The Obama Plan

[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?