The Obama Plan

[texaspackerbacker]

I don't trust the guy. He has a history of being anti-free enterprise/pro-socialism--real socialism, not just social programs which some now like to define socialism as. I don't like his rhetoric about the severity of the economic "crisis" and the causes of it.

I do, however, like his plan--to the extent that the descriptions of it are accurate. His combining of massive infrastructure spending with a large tax cut, never mind the fact that a short term budget deficit results, is the essence of Keynesian economics. It is what Kennedy did; It is what Reagan did--if not by design on the spending side, by the fact that he had a Dem/lib Congress to deal with.

I don't believe this "crisis" is anywhere near as bad as portrayed. I don't believe we would be having economic difficulty at all if not for the media, leftist and otherwise, selling people on the idea that things were so bad and causing them to spend and invest less. I am suspicious of this leftist motive for possibly trumping up the problem in order to legitimize spending on many programs libs wanted to ram through all along.

I do, however, expect the massive spending and tax cutting as a package to greatly strengthen our economy. That concept, after all, has been proven in the past.

This still doesn't mean I support Obama. On the larger more significant issues of security from terrorist hits and defense/military /intelligence policies, he is still all wrong, and I'm very concerned that he will allow repeats of 9/11 or worse. Obama is also on the wrong side of just about every other issue that ever came along--most notably in the realm of moral/social/cultural priorities. He also has consistently talked and voted on the wrong side of the illegal immigration situation.

His prescription for the economy, however, is right on point.

[bobblehead]

Yes, much like clinton he sounds pretty good.....13 days before he takes office. Talk to me in may when he tearfully says he has no choice but to raise taxes....and its GW's fault.

[HowardRoark]

I do, however, expect the massive spending and tax cutting as a package to greatly strengthen our economy. That concept, after all, has been proven in the past.

What do you think these wise men should do with my grandkid's money? I hope they install solar panels on the entire Interstate System...making it useless.

I also really hope they build more places that enable us to burn our food supplies as a fuel source.

[mraynrand]

http://weblogs.elearning.ubc.ca/ross/archives/59V0460r.jpg

Workers of the world, awaken!
Rise in all your splendid might
Take the wealth that you are making,
It belongs to you by right.
No one will for bread be crying
We'll have freedom, love and health,
When the grand red flag is flying
In the Workers' Commonwealth
(Joe Hill)

[HowardRoark]

What We Are Learning About the Democratic Stimulus...

Posted by Brad Dayspring :: Wednesday January 7, 2009

As the Congressional budget office prepares to release their forecast this morning, we are learning more about the Democrat’s ‘stimulus’ plans. As you consider the plan over the coming days, take a moment to consider:

Size: The stimulus being discussed now could range anywhere from $800 billion to more than $1.3 trillion (Senator Reid, Congress Daily AM, January 6, 2009) over the next two years. This will likely be the largest single spending bill in history.
Deficit Impact: Given the size of the stimulus being discussed, non-partisan budget experts are now predicting a deficit for 2009 of almost $1.3 trillion; triple the current year’s deficit. That would equal 9% of GDP, which is a 50% increase over the post WW II record of 6%. (Robert Samuelson, Washington Post, January 5, 2009) Some are now speculating that we may have to pay a premium interest rate to foreign investors, like China, to borrow this kind of money.

Waste: Democrats have suggested that a large part of the stimulus will be spent on vital infrastructure projects that are “ready to go” or “shovel-ready”. In preparation for the stimulus, the Conference of Mayors has published a list of such projects on their website. According to the Conference of Mayors, these projects will “produce lasting economic and environmental benefits for the nation.” Their list includes items, such as:

$350,000 for an Albuquerque, N.M., fitness center;
$94 million for a parking garage at the Orange Bowl in Miami;
$4.5 million for Gretna, Florida, to bottle water with recyclable bottles;
$35 million music hall of fame in Florissant, Missouri;
$55 million for a mob museum in Las Vegas (described in the mayors report as “Historic Post Office Museum Rehabilitation”);
$20 million for a minor league baseball museum in Durham, North Carolina; and
$6 million for snowmaking and maintenance facilities at Spirit Mountain, Minnesota.
Government Jobs as Centerpiece: The Democrats have promised that their stimulus plan will create or save 3 million jobs. The incoming head of the National Economic Council has promised that “more than 80 percent of these 3 million jobs will be in the private sector…” (Lawrence Summers, Washington Post, December 28, 2008) That means that 600,000 of these new jobs will be government jobs, whose salaries and benefits will continually have to be paid by the taxpayers. To put 600,000 government jobs in context, that is roughly 50% of the Federal government’s current civilian (non-postal) employment. It is six times the number of people employed in the Department of Agriculture.

Spending Disguised as Tax Cuts: Democrats are now claiming that 40% of the stimulus plan will go towards tax cuts. Democrats apparently are reaching this figure by claiming that payments to people who do not pay income taxes are tax cuts, not spending. Even Federal budget rules classify such programs as spending.

Cost Per Job: If the stimulus costs $1 trillion and creates or saves only 3 million jobs, that is a per job cost of $333,000.

[MJZiggy]

Wonder what non-biased source that came from...

[bobblehead]

Wonder what non-biased source that came from...

I believe its cited if you read it instead of dismissing it because howard posted it.

[MJZiggy]

He posted an author, not a source or a link.

[mraynrand]

He posted an author, not a source or a link.

You might actually have to do some research. Consternation might invade your cozy little cloistered reality.

[HowardRoark]

Wonder what non-biased source that came from...

It came from your “Public Servant’s” website (I think you live in VA). What part of this information do you find subjective or inflammatory?

http://republicanwhip.house.gov/blog_010709.htm

[sheepshead]

http://www.youtube.com/watch?v=OGtFSTL1Nbo



WASHINGTON — Get ready for the in-law in chief.

Transition officials said Friday that President-elect Barack Obama's mother-in-law, Marian Robinson, is moving into the White House to join Michelle Obama and their two children.

It's not clear whether the move will be permanent.

Katie McCormick Lelyveld, the press secretary for Michelle Obama, said Robinson would decide in coming months whether she wants to stay in Washington.

Robinson retired from her job as a bank executive secretary to help with her granddaughters during the campaign.

[packinpatland]

Smart move on the Obama's part.

[Tyrone Bigguns]

Waste. Until we see all the projects funded it is a bit premature to start talking about it.

BTW, nice selective use of wasteful projects.

And, who is the writer to judge if they are wasteful.

[sheepshead]

Smart move on the Obama's part.

It is actually, but I needed to insert my sick humor into the item!

[HowardRoark]

And, who is the writer to judge if they are wasteful.

That, Tyrone, is an EXCELLENT point!!! Seriously. And, who is Obama to judge if they are good projects?

[HowardRoark]

Smart move on the Obama's part.

I agree. I don't see this as a big deal. I would probably do the same thing. It shows he cares about the sanity of his daughters.

[Tyrone Bigguns]

And, who is the writer to judge if they are wasteful.

That, Tyrone, is an EXCELLENT point!!! Seriously. And, who is Obama to judge if they are good projects?

I'm sure there aer some smart guys and gals on the team.

[Freak Out]

Until the bill is published for public review prior to vote we have little to go on....Has it been posted anywhere yet?
I have to say nothing would surprise me anymore when it comes to what might be considered vital infrastructure....a mob museum in Vegas..ha ha...
Many would argue that it is putting our Mexican laborers to work so it's all good.

[texaspackerbacker]

I'm not surprised to see the elitist/class warfare faction of our forum conservatives come out against the plan. I am, however, surprised to find no forum liberals (except for a one line retort from Ziggy and a typically weak comeback from Tyrone) come out in favor of it.

Howard, this is NOT going to harm our grandkids or cost any future generations or whatever.

First of all, the whole "crisis", to the extent it is tangible at all, was triggered by the media and leftist politicians (with the help of a few complicit Republicans) telling people there was a problem, causing consumer spending to dry up and a real downturn to occur. Typically, the beginning of the end of a downturn is when unemployment spikes. That is now occurring. The media declaring Obama's stimulus package a success should be all it takes to relieve the public's psyche and end this mostly psychological pseudo-crisis.

Let me anticipate the response of Bobblehead, Howard, and Aynrand to that: "If there was no (or not much of) a real crisis, and it's ending anyway, why do we need to spend that nearly trillion dollars?" Well, need may be too strong a word. Obama and the libs undoubtedly intended to spend like drunken sailors anyway, but not to cut taxes--even though he campaigned on doing so.

This package combines both aspects of the Keynesian success formula--as Kennedy did, as Reagan did. The Reagan tax cuts--combined with the military buildup and domestic spending that was forced on him by the Dem-controlled Congress--quadrupled tax revenue to government--even at the lower rates. That same scenario should occur here--thus alleviating any need for either tax hikes or runaway inflation or whatever other dire consequences some predict for the future.

It is really annoying to hear this same line of crap BHead, Howard, and AynR are spewing in here from some of the commentators I usually respect the most in the media. Why not just give Obama credit for doing what will help the economy while attacking him on the much more serious issue of security/defense and the many moral and cultural issues where he is so disgusting wrong--instead of retreating into class warfare pro-wealthy rhetoric?

[HowardRoark]

--instead of retreating into class warfare pro-wealthy rhetoric?

Who did this so called "class warfare pro-wealthy rhetoric?"

The point I am making is who gets to decide on what this money is spent? All statistics seem to prove that children brought up in a home with two parents save our society money in the long run. Should we put up, and staff, facilities that will counsel every married couple to stay married in every zip code? That sounds like a solid thing to spend our, um, paper with green ink it. Should we do that? Wise people on his team might think we should.

Also, when the Chinese start selling off/not buying more of our Treasuries because of our deficits, who will fund all this Keynesian nonsense? Rates will spike, we will be saddled with the debt.....my kids/grandkids will bear the burden.

[texaspackerbacker]

--instead of retreating into class warfare pro-wealthy rhetoric?

Who did this so called "class warfare pro-wealthy rhetoric?"

The point I am making is who get's to decide on what this money is spent? All statistics seem to prove that children brought up in a home with two parents save our society money in the long run. Should we put up, and staff, facilities that will counsel every married couple to stay married in every zip code? That sounds like a solid thing to spend our, um, paper with green ink it. Should we do that? Wise people on his team might think we should.

Also, when the Chinese start selling off/not buying more of our Treasuries because of our deficits, who will fund all this Keynesian nonsense? Rates will spike, we will be saddled with the debt.....my kids/grandkids will bear the burden.

I was mostly referring to historically conservative people I've see commenting who keep whining and ranting about "who's gonna pay for all this?", when clearly, the tax cuts and spending in tandem will generate greatly enhanced economic growth/personal and corporate income/ greatly increased tax revenue even at lower rates.

Debt is leverage. It is rolled over, not paid off; It logically is maximized when interest is low. That is as true, maybe more so, for governments as it is for individuals and businesses. As for the Chinese, I doubt they invested in America out of altruism. Assuming it was a sound business decision on their part, they'd be hurting themselves more than us to liquidate. In the extreme scenario you describe, they would just be paid off in devalued dollars--a bigger negative for them than for us.

As for your gibberish about a government program to promote stable marriage, where did you dig that up, and what's your point? Who's gonna decide how the money is spent? In the current political climate, it sure as hell ain't the good guys. We probably will get a whole new round of stupid and intrusive liberal crap inflicted on the country. That aspect, however, is far less significant than the prospect of that money being injected and turning over and turning over again and again. What it goes for is less important.

The simple fact is that what you call "Keynesian nonsense" works. And even if it didn't work, the ultimate downside would not be higher taxes, but inflation. And inflation, in effect, is a flat tax--hitting all strata of society at the same rate--something you should like.

[The Shadow]

"The Obama Plan"?
After careful observation over the last 2 years, I was never able to actually find one.

[The Shadow]

Prediction : This was the 'touchy-feely' election, where America grafted onto Obama whatever qualities they wanted him to have.
Once Americans see the results of the Amateur Hour presidency; once we are again being attacked by terrorists emboldened by weakness = the country will be looking for a 'Daddy' - someone to straighten out the mess and actually protect the citizenry.
Look for a strong (conservative) Republican candidate next time. McCain had the character credentials, but had 3 obstacles :
1. The country wanted a complete change, even if the one espousing it had no experience or achievements.
2. He attempted to be a new 'hybrid' Rep/Dem. Didn't sell.
3. He had absolutely no charisma.

[mraynrand]

--instead of retreating into class warfare pro-wealthy rhetoric?

Who did this so called "class warfare pro-wealthy rhetoric?"

The point I am making is who get's to decide on what this money is spent? All statistics seem to prove that children brought up in a home with two parents save our society money in the long run. Should we put up, and staff, facilities that will counsel every married couple to stay married in every zip code? That sounds like a solid thing to spend our, um, paper with green ink it. Should we do that? Wise people on his team might think we should.

Also, when the Chinese start selling off/not buying more of our Treasuries because of our deficits, who will fund all this Keynesian nonsense? Rates will spike, we will be saddled with the debt.....my kids/grandkids will bear the burden.

I was mostly referring to historically conservative people I've see commenting who keep whining and ranting about "who's gonna pay for all this?", when clearly, the tax cuts and spending in tandem will generate greatly enhanced economic growth/personal and corporate income/ greatly increased tax revenue even at lower rates.

Debt is leverage. It is rolled over, not paid off; It logically is maximized when interest is low. That is as true, maybe more so, for governments as it is for individuals and businesses. As for the Chinese, I doubt they invested in America out of altruism. Assuming it was a sound business decision on their part, they'd be hurting themselves more than us to liquidate. In the extreme scenario you describe, they would just be paid off in devalued dollars--a bigger negative for them than for us.

The simple fact is that what you call "Keynesian nonsense" works. And even if it didn't work, the ultimate downside would not be higher taxes, but inflation. And inflation, in effect, is a flat tax--hitting all strata of society at the same rate--something you should like.

The tax cuts you talk about are 300 billion - 200 billion are to go to those paying no income tax - thus it is simple rediistribuition and/or printing of money. 100 billion is gor business. Given that the stimulus is anywhere from 700 bil to 1.3 trillion on top of a record predicted deficit of 1.2 trillion for the fiscal year, please tell me how that 100 billion in actual reduced taxes will stimulate business enough to compensate for 1) increased inflation 2) loss in dollar status 3) loss in lending due to loss of confidence by lenders due to a debtor society.

Please also show me where Keynsian strategems show that the 'stimulus' will result in a net gain under the current circumstances. How were the current payouts decided? Assuming that a 1,000 payout to individuals paying no tazes is good Keynsian economics, why wasn't the number 1,500 or 2,000 or 5,000 or 10,000 or 200,000? Certainly you must admit that at some level there must be diminishing returns from such a strategy. If so, then how is that being determined? Please explain. Also, please demonstrate how the 150 billion stimulus checks from 2007 were a net gain for the economy and how the 170 billion for Katrina was a net gain.

Real reduction in tax cuts work; under Bush tax cut, revenues increased by almost 200 billion per year, and revenues increased in all modern tax cuts from Cleveland to JKF to Reagan to Bush. The current proposed tax cuts are a drop in the bucket compared to those previous cuts and much like with Bush, under Obama's plan they are coupled with huge spending increases in addition to automatic spending increases in entitlement programs at the Federal and State levels at double the rate of inflation and that account for almost 75% of all budgetary items. No amount of stimulus of any kind can compensate for that kind of spending growth.

[bobblehead]

Rand I've tried every angle under the sun including the ones you just did. He doesn't get it and never will.

[swede]

My goldfish looked sick. I fed him 300 billion goldfish flakes.

Damn thing died.

Maybe too much of a good thing is bad.

http://i190.photobucket.com/albums/z236/dsteenswede44/deadfish-1.jpg

[packinpatland]

Too bad about your fish Swede. Mine is thriving and is looking forward to the next 8 years. :lol:

http://i153.photobucket.com/albums/s229/packinpatland/Mister.jpg

[texaspackerbacker]

--instead of retreating into class warfare pro-wealthy rhetoric?

Who did this so called "class warfare pro-wealthy rhetoric?"

The point I am making is who get's to decide on what this money is spent? All statistics seem to prove that children brought up in a home with two parents save our society money in the long run. Should we put up, and staff, facilities that will counsel every married couple to stay married in every zip code? That sounds like a solid thing to spend our, um, paper with green ink it. Should we do that? Wise people on his team might think we should.

Also, when the Chinese start selling off/not buying more of our Treasuries because of our deficits, who will fund all this Keynesian nonsense? Rates will spike, we will be saddled with the debt.....my kids/grandkids will bear the burden.

I was mostly referring to historically conservative people I've see commenting who keep whining and ranting about "who's gonna pay for all this?", when clearly, the tax cuts and spending in tandem will generate greatly enhanced economic growth/personal and corporate income/ greatly increased tax revenue even at lower rates.

Debt is leverage. It is rolled over, not paid off; It logically is maximized when interest is low. That is as true, maybe more so, for governments as it is for individuals and businesses. As for the Chinese, I doubt they invested in America out of altruism. Assuming it was a sound business decision on their part, they'd be hurting themselves more than us to liquidate. In the extreme scenario you describe, they would just be paid off in devalued dollars--a bigger negative for them than for us.

The simple fact is that what you call "Keynesian nonsense" works. And even if it didn't work, the ultimate downside would not be higher taxes, but inflation. And inflation, in effect, is a flat tax--hitting all strata of society at the same rate--something you should like.

The tax cuts you talk about are 300 billion - 200 billion are to go to those paying no income tax - thus it is simple rediistribuition and/or printing of money. 100 billion is gor business. Given that the stimulus is anywhere from 700 bil to 1.3 trillion on top of a record predicted deficit of 1.2 trillion for the fiscal year, please tell me how that 100 billion in actual reduced taxes will stimulate business enough to compensate for 1) increased inflation 2) loss in dollar status 3) loss in lending due to loss of confidence by lenders due to a debtor society.

Please also show me where Keynsian strategems show that the 'stimulus' will result in a net gain under the current circumstances. How were the current payouts decided? Assuming that a 1,000 payout to individuals paying no tazes is good Keynsian economics, why wasn't the number 1,500 or 2,000 or 5,000 or 10,000 or 200,000? Certainly you must admit that at some level there must be diminishing returns from such a strategy. If so, then how is that being determined? Please explain. Also, please demonstrate how the 150 billion stimulus checks from 2007 were a net gain for the economy and how the 170 billion for Katrina was a net gain.

Real reduction in tax cuts work; under Bush tax cut, revenues increased by almost 200 billion per year, and revenues increased in all modern tax cuts from Cleveland to JKF to Reagan to Bush. The current proposed tax cuts are a drop in the bucket compared to those previous cuts and much like with Bush, under Obama's plan they are coupled with huge spending increases in addition to automatic spending increases in entitlement programs at the Federal and State levels at double the rate of inflation and that account for almost 75% of all budgetary items. No amount of stimulus of any kind can compensate for that kind of spending growth.

You obviously recognize the tax revenue generating value of tax cuts--which is clear proof of the Keynesian multiplier effect. How then can you deny the exact same scenario when the increased money in the hands of people comes from government spending rather than tax cutting?

As for $200 billion of the $300 billion in tax cuts going to people not now paying any tax (that is an exaggeration, but whatever), these people are at least as likely to spend the money, thereby triggering the multiplier and increasing growth, total income, and tax revenue as if the tax cuts were limited to the "more deserving" who currently do pay tax--or more accurately, who pay it in larger amounts. This idea of tax "cuts" to those who do not pay--basically, a negative income tax--can be attacked on fairness ground--as I'm sure you three class warriors will do. However, the economic benefit is undeniable.

You want to call it "redistribution of wealth"? I won't argue with that. The reason it is that is that Obama's crowd is playing its own brand of class warfare game by raising taxes on the upper levels of income. Ideally, the low end cuts he is touting would NOT be accompanied by the tax increases on the high end. Then, there would be no justification to the whine about redistribution--and the whine about "where is the money gonna come from?" is just plain bogus all the way around.

Diminishing returns? I'm the one who theorized a system of zero tax revenue--ALL government spending done by merely printing the money. I bet it would work--why the hell wouldn't it?

I challenge you three valiant class warriors to leave class warfare behind--the "unfairness doctrine"--and state exactly in detail why economic growth through deficit spending--small scale, large scale, any scale--won't work.

I don't like the tax raising aspect of Obama's plan either. That part really is redistribution of wealth, but worse than that, it partially negates the positive aspects of the plan--a net tax cut and money injected through spending.

The real danger is when you combine the liberal propensity for social spending with you guys' wrongheaded idea that you have to pay for it with tax money. That is the LBJ/Jimmy Carter way--in stark contrast to the Kennedy/Reagan way.

[texaspackerbacker]

Prediction : This was the 'touchy-feely' election, where America grafted onto Obama whatever qualities they wanted him to have.
Once Americans see the results of the Amateur Hour presidency; once we are again being attacked by terrorists emboldened by weakness = the country will be looking for a 'Daddy' - someone to straighten out the mess and actually protect the citizenry.
Look for a strong (conservative) Republican candidate next time. McCain had the character credentials, but had 3 obstacles :
1. The country wanted a complete change, even if the one espousing it had no experience or achievements.
2. He attempted to be a new 'hybrid' Rep/Dem. Didn't sell.
3. He had absolutely no charisma.

You won't get any disagreement from me. In fact, that's essentially what I've always said--Obama's biggest vulnerability politically is the horrendous danger from his total opposition to everything that has worked to prevent repeats of 9/11. Picking Panetta as CIA Director shows that he still opposes what works.

I also agree completely with what you said about McCain, and that there is a strong chance the country will be ready for a decent conservative Republican next time--the strength of that chance, unfortunately, is directly proportional to the increased chance of terrorist hits in America. Anything short of that, and the God damned leftist mainstream media will pull Obama through.

This thread, however, is about the economy--and like the proverbial blind squirrel, this economic package is Obama's "nut"--probably the only thing he is getting right.

[mraynrand]

--instead of retreating into class warfare pro-wealthy rhetoric?

Who did this so called "class warfare pro-wealthy rhetoric?"

The point I am making is who get's to decide on what this money is spent? All statistics seem to prove that children brought up in a home with two parents save our society money in the long run. Should we put up, and staff, facilities that will counsel every married couple to stay married in every zip code? That sounds like a solid thing to spend our, um, paper with green ink it. Should we do that? Wise people on his team might think we should.

Also, when the Chinese start selling off/not buying more of our Treasuries because of our deficits, who will fund all this Keynesian nonsense? Rates will spike, we will be saddled with the debt.....my kids/grandkids will bear the burden.

I was mostly referring to historically conservative people I've see commenting who keep whining and ranting about "who's gonna pay for all this?", when clearly, the tax cuts and spending in tandem will generate greatly enhanced economic growth/personal and corporate income/ greatly increased tax revenue even at lower rates.

Debt is leverage. It is rolled over, not paid off; It logically is maximized when interest is low. That is as true, maybe more so, for governments as it is for individuals and businesses. As for the Chinese, I doubt they invested in America out of altruism. Assuming it was a sound business decision on their part, they'd be hurting themselves more than us to liquidate. In the extreme scenario you describe, they would just be paid off in devalued dollars--a bigger negative for them than for us.

The simple fact is that what you call "Keynesian nonsense" works. And even if it didn't work, the ultimate downside would not be higher taxes, but inflation. And inflation, in effect, is a flat tax--hitting all strata of society at the same rate--something you should like.

The tax cuts you talk about are 300 billion - 200 billion are to go to those paying no income tax - thus it is simple rediistribuition and/or printing of money. 100 billion is gor business. Given that the stimulus is anywhere from 700 bil to 1.3 trillion on top of a record predicted deficit of 1.2 trillion for the fiscal year, please tell me how that 100 billion in actual reduced taxes will stimulate business enough to compensate for 1) increased inflation 2) loss in dollar status 3) loss in lending due to loss of confidence by lenders due to a debtor society.

Please also show me where Keynsian strategems show that the 'stimulus' will result in a net gain under the current circumstances. How were the current payouts decided? Assuming that a 1,000 payout to individuals paying no tazes is good Keynsian economics, why wasn't the number 1,500 or 2,000 or 5,000 or 10,000 or 200,000? Certainly you must admit that at some level there must be diminishing returns from such a strategy. If so, then how is that being determined? Please explain. Also, please demonstrate how the 150 billion stimulus checks from 2007 were a net gain for the economy and how the 170 billion for Katrina was a net gain.

Real reduction in tax cuts work; under Bush tax cut, revenues increased by almost 200 billion per year, and revenues increased in all modern tax cuts from Cleveland to JKF to Reagan to Bush. The current proposed tax cuts are a drop in the bucket compared to those previous cuts and much like with Bush, under Obama's plan they are coupled with huge spending increases in addition to automatic spending increases in entitlement programs at the Federal and State levels at double the rate of inflation and that account for almost 75% of all budgetary items. No amount of stimulus of any kind can compensate for that kind of spending growth.

You obviously recognize the tax revenue generating value of tax cuts--which is clear proof of the Keynesian multiplier effect. How then can you deny the exact same scenario when the increased money in the hands of people comes from government spending rather than tax cutting?

As for $200 billion of the $300 billion in tax cuts going to people not now paying any tax (that is an exaggeration, but whatever), these people are at least as likely to spend the money, thereby triggering the multiplier and increasing growth, total income, and tax revenue as if the tax cuts were limited to the "more deserving" who currently do pay tax--or more accurately, who pay it in larger amounts. This idea of tax "cuts" to those who do not pay--basically, a negative income tax--can be attacked on fairness ground--as I'm sure you three class warriors will do. However, the economic benefit is undeniable.

You want to call it "redistribution of wealth"? I won't argue with that. The reason it is that is that Obama's crowd is playing its own brand of class warfare game by raising taxes on the upper levels of income. Ideally, the low end cuts he is touting would NOT be accompanied by the tax increases on the high end. Then, there would be no justification to the whine about redistribution--and the whine about "where is the money gonna come from?" is just plain bogus all the way around.

Diminishing returns? I'm the one who theorized a system of zero tax revenue--ALL government spending done by merely printing the money. I bet it would work--why the hell wouldn't it?

I challenge you three valiant class warriors to leave class warfare behind--the "unfairness doctrine"--and state exactly in detail why economic growth through deficit spending--small scale, large scale, any scale--won't work.

I don't like the tax raising aspect of Obama's plan either. That part really is redistribution of wealth, but worse than that, it partially negates the positive aspects of the plan--a net tax cut and money injected through spending.

The real danger is when you combine the liberal propensity for social spending with you guys' wrongheaded idea that you have to pay for it with tax money. That is the LBJ/Jimmy Carter way--in stark contrast to the Kennedy/Reagan way.

Fuck class warfare. It seems we've been doing massive Keynsian economics for the past 5 years. Even with tax cuts, the economy is tanking. Certainly even the rape of by the financial/Mortgage industry should have worked as a massive Keynsian boost to the economy too, right - all that money flooded into the system spurred massive growth - nothing wrong with that, even if it was fake (i.e. printed or loaned money). Prove to me that Keynsian tactics work. What is your evidence?

And you didn't answer any of my questions. If a 1,000 check from the Gov. is a good thing, why not 2,000 or any number on up to 1,000,000? How do you determine the correct amount? How?

Did the first stimulus work? Did the Katrina money work? If it did, then I agree with you - the Government should just write checks to everyone for what ever amount (???) saves the economy. Just keep printing money. The more the merrier. It will have high value no matter what you print, right?

[gex]

--instead of retreating into class warfare pro-wealthy rhetoric?

Who did this so called "class warfare pro-wealthy rhetoric?"

The point I am making is who get's to decide on what this money is spent? All statistics seem to prove that children brought up in a home with two parents save our society money in the long run. Should we put up, and staff, facilities that will counsel every married couple to stay married in every zip code? That sounds like a solid thing to spend our, um, paper with green ink it. Should we do that? Wise people on his team might think we should.

Also, when the Chinese start selling off/not buying more of our Treasuries because of our deficits, who will fund all this Keynesian nonsense? Rates will spike, we will be saddled with the debt.....my kids/grandkids will bear the burden.

I was mostly referring to historically conservative people I've see commenting who keep whining and ranting about "who's gonna pay for all this?", when clearly, the tax cuts and spending in tandem will generate greatly enhanced economic growth/personal and corporate income/ greatly increased tax revenue even at lower rates.

Debt is leverage. It is rolled over, not paid off; It logically is maximized when interest is low. That is as true, maybe more so, for governments as it is for individuals and businesses. As for the Chinese, I doubt they invested in America out of altruism. Assuming it was a sound business decision on their part, they'd be hurting themselves more than us to liquidate. In the extreme scenario you describe, they would just be paid off in devalued dollars--a bigger negative for them than for us.

The simple fact is that what you call "Keynesian nonsense" works. And even if it didn't work, the ultimate downside would not be higher taxes, but inflation. And inflation, in effect, is a flat tax--hitting all strata of society at the same rate--something you should like.

The tax cuts you talk about are 300 billion - 200 billion are to go to those paying no income tax - thus it is simple rediistribuition and/or printing of money. 100 billion is gor business. Given that the stimulus is anywhere from 700 bil to 1.3 trillion on top of a record predicted deficit of 1.2 trillion for the fiscal year, please tell me how that 100 billion in actual reduced taxes will stimulate business enough to compensate for 1) increased inflation 2) loss in dollar status 3) loss in lending due to loss of confidence by lenders due to a debtor society.

Please also show me where Keynsian strategems show that the 'stimulus' will result in a net gain under the current circumstances. How were the current payouts decided? Assuming that a 1,000 payout to individuals paying no tazes is good Keynsian economics, why wasn't the number 1,500 or 2,000 or 5,000 or 10,000 or 200,000? Certainly you must admit that at some level there must be diminishing returns from such a strategy. If so, then how is that being determined? Please explain. Also, please demonstrate how the 150 billion stimulus checks from 2007 were a net gain for the economy and how the 170 billion for Katrina was a net gain.

Real reduction in tax cuts work; under Bush tax cut, revenues increased by almost 200 billion per year, and revenues increased in all modern tax cuts from Cleveland to JKF to Reagan to Bush. The current proposed tax cuts are a drop in the bucket compared to those previous cuts and much like with Bush, under Obama's plan they are coupled with huge spending increases in addition to automatic spending increases in entitlement programs at the Federal and State levels at double the rate of inflation and that account for almost 75% of all budgetary items. No amount of stimulus of any kind can compensate for that kind of spending growth.

You obviously recognize the tax revenue generating value of tax cuts--which is clear proof of the Keynesian multiplier effect. How then can you deny the exact same scenario when the increased money in the hands of people comes from government spending rather than tax cutting?

As for $200 billion of the $300 billion in tax cuts going to people not now paying any tax (that is an exaggeration, but whatever), these people are at least as likely to spend the money, thereby triggering the multiplier and increasing growth, total income, and tax revenue as if the tax cuts were limited to the "more deserving" who currently do pay tax--or more accurately, who pay it in larger amounts. This idea of tax "cuts" to those who do not pay--basically, a negative income tax--can be attacked on fairness ground--as I'm sure you three class warriors will do. However, the economic benefit is undeniable.

You want to call it "redistribution of wealth"? I won't argue with that. The reason it is that is that Obama's crowd is playing its own brand of class warfare game by raising taxes on the upper levels of income. Ideally, the low end cuts he is touting would NOT be accompanied by the tax increases on the high end. Then, there would be no justification to the whine about redistribution--and the whine about "where is the money gonna come from?" is just plain bogus all the way around.

Diminishing returns? I'm the one who theorized a system of zero tax revenue--ALL government spending done by merely printing the money. I bet it would work--why the hell wouldn't it?

I challenge you three valiant class warriors to leave class warfare behind--the "unfairness doctrine"--and state exactly in detail why economic growth through deficit spending--small scale, large scale, any scale--won't work.

I don't like the tax raising aspect of Obama's plan either. That part really is redistribution of wealth, but worse than that, it partially negates the positive aspects of the plan--a net tax cut and money injected through spending.

The real danger is when you combine the liberal propensity for social spending with you guys' wrongheaded idea that you have to pay for it with tax money. That is the LBJ/Jimmy Carter way--in stark contrast to the Kennedy/Reagan way.

Fuck class warfare. It seems we've been doing massive Keynsian economics for the past 5 years. Even with tax cuts, the economy is tanking. Certainly even the rape of by the financial/Mortgage industry should have worked as a massive Keynsian boost to the economy too, right - all that money flooded into the system spurred massive growth - nothing wrong with that, even if it was fake (i.e. printed or loaned money). Prove to me that Keynsian tactics work. What is your evidence?

And you didn't answer any of my questions. If a 1,000 check from the Gov. is a good thing, why not 2,000 or any number on up to 1,000,000? How do you determine the correct amount? How?

Did the first stimulus work? Did the Katrina money work? If it did, then I agree with you - the Government should just write checks to everyone for what ever amount (???) saves the economy. Just keep printing money. The more the merrier. It will have high value no matter what you print, right?

How about $425,000

"Give $425,000 to every person 18+ as a "We Deserve
It Dividend".

Of course, it would NOT be tax free.

So let's assume a tax rate of 30%.

Every individual 18+ has to pay $127,500.00 in taxes.

That sends $25,500,000,000 right back to Uncle Sam.

But it means that every adult 18+ has $297,500.00 in their
pocket.

A husband and wife has $595,000.00.



This even takes care of the AIG employees that lose their job.

What would you do with $297,500.00 to $595,000.00 in your
family?

Pay off your mortgage - housing crisis solved.


If you had insurance from AIG, now you have the money to replace
it with a more stable company.


Repay college loans - what a great boost to new grads

Put away money for college - it'll be there

Save in a bank - create money to loan to entrepreneurs.

Buy a new car - create jobs

Invest in the market - capital drives growth

Pay for your parent's medical insurance - health care improves

Enable Deadbeat Dad s to come clean - or else

Remember this is for every adult U S Citizen 18+ including the
folks who lost their jobs at Lehman Brothers and every other company
that is cutting back. And of course, for those serving in our Armed
Forces.

If we're going to re-distribute wealth let's really do
it...instead of trickling out a puny $1000.00 "

[HowardRoark]

http://www.youtube.com/watch?v=WHPWjaSCXTw

[texaspackerbacker]

Sorry about not answering your questions directly, aynrand. I thought they were merely sarcastic and rhetorical. Besides, my whole post in effect answered them.

Why not a bigger amount than $1,000? Obviously, at some point, it would become inflationary. Even that in an actual tangible sense wouldn't be a deal breaker. Everything would be the same, just with bigger numbers. It would, however, be psychologically bad, and if the past year demonstrates nothing else, it shows how a trumped up psychological economic problem can turn real if consumers and investors are brainwashed to act as if the problem is real.

Our money supply is backed by government debt instruments. Thus, for better or worse, increasing the deficit by borrowing is synonymous with just printing more money. As long as the increase in the money supply over the medium and long term doesn't exceed the rate of growth, there won't be inflation. Detractors of the stimulus idea would probably argue that we are pushing that concept beyond the limit. Well, it damn well better generate the growth it is supposed to based on Keynesian theory. I'm betting it will.

Did the first stimulus work, or the Katrina money? It's a little soon to say for the first stimulus. Half of it hasn't even been injected yet. If the idea that a spike in unemployment is the last stage of an economic downturn, though, then the answer probably is yes. Katrina money? That was a mere pittance compared to the really big money being tossed around these days. Based on the recovery everywhere except maybe the New Orleans ghetto, it seems to be a success. Based on the fact that the economy continued on business as usual, nationally, after Katrina, it also would seem to have succeeded.

The best example of recent Keynesian success, however, is the Bush tax cuts--combined with deficits--after 9/11. As you, a.r., or somebody said, it seems like we've been practicing Keynesian economics for the past five years or more--actually, a lot more. The economic hit of 9/11 could easily have killed our economy and driven this country to third world status. Do you agree with that? If we had Algore as president, and he tried to tax us out of the devastating economic hit--"pay for" the recovery--we would still not be recovered, and Gore would have had his little testing ground for the bike-riding, air conditioner-not using, welfare relying society he craved. Instead, Bush cut taxes, and increased deficit spending, and the economy snapped back in record time to be a raging success.

So why then the economic "crisis" of the past year? Some would attribute it to the Dems retaking Congress in '06, and that may well be true. We all seen that spam email going around that shows the before and after figures. The real reason, though, for this now real economic downturn--as I've been saying since it started--is that the political left and their cohorts that dominate the mainstream media CAUSED it by falsely convincing the public that a minor correction in the housing market with a relative few subsequent foreclosures actually was a major problem. Putting people in "crisis mode"--cutting back on spending, etc. then began to cause real problems--lower demand/lower production/less jobs, etc.--unfortunately, there's a multiplier effect in that direction too. Even McCain, at one point, said it was all "psychological"--until the leftist mainstream media jumped all over him, and he backtracked.

Now, we have the libs taking advantage of the situation and calling the crap they have always wanted to spend money for a "stimulus package". I'm not all that pleased with that crap that they want to spend for, but the plan WILL work economically--for two clear reasons: Keynesian theory--any additional money in the hands of people is good, AND the psychological factor--throwing some money people's way, combined with the shapers of public opinion--the dastardly mainstream media telling them Obama is fixing things--will have a positive psychological effect. Nothing like a good psychological solution to what is essentially a psychological downturn.

BTW, a.r., you also failed to answer my question from the first paragraph of my previous post: how can you claim increased money in people's hands is different the one way from the other?

[Tyrone Bigguns]

Rand I've tried every angle under the sun including the ones you just did. He doesn't get it and never will.

Yep.

Thank god he is playing for your team. Kinda like watching the second of the Jet's season and Favre.

[texaspackerbacker]

Rand I've tried every angle under the sun including the ones you just did. He doesn't get it and never will.

Yep.

Thank god he is playing for your team. Kinda like watching the second of the Jet's season and Favre.

So now you're echoing the three elitist stooges, Tyrone? And after I help you libs out by explaining how your boy's big stimulus plan actually ain't so bad--if you just hold your nose and overlook some of the crap he wants to spend it on. Kick me in the ass for being fair and balanced.

[mraynrand]

Rand I've tried every angle under the sun including the ones you just did. He doesn't get it and never will.

Yep.

Thank god he is playing for your team. Kinda like watching the second of the Jet's season and Favre.

Did you mean second half of the season? Strange, I was under the impression that the Jets' wins over Tenn and Ne were in the second half of the season. But still, the second half of the Jets' season is probably analogous to Tex being right on tax cuts and then totally wrong on printing and handing out money, and thereby subsidizing non-growth spending, and creating false demand.

[texaspackerbacker]

Aynrand, could you please define "non-growth spending" and "false demand".

Surely it couldn't be this scenario:

Obama and company succeed in handing out what amounts to a negative income tax (actually, we already have that--Earned Income Credit) to people not paying tax. Those people spend the money on groceries, clothing, utilities, rent or mortgage, car payments, toys and games, travel expenses, etc. The grocer and its employees, the retailers, wholesalers, and producers of the various items bought, the utility companies, the landlord or mortgage company, etc. and all of their employees all receive money and mostly turn around and spend it and on and on. What part of that "Multiplier" effect do you have a quarrel with? What part of that spending is "non-growth"? What part of the demand I just cited is false?

Some specifics, please, aynrand.

You want a football analogy? Brett Favre is the greatest QB in NFL history--just like Keynesian economics is the greatest concept in economic history. Favre, however, has a tendency to throw interceptions that undo the good he does, just like liberals have a tendency to raise taxes that undo the good their spending does. Detractors of Keynesian economics are like the Woody Hayes types who prefer 3 yards and a cloud of dust to a passing attack.

[mraynrand]

Aynrand, could you please define "non-growth spending" and "false demand".

Surely it couldn't be this scenario:

Obama and company succeed in handing out what amounts to a negative income tax (actually, we already have that--Earned Income Credit) to people not paying tax. Those people spend the money on groceries, clothing, utilities, rent or mortgage, car payments, toys and games, travel expenses, etc. The grocer and its employees, the retailers, wholesalers, and producers of the various items bought, the utility companies, the landlord or mortgage company, etc. and all of their employees all receive money and mostly turn around and spend it and on and on. What part of that "Multiplier" effect do you have a quarrel with? What part of that spending is "non-growth"? What part of the demand I just cited is false?

Some specifics, please, aynrand.
.

Where did the money come from? If it came from a loan from the Chinese and so when folks just spend their stimulus on junk from China, how does that stimulate our economy? As to false demand, check your premises and your basic economics. When you subsidize anything - ANYTHING - the quality tends to go down and/or the cost tends to increase. Once the subsidized demand falls apart due to the crappy structure it was standing on, the entire industry can collapse, like say, the housing industry. I can take the money from my Monopoly game and call it real dollars and go and spend it, but, like any counterfeit money, it will just weaken the monetary system. It's possible that there is some low level multiplier, but you can't demonstrate any positive effect of any stimulus that outweighs the negative of the devaluation of the dollar, the effect of inflation, or the destruction of subsidized industries. Real growth is from the supply side - that which creates (innovates, generates) or responds to real demand.

And why you would support having the government (either Dem or Repub or both) decide what to do with 800 billion of our dollars in a stimulus is beyond me. Why not just cancel taxes for the time it takes to run up that bill? Everyone across the board from individuals to businesses would have a relief and the exact same 800 bil dept would still remain (assuming a flat spending by the govt.). Then at least the people - all people - could decide for themselves what to do with their money - not Obama and the other 535 fuckups in Washington.

[bobblehead]

Rand I've tried every angle under the sun including the ones you just did. He doesn't get it and never will.

Yep.

Thank god he is playing for your team. Kinda like watching the second of the Jet's season and Favre.

So now you're echoing the three elitist stooges, Tyrone? And after I help you libs out by explaining how your boy's big stimulus plan actually ain't so bad--if you just hold your nose and overlook some of the crap he wants to spend it on. Kick me in the ass for being fair and balanced.

Yes Ty, allow us to try and tackle Leon before he gets to the endzone, you just stand and watch.

[HowardRoark]

I saw this the other day and thought of Tex:


“The way to get a maximum rate of “economic” growth---assuming this is to be your aim---is to give maximum encouragement to production, employment, saving and investment. And the way to do this is to maintain a free market and a sound currency.” Henry Hazlitt

Henry Hazlitt (1894 – 1993) was a libertarian, philosopher, economist and journalist for The Wall Street Journal, The NY Times, Newsweek and The American Mercury. It is said that it was Mr. Hazlitt who championed Austrian economics and brought it to the English speaking nations. It is also reported that Mr. Hazlitt once famously said of Lord J.M. Keynes’ General Theory of Employment, Interest and Money, that there is, in the book, not “a single doctrine that is both true and original, for what is original in the book is not true and what is true is not original.”

[texaspackerbacker]

Aynrand, could you please define "non-growth spending" and "false demand".

Surely it couldn't be this scenario:

Obama and company succeed in handing out what amounts to a negative income tax (actually, we already have that--Earned Income Credit) to people not paying tax. Those people spend the money on groceries, clothing, utilities, rent or mortgage, car payments, toys and games, travel expenses, etc. The grocer and its employees, the retailers, wholesalers, and producers of the various items bought, the utility companies, the landlord or mortgage company, etc. and all of their employees all receive money and mostly turn around and spend it and on and on. What part of that "Multiplier" effect do you have a quarrel with? What part of that spending is "non-growth"? What part of the demand I just cited is false?

Some specifics, please, aynrand.
.

Where did the money come from? If it came from a loan from the Chinese and so when folks just spend their stimulus on junk from China, how does that stimulate our economy? As to false demand, check your premises and your basic economics. When you subsidize anything - ANYTHING - the quality tends to go down and/or the cost tends to increase. Once the subsidized demand falls apart due to the crappy structure it was standing on, the entire industry can collapse, like say, the housing industry. I can take the money from my Monopoly game and call it real dollars and go and spend it, but, like any counterfeit money, it will just weaken the monetary system. It's possible that there is some low level multiplier, but you can't demonstrate any positive effect of any stimulus that outweighs the negative of the devaluation of the dollar, the effect of inflation, or the destruction of subsidized industries. Real growth is from the supply side - that which creates (innovates, generates) or responds to real demand.

And why you would support having the government (either Dem or Repub or both) decide what to do with 800 billion of our dollars in a stimulus is beyond me. Why not just cancel taxes for the time it takes to run up that bill? Everyone across the board from individuals to businesses would have a relief and the exact same 800 bil dept would still remain (assuming a flat spending by the govt.). Then at least the people - all people - could decide for themselves what to do with their money - not Obama and the other 535 fuckups in Washington.

Aynrand, you are wrong and your logic is flawed in more ways than I can count.

The second sentence of your post simply does not follow. Assuming there is any truth at all to the premise of money borrowed from China, how can you say that leads to people buying Chinese products instead of American? There's no connection at all.

Your line about subsidizing leading to lower quality, yeah if you're talking about products or services, but demand? That's just ridiculous. What exactly is "low quality demand" anyway? The term doesn't make sense.

The housing industry "collapsed" was actually just a correction from super high real estate prices, and only that in certain areas where the prices went the highest. It will recover--as real estate always does.

Having the dollar devalued is actually a good thing--making American products more competitive in foreign markets and foreign products less attractive in American markets. It may have even been intentional to combat the intentional devaluing of the yuan by the Chinese for the exact reasons I stated.

The Multiplier Effect is as solid a doctrine as there is in economics. There is simply no way it could not occur with added money in the hands of people EITHER BY TAX CUTS OR SPENDING. If inflation occurs at all--and it effectively has not in recent decades, it does no real harm, it only makes the numbers bigger. The effects of inflation, therefore, are mainly psychological. In any case, there's no reason to expect it to happen unless debt grows at a greater rate than GDP over an extended period--and based on Keynesian economics, that should not happen--unless they kill the golden goose by stupidly raising taxes to "pay for" the spending.

I obviously have nothing against supply side economic theory. It's equivalent to truth, but not the whole truth. There is simply no logical reason why demand side stimulation doesn't generate growth just as effectively if not more so--since it has a more direct link to consumer spending/demand for products and services/increased production and services provided/enhanced employment and income/greater tax revenue to the government. Either way there is more money in people's hands, and the positive effects are triggered. I asked/challenged you to state WHY you think there is a difference between tax cut generated/supply side stimulus and spending generated/demand side stimulus. All you did was repeat that there is a difference without stating why or how you have that belief. Lord Keynes and I and a whole lot of other people think you are wrong. I have explained in great detail many times how it works; Suppose you try and explain why you think it doesn't work.

The bottom line here is that there are only two reasons for opposing this stimulus package: One is the class jealousy thing--worry that somebody is getting something for nothing while you are working or whatever for it; The other is disgust over how the money is being spent. I share your negativity about the latter, some of it, anyway. That, however, falls way short in significance to the economic benefit of it all.

[mraynrand]

Aynrand, you are wrong and your logic is flawed in more ways than I can count.

The second sentence of your post simply does not follow. Assuming there is any truth at all to the premise of money borrowed from China, how can you say that leads to people buying Chinese products instead of American? There's no connection at all.


Ever hear about the trade deficit that we have with China? Where the hell do you think people are buying their shit? Look it up. Look at the "made in" labels on everything you buy. Sheesh.

[texaspackerbacker]

Aynrand, you are wrong and your logic is flawed in more ways than I can count.

The second sentence of your post simply does not follow. Assuming there is any truth at all to the premise of money borrowed from China, how can you say that leads to people buying Chinese products instead of American? There's no connection at all.


Ever hear about the trade deficit that we have with China? Where the hell do you think people are buying their shit? Look it up. Look at the "made in" labels on everything you buy. Sheesh.

True as that might be, it has no connection to stimulating the economy and deficit spending--whether the borrowing is from China or whoever. Why would that have any effect whatsoever on which goods and services people buy?

I will be interested in reading your response to the rest of the post.

[mraynrand]

The housing industry "collapsed" was actually just a correction from super high real estate prices, and only that in certain areas where the prices went the highest. It will recover--as real estate always does.


It collapsed because a huge amount of false demand was created and subsidized in the form of low interest ARM loans. Inflated prices led to massive borrowing as second mortgages. Not to mention packaging all those worthless loans as valuable securities. And you basically are supporting the government in taking out a second mortgage on the country.

[mraynrand]

Aynrand, you are wrong and your logic is flawed in more ways than I can count.

The second sentence of your post simply does not follow. Assuming there is any truth at all to the premise of money borrowed from China, how can you say that leads to people buying Chinese products instead of American? There's no connection at all.


Ever hear about the trade deficit that we have with China? Where the hell do you think people are buying their shit? Look it up. Look at the "made in" labels on everything you buy. Sheesh.

True as that might be, it has no connection to stimulating the economy and deficit spending--whether the borrowing is from China or whoever. Why would that have any effect whatsoever on which goods and services people buy?

I will be interested in reading your response to the rest of the post.

Sigh. would you lend money to someone deep in credit card debt - who had demonstrated outrageous spending practices - just so they could purchase your stuff?

[mraynrand]

I asked/challenged you to state WHY you think there is a difference between tax cut generated/supply side stimulus and spending generated/demand side stimulus.

The spending/demand comes from printed money. That will devalue the currency/buying power of the money. Tax cuts lower the burden on producers and that has been proven over and over to stimulate growth. I can't think of an example where printing money and handing it out has stimulated sustained growth. Give me one example.

[texaspackerbacker]

Aynrand, you are wrong and your logic is flawed in more ways than I can count.

The second sentence of your post simply does not follow. Assuming there is any truth at all to the premise of money borrowed from China, how can you say that leads to people buying Chinese products instead of American? There's no connection at all.


Ever hear about the trade deficit that we have with China? Where the hell do you think people are buying their shit? Look it up. Look at the "made in" labels on everything you buy. Sheesh.

True as that might be, it has no connection to stimulating the economy and deficit spending--whether the borrowing is from China or whoever. Why would that have any effect whatsoever on which goods and services people buy?

I will be interested in reading your response to the rest of the post.

Sigh. would you lend money to someone deep in credit card debt - who had demonstrated outrageous spending practices - just so they could purchase your stuff?

That depends on ability to pay--where I thought I'd see the money I loaned again. Anyway, I reject the premise that America is that "someone".

[texaspackerbacker]

The housing industry "collapsed" was actually just a correction from super high real estate prices, and only that in certain areas where the prices went the highest. It will recover--as real estate always does.


It collapsed because a huge amount of false demand was created and subsidized in the form of low interest ARM loans. Inflated prices led to massive borrowing as second mortgages. Not to mention packaging all those worthless loans as valuable securities. And you basically are supporting the government in taking out a second mortgage on the country.

You still have never defined what you mean by false demand. Either there is demand or there isn't; "False demand" just doesn't compute. If there was any chicanery at all in this, it was the policy of making lending easier for minorities and other under-qualified buyers for social reasons--kind of a de-facto affirmative action thing.

There simply were NOT enough foreclosures, however, for the mortgage securities crisis to be real. It had to be contrived by somebody to bilk the government, and THAT is a political and/or criminal thing, NOT an economic thing.

[texaspackerbacker]

I asked/challenged you to state WHY you think there is a difference between tax cut generated/supply side stimulus and spending generated/demand side stimulus.

The spending/demand comes from printed money. That will devalue the currency/buying power of the money. Tax cuts lower the burden on producers and that has been proven over and over to stimulate growth. I can't think of an example where printing money and handing it out has stimulated sustained growth. Give me one example.

As I said, I am a firm believer in supply side too. The scenario you describe, however, would make supply LEAD demand--producers reacting to money available to increase production based on PROJECTED demand. That is not necessarily a bad thing, but it is less of a sure thing IMO than having demand lead production--which is the case with demand side stimulation. Do you disagree with that?

[mraynrand]

I asked/challenged you to state WHY you think there is a difference between tax cut generated/supply side stimulus and spending generated/demand side stimulus.

The spending/demand comes from printed money. That will devalue the currency/buying power of the money. Tax cuts lower the burden on producers and that has been proven over and over to stimulate growth. I can't think of an example where printing money and handing it out has stimulated sustained growth. Give me one example.

As I said, I am a firm believer in supply side too. The scenario you describe, however, would make supply LEAD demand--producers reacting to money available to increase production based on PROJECTED demand. That is not necessarily a bad thing, but it is less of a sure thing IMO than having demand lead production--which is the case with demand side stimulation. Do you disagree with that?

I disagree with printing money to create demand. If that's a good thing, then counterfeiting should be lauded as well. And I don't think it's wise to let the fuckers in DC decide what should be in demand by how they hand out money - printed or borrowed. And I think it's a terrible idea to hand out money borrowed from the same places where most people will spend it - e.g. China, Japan, and Korea.

[texaspackerbacker]

I asked/challenged you to state WHY you think there is a difference between tax cut generated/supply side stimulus and spending generated/demand side stimulus.

The spending/demand comes from printed money. That will devalue the currency/buying power of the money. Tax cuts lower the burden on producers and that has been proven over and over to stimulate growth. I can't think of an example where printing money and handing it out has stimulated sustained growth. Give me one example.

As I said, I am a firm believer in supply side too. The scenario you describe, however, would make supply LEAD demand--producers reacting to money available to increase production based on PROJECTED demand. That is not necessarily a bad thing, but it is less of a sure thing IMO than having demand lead production--which is the case with demand side stimulation. Do you disagree with that?

I disagree with printing money to create demand. If that's a good thing, then counterfeiting should be lauded as well. And I don't think it's wise to let the fuckers in DC decide what should be in demand by how they hand out money - printed or borrowed. And I think it's a terrible idea to hand out money borrowed from the same places where most people will spend it - e.g. China, Japan, and Korea.

If nothing was relevant except economics, then indeed, counterfeiting WOULD be a good thing. It, of course, is criminal, and it would direct all of the money to criminal elements, probably financing who knows what forms of evil. Economically, though, it would do no harm, and in fact, be a plus.

[Tyrone Bigguns]

Rand I've tried every angle under the sun including the ones you just did. He doesn't get it and never will.

Yep.

Thank god he is playing for your team. Kinda like watching the second of the Jet's season and Favre.

So now you're echoing the three elitist stooges, Tyrone? And after I help you libs out by explaining how your boy's big stimulus plan actually ain't so bad--if you just hold your nose and overlook some of the crap he wants to spend it on. Kick me in the ass for being fair and balanced.

Nope. I am echoing sound economics/math. Something that you a completely lacking in. You never produce any evidence nor do you post any math regarding your analysis...both are pretty much de riguer when it comes to econ.

Speaking of elitism. Do you not see the irony of your statement when you write things like, "I help you libs out by explaining how your boy's big stimulus plan actually ain't so bad"?

[Tyrone Bigguns]

Rand I've tried every angle under the sun including the ones you just did. He doesn't get it and never will.

Yep.

Thank god he is playing for your team. Kinda like watching the second of the Jet's season and Favre.

So now you're echoing the three elitist stooges, Tyrone? And after I help you libs out by explaining how your boy's big stimulus plan actually ain't so bad--if you just hold your nose and overlook some of the crap he wants to spend it on. Kick me in the ass for being fair and balanced.

Yes Ty, allow us to try and tackle Leon before he gets to the endzone, you just stand and watch.

:lol:

I was thinking Jim Marshall.

[texaspackerbacker]

I don't recall the last time I've even seen any comments from you on economics or anything else worthy of being countered. Maybe it's a lack of intellect, but more likely, you just don't have the balls to stand up for your cause and get shot down.

Math? Like you'd understand it anyway? I've cited solid recent real world examples which have not been countered and cannot be countered to prove the effectiveness of Keynesian economics (this is more for aynrand's benefit than yours, Tyrone). If you think there's any math or anything else to effectively dispute that, bring it on--but of course, there isn't, thus you can't/won't.

Elitist? Looking down on you liberals doesn't count when because you are so consistently down there to look at. Try writing something deserving of respect sometime, and maybe I'll afford you the respect I have for aynrand, Bobblehead, and Howard.

[mraynrand]

I've cited solid recent real world examples which have not been countered and cannot be countered to prove the effectiveness of Keynesian economics (this is more for aynrand's benefit than yours, Tyrone)..

You can't separate the tax cuts from the deficit spending and get sustainable growth. When spending by the government in the form of 'printing money' (any form of handouts actually - whether it be food stamps, healthcare, 0% ARMs, etc) occurs without a supply side stimulus, the results are disastrous. They were for FDR and they are/will be for the Bush/Obama stimulus plans. Every other growth was caused from the supply side. Why? manufactured (fake) demand is not sustainable. If Keynsian economics is reducing the burden of government on producers, then yes, Keynsian economics works. If Keynsian economics is lending money to people with some reasonable down payment and some collateral who are good risks to pay the loan off, then yes Keynsian economics work to expland the economy. If Keynsian economics is the government counterfeiting money then, no it doesn't work. If Keynsian economics is giving counterfeited money to the very entities in the economy that have already demonstrated a track record of failure, then Keynsian economics doesn't work.

And no economy will last long that has a collection of 'Czars' who choose who will be the winners and who will be the losers based on political calculation. We may as well invite Jim Taggart, Cuffy Meigs, and Wesley Mouch to run our economy.

[texaspackerbacker]

You can't separate the tax cuts from the deficit spending and get sustainable growth.

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This is exactly what I've said consistently. BOTH the tax cutting and the spending, even with deficits, even "printing money" stimulate the economy. We clearly had BOTH in the Reagan years and in the GW Bush years.

The disastrous results you speak of came in the LBJ through Carter years when they deviated from the formula and raised taxes. THAT--not the spending--was responsible for the debacle of the 70s I don't honestly remember if FDR raised taxes, but I'm pretty sure he didn't cut them, hence, the relative ineffectiveness of his New Deal. And many think the drastic tax increase--even though it was a tariff--Smoot/Hawley--during Hoover's term triggered the Depression.

Do you dispute the success of the Reagan and Bush II years? I doubt it.

Do you dispute the dual force of tax cutting AND deficit spending--whether by design or not--during those periods? How could you?

Do you dispute that after Kennedy, the Dems, etc. went to "paying for" spending with tax increases? I hope not; It's a matter of history.

Do you dispute the linkage between those tax increases with the disaster of the Carter years? I doubt it.

Then putting that altogether, how could you possibly dispute the POSITIVE effect of deficit spending combined with tax cutting?

[mraynrand]

You can't separate the tax cuts from the deficit spending and get sustainable growth.

-------------------------------------------------------------------------------------

This is exactly what I've said consistently. BOTH the tax cutting and the spending, even with deficits, even "printing money" stimulate the economy. We clearly had BOTH in the Reagan years and in the GW Bush years.

The disastrous results you speak of came in the LBJ through Carter years when they deviated from the formula and raised taxes. THAT--not the spending--was responsible for the debacle of the 70s I don't honestly remember if FDR raised taxes, but I'm pretty sure he didn't cut them, hence, the relative ineffectiveness of his New Deal. And many think the drastic tax increase--even though it was a tariff--Smoot/Hawley--during Hoover's term triggered the Depression.

Do you dispute the success of the Reagan and Bush II years? I doubt it.

Do you dispute the dual force of tax cutting AND deficit spending--whether by design or not--during those periods? How could you?

Do you dispute that after Kennedy, the Dems, etc. went to "paying for" spending with tax increases? I hope not; It's a matter of history.

Do you dispute the linkage between those tax increases with the disaster of the Carter years? I doubt it.

Then putting that altogether, how could you possibly dispute the POSITIVE effect of deficit spending combined with tax cutting?

All the points you make are correct, except that I can't find a single example of where printing money (etc.) and handing it out did anything but harm the economy. Sure, when this type of spending is coupled with tax cuts and massive supply side growth, the effect can be muted; conversely, the effect is exacerbated by tax increases. But on it's own, printing money and handing it out with no strings attached is a disaster.

[texaspackerbacker]

The items you yourself defined as "printing money"--food stamps, government health care (Medicare/Medicaid), and subsidized mortgages even if not all the way to 0%, unless you meant 0% down)--have been going on for more than a generation. Are you honestly going to say these things seriously harmed our economy? I mean, we've all been living pretty well through most of that time period--except when the specter of "paying for it" with tax increases messed things up.

Arguably, we have been just "printing money" ever since we went to having our currency backed by nothing other than government debt instruments--about a half century ago. Has that seriously harmed the economy? I would suggest it removed restrictions to the massive economic growth and progress we have made in that time frame.

[mraynrand]

The items you yourself defined as "printing money"--food stamps, government health care (Medicare/Medicaid), and subsidized mortgages even if not all the way to 0%, unless you meant 0% down)--have been going on for more than a generation. Are you honestly going to say these things seriously harmed our economy? I mean, we've all been living pretty well through most of that time period--except when the specter of "paying for it" with tax increases messed things up.

Arguably, we have been just "printing money" ever since we went to having our currency backed by nothing other than government debt instruments--about a half century ago. Has that seriously harmed the economy? I would suggest it removed restrictions to the massive economic growth and progress we have made in that time frame.

Handouts without condition hurt the economy, hurt those receiving them who don't actually need them, but the damage to the economy is only readily apparent when there are growth killing tax or trade (or other) policies along with them. When Reagan and Bush and Kennedy cut taxes and promoted economic growth by supporting business, excessive spending from the government can be overcome. But the train wreck of spending that is coming, coupled with most likely bad business policy will reveal the foolishness of massive debt spending and money printing - especially if deficit spending goes from the historical average of under 3% of GDP to 10% or more.

[mraynrand]

The Fiscal Stimulus: What Will Work?
Bruce Bartlett 01.09.09, 12:01 AM ET

Last year at this time, Congress and the White House were so concerned about an economic downturn that they agreed in record time to a $152 billion stimulus bill that sent $300 rebate checks to every taxpayer.

The theory was that people would immediately run out and buy $300 worth of stuff; this added spending was expected to give the economy such a boost that a recession would be avoided.

During debate on the legislation, however, several polls showed that only about 20% of people planned to spend the rebate, with close to 80% saying they would save it or use it to pay bills. As we now know, not only did consumption not increase because of the rebate, it actually fell 2.75% in the third quarter at an annual rate. This was the primary reason why overall gross domestic product growth turned negative--all other GDP components were positive.

Back in 1957, economist Milton Friedman explained why rebates don't work in A Theory of the Consumption Function. He found that people generally don't change their spending in response to transitory changes in their income. Windfalls are mostly saved or used to pay down debt and short-term losses are covered by borrowing or drawing down saving. Friedman concluded that people spend largely on the basis of what they view as their "permanent income."

In the years since we have had many tests of Friedman's hypothesis. In 1968, the federal government imposed a temporary income tax surcharge. The idea was to reduce spending in order to dampen inflation. But according to economist William Springer, spending never fell because everyone knew that the surcharge would only be in effect for one year, although it was later extended by a year. Additionally, economist Robert Eisner found that the higher taxes stimulated federal spending, thus frustrating the purpose of the surcharge, which was to reduce aggregate spending in the economy.

In 1975, the government first tried rebates to stimulate growth. Checks for up to $200 per taxpayer were paid out--almost $800 in today's dollars. Economists Franco Modigliani and Charles Steindel later found that less than a fourth of the money was spent in the three quarters after receipt. The rebate only had 38% as much impact as a permanent tax cut of similar magnitude because such a tax cut would have raised peoples' permanent (after-tax) income, according to economist Alan Blinder.

Despite this evidence, George W. Bush decided to send out another rebate in 2001. Treasury Secretary Paul O'Neill, an Office of Management and Budget official when the earlier rebate was implemented, said publicly that another rebate would work no better. Said O'Neill in a March 27, 2001, speech, "Some suggest we send a rebate to taxpayers now and stop there. That's not good enough. I was here when we tried that in 1975, and it just didn't work."

According to journalist Ron Suskind, Bush's top White House economist also opposed the rebate because of its proven ineffectiveness. But Bush dismissed his concerns without explanation.

As was the case 26 years earlier, the 2001 rebate was underwhelming in its impact. Economists Matthew Shapiro and Joel Slemrod concluded that less than a fourth was spent. Even the president's Council of Economic Advisers estimated that only about a third of the money was spent. The most positive analysis of the rebate found that at most 40% of the money was spent in the quarter in which it was received, meaning that 60% effectively was wasted, providing no macroeconomic stimulus.

Thankfully, Barack Obama has rejected the idea of yet another rebate. Instead, he plans to adjust withholding tables to reflect a proposed $500 tax credit ($1,000 for families) that up to 150 million Americans will qualify for. The idea is that people might be more willing to increase their spending when they see an increase in their disposable income on a regular weekly basis than they would if they got a one-shot rebate.

To be effective, however, people must view the new tax credit as a permanent feature of the tax code. As Federal Reserve Bank of New York economist Charles Steindel explains, "consumers will be much more likely to alter their spending behavior if they perceive a tax change to be lasting." The experience of the 1968 surtax shows that temporary tax changes are not effective even when reflected in withholding tables. This fact is also proven by the experience in 1992, when the George H.W. Bush Administration temporarily reduced withholding to give the economy a boost.

Unfortunately, Obama also plans another tax scheme with a very dubious record: a $3,000 tax credit for businesses for each new job created.

A similar program was enacted in 1978, but a report from the Department of Labor's Inspector General during the Clinton Administration urged Congress to discontinue it because 92% of those hired under the program would have been hired anyway. An academic study found that 70% of the credits were payments for workers that would have been hired without them. Despite many efforts to reform the credit, it was eventually abolished in 2006.

In reality, it's very difficult to determine what a "new" job is. And it's hard to prevent businesses from gaming the system--laying off workers, rehiring them later and claiming a credit for job creation. Of course, the government will try as hard as it can to prevent this from happening, but in practice it is almost impossible to do. The primary beneficiaries will necessarily be firms that happen to be hiring for unrelated reasons.

It the near term, it's possible that the prospect of a tax credit for employment will encourage businesses to lay off workers now and postpone hiring. No business wants to hire a worker and find out that if it had just waited a little bit longer to do so it would have saved $3,000 in taxes.

In addition, Obama is planning to extend a tax provision enacted by George W. Bush that allows businesses to depreciate investments more rapidly. However, the effectiveness of bonus depreciation is very much open to question. An analysis by two Federal Reserve economists cites a number of business surveys showing that only about 10% of businesses increased their capital spending as a consequence. The rest were rewarded for investments they were going to make anyway. A Treasury Department study found that a substantial number of firms qualifying for bonus depreciation didn't even bother to claim it.

Of course, Obama isn't only relying on tax policy to stimulate growth; he has plans to increase spending on public works as well. But this may not do much to create jobs this year. Despite claims by the Conference of Mayors and the transportation lobby that there is as much as $96 billion in construction "ready to go," the fact is that it takes a long time before meaningful numbers of workers can be hired for such projects.

As a recent Congressional Budget Office study explains, "Practically speaking ... public works involve long start-up lags. ... Even those that are 'on the shelf' generally cannot be undertaken quickly enough to provide timely stimulus to the economy."

The prospects for unconventional projects such as alternative energy sources are even worse. The CBO calls them "totally impractical for counter-cyclical policy" because they take even longer to come online.

In any case, the employment impact of public works construction is not as high as generally thought. It is not very labor-intensive, the unemployed don't generally have the required skills, and construction projects don't necessarily exist in places where unemployment is high. The Federal Highway Administration estimates that only 9,536 direct jobs are created for each $1 billion of road construction. Another 4,324 jobs are estimated to be created in supporting industries, and 13,962 jobs from the multiplier effect on other businesses.

It's important to remember that these estimates assume that the public works spending doesn't displace spending that otherwise would occur. As Congressional Research Service economist Linda Levine explains, "Unless there is an increase in total spending ... the number of jobs in the labor market would remain largely unchanged." She also says that induced jobs resulting from a multiplier effect are considered "tenuous."

Finally, the impact of increased public works spending on state and local governments cannot be ignored. Most federal transportation spending goes for projects initiated by them. When they think there is a chance that the federal government will increase its funding, they tend to cut back on their own spending in hopes that the feds will foot the bill. A study by economist Edward Gramlich found that the $2 billion appropriated by the Local Public Works Act of 1976 postponed $22 billion in total spending as state and local governments competed for federal funds and actually reduced GDP by $30 billion ($225 billion today).

There are reports that California and other states are halting highway, school and bridge construction already underway. While it may be that they are simply reacting to a shortfall in tax revenue, it would be naive to think that the prospect of stimulus spending from Washington isn't a factor as well. As The New York Times recently reported, states "are clearly holding out hope that President-elect Barack Obama will pump some federal money into the stalled infrastructure projects, and some may even be delaying work until they have a chance to make the case for federal spending."

In the end, it's harder to stimulate the economy in the short-run than the public and policymakers believe. As economist Paul Krugman has noted, "By the time Congress has finished negotiating who gets what, and puts the new law into effect, the recession is usually past--and the fiscal stimulus arrives just when it is least needed." I couldn't have put it better myself.

Bruce Bartlett is a former Treasury Department economist and the author of Reaganomics: Supply-Side Economics in Action and Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy. Last week, he began a weekly column for Forbes.com.

[texaspackerbacker]

The items you yourself defined as "printing money"--food stamps, government health care (Medicare/Medicaid), and subsidized mortgages even if not all the way to 0%, unless you meant 0% down)--have been going on for more than a generation. Are you honestly going to say these things seriously harmed our economy? I mean, we've all been living pretty well through most of that time period--except when the specter of "paying for it" with tax increases messed things up.

Arguably, we have been just "printing money" ever since we went to having our currency backed by nothing other than government debt instruments--about a half century ago. Has that seriously harmed the economy? I would suggest it removed restrictions to the massive economic growth and progress we have made in that time frame.

Handouts without condition hurt the economy, hurt those receiving them who don't actually need them, but the damage to the economy is only readily apparent when there are growth killing tax or trade (or other) policies along with them. When Reagan and Bush and Kennedy cut taxes and promoted economic growth by supporting business, excessive spending from the government can be overcome. But the train wreck of spending that is coming, coupled with most likely bad business policy will reveal the foolishness of massive debt spending and money printing - especially if deficit spending goes from the historical average of under 3% of GDP to 10% or more.

We seem to be getting a little bit closer to accomodation, but there are still major differences.

We both agree, damage to the economy is "readily apparent" when taxes are raised. I'd be interested in hearing, however, how you can be so sure all this damage that is NOT "readily apparent" has happened. How many consecutive quarters of growth were there once the Reagan cuts got rolling? How well did the economy bounce back from the enormous hit of 9/11? How is it that the bad effects from Kennedy's New Frontier spending didn't become "readily apparent" until LBJ raised taxes?

The net effect of all this "not readily apparent" damage is that from the time I was young--fifties and sixties, the rich are richer, the working and middle classes live a lot better, and the so-called poor now have more than what the working and middle classes had back then. Technology has a lot to do with the improvement, and the magnificence of free enterprise capitalism has worked its magic, but it is undeniable that the government largesse has helped many on the lower end WITHOUT harming those in the middle and upper end.

It really sounds like you are falling back to a position that the recipients of "handouts without condition" are damaged or harmed morally or psychologically by getting something for nothing. Aside from the fact that all evidence is contrary to that assertion, the moral or psychological damage is NOT an economic consequence at all, merely a social one.

I wouldn't be surprised if a bit of an economic train wreck like you speak of is coming. If and when it does happen, though, it won't be because of the spending and deficits. It will be from the tax increases which so far, Obama has, against all of his past history of voting and public statements, not done of requested of Congress. Many of both parties are coming up with the old familiar wrongheaded whine that tax increases will be necessary to "pay for" the spending. If that happens, we're screwed.