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)
On August 22 2012 14:23 Souma wrote: Speaking of which, is there any genuine interest coming from any of the candidates to legalize marijuana?
There is likely lots of genuine interest from all liberal candidates but it is so far down the list of political priorities that marijuana advocates will have to expend their own political capital to make anything happen. When pro-marijuana lobby is as strong as the anti-marijuana lobby 20 years ago then we will see some actual change.
Even as the Republican establishment continued to call for Representative Todd Akin of Missouri to drop out of his Senate race because of his comments on rape and abortion, Republicans approved platform language on Tuesday calling for a constitutional amendment outlawing abortion with no explicit exceptions for cases of rape or incest.
The anti-abortion plank, approved by the Republican platform committee Tuesday morning in Tampa, Fla., was similar to the planks Republicans have included in their recent party platforms, which also called for a constitutional ban on abortions. The full convention is set to vote on the party’s platform on Monday.
While Republican officials stressed that the plank did not go into granular details, saying that they were better left to the states, the language of the plank seems to leave little room for exceptions to the abortion ban. It states that “the unborn child has a fundamental individual right to life which cannot be infringed.”
Low odds of Obama bombing Iran UNLESS he's in talks with Israel favorable to a strike ... in which case it would strengthen his poll numbers in the pro-Israel lobby & Jews in general. I anticipate Israel doing that in next 2 years, just by itself or with America doing a drone role.
Yeah the legalize movement is not strong enough to attract major candidate support yet. Give it another 2 generations and it'll be a good idea politically to get behind.
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.
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.
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.
Bro, it's linked in the post and labeled Bush. Calm it down a little. There's quite some room for latitude above the quality that StealthBlue routinely dredges up. The question here is looking back ... how much stimulus is in keeping with the economic thought behind freeing up capital, create jobs, etc? How much stimulus is rewarding politically powerful democrats and pleasing special interest groups? Spending isn't free, and its wasted when cronies get fatter.
Romney thus far has talked heavily on the overall failure of the Obama administration to control unemployment. His plan points focus on energy, job training, free trade, deficit control, and a breather for small business. I'm wondering if he will bring up stuff like Solyndra and other examples of crony stimulus, or keep it positive for solutions that Obama is clearly opposed to but businessmen and workers would like to see tried.
Even as the Republican establishment continued to call for Representative Todd Akin of Missouri to drop out of his Senate race because of his comments on rape and abortion, Republicans approved platform language on Tuesday calling for a constitutional amendment outlawing abortion with no explicit exceptions for cases of rape or incest.
The anti-abortion plank, approved by the Republican platform committee Tuesday morning in Tampa, Fla., was similar to the planks Republicans have included in their recent party platforms, which also called for a constitutional ban on abortions. The full convention is set to vote on the party’s platform on Monday.
While Republican officials stressed that the plank did not go into granular details, saying that they were better left to the states, the language of the plank seems to leave little room for exceptions to the abortion ban. It states that “the unborn child has a fundamental individual right to life which cannot be infringed.”
Republicans just find rape offensive. So that's why they don't include it in their legislation. Too offensive.[/sarcasm] Seriously though, how does someone like Todd Akin become successful enough in his life to even be remotely considered electable into a federal office?
That is the question.
Karl Rove's CPAC and other contributors were going to give this guy millions of dollars for his campaign, and this guy doesn't even have the knowledge, sense, or decency to believe that the sperm of a rapist can fertilize a woman's egg? Why would he believe what he does, despite even the most basic common sense? Is this the magic of Republican partisanship? This man, one of their chosen leaders for our country, tragically devoid of basic sexual education, actually comes to the conclusion that a rapist's sperm is magically different than the sperm of a good married Christian, and thus women don't have to worry about abortions for rape.
edit: didn't mean to come back to this topic, but yet again, this is the Republican party bringing it up. They can't address the inconsistency of their stance on the issue, so they just ram their foot up their mouths.
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.
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."
As for Reinhart, I asked her about this for a retrospective I did on the Obama administration’s economic policy. “The initial policy of monetary and fiscal stimulus really made a huge difference,” she told me. “I would tattoo that on my forehead. The output decline we had was peanuts compared to the output decline we would otherwise have had in a crisis like this. That isn’t fully appreciated.”
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.
Why 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.
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...
Now you've changed the subject from whether fiscal stimulus is effective when government has high debt to the cost of fiscal stimulus.
The idea that people would withhold a small portion of spending due to anticipated future tax increases that is needed to pay off the debt incurred with fiscal stimulus is highly unrealistic. But even if we stick to the model, and assume this is true, you're assertion that people will spend less in the future because of this doesn't mean that fiscal stimulus is a bad idea.
You're comparing 2 scenarios: (a) reduced future spending due to stimulus with (b) no reduction in future spending due to not doing stimulus. Then you conclude that (b) is better than (a), therefore stimulus is bad. But this only shows that fiscal stimulus is useless in normal times (which it is), it completely misses the point. The alternative to (a) isn't (b). In the absence of stimulus, in a recession, (b) will not happen, future spending will decrease due to the collapse of aggregate demand as part of the recession. Here, (b) does not describe a recession absent stimulus, it describes an economy in normal times absent stimulus. Therefore, your analysis does not apply in the current economic environment. The two choices are more like: (a) reduced future spending due to stimulus and (b) even more reduced future spending and prolonged recession due to not doing stimulus.
On August 22 2012 16:15 kwizach wrote: Good timing for the Democrats :-)
Even as the Republican establishment continued to call for Representative Todd Akin of Missouri to drop out of his Senate race because of his comments on rape and abortion, Republicans approved platform language on Tuesday calling for a constitutional amendment outlawing abortion with no explicit exceptions for cases of rape or incest.
The anti-abortion plank, approved by the Republican platform committee Tuesday morning in Tampa, Fla., was similar to the planks Republicans have included in their recent party platforms, which also called for a constitutional ban on abortions. The full convention is set to vote on the party’s platform on Monday.
While Republican officials stressed that the plank did not go into granular details, saying that they were better left to the states, the language of the plank seems to leave little room for exceptions to the abortion ban. It states that “the unborn child has a fundamental individual right to life which cannot be infringed.”
Republicans just find rape offensive. So that's why they don't include it in their legislation. Too offensive.[/sarcasm] Seriously though, how does someone like Todd Akin become successful enough in his life to even be remotely considered electable into a federal office?
That is the question.
Karl Rove's CPAC and other contributors were going to give this guy millions of dollars for his campaign, and this guy doesn't even have the knowledge, sense, or decency to believe that the sperm of a rapist can fertilize a woman's egg? Why would he believe what he does, despite even the most basic common sense? Is this the magic of Republican partisanship? This man, one of their chosen leaders for our country, tragically devoid of basic sexual education, actually comes to the conclusion that a rapist's sperm is magically different than the sperm of a good married Christian, and thus women don't have to worry about abortions for rape.
edit: didn't mean to come back to this topic, but yet again, this is the Republican party bringing it up. They can't address the inconsistency of their stance on the issue, so they just ram their foot up their mouths.
The party doesn't pick who wins the primaries. All they do is support the people that are selected in the primaries by the electorate. Your beef doesn't lie with the party, but with the voters of Missouri.
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.
Again you are using past experience from very recent period and extrapolating it to the future without any model and mechanism. With hindsight it is easy to say how things should have been done in the past.
Lol wtf. Thought the democrats where the more classy of the 2 parties in their adds and campaigning but i guess i was wrong. Its funny, i have to admit, its also extremely childish though. The (arguably) most powerfull job in the world, and then people try win it with adds like this. Usa deserves to loose its leading postion to china tbh.
The swiss feel offended by this vid btw, so guess will hear more about it.
Lol wtf. Thought the democrats where the more classy of the 2 parties in their adds and campaigning but i guess i was wrong. Its funny, i have to admit, its also extremely childish though. The (arguably) most powerfull job in the world, and then people try win it with adds like this. Usa deserves to loose its leading postion to china tbh.
The swiss feel offended by this vid btw, so guess will hear more about it.
Lol wtf. Thought the democrats where the more classy of the 2 parties in their adds and campaigning but i guess i was wrong. Its funny, i have to admit, its also extremely childish though. The (arguably) most powerfull job in the world, and then people try win it with adds like this. Usa deserves to loose its leading postion to china tbh.
The swiss feel offended by this vid btw, so guess will hear more about it.
Lol wtf. Thought the democrats where the more classy of the 2 parties in their adds and campaigning but i guess i was wrong. Its funny, i have to admit, its also extremely childish though. The (arguably) most powerfull job in the world, and then people try win it with adds like this. Usa deserves to loose its leading postion to china tbh.
The swiss feel offended by this vid btw, so guess will hear more about it.
Lol wtf. Thought the democrats where the more classy of the 2 parties in their adds and campaigning but i guess i was wrong. Its funny, i have to admit, its also extremely childish though. The (arguably) most powerfull job in the world, and then people try win it with adds like this. Usa deserves to loose its leading postion to china tbh.
The swiss feel offended by this vid btw, so guess will hear more about it.
Wait, wait. You thought that the party that, 1) inferred that Romney was a felon, 2) ran an ad showing Paul Ryan rolling granny off of a cliff, and 3) ran an add inferring that Romney killed another guy's wife was the classier of the two parties? What have republicans done that comes anywhere near any of these three things?
Lol wtf. Thought the democrats where the more classy of the 2 parties in their adds and campaigning but i guess i was wrong. Its funny, i have to admit, its also extremely childish though. The (arguably) most powerfull job in the world, and then people try win it with adds like this. Usa deserves to loose its leading postion to china tbh.
The swiss feel offended by this vid btw, so guess will hear more about it.
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.
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."
As for Reinhart, I asked her about this for a retrospective I did on the Obama administration’s economic policy. “The initial policy of monetary and fiscal stimulus really made a huge difference,” she told me. “I would tattoo that on my forehead. The output decline we had was peanuts compared to the output decline we would otherwise have had in a crisis like this. That isn’t fully appreciated.”
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.
Why 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.
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...
Now you've changed the subject from whether fiscal stimulus is effective when government has high debt to the cost of fiscal stimulus.
The idea that people would withhold a small portion of spending due to anticipated future tax increases that is needed to pay off the debt incurred with fiscal stimulus is highly unrealistic. But even if we stick to the model, and assume this is true, you're assertion that people will spend less in the future because of this doesn't mean that fiscal stimulus is a bad idea.
You're comparing 2 scenarios: (a) reduced future spending due to stimulus with (b) no reduction in future spending due to not doing stimulus. Then you conclude that (b) is better than (a), therefore stimulus is bad. But this only shows that fiscal stimulus is useless in normal times (which it is), it completely misses the point. The alternative to (a) isn't (b). In the absence of stimulus, in a recession, (b) will not happen, future spending will decrease due to the collapse of aggregate demand as part of the recession. Here, (b) does not describe a recession absent stimulus, it describes an economy in normal times absent stimulus. Therefore, your analysis does not apply in the current economic environment. The two choices are more like: (a) reduced future spending due to stimulus and (b) even more reduced future spending and prolonged recession due to not doing stimulus.
We are neither in normal times nor recessionary times. We're in between. I don't deny that a stimulus can help during a recession - though the one we had wasn't particularly effective - but we are not in a recession anymore.
That's not to say that if we look at the economy as a whole things are fine and dandy - they certainly are not. But economic misery is not evenly spread out. Sure, California with a 10.7% unemployment rate could use a stimulus, but certainly not North Dakota with a 3% unemployment rate. Yet the ARRA continues to pour money into North Dakota and any new stimulus bill will do the same. The disparity isn't just regional either. Some industries, such as natural gas drilling, are doing phenomenally well while other industries, such as new home construction, continue to languish.
Yet the reality of any current or planned stimulus is that it will blanket the economy. Stimulus is like a sledgehammer. If during a recession it is the only tool you have then by all means use it. But once the recession ends the sledgehammer should be returned to the tool shed and more precise tools need to be employed.
Lol wtf. Thought the democrats where the more classy of the 2 parties in their adds and campaigning but i guess i was wrong. Its funny, i have to admit, its also extremely childish though. The (arguably) most powerfull job in the world, and then people try win it with adds like this. Usa deserves to loose its leading postion to china tbh.
The swiss feel offended by this vid btw, so guess will hear more about it.
Wait, wait. You thought that the party that, 1) inferred that Romney was a felon, 2) ran an ad showing Paul Ryan rolling granny off of a cliff, and 3) ran an add inferring that Romney killed another guy's wife was the classier of the two parties? What have republicans done that comes anywhere near any of these three things?
Do we really need to go down memory lane of the past two presidential elections?
You know what the difference is between the things you mention and the Swift Boat Veterans For Truth? The GOP and Fox News gave the Swift Boat Veterans For Truth all the benefit of doubt and legitimacy they could ask for. Or when Sarah Palin accused Obama of "palling around with terrorists", she didn't use a second-hand campaign contributor. No, she stood right in front of a massive audience and told them her political opponent for President of the United States was a friend of terrorists.
Lol wtf. Thought the democrats where the more classy of the 2 parties in their adds and campaigning but i guess i was wrong. Its funny, i have to admit, its also extremely childish though. The (arguably) most powerfull job in the world, and then people try win it with adds like this. Usa deserves to loose its leading postion to china tbh.
The swiss feel offended by this vid btw, so guess will hear more about it.
On August 22 2012 16:15 kwizach wrote: Good timing for the Democrats :-)
Even as the Republican establishment continued to call for Representative Todd Akin of Missouri to drop out of his Senate race because of his comments on rape and abortion, Republicans approved platform language on Tuesday calling for a constitutional amendment outlawing abortion with no explicit exceptions for cases of rape or incest.
The anti-abortion plank, approved by the Republican platform committee Tuesday morning in Tampa, Fla., was similar to the planks Republicans have included in their recent party platforms, which also called for a constitutional ban on abortions. The full convention is set to vote on the party’s platform on Monday.
While Republican officials stressed that the plank did not go into granular details, saying that they were better left to the states, the language of the plank seems to leave little room for exceptions to the abortion ban. It states that “the unborn child has a fundamental individual right to life which cannot be infringed.”
Republicans just find rape offensive. So that's why they don't include it in their legislation. Too offensive.[/sarcasm] Seriously though, how does someone like Todd Akin become successful enough in his life to even be remotely considered electable into a federal office?
That is the question.
Karl Rove's CPAC and other contributors were going to give this guy millions of dollars for his campaign, and this guy doesn't even have the knowledge, sense, or decency to believe that the sperm of a rapist can fertilize a woman's egg? Why would he believe what he does, despite even the most basic common sense? Is this the magic of Republican partisanship? This man, one of their chosen leaders for our country, tragically devoid of basic sexual education, actually comes to the conclusion that a rapist's sperm is magically different than the sperm of a good married Christian, and thus women don't have to worry about abortions for rape.
edit: didn't mean to come back to this topic, but yet again, this is the Republican party bringing it up. They can't address the inconsistency of their stance on the issue, so they just ram their foot up their mouths.
The party doesn't pick who wins the primaries. All they do is support the people that are selected in the primaries by the electorate. Your beef doesn't lie with the party, but with the voters of Missouri.
Karl Rove's CPAC is entirely private. They give money to whomever they please. And they were going to give this idiot millions of dollars, until he embarrassed himself beyond repair by trying to actually explain the Republican's way of thinking on a social issue. The voters did elect him, because he was one of the candidates offered on the ticket. Also, the party is the voters. They're not mutually exclusive. They were all set to fund this guy and leverage him into a position of immense responsibility, requiring the most intelligent, diligent, and fair of minds, to govern us all. Todd Akin. And he doesn't even know the fundamentals behind human reproduction -- but at the same time wants to enact forceful and harmful legislation centered around human reproduction.
EPT
