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On August 22 2012 03:26 mcc wrote:Show nested quote +On August 22 2012 03:20 Savio wrote:On August 21 2012 19:52 mcc wrote:On August 21 2012 12:26 Savio wrote:On August 21 2012 12:17 {CC}StealthBlue wrote:
Anyone who has been working for a few years knows that some of their paycheck has gone to SS etc.
So if it ends the Government better start sending out refunds. SS was a retarded system anyway. If they Govt had taken that money and invested it in any of the large diversified funds out there, the majority of retirees in American would be Millionaires (I don't have a source for that other than my brother who has PhD in Finance) As it is, it guarantees us all a pittance at the biggest loss you can imagine, because we lost the opportunity to invest that money. imo, SS is basically the stupidest government program ever created. EDIT: I just realized I wrote that SS "was" a retarded system. That shows how much confidence I have that it will continue working "as we know it" for the rest of my life. You understand that the point of SS was not to provide luxury life, but to guarantee that people would not live in abject poverty when old ? Investments are risky (no matter what some "experts" say) and thus would run against the point of SS, which is to provide guaranteed security, not possible riches. Of course with time role of SS changed from this secure minimum to providing comfortable life to retired, but the point is still the guaranteed part and no investment with high return is risk-free. That is not to say that SS could not have been managed better. Even assuming worst case scenarios, in any major diversified fund 100% of retirees would be better off. Even bad investments are better than Social Security long term. That is not guaranteed, that is just extrapolation of current trend. Plus in case of short term losses the investment based SS might not have enough money to pay at the specific moment, but it has to be able to.
If it had been investment based over the last 50 years, it probably would have an enormous surplus stored up (or it could have if we just paid out to everyone what they have actually recieved from SS over the last 50 years or even a bit more). In that way, everyone would have been at least as well off as they are now, but instead of facing an upcoming problem, we would have an enormous surplus that built up over 50 years. That surplus could help it ride out temporary economic challenges (as long as we could keep politicians from dipping into its surplus to pay for other programs...(Like Obama paying for Obamacare by taking from Medicare)
The only main difference wtih this approach is that politicians of the day would not have gotten the temporary political boost they wanted from giving money to the first generation of Seniors for nothing.
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As Newsweek has already said, Obama should hit the road. I'm voting Romney.
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Here is an interesting tool to see how long and at what interest rate you would have to invest to by a millionaire.
http://www.investopedia.com/calculator/MillionaireCal.aspx#axzz24CvqJQaA
Useful to think about when you see how much the Govt takes from your paycheck each month for SS. Also remember to double the number the Govt takes from your paycheck because your company pays 50% and you pay 50%
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On August 22 2012 03:28 aksfjh wrote:Show nested quote +On August 22 2012 02:18 JonnyBNoHo wrote:On August 21 2012 18:58 paralleluniverse wrote:On August 21 2012 01:40 JonnyBNoHo wrote:On August 20 2012 21:03 paralleluniverse wrote:
I'm definitely not opposed to redirecting "poor quality government spending" to better uses. You say that this is the main thing you're advocating for, but it's not obvious from any of your writings that that's your view. The standard Republican view is to gut all spending (apart from tax cuts to the rich, of course).
The "making stuff up" comment was directed at your factoid that stimulus is ineffective when debt is high. I can't accuse you of making stuff up now that you have given a source (probably the most random and no-name source that's been linked this thread). However, I still don't agree with the content in your link. If it seems random and no-name it was mentioned on CNBC a few weeks back (randomly) and so I took a look at it then. It is also reflective of the views and opinions of quite a few guests they have had on the channel over the last couple years. It is not wise to ignore what market participants are telling you. Plenty are saying that the high level of government debt and deficits are leading to less investment - that's not a good thing and it needs to be noted. Now, while you're source is quite no-name, it does cite some more reputable studies (in the "Recent Academic Evidence" section) to come to the view quoted above, that being Reinhart, Reinhart, Rogoff. But your source has misinterpreted the finding of this paper, which is that recessions caused by debt overhangs are long, and that high debt (the magical 90% number) is correlated with slow economic growth. It even calls it a "corollary", because it's the implication they drew from the evidence. But it does not follow from the Reinhart, Reinhart, Rogoff paper that was cited, that even higher debt, in the form of stimulus, will cause even slower economic growth. This Hoisington paper confuses correlation with causation. The original source says that prolonged levels of high debt is correlated with slow economic growth. Now there has been some criticism of the Reinhart, Rogoff work, such as the 90% number being arbitrary and hand-picked, and also this from Krugman: http://krugman.blogs.nytimes.com/2010/07/21/notes-on-rogoff-wonkish/They are not arguing that stimulus is causing slow growth. The argument is that government stimulus is far less effective following a debt overhang than normal and that high levels of government debt (in general) leads to slower growth. Because of that higher and higher levels of stimulus will not lead to added growth (or very little of it) because the added growth from stimulus will be offset by the private sector reacting negatively towards it. We know that excessive debt is an issue for both households and businesses and leads to lower economic growth. Now, government debt is a bit different but not exceedingly so. Ultimately the cost of that debt will be paid for by households and businesses through higher taxes or lower government spending or a prolonged period of negative real rates. So it is not a huge leap in logic to say that a huge pile of government debt will have a similar impact as private debt. Maybe the 90% number isn't a good number. But according to usgovernmentspending.com we'll be at 122% of GDP this year. To a lot of people in the economy that's a scary number, and because of that many have already pared back their spending and investment plans... which has slowed growth. But, let's see what Reinhart and Rogoff actually have to say about stimulus: The U.S. must reduce its debt or suffer economic stagnation, they said in interviews with McClatchy, but in the short term they also favor more government stimulus to boost the economy, even if that raises the debt a bit more. "We may need another stimulus bill just to decompress from the previous one, a smaller one to cushion the landing," said Kenneth Rogoff, a Harvard University economist and a co-author of the book. Added his fellow co-author, Carmen Reinhart, a University of Maryland economist: "I'm not one of those deficit hawks. ... I'm not saying you run out and pull the plug and have an adjustment that could derail what fragile recovery we do have." However, she cautioned, "the whole thing that we can disregard debt because we're the U.S. is really grasping at straws. Taxpayers need to understand the tradeoff, and that is, we're going to be paying for this in terms of lower growth in the future." Source: http://www.mcclatchydc.com/2010/08/17/99285/what-should-we-do-about-national.htmlAnd then there's this from Reinhart (again): This seems to be a very reasonable economic position: stimulus now, cut spending later. In fact, it's pretty much the position of Barrack Obama. Note that the first link is from 2010, these days I believe Rogoff has become a typical "cut everything, now, now, now!!" Republican. Sure they praise the stimulus back during the recession and at first into the recovery. But that was years ago. We're now talking about continued stimulus, and even added stimulus years after growth resumed and government debt has piled up to higher levels. We're getting to the point where perpetual stimulus is being called for as has happened in Japan over the past few decades. I think Obama's plan is to spend more now, and cut more later. He wants additional stimulus like the American Jobs Act. I don't think the cost of new stimulus like that is worth the benefits. We might get a bit more growth now, but it will just set us up for a new fiscal cliff in the future and then need a new stimulus plan to offset it. Now, maybe additional stimulus is the best plan out there. But there's no 100% certainty to that. There's a risk that the added stimulus won't be very effective and will just make the future more painful. In light of that risk the prudent thing to do is redirect the garbage spending. They are arguing that when there's high debt (for the record: Bush's fault), then stimulus, which increases debt would "perpetuate the period of slow economic growth". And this is a misinterpretation of the cited work of Reinhart, Reinhart and Rogoff, which finds that high debt is correlated with slow growth. This does not imply that even higher debt will cause even slower growth. In fact, where in the Reinhart, Reinhart and Rogoff paper does it say that stimulus is bad when debt is high? It doesn't. It's a invalid inference made my this no-name paper. It fails to understand the most simplistic mantra of statistical inference: correlation does not imply causation. In the very last paragraph of the Reinhart, Reinhart and Rogoff paper it says: Finally, this paper should not be interpreted as a manifesto for rapid public debt deleveraging in an environment of extremely weak growth and high unemployment. However, our read of the evidence certainly casts doubt on the view that soaring government debt is a non-issue simply because markets are presently happy to absorb it. Source: http://www.nber.org/papers/w18015.pdf?new_window=1Why was this statement ignored? The finding that high debt is correlated with low growth doesn't imply that even higher debt will cause even lower growth. If the government doesn't spend, then who will? Why would the private sector spend when there is a lack of aggregate demand? I generally don't dispute that in the long run, high debt is bad for growth. High government debt isn't cost-free. But this is a correlation, it can run both ways, maybe low growth causes high debt. In the short run, trying to cut government spending now would be doing exactly what Reinhart, Reinhart and Rogoff cautions us to not do. The idea that when government spending is cut, people would be inspired by the confidence fairy to spend more is exactly the flawed logic behind Europe's disastrous austerity. Cutting spending in a recession further depresses the economy, making it even harder to pay down government debt in the long run. Having high debt is not a sustainable long run policy, but in the short run, it is self-defeating to make the recession worse by cutting spending which makes the debt problem worse. Also, that quote from Reinhart in the Washington Times, essentially saying that stimulus saved the economy, wasn't from many years ago. It's from November 2011, which is quite recent. Where does she say that stimulus is a waste of money? The fact that people are somehow spooked out of investing my high government debt is laughable. Government debt should only factor into investment decisions to the extend that rational agents anticipate higher future taxes because the government would need to pay down the debt later. The argument that this stops stimulus from working is known as Ricardian Equivalence. Krugman got into a long debate with Chicago economists on why this is completely wrong: http://krugman.blogs.nytimes.com/2011/12/26/a-note-on-the-ricardian-equivalence-argument-against-stimulus-slightly-wonkish/They've since backed down from the claim. Rogoff argued for a stimulus going into and during the recession. But Rogoff also argued that after the recession (where we are now) more prudence was in order. As it becomes increasingly evident that the recovery will remain subdued in Europe and the US, there is a growing chorus for indefinitely sustaining aggressive post-crisis fiscal stimulus. Governments that instead propose gradually reducing deficits and ultimately stabilising debt to income levels - such as both Germany and the UK - are accused of pig-headed fiscal conservatism. Had they only a better grasp of Keynesian truisms, we are told, these countries' leaders would realise that their penury risks throwing already weak economies into double-dip recessions, or even a sustained depression. There is no question that huge uncertainty hangs over the global economy, but is the case against commonsense fiscal conservatism so compelling? I don't see it. source (requires subscription) As to the Krugman article - yes, buying a home on credit will result in a large net increase in spending. But in following years spending will be lessened due to repaying the mortgage. In policy terms, yes, deficit spending can boost overall spending but the after affect is sluggish growth. Just as the mortgage results in a crimp in household spending, the government debt acts as a drag on growth. If the response to the sluggish growth is more debt then the consequence will repeat itself - more debt, less growth, leading to more debt and continued sluggish growth. That's the story of Japan over the past 30 years as government debt climbed from 60% of GDP to 230%. Moreover, what if we consider bad debt? If a bank lends out money to finance a home purchase and sees that the homeowner is having difficulty paying it back then the bank will increase its loan loss reserves and curtail new lending. Similarly if people see government spending as inefficient or unsustainable it will result in them curtailing their own lending, spending and investment. It may not be $1 for $1, but it will be more than nothing. Did the Bush tax cuts and resulting deficits result in a prosperous decade? Certainly not. The tax cuts may have helped stabilize the economy following the recession but it didn't make the economy very robust afterwards. Why? Were the tax cuts just not big enough? Yeah, that's the ticket... Because the tax cuts were inefficient. We had taxes the lowest they had been in half a century, and then they're cut even more. The same thing with the Japan scenario. They had a well kept infrastructure, and then kept throwing money at those projects. The ideal progression of events would unfold as follows: Private sector gathers too much debt, then goes into a deleveraging shock. During that shock, consumer spending drops tremendously in order to pay down debt as fast as possible, which causes demand to drop, and subsequently employment to drop as well. At some point, so many people are unemployed that debt repayment schedules go back to normal, but with depressed demand with more people not earning wages. The government, having taken a minimal role in private sector supply/demand manipulation would fill in the demand gap of the people that were laid off. Essentially, this works out to a tradeoff of private sector debt with public sector debt. Because the government is assumed to react poorly to investment decisions, the intervention should be quick, powerful, and dedicated to the most ailing portion of the economy that provides the best longterm gains. Once employment returns to natural levels, the government slowly enacts measures to deal with the long term debt. The investments made by the government should increase output, in the long run, that can handle the higher debt burden.
That's really the key right there. A good equivalent argument would be taking out a loan for a college education. You want to make sure your education will grant you the income to pay back that loan. At the same time, you have to make the most out of every dollar you borrow. Since most student loans can help with living expenses as well, it's best to spend as much as possible (%) on the education and the least on living expenses. It's not good to be scared of borrowing money so much that you only borrow enough to live off of while taking minimal hours, because, in the long run, you end up with even higher debt with so much of the money (%) going into living expenses.
I largely agree with this. I think the main areas of disagreement are when the government should start pairing back their investments and just how much of government spending is on investments that will yield real long term growth and how much is being spent on living expenses (to use your college analogy).
Show nested quote +On August 22 2012 02:28 JonnyBNoHo wrote:On August 21 2012 19:09 paralleluniverse wrote:On August 21 2012 06:25 JonnyBNoHo wrote:On August 21 2012 05:25 aksfjh wrote:On August 21 2012 05:03 JonnyBNoHo wrote:On August 21 2012 04:17 aksfjh wrote:On August 21 2012 03:44 JonnyBNoHo wrote:On August 21 2012 02:49 aksfjh wrote:On August 21 2012 01:40 JonnyBNoHo wrote:
[quote]
If it seems random and no-name it was mentioned on CNBC a few weeks back (randomly) and so I took a look at it then. It is also reflective of the views and opinions of quite a few guests they have had on the channel over the last couple years. It is not wise to ignore what market participants are telling you. Plenty are saying that the high level of government debt and deficits are leading to less investment - that's not a good thing and it needs to be noted.
[quote]
They are not arguing that stimulus is causing slow growth. The argument is that government stimulus is far less effective following a debt overhang than normal and that high levels of government debt (in general) leads to slower growth. Because of that higher and higher levels of stimulus will not lead to added growth (or very little of it) because the added growth from stimulus will be offset by the private sector reacting negatively towards it.
We know that excessive debt is an issue for both households and businesses and leads to lower economic growth. Now, government debt is a bit different but not exceedingly so. Ultimately the cost of that debt will be paid for by households and businesses through higher taxes or lower government spending or a prolonged period of negative real rates. So it is not a huge leap in logic to say that a huge pile of government debt will have a similar impact as private debt.
Maybe the 90% number isn't a good number. But according to usgovernmentspending.com we'll be at 122% of GDP this year. To a lot of people in the economy that's a scary number, and because of that many have already pared back their spending and investment plans... which has slowed growth.
[quote]
Sure they praise the stimulus back during the recession and at first into the recovery. But that was years ago. We're now talking about continued stimulus, and even added stimulus years after growth resumed and government debt has piled up to higher levels. We're getting to the point where perpetual stimulus is being called for as has happened in Japan over the past few decades.
I think Obama's plan is to spend more now, and cut more later. He wants additional stimulus like the American Jobs Act. I don't think the cost of new stimulus like that is worth the benefits. We might get a bit more growth now, but it will just set us up for a new fiscal cliff in the future and then need a new stimulus plan to offset it.
Now, maybe additional stimulus is the best plan out there. But there's no 100% certainty to that. There's a risk that the added stimulus won't be very effective and will just make the future more painful. In light of that risk the prudent thing to do is redirect the garbage spending. People are cutting back their investments because there is little to invest in. Consumers stopped trying to borrow money while they attempt to lower their debt levels. Businesses don't want to invest in increasing output because people are using their income to pay off debt, meaning there isn't rising demand. Then, there's no strong economy out there to carry the torch. EU has touched into another recession, China's growth has slowed tremendously (since its exports have slowed), and South America is being South America. The result? Shove your money into countries that can't or won't realistically default. AKA, countries that print their own money and have a diversified economy. Or shove your money into gold and "safe" businesses. If we use government borrowing to put idle private sector workers back to work, we're investing in a better chance to pay off any extra debt. By sitting on high unemployment and an unvoluntary mass exodus from the workforce, we're eroding worker skills and experience and lowering the potential for growth in the long run, which takes a dump over any plan to repay debt we have. There are many reasons why people aren't investing. Fear of government debt and deficits is just one them. But just because it is one of many factors doesn't mean you get to ignore it. Using government money to put idle workers to work is only worthwhile if it is spent on useful things. China is struggling with bad loans from its stimulus program and Japan is trapped in perpetual stimulus mode (government debt 230% of GDP and counting!) in part due to wasteful spending. So no, just because we have idle workers doesn't mean that the government gets a blank check and a free pass to blow money on whatever the heck it wants. Nobody is asking for a blank check. You're trying to paint stabilizer spending as stimulus investment. It's funny, because the article you linked even stated that the proposals being made in the U.S. DO learn from Japan's mistakes by making investments that are more needed. We have good data stating what the government could invest in. Stabilizer spending is stimulative. There's plenty of government spending that is wasteful. I don't know why you want to argue with these two points. So, you want to stop stabilization spending? What government spending do you find wasteful right now? No, I don't want to stop stabilization spending. Never said I did. Ethanol subsidies are wasteful. A lot of agriculture subsidies are wasteful. The military has complained about getting equipment it doesn't want. The government owns a bunch of buildings and land it doesn't use or under-utilizes. There's a lot of government waste out there. Redirecting it to useful endeavors is the low hanging fruit we should be after. I don't know enough about these programs to decide whether they're a waste or not. The first one seems OK. But, yes, government waste is bad. The US should eliminate government waste. But it would be delusional to think that you can make any difference to government debt by eliminating "government waste". The major drivers of government debt is Social Security, medical costs, and Defense. But this... this is peanuts. Immaterial in the grand scheme of things. I didn't intend the list to be an exhaustive guide to every dollar the government spends ineffectively. I also wasn't proposing that we eliminate government debt by removing wasteful spending. I was proposing that we help the economy grow by replacing wasteful and ineffective spending with higher priority items like needed roads and bridges. The thing is, all that wasteful spending might add up to a couple of billion, maybe even 10s of billions. We should start there, but that is definitely not enough to enact the programs we need right now.
Well, $10's of billions is hardly pennies  According to recovery.gov the department of transportation has gotten a cumulative total of $49B from the ARRA. So taking tens of billions from ineffective spending and putting it to good use can do a lot.
Let's not also forget that in the coming years there will be more opportunities to redirect military spending overseas back home as we continue to wind down the Afghanistan and Iraq military and rebuilding efforts. If you combine those two things you have a lot of money to play with.
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So Romney is now saying Akin must accept the idea of stepping down. Too late as the damage has been done and would probably be safer for him to stay in unless a TP decides to also run.
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On August 22 2012 05:04 JonnyBNoHo wrote:Show nested quote +On August 22 2012 03:28 aksfjh wrote:On August 22 2012 02:18 JonnyBNoHo wrote:On August 21 2012 18:58 paralleluniverse wrote:On August 21 2012 01:40 JonnyBNoHo wrote:On August 20 2012 21:03 paralleluniverse wrote:
I'm definitely not opposed to redirecting "poor quality government spending" to better uses. You say that this is the main thing you're advocating for, but it's not obvious from any of your writings that that's your view. The standard Republican view is to gut all spending (apart from tax cuts to the rich, of course).
The "making stuff up" comment was directed at your factoid that stimulus is ineffective when debt is high. I can't accuse you of making stuff up now that you have given a source (probably the most random and no-name source that's been linked this thread). However, I still don't agree with the content in your link. If it seems random and no-name it was mentioned on CNBC a few weeks back (randomly) and so I took a look at it then. It is also reflective of the views and opinions of quite a few guests they have had on the channel over the last couple years. It is not wise to ignore what market participants are telling you. Plenty are saying that the high level of government debt and deficits are leading to less investment - that's not a good thing and it needs to be noted. Now, while you're source is quite no-name, it does cite some more reputable studies (in the "Recent Academic Evidence" section) to come to the view quoted above, that being Reinhart, Reinhart, Rogoff. But your source has misinterpreted the finding of this paper, which is that recessions caused by debt overhangs are long, and that high debt (the magical 90% number) is correlated with slow economic growth. It even calls it a "corollary", because it's the implication they drew from the evidence. But it does not follow from the Reinhart, Reinhart, Rogoff paper that was cited, that even higher debt, in the form of stimulus, will cause even slower economic growth. This Hoisington paper confuses correlation with causation. The original source says that prolonged levels of high debt is correlated with slow economic growth. Now there has been some criticism of the Reinhart, Rogoff work, such as the 90% number being arbitrary and hand-picked, and also this from Krugman: http://krugman.blogs.nytimes.com/2010/07/21/notes-on-rogoff-wonkish/They are not arguing that stimulus is causing slow growth. The argument is that government stimulus is far less effective following a debt overhang than normal and that high levels of government debt (in general) leads to slower growth. Because of that higher and higher levels of stimulus will not lead to added growth (or very little of it) because the added growth from stimulus will be offset by the private sector reacting negatively towards it. We know that excessive debt is an issue for both households and businesses and leads to lower economic growth. Now, government debt is a bit different but not exceedingly so. Ultimately the cost of that debt will be paid for by households and businesses through higher taxes or lower government spending or a prolonged period of negative real rates. So it is not a huge leap in logic to say that a huge pile of government debt will have a similar impact as private debt. Maybe the 90% number isn't a good number. But according to usgovernmentspending.com we'll be at 122% of GDP this year. To a lot of people in the economy that's a scary number, and because of that many have already pared back their spending and investment plans... which has slowed growth. But, let's see what Reinhart and Rogoff actually have to say about stimulus: The U.S. must reduce its debt or suffer economic stagnation, they said in interviews with McClatchy, but in the short term they also favor more government stimulus to boost the economy, even if that raises the debt a bit more. "We may need another stimulus bill just to decompress from the previous one, a smaller one to cushion the landing," said Kenneth Rogoff, a Harvard University economist and a co-author of the book. Added his fellow co-author, Carmen Reinhart, a University of Maryland economist: "I'm not one of those deficit hawks. ... I'm not saying you run out and pull the plug and have an adjustment that could derail what fragile recovery we do have." However, she cautioned, "the whole thing that we can disregard debt because we're the U.S. is really grasping at straws. Taxpayers need to understand the tradeoff, and that is, we're going to be paying for this in terms of lower growth in the future." Source: http://www.mcclatchydc.com/2010/08/17/99285/what-should-we-do-about-national.htmlAnd then there's this from Reinhart (again): This seems to be a very reasonable economic position: stimulus now, cut spending later. In fact, it's pretty much the position of Barrack Obama. Note that the first link is from 2010, these days I believe Rogoff has become a typical "cut everything, now, now, now!!" Republican. Sure they praise the stimulus back during the recession and at first into the recovery. But that was years ago. We're now talking about continued stimulus, and even added stimulus years after growth resumed and government debt has piled up to higher levels. We're getting to the point where perpetual stimulus is being called for as has happened in Japan over the past few decades. I think Obama's plan is to spend more now, and cut more later. He wants additional stimulus like the American Jobs Act. I don't think the cost of new stimulus like that is worth the benefits. We might get a bit more growth now, but it will just set us up for a new fiscal cliff in the future and then need a new stimulus plan to offset it. Now, maybe additional stimulus is the best plan out there. But there's no 100% certainty to that. There's a risk that the added stimulus won't be very effective and will just make the future more painful. In light of that risk the prudent thing to do is redirect the garbage spending. They are arguing that when there's high debt (for the record: Bush's fault), then stimulus, which increases debt would "perpetuate the period of slow economic growth". And this is a misinterpretation of the cited work of Reinhart, Reinhart and Rogoff, which finds that high debt is correlated with slow growth. This does not imply that even higher debt will cause even slower growth. In fact, where in the Reinhart, Reinhart and Rogoff paper does it say that stimulus is bad when debt is high? It doesn't. It's a invalid inference made my this no-name paper. It fails to understand the most simplistic mantra of statistical inference: correlation does not imply causation. In the very last paragraph of the Reinhart, Reinhart and Rogoff paper it says: Finally, this paper should not be interpreted as a manifesto for rapid public debt deleveraging in an environment of extremely weak growth and high unemployment. However, our read of the evidence certainly casts doubt on the view that soaring government debt is a non-issue simply because markets are presently happy to absorb it. Source: http://www.nber.org/papers/w18015.pdf?new_window=1Why was this statement ignored? The finding that high debt is correlated with low growth doesn't imply that even higher debt will cause even lower growth. If the government doesn't spend, then who will? Why would the private sector spend when there is a lack of aggregate demand? I generally don't dispute that in the long run, high debt is bad for growth. High government debt isn't cost-free. But this is a correlation, it can run both ways, maybe low growth causes high debt. In the short run, trying to cut government spending now would be doing exactly what Reinhart, Reinhart and Rogoff cautions us to not do. The idea that when government spending is cut, people would be inspired by the confidence fairy to spend more is exactly the flawed logic behind Europe's disastrous austerity. Cutting spending in a recession further depresses the economy, making it even harder to pay down government debt in the long run. Having high debt is not a sustainable long run policy, but in the short run, it is self-defeating to make the recession worse by cutting spending which makes the debt problem worse. Also, that quote from Reinhart in the Washington Times, essentially saying that stimulus saved the economy, wasn't from many years ago. It's from November 2011, which is quite recent. Where does she say that stimulus is a waste of money? The fact that people are somehow spooked out of investing my high government debt is laughable. Government debt should only factor into investment decisions to the extend that rational agents anticipate higher future taxes because the government would need to pay down the debt later. The argument that this stops stimulus from working is known as Ricardian Equivalence. Krugman got into a long debate with Chicago economists on why this is completely wrong: http://krugman.blogs.nytimes.com/2011/12/26/a-note-on-the-ricardian-equivalence-argument-against-stimulus-slightly-wonkish/They've since backed down from the claim. Rogoff argued for a stimulus going into and during the recession. But Rogoff also argued that after the recession (where we are now) more prudence was in order. As it becomes increasingly evident that the recovery will remain subdued in Europe and the US, there is a growing chorus for indefinitely sustaining aggressive post-crisis fiscal stimulus. Governments that instead propose gradually reducing deficits and ultimately stabilising debt to income levels - such as both Germany and the UK - are accused of pig-headed fiscal conservatism. Had they only a better grasp of Keynesian truisms, we are told, these countries' leaders would realise that their penury risks throwing already weak economies into double-dip recessions, or even a sustained depression. There is no question that huge uncertainty hangs over the global economy, but is the case against commonsense fiscal conservatism so compelling? I don't see it. source (requires subscription) As to the Krugman article - yes, buying a home on credit will result in a large net increase in spending. But in following years spending will be lessened due to repaying the mortgage. In policy terms, yes, deficit spending can boost overall spending but the after affect is sluggish growth. Just as the mortgage results in a crimp in household spending, the government debt acts as a drag on growth. If the response to the sluggish growth is more debt then the consequence will repeat itself - more debt, less growth, leading to more debt and continued sluggish growth. That's the story of Japan over the past 30 years as government debt climbed from 60% of GDP to 230%. Moreover, what if we consider bad debt? If a bank lends out money to finance a home purchase and sees that the homeowner is having difficulty paying it back then the bank will increase its loan loss reserves and curtail new lending. Similarly if people see government spending as inefficient or unsustainable it will result in them curtailing their own lending, spending and investment. It may not be $1 for $1, but it will be more than nothing. Did the Bush tax cuts and resulting deficits result in a prosperous decade? Certainly not. The tax cuts may have helped stabilize the economy following the recession but it didn't make the economy very robust afterwards. Why? Were the tax cuts just not big enough? Yeah, that's the ticket... Because the tax cuts were inefficient. We had taxes the lowest they had been in half a century, and then they're cut even more. The same thing with the Japan scenario. They had a well kept infrastructure, and then kept throwing money at those projects. The ideal progression of events would unfold as follows: Private sector gathers too much debt, then goes into a deleveraging shock. During that shock, consumer spending drops tremendously in order to pay down debt as fast as possible, which causes demand to drop, and subsequently employment to drop as well. At some point, so many people are unemployed that debt repayment schedules go back to normal, but with depressed demand with more people not earning wages. The government, having taken a minimal role in private sector supply/demand manipulation would fill in the demand gap of the people that were laid off. Essentially, this works out to a tradeoff of private sector debt with public sector debt. Because the government is assumed to react poorly to investment decisions, the intervention should be quick, powerful, and dedicated to the most ailing portion of the economy that provides the best longterm gains. Once employment returns to natural levels, the government slowly enacts measures to deal with the long term debt. The investments made by the government should increase output, in the long run, that can handle the higher debt burden.
That's really the key right there. A good equivalent argument would be taking out a loan for a college education. You want to make sure your education will grant you the income to pay back that loan. At the same time, you have to make the most out of every dollar you borrow. Since most student loans can help with living expenses as well, it's best to spend as much as possible (%) on the education and the least on living expenses. It's not good to be scared of borrowing money so much that you only borrow enough to live off of while taking minimal hours, because, in the long run, you end up with even higher debt with so much of the money (%) going into living expenses. I largely agree with this. I think the main areas of disagreement are when the government should start pairing back their investments and just how much of government spending is on investments that will yield real long term growth and how much is being spent on living expenses (to use your college analogy). Show nested quote +On August 22 2012 02:28 JonnyBNoHo wrote:On August 21 2012 19:09 paralleluniverse wrote:On August 21 2012 06:25 JonnyBNoHo wrote:On August 21 2012 05:25 aksfjh wrote:On August 21 2012 05:03 JonnyBNoHo wrote:On August 21 2012 04:17 aksfjh wrote:On August 21 2012 03:44 JonnyBNoHo wrote:On August 21 2012 02:49 aksfjh wrote:
[quote]
People are cutting back their investments because there is little to invest in. Consumers stopped trying to borrow money while they attempt to lower their debt levels. Businesses don't want to invest in increasing output because people are using their income to pay off debt, meaning there isn't rising demand. Then, there's no strong economy out there to carry the torch. EU has touched into another recession, China's growth has slowed tremendously (since its exports have slowed), and South America is being South America.
The result? Shove your money into countries that can't or won't realistically default. AKA, countries that print their own money and have a diversified economy. Or shove your money into gold and "safe" businesses.
If we use government borrowing to put idle private sector workers back to work, we're investing in a better chance to pay off any extra debt. By sitting on high unemployment and an unvoluntary mass exodus from the workforce, we're eroding worker skills and experience and lowering the potential for growth in the long run, which takes a dump over any plan to repay debt we have. There are many reasons why people aren't investing. Fear of government debt and deficits is just one them. But just because it is one of many factors doesn't mean you get to ignore it. Using government money to put idle workers to work is only worthwhile if it is spent on useful things. China is struggling with bad loans from its stimulus program and Japan is trapped in perpetual stimulus mode (government debt 230% of GDP and counting!) in part due to wasteful spending. So no, just because we have idle workers doesn't mean that the government gets a blank check and a free pass to blow money on whatever the heck it wants. Nobody is asking for a blank check. You're trying to paint stabilizer spending as stimulus investment. It's funny, because the article you linked even stated that the proposals being made in the U.S. DO learn from Japan's mistakes by making investments that are more needed. We have good data stating what the government could invest in. Stabilizer spending is stimulative. There's plenty of government spending that is wasteful. I don't know why you want to argue with these two points. So, you want to stop stabilization spending? What government spending do you find wasteful right now? No, I don't want to stop stabilization spending. Never said I did. Ethanol subsidies are wasteful. A lot of agriculture subsidies are wasteful. The military has complained about getting equipment it doesn't want. The government owns a bunch of buildings and land it doesn't use or under-utilizes. There's a lot of government waste out there. Redirecting it to useful endeavors is the low hanging fruit we should be after. I don't know enough about these programs to decide whether they're a waste or not. The first one seems OK. But, yes, government waste is bad. The US should eliminate government waste. But it would be delusional to think that you can make any difference to government debt by eliminating "government waste". The major drivers of government debt is Social Security, medical costs, and Defense. But this... this is peanuts. Immaterial in the grand scheme of things. I didn't intend the list to be an exhaustive guide to every dollar the government spends ineffectively. I also wasn't proposing that we eliminate government debt by removing wasteful spending. I was proposing that we help the economy grow by replacing wasteful and ineffective spending with higher priority items like needed roads and bridges. The thing is, all that wasteful spending might add up to a couple of billion, maybe even 10s of billions. We should start there, but that is definitely not enough to enact the programs we need right now. Well, $10's of billions is hardly pennies According to recovery.gov the department of transportation has gotten a cumulative total of $49B from the ARRA. So taking tens of billions from ineffective spending and putting it to good use can do a lot. Let's not also forget that in the coming years there will be more opportunities to redirect military spending overseas back home as we continue to wind down the Afghanistan and Iraq military and rebuilding efforts. If you combine those two things you have a lot of money to play with.
Indeed it can do a lot, but also remember that many of us thought the ARRA was pitifully small. Especially when you consider that 1/3 of it was tax breaks. We wanted $1 trillion+ in both mortgage debt relief and infrastructure improvements, as well as enough money to give to state and local governments so they could keep doing their thing. We got half of that, and instead of a full recovery, we're stuck at 8% unemployment.
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Now Steve King had to open his mouth.
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On August 21 2012 18:08 HunterX11 wrote:Show nested quote +On August 21 2012 17:41 Danglars wrote:On August 21 2012 16:15 HunterX11 wrote:On August 21 2012 11:04 Bigtony wrote:On August 21 2012 11:01 BluePanther wrote:On August 21 2012 10:53 Signet wrote:On August 21 2012 10:26 aksfjh wrote:On August 21 2012 10:20 Signet wrote:On August 21 2012 10:10 xDaunt wrote:Here's a good article from The Weekly Standard about why republicans like the Medicare debate that goes into considerable detail about the lay of the battlefield. Here's the most interesting part: Meanwhile, in the race to fill an open seat in Nevada’s second congressional district in September 2011, Republicans had a perfect test case for their Medicare argument. Democrat Kate Marshall attacked Republican Mark Amodei for his support of the Ryan reforms, and Amodei answered with a series of ads pressing home two points that Republican polling had discovered to be powerfully effective: The Republican proposal would never affect any current seniors, and the Democrats had actually cut half a trillion dollars from Medicare. Amodei not only won the election, he won the senior vote comfortably and was deemed a more reliable protector of Medicare than Marshall in the final pre-election polls. His standing on Medicare was better after the campaign than it had been before his opponent ever told voters about the Ryan plan in the first place. Source. While I understand the strategic aspects of this proposal for the Republican Party, it really infuriates me. So basically senior citizens believe my generation should pay the payroll tax while we work but then not have those programs around anymore when we retire. The honorable thing to do would be to start the cuts with themselves, not their kids/grandkids. Raise the retirement age to 70 for us or something but don't make us pay for the program then never have that part of the safety net there when we might need it. You can't just cut/reform programs like Medicare, Medicaid, and SS. There are quite a few people who have planned for decades on having those benefits in place. To change them suddenly would be catastrophic for possibly hundreds of thousands of people. I'm totally fine with phasing the changes in. But, if I'm understanding the proposal correctly, it's basically no changes for anyone currently 55 and older, then the rest of us are all expected to have private plans -- while still paying for SS for the older people. Kinda sucks... pretty much, yep. you have a better idea? Screw everyone instead of only screwing some people? That sounds more like a "worse" idea. A "better" idea would be not to screw anyone, as Social Security, Medicare, and Medicaid are perfectly fine except for deliberate attempts to undermine them. Strange considering the administrators of both Medicare and Social Security released reports describing how it would collapse and estimating when. I'd like to hear more about this conspiracy where the guys running medicare are completely snookered into believing everything's fine. It would be trivial to keep them solvent past 2036 (well not from a political perspective of course) simply by slightly raising the cap on FICA. But of course that would socialism, etc. etc.
Oh, all these 3 are really fine, if not for those stingy bastards in Congress holding the purse strings. The program is going broke, plain and simple. Medicare and Social Security costs outpace all current funding. Asserting that they are "perfectly fine" and it is "trivial to keep them solvent past 2036" is the basest kind of deception practiced in today's politics. It is becoming more and more believable that there will remain a portion of the American populace that will say everything is peachy until the proverbial checks bounce.
One immutable fact about the cost of government programs is they exceed projections time and time again. 1) The program is sold with a price tag, everybody's gushing about how this is going to help everybody for so little cost! 2) Costs go up, everybody ignores. 3) Costs rise more, goes hardly reported. 4) Temporary fix enacted, used as campaign to raise taxes on the rich. 5) Oh everything's fine, we just need a wee bit more money. No no, we aren't running out of money, we just need this fee increased and that loophole removed. How dare you insinuate that inability to pay the cost is reflective of a need to reform the program!
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Has SS ever been modified on the revenue side?
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On August 22 2012 05:55 aksfjh wrote:
Has SS ever been modified on the revenue side?
The tax rate has been increased multiple times. The cap income that can be taxed is tied to wage inflation. I think it has been increased beyond inflation at times but I'm not certain.
![[image loading]](http://upload.wikimedia.org/wikipedia/commons/e/e0/Historical_Payroll_Tax_Rates.jpg)
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On August 22 2012 06:34 JonnyBNoHo wrote:Show nested quote +On August 22 2012 05:55 aksfjh wrote:
Has SS ever been modified on the revenue side? The tax rate has been increased multiple times. The cap income that can be taxed is tied to wage inflation. I think it has been increased beyond inflation at times but I'm not certain.
We really need serious changes to Medicare and SS. So far, only 1 presidential campaign has endorsed a plan with long term solutions to our entitlement-based society.
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On August 22 2012 06:46 Savio wrote:Show nested quote +On August 22 2012 06:34 JonnyBNoHo wrote:On August 22 2012 05:55 aksfjh wrote:
Has SS ever been modified on the revenue side? The tax rate has been increased multiple times. The cap income that can be taxed is tied to wage inflation. I think it has been increased beyond inflation at times but I'm not certain. We really need serious changes to Medicare and SS. So far, only 1 presidential campaign has endorsed a plan with long term solutions to our entitlement-based society.
Al Gore? I don't think that's terribly relevant today.
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On August 22 2012 06:34 JonnyBNoHo wrote:Show nested quote +On August 22 2012 05:55 aksfjh wrote:
Has SS ever been modified on the revenue side? The tax rate has been increased multiple times. The cap income that can be taxed is tied to wage inflation. I think it has been increased beyond inflation at times but I'm not certain.
That's interesting. There also seems to be a slight overcompensation right now when compared to inflation numbers since at least the 1980's. Something like a 50% increase in benefits from 1980 to 2008 when compared with inflation numbers.
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The Labor Department paid out hundreds of thousands of dollars in federal stimulus funds to a public relations firm to run more than 100 commercials touting the Obama administration’s “green training” job efforts on two MSNBC cable shows, records show.
The commercials ran on MSNBC on shows hosted by Rachel Maddow and Keith Olbermann in 2009, but the contract didn’t report any jobs created, according to records reviewed recently by The Washington Times.
Spending reports under the federal Recovery Act show $495,000 paid to McNeely Pigott & Fox Public Relations LLC, which the Labor Department hired to raise awareness “among employers and influencers about the [Job Corps] program’s existing and new training initiatives in high growth and environmentally friendly career areas” as well as spreading the word to prospective Job Corps enrollees.
The firm ultimately negotiated ad buys for “two approved spots” airing 14 times per week for two months on “Countdown With Keith Olbermann” and “The Rachel Maddow Show,” according to a project report, which listed the number zero under a section of the report asking how many jobs had been created through the stimulus contract.
David Williams, president of the nonprofit watchdog Taxpayers Protection Alliance, called the contract “questionable” because it created no jobs and because of the placement of the ads on shows viewed as friendly to the administration’s policies.
“Hiring a PR firm does not create jobs, and this was obviously meant for selling a particular political agenda,” Mr. Williams said. “The placement really reeks of a political ad rather than a job ad, and taxpayers see through this.
“Taxpayers would be a lot happier at the end of the day to see a completed road rather than a bunch of ads on cable television,” he said.
The public relations firm did not respond to inquiries from The Times about who directed the ads to appear on MSNBC, but Labor Department officials defended the expenditures, saying the decision to place the ads on the network — now NBC News — had nothing to do with politics.
In a joint email statement to The Times from two Labor Department spokesmen, David Roberts and Michael Volpe, officials said the money was used for outreach efforts to raise awareness among potential employers about the Job Corps’ green training in career areas, including automotive, advanced manufacturing and solar-panel installation.
Mr. Roberts and Mr. Volpe also said Labor Department research showed that advertisements would reach the target demographic of business owners and managers interested in hiring “green-trained” employees through a programming list that initially also included shows hosted by CNN’s Larry King and public television’s Jim Lehrer as well as the two MSNBC programs where the ads eventually appeared.
Public television was eliminated because advertising rates were too high, Labor officials said, and Larry King was dropped because MSNBC held the potential to reach more viewers, officials said. Officials gave no indication whether their research indicated if Fox News, ESPN or other cable outlets were considered for the Job Corps ads.
The Labor Department said that as measured in “gross impressions per spot,” the two MSNBC shows — Mr. Olbermann is no longer with the network — were twice as effective compared with running ads on Mr. King’s show, which also is no longer on the air.
Mr. Obama signed the $829 billion stimulus into law in February 2009 with the promise it would sustain 3.5 million jobs. But at its peak it likely was responsible for far fewer, according to estimates by the Congressional Budget Office.
The president has since said the economy was in a deeper slump than he had predicted coming into office, and the White House says the stimulus’s combination of spending and tax cuts helped bolster state and local governments and keep the downturn from becoming a depression.
Republicans, though, argue that the price tag was too large and say much of the spending went to fund Mr. Obama’s political agenda, such as green energy programs, rather than to shovel-ready roads, bridges and other infrastructure projects.
Source:Washington Times
Continues on page 2, Bush
Questionable tactics, indeed. The placement of this ad leads you to roll your eyes ... appears to have a political purpose rather than an innocent job ad.
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On August 22 2012 11:09 Danglars wrote:Show nested quote +The Labor Department paid out hundreds of thousands of dollars in federal stimulus funds to a public relations firm to run more than 100 commercials touting the Obama administration’s “green training” job efforts on two MSNBC cable shows, records show.
The commercials ran on MSNBC on shows hosted by Rachel Maddow and Keith Olbermann in 2009, but the contract didn’t report any jobs created, according to records reviewed recently by The Washington Times.
Spending reports under the federal Recovery Act show $495,000 paid to McNeely Pigott & Fox Public Relations LLC, which the Labor Department hired to raise awareness “among employers and influencers about the [Job Corps] program’s existing and new training initiatives in high growth and environmentally friendly career areas” as well as spreading the word to prospective Job Corps enrollees.
The firm ultimately negotiated ad buys for “two approved spots” airing 14 times per week for two months on “Countdown With Keith Olbermann” and “The Rachel Maddow Show,” according to a project report, which listed the number zero under a section of the report asking how many jobs had been created through the stimulus contract.
David Williams, president of the nonprofit watchdog Taxpayers Protection Alliance, called the contract “questionable” because it created no jobs and because of the placement of the ads on shows viewed as friendly to the administration’s policies.
“Hiring a PR firm does not create jobs, and this was obviously meant for selling a particular political agenda,” Mr. Williams said. “The placement really reeks of a political ad rather than a job ad, and taxpayers see through this.
“Taxpayers would be a lot happier at the end of the day to see a completed road rather than a bunch of ads on cable television,” he said.
The public relations firm did not respond to inquiries from The Times about who directed the ads to appear on MSNBC, but Labor Department officials defended the expenditures, saying the decision to place the ads on the network — now NBC News — had nothing to do with politics.
In a joint email statement to The Times from two Labor Department spokesmen, David Roberts and Michael Volpe, officials said the money was used for outreach efforts to raise awareness among potential employers about the Job Corps’ green training in career areas, including automotive, advanced manufacturing and solar-panel installation.
Mr. Roberts and Mr. Volpe also said Labor Department research showed that advertisements would reach the target demographic of business owners and managers interested in hiring “green-trained” employees through a programming list that initially also included shows hosted by CNN’s Larry King and public television’s Jim Lehrer as well as the two MSNBC programs where the ads eventually appeared.
Public television was eliminated because advertising rates were too high, Labor officials said, and Larry King was dropped because MSNBC held the potential to reach more viewers, officials said. Officials gave no indication whether their research indicated if Fox News, ESPN or other cable outlets were considered for the Job Corps ads.
The Labor Department said that as measured in “gross impressions per spot,” the two MSNBC shows — Mr. Olbermann is no longer with the network — were twice as effective compared with running ads on Mr. King’s show, which also is no longer on the air.
Mr. Obama signed the $829 billion stimulus into law in February 2009 with the promise it would sustain 3.5 million jobs. But at its peak it likely was responsible for far fewer, according to estimates by the Congressional Budget Office.
The president has since said the economy was in a deeper slump than he had predicted coming into office, and the White House says the stimulus’s combination of spending and tax cuts helped bolster state and local governments and keep the downturn from becoming a depression.
Republicans, though, argue that the price tag was too large and say much of the spending went to fund Mr. Obama’s political agenda, such as green energy programs, rather than to shovel-ready roads, bridges and other infrastructure projects. Source:Washington TimesContinues on page 2, BushQuestionable tactics, indeed. The placement of this ad leads you to roll your eyes ... appears to have a political purpose rather than an innocent job ad.
Wow, find a more biased source/article maybe? CBO predicted job saving/creation as high as 3.6 million. You even leave out the part where Bush was found spending $1.6 billion on public relations, far more than a few hundred thousands.
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Here's a question for y'all: What are the odds that Obama bombs Iran?
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2nd Worst City in CA8938 Posts
What are the odds of Iran doing something worthy of getting bombed?
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On August 22 2012 13:25 Souma wrote:
What are the odds of Iran doing something worthy of getting bombed?
best comeback of my lifetime lmao
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On August 22 2012 13:17 xDaunt wrote:
Here's a question for y'all: What are the odds that Obama bombs Iran?
We should have a poll on the "October Suprise".
Obama leagalizes weed.
Michelle announces she's pregnant. (my secret choice all along)
Biden pops an anuresym and/or is replaced as VP.
Deadpool anyone of the top pols or SC justice.
Stockmarket down 20% before election.
Gas prices above $4.00 before election.
Something involving 2 of the 3 Iran/USA/Israel and bombs.
Cat 4 Hurricane hits USA.
Romney releases taxes, and shows a decade of anonymous donations to the UNCF.
Ryan shirtless. (going to happen)
There's a quick 10.
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2nd Worst City in CA8938 Posts
Gas prices have been above $4.00 here. :< The other day I paid $4.25.
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EPT
