Good morning.
- Considering Vampires, an interview.
- Pretty.
- Reflections on marriage.
- A return to Canae.
- A resource for Lent.
- On the Conan/Leno thing.
- The crescent in the EU.
- Ice biking.
- Hmm.
- My first thought on that was that why just freeze (or cut) such a small portion of the budget. Doesn’t he realize that won’t really have much effect? This piece says that more fluently than I. It also occurred to me they could halt (and terminate) any further “stimulus” expenditures that remain to be allocated.
- More divisive than that other guy.
- A question.
- A beating, racially motivated?
It also occurred to me they could halt (and terminate) any further “stimulus” expenditures that remain to be allocated.
Why do you have so much trouble putting yourself in another’s shoes? Obama clearly believes (correctly, I might add) that the stimulus is good for the economy and therefore (in the long run) the deficit. You don’t have to agree with him to recognize that that is what he believes, so I’m mystified why you make comments like this that make it seem like he’s completely incomprehensible to you.
JA,
Uhm, this latest offering (the spending freeze on a small part of the budget) was done allegedly in a concern for budget deficits. If cutting (freezing) spending is good for the deficit why not cut hasty stimulus spend/waste measures?
I’m mystified why my criticism seems mystifying to you in return.
The stimulus is the kind of spending you want in the current economy. It’s spending that doesn’t help the economy that we don’t want.
Actually the deficit is a short term good but long term problem. A good analogy might be a diabetic who is having a low blood sugar attack. A candy bar is what he needs. A long term diet with lots of candy bars, though, is very destructive in the long run.
Anyway, over the long term a freeze would be analgous to cutting back from cream in your coffee to drinking it black. The short term savings in fat is minimial but it does add up over the long term. Going after the stimulus would be like trying to diet by refraining from eating richly at a wedding your attending tomorrow. In terms of long term value the freeze is worth more, but not much more. Discretionary spending is a small piece of total spending to begin with.
Right now I suspect Obama is taking a play from Clinton. Too much time has been spent on big issues and fatigue is setting in. He’s going to buy himself and the Dems breathing space by making a series of small, quick, and easy policies that are ‘easy wins’.
JA,
OK, and how does that apply to the spending freeze put in place yesterday? How does that “spending that doesn’t help in a way that differentiates this from spending money fixing roads that don’t need it right now?
Boonton,
Cutting back on cream in your coffee is disingenuous at best if you continue to take your coffee with a tray of pastries. Part of the problem is that the stimulus isn’t just one time spending appropriations but that it included a number of long term programs.
Why is that the easy wins are symbolic token efforts and not real reforms? Give yourself the appearance of “taking on the budget” but leaving 90% of the budget off the table.
I’m not against a budget freeze of this sort, my complaint is in calling it anything but a token effort that needs to be followed up with addressing the big entitlement budget items.
Cutting back on cream in your coffee is disingenuous at best if you continue to take your coffee with a tray of pastries. Part of the problem is that the stimulus isn’t just one time spending appropriations but that it included a number of long term programs.
In terms of making an analogy to a diet, the stimulus is basically a one time spend. You seem to be totally ignorant of what was actually in the bill and instead to be operating off the GOP line of cherry picking one or two things and acting as if they represent the entire bill (and more often than not even there the GOP seems to be get it wrong). Anyway, I think 5 and 5 is fair. Please back up your assertion by showing a significant amount of the stimulus (5% or greater) commits to a significantly long term spending committment (5 years or more).
Your argument has a few other problems:
1. Stimulus spending has a much lower quality bar than normal types of spending. Dropping bags of money from an airplane would be stimulus spending, but not very productive long term spending. Hence your ability to identify truely wasteful stimulus would be harder than you think.
2. Stimulus spending cut would need to be replaced with stimulus of equal or better value. This is not so easy. As you pointed out long ago, construction projects often require a lot of lead time and a lot of red tape. Finding and funding replacement projects in time would be a major problem (and, while doing this, you’d have to keep 100 Senators and hundreds of Representatives from corrupting your search with their own pet ideas). In theory I wouldn’t object to a bill that did this, say by extending unemployment benefits in place of some construction or issuing, say, $5000 ‘moving’ grants to people in areas with exceptional unemployment (say 2 std deviations above the national average). But I’m skeptical it could be delievered esp. considering the stimulus bill was and is too small to begin with!
Why is that the easy wins are symbolic token efforts and not real reforms? Give yourself the appearance of “taking on the budget” but leaving 90% of the budget off the table.
Token efforts. Again I think the tactic here is to take a needed ‘breather’ before another big, partisan battle. And I wouldn’t start throwing stones about leaving 90% of the budget off the table. The Republicans may have just sunk a bill that would have made serious cuts in Medicare’s growth. Put that together with Defense and Social Security and interest which is basically untouchable and you might as well have 90% off the table.
Fatige is very real. I don’t think Congress or the media is prepared to handle a serious debate to touch that 90%. It’s not going to happen and if you want it to be effective you need an Obama and Democratic party who is recharged. Your inclination for GOP partisanship is working at cross purpose to your goals here.
Boonton,
I call BS.
Not. The Democrats for decades have been the tax/spend party, the one trying to put more and more in the federal budget. I won’t (and I suggest you don’t) hold your breath until the Democrats get serious about tackling entitlement (over) spending and controlling that part of the budget.
You’re also missing the point.
The tray of pastries is not the stimulus but the rest of the budget. Now I think there are a lot of problems with the stimulus (and our ideas of the stimulus) not the least of which is evidenced in your remark, “esp. considering the stimulus bill was and is too small to begin with” which is stated as fact but is instead just your opinion.
The “dropping bags of money” idea has the whole broken windows problem unaddressed. Now you might want to do a “stimulus” in the face of a recession, but it seems to me instead of a bandaid you should really be trying to develop real infrastructure, not dropping bags of money and short term tax credits. That didn’t work for Japan and it, oddly enough, won’t work here … except if you mean by “work” you mean get the Dems run out of office.
Which was the fault of the Democrats in turn. If they wanted a bill that “aided those with pre-existing conditions” and “curbed Medicare growth” that wouldn’t have been the abortion they brought to the table which tried to completely restructure healthcare with some gross new New Deal gone bad thing.
Boonton,
Just noted at LOOG:
OK, I call is a lie, he says “cynical,” take your pick.
I’m raising your quota. You must now show me 33% of the stimulus was/is ‘waste’. Why?
Well Obama’s ‘trivial’ spending freeze amounts to $250B total. Since the stimulus was only $750, that’s 1/3 of it. Since you have implied slashing the stimulus would be a better way to save money you must now establish at least 1/3 of that fits the criteria of waste. Failure to do so can only be seen as dishonesty on your part.
Not. The Democrats for decades have been the tax/spend party, the one trying to put more and more in the federal budget.
Interestingly it was the Democrats who agreed to fix social security during the Reagan admin, it was the Democrats whose health reform was funded with spending cuts. It was the last Democratic administration that ran surpluses enough for the financial press to actually ponder what type of security could be used as a substitute for the 3 month Treasury bill if the Fed. debt was paid off. The previous administration….well ‘deficits don’t matter’, major new entitlement with zero funding…… You sound like an old bigot who goes around telling everyone how blacks are welfare cheats and theives while he himself is stealing money & bilking gov’t programs. Physician heal thyself…
The “dropping bags of money” idea has the whole broken windows problem unaddressed. Now you might want to do a “stimulus” in the face of a recession, but it seems to me instead of a bandaid you should really be trying to develop real infrastructure, not dropping bags of money and short term tax credits.
Are you complaining that windows might be broken by dropping bags of money? OK, just lower the payroll tax temporarily, boost unemployment, food stamps & help the states with medicaid. Ohhh wait, that’s like 50-70% of the stimulus!
That didn’t work for Japan and it, oddly enough, won’t work here … except if you mean by “work” you mean get the Dems run out of office.
Actually it did work in Japan, just they kept pulling back & wouldn’t let the banks die. Also they were a bit too much hyped about what you would call ‘developing real infrastructure’….pouring concrete just about everywhere. They would have done better with more consumption based stimulus.
Which was the fault of the Democrats in turn. If they wanted a bill that “aided those with pre-existing conditions” and “curbed Medicare growth” that wouldn’t have been the abortion they brought to the table which tried to completely restructure healthcare with some gross new New Deal gone bad thing.
Coming from someone who is totally unaware of the what was actually in the bill.
OK, I call is a lie, he says “cynical,” take your pick.
It takes only a true hack to imply the definition of lie has nothing to do with actual untruth.
“We’re not here to tell you we’ve solved the deficit, but you have to take steps to put spending under control”
Those are the words of a senior admin. official quoted in the front page article of today’s WSJ….like other statements I’ve seen in other papers.
Where is the supposed ‘lie’ that claims the admin ever said this would be anything but a tiny piece of the deficit? It would seem such a claim exists nowhere but in the imagination of bloggers like Mark. We now must ask what accounts for their behavior. Are they simply being lazy, not getting the facts and thereby bearing false witness out of negligence but not actual commission? Or are they aware of the truth and instead pushing an untruth because it serves their purposes, such as to generate copy to fill the white space on their blogs?
So very sad….
Boonton,
Ah, you misunderstood. My remark on the stimulus was that remaining/outstanding funds should be halted because suddenly (now) the concern is to balance the budget. Does or does not the “freeze” point indicate there is a need to tackle the deficit? If there is, is not removing remaining stimulus a way to do that or not?
I don’t think the stimulus was the right thing to do, in fact think it was the reverse of what was needed.
Who got it from the NYTimes, alas.
Except as noted by Ms McArdle substantial amounts of those “cuts” where in there for CBO audit purposes and would never had stood (and nobody believed … except gullible lefties like Mr Boonton apparently).
From here tax cuts look more like 30% to me.
Regarding the remark on Obamacare, I was borrowing from reading this in the morning:
“Unaware of the bill” I’m taking a class, working a full time job, and blogging a bit. I didn’t read the bill, and I suspect, neither did you. So, until you can say you “read the bill” don’t throw that stone.
I don’t think the stimulus was the right thing to do, in fact think it was the reverse of what was needed.
That belief has no basis in reality. You have no clue what you’re talking about.
Except as noted by Ms McArdle substantial amounts of those “cuts” where in there for CBO audit purposes and would never had stood (and nobody believed … except gullible lefties like Mr Boonton apparently).
By which she meant that a bill that cuts Medicare would be reversed before it could go into effect by another bill that would undo such cuts. By this standard there is no possible bill to control any entitlement spending since even if Congress were to pass such a bill a future hypothetical Congress would vote to reverse it.
I don’t think the stimulus was the right thing to do, in fact think it was the reverse of what was needed.
You claimed the stimulus contained long term spending increases rather than one time increases. Instead of supporting this assertion, as you have been requested to several times now, with non-trivial examples (or examples that total a non-trivial amount), you have been avoiding the issue and now are trying to change the subject. This indicates dishonesty.
Does or does not the “freeze” point indicate there is a need to tackle the deficit? If there is, is not removing remaining stimulus a way to do that or not?
The long term deficit needs to be tackled. The short term does not. Removing stimulus would do the opposite and quite likely harm the long term deficit by reducing revenue as recovery is further delayed.
JA,
Untrue. There is this school of economics called the Austrian, you may have heard of it. Hayek, Mises are some of the leading figures. Have you ever heard of them? Apparently they too had no clue about what they were talking about either and their writing and research had “no basis in reality.” Live and learn dude.
Boonton,
That’s because it wasn’t relevant. Not supporting a point irrelevant to the issue is not “dishonesty” it’s trying to keep the argument on track.
Now that finally is a relevant point. Long term vs short term is a point, and I don’t know (and likely you do not either) how much unspent stimulus money is left. The stimulus was 3/4 trillion …. and long or short term … it remains a sizeable chunk. Which was my point.
Removing the stimulus would only do harm if you believe the stimulus is doing good. You have hard evidence for that?
Untrue. She also pointed to a number of other prior cases where exactly the same thing occurred. So the standard is a little sharper, having precedent. And yes, if Congress were to pass a bill to control spending that on the five previous occasions when said sort of bill was passed the teeth were removed before they went in effect I offer that you would be right to suspect them in the current case.
That’s because it wasn’t relevant. Not supporting a point irrelevant to the issue is not “dishonesty” it’s trying to keep the argument on track.
wouldn’t a better tactic to keep the argument on track consist of not making points you will later declare irrelevant.
And it’s not irrelevant since your argument was that while a freeze would impact long term spending, so would reversing the stimulus since that too engaged in long term spending.
Now that finally is a relevant point. Long term vs short term is a point, and I don’t know (and likely you do not either) how much unspent stimulus money is left. The stimulus was 3/4 trillion …. and long or short term … it remains a sizeable chunk. Which was my point.
But 1/4 Trillion is not a sizeable chunck? Odd?
Also you ignore the fact that when you factor out the payroll tax cut, unemployment extension, food stamp, and Medicaid aid you have left probably not even 20% of the total stimulus which seems to be the place where you would locate your ‘wasteful programs’ to cut. You’d probably be lucky to identify $20B which means Obama’s spending freeze, at $250B, is over ten times your proposal.
Removing the stimulus would only do harm if you believe the stimulus is doing good. You have hard evidence for that?
The only way the stimulus could be doing harm is if the Austrian school is 100% right. Is there evidence for that? None that I’ve seen.
Untrue. She also pointed to a number of other prior cases where exactly the same thing occurred. So the standard is a little sharper, having precedent.
And irrelevant. If Congress passes bill A that cuts $100B and a year later passes bill B that restores the $100B cut then A cuts spending and B increases it. The proper accounting both with CBO and in general is to say supporters of bill B are supporting a spending increase. Maybe there’s a case to be made for it but that is the reality. If B doesn’t pass then the spending increase won’t happen.
Now since in this case ‘bill B’ would have required passing through Congress, is it reasonable to have projected that the Republicans would have allowed such a bill past their filibuster? Here Megan was full of crap and you know it.
And now your ‘untrue’ statement is revealed to be dishonest too. You are basically saying a spending cut isn’t reall if we can imagine some hypothetical future congress reversing it. By that standard what serious spending cuts could ever pass? Any serious bill will be shot down by that very dubious argument!
Furthermore you are still engaging in distracting from the argument. You can’t argue that the funding mechanism of the health bill is flawed when you have the GOP record of zero funding on your back.
There is this school of economics called the Austrian…
Then please explain clearly by what mechanism stimulus spending is/was destructive?
Mark,
Untrue. There is this school of economics called the Austrian, you may have heard of it. Hayek, Mises are some of the leading figures. Have you ever heard of them? Apparently they too had no clue about what they were talking about either and their writing and research had “no basis in reality.” Live and learn dude.
Those guys seem to have thought they could get to economic truths deductively rather than empirically. (This was put well in Robin Hanson’s post about his debate with Moldbug.)
In REALITY, hundreds of thousands of people have jobs because of the stimulus who would otherwise be employed, plus GDP is significantly higher than it would have been. CBO:
“The Congressional Budget Office late Monday said it estimates that the federal stimulus package sustained between 600,000 and 1.6 million jobs in the third quarter, and raised gross domestic product by 1.2 to 3.2 percentage points higher than it would have been without the program.”
That’s 600,000 to 1.6 million human beings like you or me who have jobs because of the stimulus. But you stick to your ivory tower theories.
Boonton,
You find yourself between a rock and a hard place I think. You argue that 1/4 trillion (over 10 years) is sizeable … then the stimulus being three times larger is also sizeable. If it is not sizeable, then why are two token gesture not better than one?
That isn’t my reading of the breakdown. I did ask how much was unspent. You suggest 20billion only … in which case that stimulus was a horrible waste, as it didn’t work.
No, it could do harm if the Keynesians aren’t 100% correct. Evidence for that, also none that I’ve seen.
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.
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.
I have no idea what this sentence means.
Hmm, clearly? Watch the Keynes/Hayek rap video. That seems fairly clear. Animal spirits, eh?
JA,
Empirical data interpreted with bad theory is garbage.
Let me try an analogy. You have a friend who is diabetic. He eats some sugar. He is happy because it tastes good. You are happy because he is happy. You both ignore the longer term damage it is doing. 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.
I should make this clear. I’m not “an Austrian” economically speaking, I’m not competent at their teaching to make such a claim. At the same time however, I think their criticisms of Keynsian methods and assumptions are valid and that a lot of the foundational assumptions of Keynesian economics is bunk. I also think a primary reason for the popularity of Keynesian type economics is that it is psychologically much easier to swallow for the ruling class. It means they matter and their intentional actions can be effective. Once that part is in place feedback from power to academia makes Keynesian ideas get more funding and puts it on the forefront there (as well, a field that pretends to have more definite answers is more satisfying in Academia as well). That isn’t to say the Austrians have all the answers.
Mark,
Let me try an analogy. You have a friend who is diabetic. He eats some sugar. He is happy because it tastes good. You are happy because he is happy. You both ignore the longer term damage it is doing. 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.
Let me modify the analogy to reflect the current situation. Your diabetic friend’s blood sugar is dangerously low, so you give him a candy bar. It fixes the situation. You then suggest reducing the sugar in his diet in the future.
Then Mark comes along on his blog and says that your candy bar did more harm then good and if we were interested in our friend’s health, we wouldn’t have given him the candybar. Furthermore, it’s stupid to talk about reducing future sugar intake, when we just provided him with a candy bar!
The recession is like a blood-sugar dip. It needs acute treatment (deficit spending) that may appear to be the opposite of what is needed under normal operating conditions (balanced spending or deficit spending when spending is an investment that will pay for itself.)
JA,
That’s right, the Keynesian analysis is that the friend’s problem is hypoglycemia, the Austrians are saying he is hyperglycemic.
“The recession is like a blood-sugar dip. ” That’s your interpretation of the data. It assumes your theory.
That’s your interpretation of the data. It assumes your theory.
That’s pretty much everybody’s interpretation except for the Republican partisans. Do you think the CBO is biased now? What empirical support do you have for the Austrian claim?
JA,
Libertarians are Republicans now?
How can the CBO tell you what job or the economies performance would be in the absence of the stimulus? Oh, wait they don’t, you just pretend they did.
Libertarians are Republicans now?
What party is Ron Paul a member of?
How can the CBO tell you what job or the economies performance would be in the absence of the stimulus? Oh, wait they don’t, you just pretend they did.
It’s an ESTIMATE, obviously. If you’re genuinely interested in how they arrived at it, you can start with the article I linked to above.
Now how can you tell us that the stimulus was the opposite of what was needed? Was your methodology as rigorous and fair-minded as the CBO’s? Or is it just all “obvious” to you?
JA,
Ron Paul is representative of Libertarians? Do you read or know any Libertarians and what they think of Mr Paul? Do you read “Positive Liberty” or “In the Agora”? Megan McArdle is a Libertarian. I don’t know or regularly read any Libertarians who either affirm Mr Paul as one of their own and not a crackpot or for that will claim to be members of the GOP.
I read a number of Libertarian blogs, many vote with the GOP more often than the Democratic, but that is just because Democrats are less friendly toward the cause of liberty.
I’m not “certain” that it was the wrong thing to do. My feeling is that when I weigh the likelihood that the stimulus was required against the cost if it is the wrong thing to do (or even neutral) … leads me to be against it. My intuition is that intentional pushes on the economy don’t work as expected if at all.
Now the Austrians claim it is the wrong thing to do, but as noted above, I’m not competent to defend their theory. The point is the Austrians exist as acknowledged and an important (not dominant) economic theory. It seems surprising that you give them absolutely no credence. Why is that. However, the GMU bloggers will likely answer your questions or point you in the right direction if you are actually honestly curious.
That isn’t my reading of the breakdown. I did ask how much was unspent. You suggest 20billion only … in which case that stimulus was a horrible waste, as it didn’t work.
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.
Boonton,
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.
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.
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).
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.
No you haven’t. You’ve been largely appealing to authority to explain the stimulus.
Truly? OK, say the stimulus is neutral. Not harmful nor helpful…
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.
Not. The Democrats for decades have been the tax/spend party, the one trying to put more and more in the federal budget.
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.
Boonton,
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?
Boonton,
I also notice the “tax” chart. How do they figure personal “social insurance” taxes at 5%. I figure it at
15%, sorry, 12% unless you make more than the cap. Do that many people make that much more than the cap that it drops to 5%?Are you arguing that the Democratic dream is small government, elimination of entitlements, and the minimal tax footprint?
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.
Boonton,
I give the predictions little to no credence. They assume a quick recovery among other things. Recall the CBO (and Obama’s) predictions throughout 2009 of the expected employment (and the effect of the stimulus) which were wildly out of balance with what occurred. Oddly enough that has done nothing to weaken your adherence to the economic principles on which those very bad predictions were based.
Oh, I missed that. thanks.
Boonton,
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.
I give the predictions little to no credence. They assume a quick recovery among other things.
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?