US Politics Mega-thread - Page 92

On January 31 2013 01:01 JonnyBNoHo wrote:

A bit. Overall, government spending is up and revenues are down.

On January 31 2013 02:43 aksfjh wrote:

+ Show Spoiler +
The natural log transformation is to get rid of the exponential nature of the expenditures due to GDP growth + inflation. We're mainly looking for a constant slope for "no changes" in government spending. Spending did increase slightly during the recession, but has since been cut by a large amount.

On January 31 2013 04:20 JonnyBNoHo wrote:

You'll need to convince me that's an acceptable definition of a cut in spending. That appears to be more of a stagnation in spending growth - which is different.

Edit: after looking at it closer there appears to be no clear linear slope to the graph - I can draw three clear trend lines, one being the 'new normal'. In other words I can interpret the graph as either government spending is too high or too low, depending on which trend line I want to follow.


Sorry for the crudeness of it. I hope I'm getting my point across though - if government spending was at levels seen in the glory days of the 90's it would be lower than today.

On January 31 2013 14:42 aksfjh wrote:

That's correct. It's not supposed to show that spending is where it should be, because that is a subjective measure. You look at it as a rate of spending growth to compare trends over decades. Right now, there is little to no spending growth. Obama and Congressional measures have slowed down the rate of growth to a crawl, contrary to the popular belief that they'very drastically increased spending up until now.

How Can Government Spending Both Rise and Fall?

The latest gross domestic product report seemed to tell an impossible story for some budget hawks.

Federal spending took the sharpest nose dive in 40 years during the fourth quarter of 2012, according to Wednesday’s GDP report, but that didn’t jive with earlier Treasury Department data that showed outlays increased by nearly $100 billion during the same three months compared with the third quarter.

On February 01 2013 08:35 JonnyBNoHo wrote:

Yes, that's correct. There was a jump in spending at the outset of the recession but since then nothing has really been added in.

The only exception to that would be Obamacare which hasn't kicked in yet and thus hasn't show up in spending numbers yet. If I recall correctly it doesn't won't too much to spending (relative to the overall budget), at least in the early year projections.

To the earlier point in the discussion about "austerity" in the US as demonstrated by the latest GDP report:


Sadly I don't have a subscription these days so I can't read (or share) the full article, but from the comments it looks like it is referencing different definitions of spending and accounting methods. The BEA doesn't include a lot of government spending in its GDP report since that would lead to double counting and other accounting quirks.

GDP (Y) is a sum of Consumption (C), Investment (I), Government Spending (G) and Net Exports (X – M).

Y = C + I + G + (X − M)

[...]

G (government spending) is the sum of government expenditures on final goods and services. It includes salaries of public servants, purchase of weapons for the military, and any investment expenditure by a government. It does not include any transfer payments, such as social security or unemployment benefits.

Source: https://en.wikipedia.org/wiki/Gross_domestic_product

Real federal government consumption expenditures and gross investment decreased 15.0 percent
in the fourth quarter, in contrast to an increase of 9.5 percent in the third. National defense decreased
22.2 percent, in contrast to an increase of 12.9 percent. Nondefense increased 1.4 percent, compared
with an increase of 3.0 percent. Real state and local government consumption expenditures and gross
investment decreased 0.7 percent, in contrast to an increase of 0.3 percent.

Source: http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

The downturn in real GDP in the fourth
quarter reflected downturns in inventory investment, in federal government spending,
in exports, and in state and local government spending that were partly offset by an
upturn in nonresidential fixed investment, a larger decrease in imports, and an
acceleration in consumer spending.

[...]

Federal government spending

Fourth-quarter federal government spending decreased at a 15.0 percent annual rate,
reflecting a large decrease in national defense spending. The decrease in national
defense spending is based on the Monthly Treasury Statement (MTS) for October,
November, and December from the Department of the Treasury, which shows a large
decrease in fourth-quarter outlays for Department of Defense-military programs other
than for military personnel. (The MTS shows a fourth-quarter increase in outlays for
military personnel, but that increase reflects special factors such as once-a-year lump
sum payments that BEA distributes across the quarters of the year, and an extra pay
day that BEA adjusts for in preparing accrual-based estimates.)

Source: http://www.bea.gov/newsreleases/national/gdp/2013/tech4q12_adv.htm

Our Incredible Shrinking Government

Most analysts are, rightly, shrugging off the surprise report of an actual decline in 4th quarter GDP. It will probably be revised away, and in any case it’s the result of one-off factors: a drop in inventories and a quirky sharp decline in defense spending.

Still, the report does highlight the role that shrinking government purchases of goods and services are playing in holding the economy back. And yes, I mean shrinking, not just growing more slowly than I’d like. Transfer payments like Medicare and Social Security are rising (although unemployment benefits are falling), but government purchases of stuff — mostly at the state and local level, where the stuff in question includes hiring schoolteachers — has been in fairly rapid decline.

Here’s a comparison, using the BEA numbers, of the relevant numbers in the current business cycle and during the Bush-era recession and aftermath:


By this measure, the era since the Great Recession began has been marked by unprecedented fiscal austerity.

How big a deal is this? Government consumption and investment is about $3 trillion; if it had grown as fast this time as it did in the Bush years, it would be 12 percent, or $360 billion, higher. Given a multiplier of more than one, which is what the IMF among others now thinks reasonable under current conditions, that ends up meaning GDP something like $450 billion higher, which is 3 percent — and an unemployment rate 1.5 points lower.

So fiscal austerity is the difference between where we are now and an unemployment rate not much above 6 percent. It’s a policy disaster.

Source: http://krugman.blogs.nytimes.com/2013/02/01/our-incredible-shrinking-government/

Hiring increased in January after accelerating more than previously estimated at the end of 2012, evidence the U.S. labor market was making progress even as lawmakers quarreled over the federal budget.

Payrolls rose 157,000 following a revised 196,000 advance in the prior month and a 247,000 surge in November, Labor Department figures showed today in Washington. The revisions added a total of 127,000 jobs to the employment count in November and December. The jobless rate increased to 7.9 percent from 7.8 percent.

Source: http://www.bloomberg.com/news/2013-02-01/payrolls-in-u-s-rose-in-january-after-jumping-at-end-of-2012.html

On February 01 2013 23:20 paralleluniverse wrote:
And another US embassy attack, this time in Turkey: http://news.yahoo.com/police-suicide-bombing-us-embassy-2-dead-120006594.html

2 dead: the suicide bomber and a Turkish security guard. Should be interesting to see if this tragedy gets politicized. Given that it was a suicide bombing at the entrance, I don't see much that could have been done to prevent it.

On February 01 2013 23:10 paralleluniverse wrote:
Pretty positive employment report.

In the last two years, the private sector, including Warren Buffett, Bank of America, Wells Fargo and Google, have announced major investments in clean energy. Originally skeptical lenders and investors now see that renewable energy will profitable. These investors are voting where it counts the most - with their wallet. As one CEO recently commented, “Solar is now bankable. When solar was perceived as more risky it required a premium.”

Through the Recovery Act, the Department of Energy made grants and loans to more than 1,300 companies. While critics try hard to discredit the program, the truth is that only one percent of the companies of the companies we funded went bankrupt. That one percent has gotten more attention than the 99 percent that have not.

The test for America’s policy makers will be whether they are willing to accept a few failures in exchange for many successes. America’s entrepreneurs and innovators who are leaders in global clean energy race understand that not every risk can – or should – be avoided. Michelangelo said, “The greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark.”

On February 03 2013 01:05 paralleluniverse wrote:
A letter from outgoing Secretary of Energy, Steven Chu: http://energy.gov/articles/letter-secretary-steven-chu-energy-department-employees-announcing-his-decision-not-serve

It also lists hundreds of achievements, nearly all of which I haven't heard of until now, and discusses the need to deal with climate change. Definitely worth a read.

On February 03 2013 05:26 JonnyBNoHo wrote:

We need a carbon tax

On February 03 2013 07:49 sam!zdat wrote:




Wish my "leftist" president would get to work on that one...

On February 03 2013 05:26 JonnyBNoHo wrote:

We need a carbon tax, not a taxpayer financed gift to the wealthy.

Sure the outcome is the same - more clean energy. But structure of what we have now is garbage.

On February 03 2013 14:24 NPF wrote:


Do you know in Canada your North neighbour the main opposition party proposed a "zero-tax" carbon tax (that is to say all revenu rasied by the tax was reinvested into research and grants for green energy) and the party more or less died and they fired the head of the party. It would be nice, but again people pass the bill to consumers, so a re-investment tax is nice.

But I wonder who would replace Mr. Chu since wasn't he a Nobel prize winning scientist, thus very qualified for the job?

On February 03 2013 14:59 paralleluniverse wrote:

Well in Australia, the government passed a carbon tax. Obviously, this leads to higher electricity costs. But revenue from the tax was used to reimburse people, so that low income people on net gains money, whereas high income people on net loses money.

This was good policy. But it wasn't good politics, because the Prime Minister promised no carbon tax before the election. As a result, the carbon tax and the government is very unpopular. And the right-wing opposition wants to scrap the tax, saying that it would destroy jobs and increase inflation. Except, none of that has happened, so their scare-mongering campaign seems to have failed.

Interestingly, the biggest advocate for a carbon tax is Romney economic adviser and Harvard economics head, Greg Mankiw.

On February 03 2013 17:09 Romantic wrote:


Carbon taxes are certainly the least bad of all of the government intervention options. If they do something, that is what it should be, even if I don't want them to do anything.

Edit: theres this argument that America Needs to be the Leader and our carbon legislation will just trigger an outburst of worldwide love that will cause everyone else to do the same thing. Obviously, I think there is no chance in hell of that happening. Just wanted to address it.