On July 30 2011 02:04 Danglars wrote: Back to some core thinking: Is the problem the current debt or the current track of spending? Keep spending beyond your means, passing entitlement bill after entitlement bill, and pretty soon gov'ts stop buying your debt. They realize eventually you will be unable to make everybody's payments on the debt and default. Nobody wants to get stuck with that bill.This debt problem is not one tax increase from being solved, for after every increase in revenue in recent days, there's an even greater increase in spending! Compare the year to year increase in the deficit compared to revenue the U.S. takes in.
Balanced budgets aren't some unattainable phenomenon. Canada had them under the Liberal government. And you're thinking is flawed. The Cato Institute released a study that governments that increased taxes also had a tendency to then look at programs to cut. Governments that cut taxes didn't reduce their spending levels. So it seems that if you're serious about cutting spending, you have to raise taxes first.
In America, no amount of tax increases will keep track with the rising spending we've seen occurring in the past decade. Whether or not Canada's spending has been in keeping with what tax revenue they raise is best discussed for those concerned with Canada's government and following those events. If they can fund the welfare programs they have without high unemployment, low growth, or high taxation then more power to them. Just a quick survey to me shows their unemployment numbers don't look too much better than the US right now.
Not familiar with the particulars of the study you mentioned from the CATO institute, if you'd like to release it to discuss, then add it to the conversation. I will say that CATO released a comparison of nations with their debt-to-GDP ratio seen here + Show Spoiler [Key Graph] +
Now, let me address what you're saying about a trend of tax cuts followed by no decreases of spending. That is a part of the problem we're confronted with. Republicans in gov't, when they get a tax cut passed with popular support, do not also cut spending to increase the effect on the budget (i.e. growth revenue increase from tax cuts, decreased spending to lessen the deficit). Corruption in Washington and the political cost of confronting lobbyists and interest groups dedicated to making sure government spending in their sector increases are to blame. Election of representatives willing to confront the obstacles to spending cuts is needed. Whether the US also must suffer additional economic collapse before that happens is uncertain. Spending we can't sustain is valuable to the people the receive it and vote for their representatives. But tax increases tied to modest cuts are what's been tried in the past ex. Bush Sr. Taxes go up, spending cuts prove only temporary amidst overall spending increases. Hence you see people holding the line on tax increases until we see cuts: a growing tiredness of promised cuts that aren't delivered upon or end up much smaller than originally promised.
On August 16 2011 04:23 xDaunt wrote: Ron Paul's position on Iran basically has 4 points:
1) It's the US's fault that they hate us; 2) Iran isn't pursuing nuclear weapons; 3) Even if Iran is pursuing nuclear weapons, it's their right to do so; 4) We shouldn't be doing anything to stop Iranfrom acquiring nuclear weapons.
Factually, Ron Paul is partially correct about number 1 and may be correct about number 2 (though I doubt this one). I even agree with him on number 3 from a philosophical point of view. However, he completely goes off the rails with number 4. There simply is no good outcome to a country like Iran acquiring nuclear weapons, and if we have a viable means to prevent Iran from getting nuclear weapons, we absolutely should use it.
He is 100% correct that it is our fault they hate us. It baffles me that some still cling to this insane notion that the world hates us for our freedoms, or as was so eloquently pointed out to me by somebody else in a different thread, they are all ignorant bigots... however Ron Paul is careful to make the distinction that he doesn't blame Americans or America, but America's foreign policy. Actions have consequences, cause and effect is a law of the universe, and you can't interfere with and exploit other people without expecting some degree of blowback. After he pointed this out in a debate, though, Fox News ran with the story that Ron Paul is a "truther"... I'm not kidding.
In reality, Ron Paul warned that Clinton's foreign policy in the Middle East would lead to a terrorist attack, and Clinton looks like a dove compared to what we've become in the last ten years. Sanctions amount to economic warfare, bombings are real warfare, and these were before we mounted full scale invasions. All of these actions took civilian lives. Of course they hate us.
We are not learning from the past. The rhetoric around Iran is frightening similar to Iraq, and the evidence is just as scarce and circumstantial. If they ARE trying to build the bomb, they are really really good at hiding it. Regardless, we cannot afford to jump to conclusions like this anymore yet here we are, on track to repeat the same monumental mistake. While I don't take his piece as unequivocal proof, Seymour Hersh echos most of my doubts and explains himself pretty well here:
Iran did sign the NPT, but I wouldn't blame them for wanting a nuclear weapon. They are surrounded by nuclear weapons, it makes some sense to arm yourself as well at least as a deterrent. And I don't think it should be our job to keep countries from attaining weapons or even telling other countries what they are allowed to do. That is the UN's role, and if they cannot perform it we should look into fixing that. If we maintain the status quo the terrorists won't have to attack us, they can just watch while we slowly kill ourselves. It is time to consolidate and focus our resources on what is important - nation building at home instead of 6000 miles away. It is not our job to protect Israel, they do a pretty good job of picking fights and subverting enemy states on their own, let them police the Middle East and leave us out of it. http://www.spiegel.de/international/world/0,1518,777899,00.html
Finally, I will quote George Washington. I don't usually do this sort of thing and I think it's annoying, but the founding fathers were clear about how the U.S. should conduct foreign policy and they knew the perils of interventionism. They were not isolationists.
"The great rule of conduct for us in regard to foreign nations is in extending our commercial relations, to have with them as little political connection as possible. . . . Why quit our own to stand upon foreign ground? Why, by interweaving our destiny with that of any part of Europe, entangle our peace and prosperity in the toils of European ambition, rivalship, interest, humor or caprice?"
Ron Paul must win the Republican nomination. Otherwise we are being given a false choice in 2012, cosmetic differences on the same old turd sandwich. Our country needs to have this fundamental debate about our role in the world and what we can afford.
In America, no amount of tax increases will keep track with the rising spending we've seen occurring in the past decade.
You do realize that this statement is way off, right? A repeal of the various Bush Tax Cuts makes a humongous dent in the deficit. If you want to actually do something that you can use to back up your plan (or lack thereof) for reform you can go to this website to try and stabilize our current debt. It'd be interesting to see what people come up with. I could reduce it by 2020, falling 120 Billion short in cuts/revenues, my savings came from about 60% spending cuts and 40% revenue increase.
While Barack Obama vacations on Martha’s Vineyard this week he’ll be thinking about his grand vision to save America – again. There is one thing you can say about Obama – he’s predictable. He promises to unveil his “new” plan for America in early September. The White House said Obama will give a speech after the September 5 Labor Day holiday to outline measures to boost hiring and find budget savings that surpass the $1.5 trillion goal of a new congressional deficit-cutting committee. It is heartening to see that Barack has turned into a cost cutter extraordinaire. He should be an inspiration to the Tea Party, except for one little problem. The plan he unveils in a few weeks will increase spending now and fret about spending cuts at some future unspecified date.
I can reveal his plan today because the White House has already leaked the major aspects of his plan. He will call for an extension of the Social Security payroll tax cut of 2% for all working Americans. This was supposed to give a dramatic boost to GDP in 2011. Maybe it will work next time. He will demand that extended unemployment benefits be renewed. Somehow providing 99 weeks of unemployment benefits is supposed to create jobs. It’s done wonders thus far. He will propose some semblance of an infrastructure bank or tax cuts to spur infrastructure spending. It will include a proposal for training and education to help unemployed people switch careers. He will attempt to steal the thunder from the SUPER COMMITTEE of 12 by coming up with $2 trillion of budget savings by insisting the Lear jet flying rich fork over an extra $500 billion.
You may have noticed that followers of Keynesian dogma like Paul Krugman, Larry Summers, Brad Delong, Richard Koo, John Galbraith, every Democrat in Congress, and every liberal pundit and columnist have been shrieking about the Tea Party terrorists and their ghastly budget cuts that are destroying our economy. They contend the stock market is tanking and the economy is heading into recession due to the brutal austerity measures being imposed by the extremists in the Republican Party. There is just one small issue with their argument. It is completely false. It is a bold faced lie. This is 2011. The economy has been in freefall since January 1. No spending cuts have occurred. Nada!!! As the CBO chart below reveals, the horrendous slashing of government will amount to $21 billion in 2012 and $42 billion in 2013. Of course, those aren’t even cuts in spending. They are reductions in the projected increases in spending. Politicians must be very secure in the knowledge that Americans are completely ignorant when it comes to anything other than the details of Kim Kardashian’s wedding and who Snooki is banging on Jersey Shore.
I’d like to remind the Harvard educated Keynesian economists that Federal government spending is currently chiming in at $3.8 trillion per year. Federal spending was $2.7 trillion in 2007 and $3.0 trillion in 2008. Keynesians believe government spending fills the gap when private companies are contracting. Obama has taken Keynesianism to a new level. Federal spending will total $10.8 trillion in Obama’s 1st three years, versus $8.4 trillion in the previous three years. Even a Harvard economist can figure out this is a 29% increase in Federal spending. What has it accomplished? We are back in recession, unemployment is rising, forty six million Americans are on food stamps, food and energy prices are soaring, and the middle class is being annihilated. The standard Keynesian response is we would have lost 3 million more jobs, we were saved from a 2nd Great Depression and the stimulus was too little. It would have worked if it had just been twice as large.
As an added benefit, there's a shocking / hilarious Paul Krugman meme at the end of the article in the link..
I don't understand what he wants for us to solve the debt (or the economy at that), but all I'm getting is "Keynes is wrong", which I mean, I've heard before and doesn't really surprise me.
I think this recession has made people a lot more wary of Keynesian economics. But to be honest, this was an economy that lost trillions of dollars. And the issue right now is in demand and deleveraging and not corporate profits and manufacturing.
Also we're expecting a trillion in spending (40% of which were tax cuts by the way...and tax credits) to solve a problem that costs us trillions of dollars? Come on. There needs to be more than just that. And I don't mean additional stimulus. Reforming entitlements, passing effective regulations, and responsible funding allocations are all needed to get the economy back on track.
By the way, when did any government spending equate to stimulus?
I mean. Fine...whatever, but at least offer an issue on how to resolve the economy. He bashed Obama's infrastructure bank idea without really telling the reader that the infrastructure bank isn't really public spending since it loans its money from private institutions.
Edit: There are also nitty gritty things that I disagree with in the article....but meh. The Hayek vs Keynes debate is an endless struggle that doesn't have much of an end. I think both have an interesting (and almost same) concept of how the economy works. It's just your personal preference one way or the other.
You can't discredit Keynes because the financial world exploded. This is a recession that's not like your normal recessions, so standard Keynes solutions won't do. And I'm sure the Harvard professors that he's talking about that are incredibly smart and talented know that too.
And since when did we discredit and start calling these public officials retarded (of course with Paul Krugman being the most common out of the ones I've seen so far)? At least show us your qualifications first before you go around and say they don't have any merit to them.
Also. I'd like to note that when he says that "banks could have just been liquidated" and bondholders and stockholders could have taken the hit......I'm wondering if he understands that "liquidating" them wouldn't have just spread to bondholders and stockholders because the reason why we were in a mess was because we had trillions of toxic assets in the derivatives market that would have affected people not just here in the country.
Some Guy He will call for an extension of the Social Security payroll tax cut of 2% for all working Americans. This was supposed to give a dramatic boost to GDP in 2011. Maybe it will work next time.
Huh? Who said a 2% tax cut would lead to a dramatic boost in GDP? It will increase demand or reduce the debt burden on the people who receive the cut, government spending being equal.
There seems to be a fundamental misunderstand and intellectual shallowness going on in these arguments. If you were faced with an economy that, no laws changed, would lead to -8% GDP growth over the next year and you decided to change laws to do something about it and end up at -2%, naysayers can declare you have failed and now we should move on to austerity because the economy still sucks. Apparently people have a hard time accepting counterfactual history, even when history and basic theory has highly empirically supported the anti-austerity crowd.
Some Guy Somehow providing 99 weeks of unemployment benefits is supposed to create jobs. It’s done wonders thus far.
No, increasing the value and duration of unemployment benefits keeps people who lost their jobs alive and maintains their purchasing power. It is pretty hard for businesses to expand when their customers are all broke due to being out of work because of an asset bubble and debt overhang. In that roundabout sense it "creates jobs."
The ratio of job seekers to job openings is currently 4.5 : 1. Encouraging people to find jobs by making them go hungry is pointless if nobody will hire them.
Some Guy You may have noticed that followers of Keynesian dogma like Paul Krugman, Larry Summers, Brad Delong, Richard Koo, John Galbraith, every Democrat in Congress, and every liberal pundit and columnist have been shrieking about the Tea Party terrorists and their ghastly budget cuts that are destroying our economy. They contend the stock market is tanking and the economy is heading into recession due to the brutal austerity measures being imposed by the extremists in the Republican Party. There is just one small issue with their argument. It is completely false. It is a bold faced lie. This is 2011. The economy has been in freefall since January 1. No spending cuts have occurred. Nada!!! As the CBO chart below reveals, the horrendous slashing of government will amount to $21 billion in 2012 and $42 billion in 2013.
I guess we're just going to start lying now.
I have not seen anyone say the stock market is falling because of austerity; if they are saying that they are to some degree wrong. The stock market is tanking because Euro experiment is failing, growth forecasts aren't good and Washington has shown it will be gridlocked.
To begin with, using levels of spending is a strawman of the position. Deficits are of primary importance; nobody is arguing for $12 trillion in revenue collection and $10 trillion in spending merely because the spending would be higher.
Revenue is rising and spending is decreasing as a % of GDP - neither of those are helping.
Some Guy I’d like to remind the Harvard educated Keynesian economists that Federal government spending is currently chiming in at $3.8 trillion per year. Federal spending was $2.7 trillion in 2007 and $3.0 trillion in 2008.
True. This is pre-recession and he really should start looking at Federal + State + Local spending combined as a % of GDP instead of just the federal government. He won't, because dishonesty and failure to understand the opposition's arguments are the name of the game.
Some Guy Obama has taken Keynesianism to a new level.
Lets clarify that "Keynesianism" is not a thing, you need to actually specify what you are talking about. If you mean run deficits, no, China used a much larger fiscal stimulus, as have other countries in the past.
Some Guy Federal spending will total $10.8 trillion in Obama’s 1st three years, versus $8.4 trillion in the previous three years. Even a Harvard economist can figure out this is a 29% increase in Federal spending. What has it accomplished?
Failed to include state & local spending cuts. As such he is only cherry picking the data set he wants. Ignores the depth of the recession.
I took a few aspirin; why didn't the gunshot wound pain go away?
Some Guy We are back in recession, unemployment is rising, forty six million Americans are on food stamps, food and energy prices are soaring, and the middle class is being annihilated.
We are not in a recession (yet, unless I haven't been reading the news), unemployment is rising depending on method of measurement. Yes, many Americans are on food stamps.
No, the federal government and the Federal Reserve have not made food and energy prices go up. No, oil did not go up permanently, it is now trading low (lol, so where did the conservatives go after blaming oil price increases on the Federal Reserve now that they fell again my a huge amount?).
Some Guy The standard Keynesian response is we would have lost 3 million more jobs, we were saved from a 2nd Great Depression and the stimulus was too little. It would have worked if it had just been twice as large.
Sort of true. The government, in aggregate, did very little fiscal stimulus aside from automatic stabilizers & ARRA from the federal government. Fiscal stimulus won't be a magic cure-all because this will still exist:
On August 24 2011 05:54 Zergneedsfood wrote: The Hayek vs Keynes debate is an endless struggle that doesn't have much of an end. I think both have an interesting (and almost same) concept of how the economy works. It's just your personal preference one way or the other.
Absolutely no reason to give this concession. There is a reason Hayek went in to the dustbin of history and Keynes became the master. Hayek himself admitted his trade cycle doesn't occur anymore(1). Even then he is wrong to think it ever did occur.
Every conservative with a brain (For example, Friedman) ran from Hayek's economic work after the ravaging it receiving early on. They love the Road to Serfdom, but not much else.
Start with Straffa's damning critiques, I guess.
Dr. Hayek on Money and Capital Piero Sraffa The Economic Journal Vol. 42, No. 165 (Mar., 1932), pp. 42-53
It is actually page 39-41 in my text version.
(1) "But this is capable of a great many modifications, particularly in connection with where the additional money goes. You see, that’s another point where I thought too much in what was true under prewar conditions, when all credit expansion, or nearly all, went into private investment, into a combination of industrial capital. Since then, so much of the credit expansion has gone to where government directed it that the misdirection may no longer be overinvestment in industrial capital, but may take any number of forms. You must really study it separately for each particular phase and situation. The typical trade cycle no longer exists, I believe. But you get very similar phenomena with all kinds of modifications." (Nobel Prize-Winning Economist: Friedrich A. von Hayek, pp. 183–186).
On August 16 2011 12:54 Danglars wrote: Just a quick survey to me shows their unemployment numbers don't look too much better than the US right now.
""In the wake of the recent recession, the Canadian economy is generating a job-filled recovery, even to the point where economists are worried about the fact that it doesn't appear that we're getting much productivity growth out of our workers," he said.
"Meanwhile the story in the United States is the dead opposite."
Statistics Canada said the Canada economy added 21,000 part-time jobs, compared with 7,000 new full-time jobs. Economists had expected an overall increase of 10,000 jobs. Meanwhile, the country's unemployment rate held steady in June at 7.4 per cent as the number of people entering the workforce increased.
In the U.S. however, the employment rate rose to 9.2 per cent, from 9.1 per cent in May, according to the U.S. Labour Department."
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