Congress to Obama: "The ATM is Closed"

[jackson33]

Believe what you want, but IMO Congress has no intention of shutting down the ATM. There are hundreds of billion dollars unspent from any number of existing unspent funds, including probably 300+B$, from TARP, that is currently being called a slush fund. No doubt a very few that shut down the recent Job's Bill, was a purely political move by a few Democrat Senators, hoping to save their careers in the upcoming election, ESPECIALLY Mr. Reid himself.

 

Where would anyone suggest, the money will come from with the ramping up the Health Care Bill provisions, designed to start in 2014, either now being activated or will be 1/1/2011, not to mention the fact, that recent Bill was an aid program for certain States (unemployment/maintaining teachers) and will NOT cutting their own expenses. The elections will determine those outcomes....

 

From here and bringing in Krugman's article (with differing cause), you know it's bad when both sides a political spectrum come to the same conclusion; He is not the only economist/pundits concerned with either a double dip recession or possible depression and frankly, I'm not convinced the Obama Administration (unsure about Obama) doesn't really wish for one. Think about this, most every 'Social Justice' action from 1935 through today has come from some seen crisis, including the HCB.

 

Here would be my scenario; If Congress dominance is seen to have vanished after the 2010 elections for the 2011 Session and according to that loss, Congress can and will pass everything possible in any manner they can, knowing a probable loss for Obama in 2012. The debt limit will be raised probably 2T$ to 16.1T, to accommodate Health Care and the current programs (SS/Welfare). All before the 2010 session ends.

 

The 2011 Congressional Session begins, probably being what's known as lame duck or do nothing, from the first day. The Republicans cannot repeal the HCB, or probably anything else in its entirety or have the majority to keep from funding (appropriation bills) from what has been enacted. The Bush Tax Cuts are automatically ended (would take a new bill, no majority) and the economy basically shuts down, which is already beginning, to prevent owing as little in taxes as possible and for years. Charitable Trust and Family estate planning are busy today. Federal Revenues will decrease (or not increase as expected), while a higher percentage of GDP will be going to (ALL) taxing authorities and that GDP shrinking (economist call this deflationary) while business tries to maintain some cash flow, dropping prices. Equity markets will drop, the dollar in relation to other currencies will drop off and National Debt will begin increasing, probably at junk rates, if not simply called in, for lack of buyers.

 

The problem; Obama would lose in 2012, if he is even nominated by his party and regardless who is elected, that person will be a one term President as well. If he/SHE, even comes close to achieving a sense of stability, the cost will be devastating on the society. Services cut, pensions cut, SS and all the Welfare Programs, including HC will be cut (not grand fathered in). States will either follow or be forced to reorganize, not subsidized, as will any business, to big to fail or not.

 

I could go on with this "hypothetical" scenario (2016, gets interesting) and have never written or spoke of anything "I hope" is totally incorrect, more so than the above. However the facts are there and the solutions are not likely to be acceptable. Here is one; The US Federal (not including States) today is or is obligated to at least 130T$ in obligations, nearly nine times the current GDP, had an income of 2.4T$ in 2009, 1/65th that obligation (comparable to making a home loan for 65 years, which would cost you about 8-10 times the original loan including inflation).

 

 

I think you're misreading Krugman, btw. He's actually supporting what the President is saying, suggesting that this is the wrong time to end emergency spending, not pleading for an ideological, permanent shift back to tax-and-spend policy.[/Quote]

 

inow; Correct...but I fail to see the difference.

[ecoli]

I think you're misreading Krugman, btw. He's actually supporting what the President is saying, suggesting that this is the wrong time to end emergency spending, not pleading for an ideological, permanent shift back to tax-and-spend policy.

 

inow; Correct...but I fail to see the difference.

 

There's a big difference between tax and spend policy and just spend policy. I think Krugman's primary policy is spending, and then to raise taxes if we have to over the long run.

[iNow]

I find it rather interesting that comments continue to be directed at Krugman and his character... exactly as I predicted.

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For example, how do bond rates being lower than ever mean that markets are not concerned over long term deficits?

Dude, this is Econ 101. Rising bond rates suggest fear on the ability for governments to pay back debts. Our bond rates have been falling, suggesting that fear is not present. That fear, however, must be present if one were to try to justify contractionary policy and fiscal austerity in the immediate term. Contraction is a response to fears that debts will go unpaid. The low bond rates suggest that fears that we will be unable to pay debts is absent.

 

 

What about the (very old) moral hazard argument? It seems to me that inflationary policies cause people to take more risks.. which can be good doing a recession, but can turn out very badly when risk is underestimated (housing bubble, for example).

Not sure how that's at all relevant to my argument. You seem to be arguing (like those berated by Krugman) that we should tighten policy so people can suffer. Really... There's no numbers underneath your point. It's all suffering for suffering's sake, and it makes little sense.

 

Since post #16 was so large, you may have missed it. I'll repeat the relevant bit here:

 

 

To repeat: the whole argument rests on the presumption that markets will turn on us unless we demonstrate a willingness to suffer, even though that suffering serves no purpose.

 

And the basis for this belief that this is what markets demand is … well, actually there’s no sign that markets are demanding any such thing.

 

 

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The thing I keep wondering is why Krugman and his side can't acknowledge that the global stimulus and bailout effort has fallen far short of its own goals. It's the greatest stimulus/bailout effort in the history of mankind, a total Manhattan Project in scope -- amounts of money that boggle the mind and would leave even John Maynard Keynes gasping for air. But has it produced the managed, predictable economy that its advocates predicted? Nope, it's an ongoing struggle, for which they can offer little but ideological blame, as if to say that if only we'd spent MORE trillions, everything would be okay.

Except, without that spending, we'd be a lot worse off than we already are. It didn't achieve it's goals. You're right. The situation was far worse than even the most expert minds realized. We needed to do more. Instead, we did too little... a half-assed attempt, and now we're going to see the negative result.

 

However, for your argument above to have worth, we'd have to agree that the stimulus didn't help at all, which I'm not sure any sane person would agree to.

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I've been trying to find the source, but I read somewhere that Krugman's defense of deficit spending changes in response to what political party the president belongs to.. much moreso than other high profile economists.

And I've read somewhere that perpetual motion machines are just around the corner, and that homeopathy can cure brain cancer. Are you shittin' me? That's your argument?

 

 

What if the Keynesians, following Krugman were right and we needed a much bigger stimulus? What if the Austrians were right and we needed no stimulus. It seems like the outcome would be the same, given what we have.

Since you prefer the Austrian school, I suppose it would be too much to ask to request some numbers in support of this assertion?

 

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From here and bringing in Krugman's article (with differing cause), you know it's bad when both sides a political spectrum come to the same conclusion; He is not the only economist/pundits concerned with either a double dip recession or possible depression and frankly, I'm not convinced the Obama Administration (unsure about Obama) doesn't really wish for one.

Am I the only one here whose stomach just sinks when reading comments like this? Like there's simply no chance any more of having a reasonable and intelligent discussion with people? You honestly think that these people in charge are wishing for a double dip recession (such as that predicted by Krugman and other bright Keysians when the stimulus was enacted in a half-hearted, "we don't have the balls to do this big enough" way)?

 

Really, Jackson? That's what you think? You're not alone, and that's what scares me.

 

 

inow; Correct...but I fail to see the difference.

You quoted Pangloss, not me. Please direct your comments to him.

Edited June 29, 2010 by iNow
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[Pangloss]

Except' date=' without that spending, we'd be a lot worse off than we already are. It didn't achieve it's goals. You're right. The situation was far worse than even the most expert minds realized. We needed to do more. Instead, we did too little... a half-assed attempt, and now we're going to see the negative result.

 

However, for your argument above to have worth, we'd have to agree that the stimulus didn't help at all, which I'm not sure any sane person would agree to.[/quote']

 

Not really, it's possible to acknowledge that it made a difference and still quite logically oppose further stimulus. These things are gray, not black and white, with people both brilliant and stupid feeling their way along with more or less equal effect.

 

Now, that having been said, I certainly don't advocate putting stupid in charge, but I don't think that's the case with either side of the Great Economic Debate. (And I think it highly suggestive that you refuse to acknowledge that the Market side has equal validity, or even any valid perspective at all.)

[iNow]

http://krugman.blogs.nytimes.com/2010/06/29/a-terrible-ugliness-is-born/

The key thing to bear in mind about calls for harsh austerity in the face of a a depressed economy is that such calls depend on two propositions, not one. Not only do you have to believe that the invisible bond vigilantes are about to strike — that you must move to appease markets, even though right now bond buyers are willing to lend money to the United States at very low rates; you must also believe that short-term fiscal cutbacks will in fact appease the markets if they do, in fact, lose confidence.

 

That’s why the Irish debacle is so important. All that savage austerity was supposed to bring rewards; the conventional wisdom that this would happen is so strong that one often reads news reports claiming that it has, in fact, happened, that Ireland’s resolve has impressed and reassured the financial markets. But the reality is that nothing of the sort has taken place: virtuous, suffering Ireland is gaining nothing.

 

 

 

 

 

 

These things are gray, not black and white, with people both brilliant and stupid feeling their way along with more or less equal effect.

 

Now, that having been said, I certainly don't advocate putting stupid in charge, but I don't think that's the case with either side of the Great Economic Debate.

 

 

http://krugman.blogs.nytimes.com/2010/06/29/learned-helplessness-in-macro/

In short, what we’re looking at is learned helplessness. Economists who didn’t go down this path, who didn’t flush everything the profession had learned between 1936 and 1973 down the memory hole, aren’t especially baffled by the situation we’re in now; on the contrary, it looks like an extreme version of a fairly familiar event, and policy recommendations aren’t hard to make.

 

It’s only if you’re committed to a failed research project — a project that failed a generation ago, but refused to admit it — that you’re baffled.

 

 

In all honesty, mate... Part of me sees your argument as equivalent to someone coming here to suggest that there's no evidence of evolution and that creationism is an equally valid description of reality. Maybe not that extreme, but certainly along those lines. This is why I focused so heavily on the concept of empiricism in my very first post to this thread.

[Pangloss]

In all honesty, mate... Part of me sees your argument as equivalent to someone coming here to suggest that there's no evidence of evolution and that creationism is an equally valid description of reality. Maybe not that extreme, but certainly along those lines. This is why I focused so heavily on the concept of empiricism in my very first post to this thread.

 

Oh, so now I'm just like an evolutionist because I point out that, completely unlike evolution, Market economics actually IS as valid as Keynesian economics. Nice try, but I'm not the one touting partisan propaganda as science. I mean seriously, Paul Krugman accusing others of flushing everything learned by their profession? As far as I'm concerned the neo-Keynesians and Marketers can play their little game just fine without my participation. But I guess that makes me like an evolutionist.

[Cap'n Refsmmat]

Is anyone in Congress actually calling for austerity? I thought this thread was about Congress refusing to increase the deficit, rather than taking sharp measures to eliminate it entirely.

 

Maintaining the current level of spending is hardly "austerity."

[swansont]

The thing I keep wondering is why Krugman and his side can't acknowledge that the global stimulus and bailout effort has fallen far short of its own goals. It's the greatest stimulus/bailout effort in the history of mankind, a total Manhattan Project in scope -- amounts of money that boggle the mind and would leave even John Maynard Keynes gasping for air.

 

Really? As a percentage of GDP, the stimulus is smaller than the New Deal (~2.5% vs ~3.5%), and the latter went on for much longer than the stimulus. The bailout has already been repaid by most of the firms of received it and/or the government has sold stock at a profit.

http://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program#Participants

 

Have any of the recipients of bailout money gone out of business?

[Pangloss]

Is anyone in Congress actually calling for austerity? I thought this thread was about Congress refusing to increase the deficit, rather than taking sharp measures to eliminate it entirely.

 

Maintaining the current level of spending is hardly "austerity."

 

That's how I see it as well -- Congress is not pushing for any budget cuts at present, just stopping new stimulus proposals. There are austerity measures taking place in various states, and the other world leaders at G-20 spoke of implementing them in their own countries.

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Really? As a percentage of GDP, the stimulus is smaller than the New Deal (~2.5% vs ~3.5%), and the latter went on for much longer than the stimulus. The bailout has already been repaid by most of the firms of received it and/or the government has sold stock at a profit.

http://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program#Participants

 

Have any of the recipients of bailout money gone out of business?

 

Well that's a good summary of the good news, and as far as I'm concerned it IS good news. IMO that's the better argument against spending stoppage.

 

That having been said, it was still the biggest bailout in history in raw dollars, it left everyone gasping for air and there are consequences in terms of politics and new thresholds for spending tolerance. But I suppose that's not relevant to the subject at hand. The question of the moment is whether it's necessary to continue stimulus efforts -- whether that will prevent a "double-dip" recession or a depression. There is no answer to that question, because we can't even say for sure that stimulus spending lessened the impact of THIS recession (and there is a good argument that it didn't, revolving mainly around the cyclical nature of economics).

 

But even if we assume it did (which is my personal opinion), there's no way to know that the relatively tiny amounts they were talking about ($50B here, $60B there) would make a difference, and the political reality speaks loudly against another trillion-dollar, or worse a 2.5-percent-of-GDP, stimulus plan. And given that debt is already approaching 80% of GDP (and will likely surpass 100% even without a new stimulus plan), that's probably a good thing in the long run.

 

Another aspect that I'm surprised nobody has brought up is that it may not necessarily be a bad thing for the US to "go it alone" for a short time in this area. With our economy we may be just about the only country in the world that can actually afford to do that. So perhaps it's not entirely fair to say that we should stop because other countries are stopping. That's a good argument, but the counter is that we may have already done that job (as the figure I quoted above for debt as a percentage of GDP suggests).

 

What this ultimately boils down to are factors that cannot be predicted, most especially the debt as a percentage of GDP and what that means. If "death" is 80% of GDP, we're toast. If "death" is 120% of GDP, we have some wiggle room. If "death is 2000% of GDP, or meaningless, then we should continue spending and not worry about it.

 

But nobody can answer that question because it's not a matter for science, it's a matter for public perception and the participation of foreign governments (buying our debt) at their whim.

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Wait, is that math right, swansont? US GDP is something like $15 trillion. Wouldn't 2.5% of that be ~$375 billion? Seems to me that the stimulus plan was close to a trillion, and TARP and other bailouts would be at least another trillion. Also I don't think most of the bailout money has been repaid, it's just repaid in certain cases, right? Does that article actually say that it's all been repaid?

 

That having been said I still think your point is legitimate, and my response is above.

Edited June 29, 2010 by Pangloss
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[iNow]

Oh, so now I'm just like an evolutionist because I point out that, completely unlike evolution, Market economics actually IS as valid as Keynesian economics.

Not JUST like anything... I was making an analogy... Also, you meant creationist.

 

 

I mean seriously, Paul Krugman accusing others of flushing everything learned by their profession? As far as I'm concerned the neo-Keynesians and Marketers can play their little game just fine without my participation.

Hey... Look at that. More personal and character based comments on Krugman and others instead of rebuttals of his actual arguments. Golly... I'm shocked... Shocked, I tells ye. I would NEVER have thought that approach to trying to rebut these points would be used in this thread.

[Cap'n Refsmmat]

Hey... Look at that. More personal and character based comments on Krugman and others instead of rebuttals of his actual arguments. Golly... I'm shocked... Shocked, I tells ye. I would NEVER have thought that approach to trying to rebut these points would be used in this thread.

 

Gosh, more excessively sarcastic attacks on Pangloss instead of argumentation? I'm shocked and awed! This is such a completely unexpected development from you. I mean, if I had noticed it before, I would have warned you against it, but this just came out of nowhere! I always assumed you knew better than to make personal attacks while complaining about personal attacks.

[swansont]

That having been said, it was still the biggest bailout in history in raw dollars

 

In raw dollars, Wedding Crashers (along with a hundred other movies) has a bigger gross than Gone With the Wind, and the latter has seen a half-dozen theatrical re-releases.

 

Wait, is that math right, swansont? US GDP is something like $15 trillion. Wouldn't 2.5% of that be ~$375 billion? Seems to me that the stimulus plan was close to a trillion, and TARP and other bailouts would be at least another trillion. Also I don't think most of the bailout money has been repaid, it's just repaid in certain cases, right? Does that article actually say that it's all been repaid?

 

The stimulus was/is being spent over two years. 2.5% per year for two years (of $14.5 trillion) would be $725 billion. I think the final amount ended up being 819. So the article rounded some numbers. 2.9%. As compared to a higher percentage for the better part of a decade.

 

If the government gets all of the TARP money back, the actual spending is zero. 12 fully repaid and 2 partial payments, out of 18 participants listed. Equity in GM and Citi, if not others, as I recall. Some Citigroup equity sold, at a profit.

[Pangloss]

Ok, that makes sense, so perhaps a tad smaller than the 1930s stimulus, but over a much shorter period of time, yes?

 

Raw dollars matter when you have to pay them back -- with interest.

 

(BTW, you know TARP isn't the stimulus plan, right? Those were two separate near-trillion-dollar programs.)

[Cap'n Refsmmat]

Ok, that makes sense, so perhaps a tad smaller than the 1930s stimulus, but over a much shorter period of time, yes?

 

Exactly. In the New Deal, the percentage of GDP was spent yearly for far more years. So more was spent.

[Pangloss]

Understood. So this is just the biggest bailout/stimulus since the great depression.

 

BTW, in addition to the Obama's stimulus bill of early 2009, and the TARP program (what's that, about 1.8 trillion?), there's also the two late-Bush stimuli of this and this, which add up to another half-trillion.

[jackson33]

iNow; As I mentioned in my post, I do hope I'm on the wrong side this discussion and somehow, spending your way out of a recession is conceivable, even though IMO, it makes absolutely no sense and thus far obviously NOT working. I'll offer the following as one of maybe 20 reasons for my pessimism.

 

Christina Romer (née Duckworth; born December 25, 1958) is the Class of 1957 Garff B. Wilson Professor of Economics at the University of California, Berkeley and Chair of the Council of Economic Advisers in the Obama administration.[1][2]

 

After her nomination and before the Obama administration took office, Romer was tasked with co-authoring the administration's plan to recover from the 2008 recession. With economist Jared Bernstein, Romer co-authored Obama's plan for economic recovery.[3] In a January 2009 video presentation,[4] she discussed details of the job creation package that the Obama administration submitted to Congress.[/Quote]

 

http://en.wikipedia.org/wiki/Christina_Romer

 

While Ms. Romer and her husband have studied and taught economy, they are strong believers in Federally Controlled Recoveries, opposed to, in general the Markets. These are the policies, used by Obama (I don't think he understands even the basics of an economy) and exactly the what's being said holding back investment and all else as we grow debt, which proponents or advocates for Friedman's (Conservative) policies would suggest.

 

 

Jared Bernstein is an American economist currently serving as Chief Economist and Economic Policy Adviser to Vice President Joseph Biden in the Obama Administration.[1] Bernstein is considered to represent a progressive, pro-labor perspective.[/Quote]

 

http://en.wikipedia.org/wiki/Jared_Bernstein

 

Further down on this link, qualifications for Berstein, the person working with Romer on the "Obama Plan for an economy recovery....

 

Bernstein graduated from the Manhattan School of Music with Bachelors Degree in Fine Arts where he studied double bass with Orin O'Brien. He earned a Masters Degree in Social Work from the Hunter School of Social Work, and, from Columbia University, he received a Masters Degree in Philosophy and Ph.D. in Social Welfare. He does not have a degree or any formal training in economics. [/Quote]

 

 

Then in conjunction, Emanuel and other in the administration, would almost seem to "desire" a crisis, then using them for other things. Rather than expressing my opinions, I'll use this link;

 

“Rule 1: Never allow a crisis to go to waste,” White House chief of staff Rahm Emanuel told the New York Times right after the election. “They are opportunities to do big things.” Over the weekend, Secretary of State Hillary Rodham Clinton told an audience at the European Parliament, “Never waste a good crisis.” Then President Obama explained in his Saturday radio and Internet address that there is “great opportunity in the midst of” the “great crisis” befalling America.

 

Numerous commentators, including me, have pointed to this never-waste-a-crisis mantra as evidence that Obama’s budget priorities are a great ideological bait-and-switch. He says he wants to fix the financial crisis, but he’s focusing on selling his longstanding liberal agenda on health care, energy, and education as the way to do it, even though his proposals have absolutely nothing to do with addressing the housing and toxic-debt problems that are the direct causes of our predicament. Indeed, some — particularly on Wall Street — would argue that his policies are making the crisis worse.[/Quote]

 

http://corner.nationalreview.com/post/?q=NDUwNzkzNjk0MGFjMzRkNWZkZmE1OWY5MGIwOGFmZmQ=

 

 

There's a big difference between tax and spend policy and just spend policy. I think Krugman's primary policy is spending, and then to raise taxes if we have to over the long run.[/Quote]

 

ecoli; You have just said "there is no difference", whether it's borrowed and paid pack with later taxation, it remains "Tax and Spend", "Spend/barrow and tax", have the same outcomes...

[ecoli]

Dude, this is Econ 101. Rising bond rates suggest fear on the ability for governments to pay back debts. Our bond rates have been falling, suggesting that fear is not present. That fear, however, must be present if one were to try to justify contractionary policy and fiscal austerity in the immediate term. Contraction is a response to fears that debts will go unpaid. The low bond rates suggest that fears that we will be unable to pay debts is absent.

 

I guess you missed point that markets might be overestimating gov't on this one.

 

Here's an alternative perspective that's just as much part of "Econ 101" as Kurgman's conjecture:

 

In the past 20 months, the US Treasury, along with the German treasury and a few others, have benefited from the fact that investors have been losing confidence in all other market participants. Therefore, their TB rates have declined while the rates of all others have increased, or are starting to increase. However, this group of beneficiaries shrinks by the day.

 

He's basically saying that bond markets are doing well, when compared to other types of markets. After all, a government never has to declare bankruptcy as long as it runs the printing presses.

 

Now before you jump to attack me, I'm ONLY making the point that trying to place teleological explanations to market movements seems to be an exercise in futility. I haven't seen unambiguous data that rules out either model... economists seem to be retrofitting their favorite models and ignoring when there prediction fails. I don't think Krugman is the exception (certainly plenty of Austrians are).

 

 

Not sure how that's at all relevant to my argument. You seem to be arguing (like those berated by Krugman) that we should tighten policy so people can suffer. Really... There's no numbers underneath your point. It's all suffering for suffering's sake, and it makes little sense.

 

Time will tell on this one, though I don't know of anyone who believes in suffering for it's own sake... just that what we perceive of as pain is the economy shedding access that deficits and debt created.

 

It's possible that the extra debt can tide us over until real recovery can begin, and the increased productivity will make up the difference for the debt. It's also plausible that the debt will not lead to increased, sustainable, productivity but to investor mistakes... which can occur simply because people tend to be less cautious when gambling with cheap or borrowed money.

 

This is why Austrian economists think that business cycles tend to aggregate around depressed interest rates.

 

 

To repeat: the whole argument rests on the presumption that markets will turn on us unless we demonstrate a willingness to suffer, even though that suffering serves no purpose.

 

Again, I didn't say anything quite so teleological despite your insistence on putting words in my mouth. My point is actually this: even the few people who did predict the housing crisis did so using very different models. I think it would be a bit arrogant to assume, therefore, that we know why markets act the way they do... that they're acting rationally at all, or that we can predict future economic performance based on current market indicators - which seems to be what you're suggesting with bond rates: that market wisdom is showing that the US gov't will be able to pay back they're debts. I should remind you that markets also predicted that US homeowners would also be able to pay off their mortgages.

 

 

And the basis for this belief that this is what markets demand is … well, actually there’s no sign that markets are demanding any such thing.

 

but neither is it apparent that markets are demanding that printed money is manna from heaven. And even if markets do make such demands - so what? The wisdom of markets/crowds only goes so far.

 

 

We needed to do more. Instead, we did too little... a half-assed attempt, and now we're going to see the negative result.

That's a fine hypothesis, but like I said... the outcome doesn't exclude the possibility that the OPPOSITE of your hypothesis is true: That the gov't did too much. The outcome would look the same, especially from a general standpoint though I'm sure economists would quibble about the details and draw no consensus.

 

 

And I've read somewhere that perpetual motion machines are just around the corner, and that homeopathy can cure brain cancer. Are you shittin' me? That's your argument?

 

Yes... this is my argument why Paul Krugman lets his economic policy be affected by politics. I don't think this should surprise you, though... it's true for many economists nor do I think this is a controversial claim.

 

If you thought I was making a different claim about Krugman... something like "his policies are wrong because he displays partisanship" than you would be mistaken, because I didn't say that.

[swansont]

Ok, that makes sense, so perhaps a tad smaller than the 1930s stimulus, but over a much shorter period of time, yes?

 

Smaller per year, and for a shorter period of time. So the new deal was perhaps 4x as large, in terms of GDP.

 

Raw dollars matter when you have to pay them back -- with interest.

 

(BTW, you know TARP isn't the stimulus plan, right? Those were two separate near-trillion-dollar programs.)

 

Precisely. I'm saying TARP shouldn't count in the discussion, or at least the money that gets paid back shouldn't count, since it's not a net government outlay.

[Pangloss]

Fair enough, and I think it's a good point. But note my previous reply (here) -- I think it's important to consider that Krugman is advocating continuing a practice with unquantifiable results (stimulus spending) that will move us toward a result that's very familiar (bankruptcy).

 

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I should probably know better than to listen to Glenn Beck, but he just made an interesting point in his 5 o'clock show saying that we've been through all this before. We had a situation -- after the Great Depression! -- where debt (or possibly the deficit; this was on video and I just caught it in passing) had grown to 120% of GDP, half the labor force was employed by the government, and Democrats and their economists were screaming that to stop spending now, with so much of the economy now dependent upon federal spending, would be to create a second Great Depression, and that we shouldn't listen to Republicans who were telling us to do something about deficit spending.

 

Republicans used the phrase "Had enough?", and won that mid-term election, taking over both houses of congress. They immediately cut spending, taking the budget in one year down to a third of the previous year.

 

The year? 1946. The result? The biggest economic boom in the history of the planet.

 

Now, do I think that's all there is to that story? Of course not. But do I think Paul Krugman is incontrovertibly, scientifically accurate? Same deal -- of course not.

[jackson33]

I should probably know better than to listen to Glenn Beck, but he just made an interesting point in his 5 o'clock show saying that we've been through all this before.[/Quote]

 

Pangloss, I think a little more than interesting...

 

 

Beck, used Alvin Hansen, as one preaching the to the Keynesian revolution (comparing to the Krugman's of today), when he and others believed was a result of near full employment at the Wars end, would cause another depression, as was before the war effort, if the spending was shut down. Up to 26% of the employed in 1944-1945, worked directly for Government and 48% for the war effort.

 

Alvin Hansen

The influential economist Alvin Hansen (1887-1975) brought the 1930's Keynesian revolution in economics to the United States. He was a prolific writer who also played significant roles in the creation of the Social Security System and the Council of Economic Advisors. [/Quote]

 

http://www.encyclopedia.com/doc/1G2-3404702781.html

 

Yes, the mid-term elections (1946) produced a Republican Congress, which had been dominated by Democrats throughout FDR's terms and before. That Congress then proceeded to passed a series of bills, including Tax reduction, regulations, slowing Union Control and others listed here;

 

http://www.ashbrook.org/publicat/oped/busch/06/1946.html

 

In 1948, some feel these actions (already stimulating the economy), led to Truman's re-election over Dewey.

 

 

Originally Posted by Pangloss

Ok, that makes sense, so perhaps a tad smaller than the 1930s stimulus, but over a much shorter period of time, yes? [/Quote]

 

Reply by swansont;

Smaller per year, and for a shorter period of time. So the new deal was perhaps 4x as large, in terms of GDP. [/Quote]

 

I'm a little confused swansont, are you thinking the policies of the 1930's worked and spending should be continued today (times four), to avert a depression or a double dip in the economy?

[Mr Skeptic]

Wouldn't a lack of confidence in the ability of the US to pay back debts look a lot more like investors scrambling to sell billions of dollars they had invested as dollars, causing massive hyperinflation, etc? I mean, that's what I would do, not just charge double the interest rate or something silly like that.

[iNow]

iNow; As I mentioned in my post, I do hope I'm on the wrong side this discussion and somehow, spending your way out of a recession is conceivable, even though IMO, it makes absolutely no sense

Just because you cannot personally understand something does not mean it makes no sense. Argument from incredulity is a logical fallacy.

 

 

and thus far obviously NOT working.

It actually did work... If you define working as it prevented us from going over the precipice. Your argument (like that from Pangloss above) requires that doing nothing would have left us in a better position than we're in now, and that's simply not a position which any sane person can espouse.

 

 

Your comments about Romer and Bernstein show only reinforcement for my previously expressed distaste about how folks like you attack the person, and set aside the central topic. Poison the well, much?

 

I don't mean this to be personal, fellas... I really don't. I'm just disgusted at how reasonably intelligent men such as yourselves put forth such posts and expect your arguments to be taken seriously.

 

It wasn't good enough for me to attack Palin just for being Palin. I had to show where her ideas are flawed and why her comments were inaccurate and mistaken.

 

Why are you putting forth posts here as if I should expect any less from your comments? Where's the beef? The meat in your posts is noticeably absent to those of us who disagree with your central premise that character attacks are sufficient to negate proposals based on empiricism.

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Wouldn't a lack of confidence in the ability of the US to pay back debts look a lot more like investors scrambling to sell billions of dollars they had invested as dollars, causing massive hyperinflation, etc? I mean, that's what I would do, not just charge double the interest rate or something silly like that.

 

The two are not mutually exclusive. We'd see both happening if confidence was lacking. However, we see neither, which supports the position I've been supporting throughout this thread.

Edited June 30, 2010 by iNow
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[swansont]

 

I should probably know better than to listen to Glenn Beck, but he just made an interesting point in his 5 o'clock show saying that we've been through all this before. We had a situation -- after the Great Depression! -- where debt (or possibly the deficit; this was on video and I just caught it in passing) had grown to 120% of GDP, half the labor force was employed by the government, and Democrats and their economists were screaming that to stop spending now, with so much of the economy now dependent upon federal spending, would be to create a second Great Depression, and that we shouldn't listen to Republicans who were telling us to do something about deficit spending.

 

Republicans used the phrase "Had enough?", and won that mid-term election, taking over both houses of congress. They immediately cut spending, taking the budget in one year down to a third of the previous year.

 

The year? 1946. The result? The biggest economic boom in the history of the planet.

 

Now, do I think that's all there is to that story? Of course not. But do I think Paul Krugman is incontrovertibly, scientifically accurate? Same deal -- of course not.

 

Hmm. 1946. Something about that era rings a bell … some reason why we would have lots of people collecting government paychecks… Maybe it was the 15+ million soldiers in uniform in addition to the 4 million government employees.

http://books.google.com/books?id=G81HonU81pAC&pg=PA139&lpg=PA139&dq=total+number+federal+employees+1945&source=bl&ots=0xp181D-DV&sig=e9iJ5hRvTwHG3OREg8-sH3G7hro&hl=en&ei=WHoqTPi9AsSAlAe_4dWsAw&sa=X&oi=book_result&ct=result&resnum=9&ved=0CDUQ6AEwCA#v=onepage&q=total%20number%20federal%20employees%201945&f=false

 

120% would be total debt

http://en.wikipedia.org/wiki/File:USDebt.png

 

 

I would have no problem in slashing the budget if we ended the wars in which we are involved.

[iNow]

I don't know of anyone who believes in suffering for it's own sake... just that what we perceive of as pain is the economy shedding access that deficits and debt created.

But this gets to the actual meat of our disagreement, here. I think it's merely a lack of understanding, but let me restate.

 

Empiricism shows that the type of deficit and debt shedding currently being advocated simply won't achieve the stated goals. Empiricism and past experience shows us how repeatedly the steps currently being advocated lead to WORSE long term economic outcomes, and that is across the board... not sector or SES specific.

 

Given a reasonable persons recognition of what the evidence shows, if someone continues to advocate fiscal contraction in the face of a zero bound, low interest rates, and high unemployment with little to no opportunity for shifts in trade balance since the aforementioned bounds are nearly global... then that person is advocating ideology for ideology's sake.

 

Each time when questioned for the rational behind contraction and austerity the responses given run contrary to the lessons of history. All rationales given thus far for why we should contract are based on misrepresentations of the actual economic system, a failure to include all proper variables and indicators, and have been repeatedly shown fallacious and gap ridden. In short, the reasons people give when explaining why they support austerity do NOT hold up when subjected to even remedial scrutiny, and yet they continue that advocacy of contraction despite the evidence.

 

Now, I agree with you that people don't tend to believe in "suffering for it's own sake," however, that's likely to be the only measurable outcome if we move forward with these policies they are advocating... Policies which were also advocated in our past... policies which when implemented in the past led to double-dip recessions and lost decades.

 

Which are you going to believe... The narrative or your own lying eyes? That is all.

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To clarify one point above, the double-dip is likely to happen, and is more a result of the previous stimulus being too weak and further how the previous stimulus is getting ready to wane and fall-off over the next few months. My point was not to imply that contraction would cause another town-turn, just that it would deepen and lengthen it unnecessarily. Hopefully this point is not lost on my more pedantic readers.

Edited June 30, 2010 by iNow
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[Pangloss]

It actually did work... If you define working as it prevented us from going over the precipice. Your argument (like that from Pangloss above) requires that doing nothing would have left us in a better position than we're in now, and that's simply not a position which any sane person can espouse.

 

Actually my argument was not the same as jackson33. As I said above, my personal opinion is that the bailouts probably helped.

 

Hmm. 1946. Something about that era rings a bell … some reason why we would have lots of people collecting government paychecks… Maybe it was the 15+ million soldiers in uniform in addition to the 4 million government employees.

http://books.google.com/books?id=G81...201945&f=false

 

120% would be total debt

http://en.wikipedia.org/wiki/File:USDebt.png

 

I would have no problem in slashing the budget if we ended the wars in which we are involved.

 

Sure' date=' but that's beside the point. Democrats said in 1941 that the economy would collapse if spending was cut, and it didn't. Where is Beck wrong?

 

 

Your comments about Romer and Bernstein show only reinforcement for my previously expressed distaste about how folks like you attack the person, and set aside the central topic. Poison the well, much?

 

Pot, kettle, black. And your whole post #49 above is appeal to ridicule, mocking the opposition and attempting to inspire an emotional reaction.

 

http://en.wikipedia.org/wiki/Appeal_to_ridicule

 

Appeal to ridicule, also called appeal to mockery, the Horse Laugh,[1] or reductio ad ridiculum (Latin: "reduction to the ridiculous"), is a logical fallacy which presents the opponent's argument in a way that appears ridiculous, often to the extent of creating a straw man of the actual argument, rather than addressing the argument itself. For example:

▪ If Einstein's theory of relativity is right, that would mean that when I drive my car it gets shorter and more massive the faster I go. That's crazy! (This is, in fact, true, but the effect is so minuscule a human observer will not notice when it's observed on object without near-light speed.)

▪ As the theory of evolution Is true, that would mean that all the apes wouldn't be here any more, since they all would have evolved into humans! (This is not true as it is not implied by the theory of evolution.)

This is a rhetorical tactic which mocks an opponent's argument, attempting to inspire an emotional reaction (making it a type of appeal to emotion) in the audience and to highlight the counter-intuitive aspects of that argument, making it appear foolish and contrary to common sense. This is typically done by demonstrating the argument's logic in an extremely absurd way or by presenting the argument in an overly simplified way, and often involves an appeal to consequences.

Appeal to Ridicule is often found in the form of challenging one's credentials or maturity;

▪ Nobody believes in socialism after college! Grow up.

The argument is ridiculed on the basis that having a view commonly associated with youth is somehow invalid.

 

I don't mean this to be personal, fellas... I really don't.

 

Yes you do. And it badly weakens your arguments.

 

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Examples of Appeal to Ridicule from your posts above:

 

And I've read somewhere that perpetual motion machines are just around the corner, and that homeopathy can cure brain cancer. Are you shittin' me? That's your argument?

 

Am I the only one here whose stomach just sinks when reading comments like this?

 

The arguments which I've seen thus far are based on flawed reasoning and wish thinking…

 

Can you guys do better, or will comments about all opinions being equal rule the day?

 

In short, the reasons people give when explaining why they support austerity do NOT hold up when subjected to even remedial scrutiny, and yet they continue that advocacy of contraction despite the evidence.

 

Given a reasonable persons recognition of what the evidence shows, if someone continues to advocate fiscal contraction in the face of a zero bound, low interest rates, and high unemployment with little to no opportunity for shifts in trade balance since the aforementioned bounds are nearly global... then that person is advocating ideology for ideology's sake.

 

Hopefully this point is not lost on my more pedantic readers.

Edited June 30, 2010 by Pangloss
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