No, it could do harm if the Keynesians aren’t 100% correct. Evidence for that, also none that I’ve seen.

Explain how, please.

Not. Politically infeasible cuts remain politically infeasible. That just the same sorts of cutbacks when put in prior bills are also de-clawed is relevant. The CBO can’t parse whether cuts to be phased in are feasible or not. Thus large infeasible cuts were used to “balance” the bill.

The purpose of the CBO is to measure what bills will do. It isn’t to make predictions about what bills will pass. By definition if a ‘politically infeasible’ cut passes it is feasible after all.

You’ve talked yourself into a corner here. Basically your way of viewing things makes any cuts impossible. Any serious cuts in entitlements will be ‘phased in’ meaning they will alter the long term growth of the programs. Any ‘phased in’ change carries the risk that some future congress may vote a law rescinding the cut. But then even a non-phased in cut could be rescinded too. Basically you and Megan have spent a lot of effort making nihilism respectable.

Untrue if not passing bill B is seen as political suicide because a large demographic is going to see not passing it as a fundamental betrayal.

Very well, then voting for bill B is a spending increase. Maybe its a worthy increase, maybe not but it’s not Bill A that’s the increase, its bill B.

Even in that case, though, it’s not very plausible to think Republicans would just let B past their filibuster. If nothing else would they not demand cuts somewhere else? In that case Bill B would have to be scored by looking at its proposed increases versus its proposed cuts. Hence you see the folly of Megan’s reasoning.

I have no idea what this sentence means.

In arguing whether or not Dems are the party of unfunded entitlement spending, you should consider that Republicas are the ones who enacted major entitlement spending without even a fig leaf effort to fund it.

Hmm, clearly? Watch the Keynes/Hayek rap video. That seems fairly clear. Animal spirits, eh?

No its not. I’ll ask again by what mechanism do you deem stimulus spending to be destructive. If you can’t write coherently about economics then don’t write at all.

So what if the stimulus means the recession will last 10 years instead of 2, 600k people got short term jobs for a year. Yippee.

That would be a bad trade off. How exactly do you derive that?

I’m not asking you to be an economist or make such precise forecasts. I’m asking you to describe the mechanisms by which you think stimulus is bad. The other side has been doing this service for you for months now on this blog, it’s only fair to tell us rather than just assuming your conclusions because there’s a ‘school’ out there that you think backs you up.