US politics circa 2011

[Texas Contrarian]

Originally Posted by TexTushHog

In a liquidity trap, there isn't enough demand to meet the existing capacity of the economy, much less to expand. Companies fear, justifiably, that business won't come back for some time even to occupy current capacity.

What companies really fear is the uncertainty overhang arising from concerns about how the political elite are going to manage issues such as health care mandates and out-of-control fiscal deficits. People making hiring decisions don't just look at the next year or two, they look at the next 5 or 10 years -- or more.

And they're not very comfortable with what they see. No one is going to cut spending to any appreciable degree. The Republican majority will probably be able to hold spending increases to a lower level than a disastrous Pelosi congress would, but that's about it. Everyone realizes that a very big tax increase is coming sooner or later. I still believe we'll see a VAT within the next 4 or 5 years. It's the only way you can even come remotely close to paying for all this spending. Talk about a demand-dampener!

Of course, we could go on paying for all this with borrowed and printed money, but I think you know that's not likely to end well.

Originally Posted by TexTushHog

Hence the viscous circular nature of a liquidity trap without stimulus spending.

If you think "stimulus" spending is so vital to recovery, then how do you explain the exceptionally robust recovery following the severe recession of 1920-21? At that time, industrial production and aggregate demand virtually fell off a cliff. Year-over-year deflation was almost 15% and the unemployment rate rose sharply. Yet instead of undertaking foolish "stimulus" spending measures, the government sharply cut spending and cut taxes. Paul Krugman's head would have started spinning if he'd been around at the time. Yet the economy quickly rebounded and from about 1922-27 turned in the best year-over-year GDP increases of any period in the last century.

Instead of listening to left-wing academic economists who have been wrong about almost everything for many years, it would be nice if people actually learned a thing or two about economic history.

Massive increases in government spending make the outlook for sustained, robust economic growth worse, not better.

[TexTushHog]

Originally Posted by CaptainMidnight

If you think "stimulus" spending is so vital to recovery, then how do you explain the exceptionally robust recovery following the severe recession of 1920-21? At that time, industrial production and aggregate demand virtually fell off a cliff. Year-over-year deflation was almost 15% and the unemployment rate rose sharply. Yet instead of undertaking foolish "stimulus" spending measures, the government sharply cut spending and cut taxes.

You should quit listening to all those Austrian school economists. I don't think even the Chicago boys believe in them any more. If you want answers to your questions -- and there are answers -- you'll find them in this article:

http://www.springerlink.com/content/5683j4v650187261/

The less scholarly version is here:

http://largegreenbird.blogspot.com/2...servative.html

[Texas Contrarian]

Originally Posted by TexTushHog

You should quit listening to all those Austrian school economists. I don't think even the Chicago boys believe in them any more. If you want answers to your questions -- and there are answers -- you'll find them in this article:

http://www.springerlink.com/content/5683j4v650187261/

The less scholarly version is here:

http://largegreenbird.blogspot.com/2...servative.html

And why don't you stop listening to clueless left-wing fools who have no idea what the hell they're talking about?

Tush Hog, I trust you'll understand that I have have limited interest in debating economic issues with you, given your history of hurling cheap insults. Last time it became clear to everyone that you had no idea what you were talking about and were getting thoroughly shellacked in the debate, you lashed out by posting that one of your favorite left-wing economists (Joe Stiglitz) is "far brighter" than I am. I must confess that I got a chuckle or two out of it, but if that's the best you can do, I suggest that you refrain from popping off with statements that just make you look like an ignorant fool.

[DFW5Traveler]

Originally Posted by TexTushHog

You should quit listening to all those Austrian school economists. I don't think even the Chicago boys believe in them any more. If you want answers to your questions -- and there are answers -- you'll find them in this article:

http://www.springerlink.com/content/5683j4v650187261/

The less scholarly version is here:

http://largegreenbird.blogspot.com/2...servative.html

Blogs = personal opinion of someone who actually thinks they are an expert. And when did the chi-town boys ever think to listen to anyone outside of Keynes?

I find it ironic that TTH says he does better under a capitalist-republican regime and then condemns the political party that gives him the ability to retire in France.

CM is right and the roaring 20's were a result of austerity measures that forced the govt to live within its means.

[discreetgent]

So no back to the interesting part lol

Republicans campaigned heavily on reducing the deficit and cutting taxes - or at least not raising them. To cut the deficit without raising taxes means cutting funding for programs. Here is where this will become fascinating: The 2 largest programs out there are Social Security and Medicaid. It seems that 2/3rds of Americans would rather see payroll taxes rise then seeing those programs face budget cuts (NYT/CBS Polls, and their polls are done professionally with standard statistical tools). Looks like I'm going to be eating a lot of popcorn for a while.

And because I can't resist: The Texas economic miracle was forced into $31 billion in budget cuts (btw RK has promised to cure me of my misguided thoughts)

[pjorourke]

Here is a down payment:
http://www.redstate.com/ladyimpactoh...reduction-act/

[discreetgent]

Downpayments are easy, dealing with entitlements .....

[pjorourke]

Lets start with a big freakin one that hasn't even started -- Repeal Obamacare. The House has already voted.

[Ansley]

Originally Posted by pjorourke

Lets start with a big freakin one that hasn't even started -- Repeal Obamacare. The House has already voted.

This subject deserves a thread. Please.

[discreetgent]

Originally Posted by pjorourke

Lets start with a big freakin one that hasn't even started -- Repeal Obamacare. The House has already voted.

You mean the vote that the CBO said would ADD 143 Billion to the deficit?

[discreetgent]

Originally Posted by Ansley

This subject deserves a thread. Please.

Ansley, if you start one they may follow.

[pjorourke]

Originally Posted by discreetgent

You mean the vote that the CBO said would ADD 143 Billion to the deficit?

That number is bullshit and you know it.

[discreetgent]

Originally Posted by pjorourke

That number is bullshit and you know it.

At least the CBO lays out what assumptions it is making, the timeframe, a best case, and a worst case scenario.

At times it has Dems bitching at it, at times Republicans which is a good thing if you are supposed to be an objective assessor lol

Not a whole lot of numbers out there that have undergone anything near that kind of analysis. So if you want to call it bullshit, fine but all the other numbers are less reliable.

On a side note: do you REALLY believe the Republicans want to repeal the Health Care bill because if the deficit?

[Texas Contrarian]

Originally Posted by discreetgent

Republicans campaigned heavily on reducing the deficit and cutting taxes - or at least not raising them. To cut the deficit without raising taxes means cutting funding for programs. Here is where this will become fascinating: The 2 largest programs out there are Social Security and Medicaid...

They may make noises about cutting spending, but it'll just be tinkering around the edges at most -- maybe a couple of percentage points cut from domestic discretionary spending (which only makes up about one-seventh of the budget).

No one is going to take a meat axe to Social Security or Medicare. People would start rioting in the streets.

And no one is going to raise taxes on the middle class to any significant degree. Both parties have engaged in substantial overpromising in this area. We're going to simply continue hurtling toward a fiscal train wreck. Everything will look OK until all of a sudden it doesn't!

Originally Posted by discreetgent

You mean the vote that the CBO said would ADD 143 Billion to the deficit?

Originally Posted by pjorourke

That number is bullshit and you know it.

Yep.

The number is bullshit because all the CBO does is calculate what the bottom line is based on assumptions fed them by the people who order up the report, no matter how fanciful or unrealistic they may be. It's simply GIGO. In fact, the health care "reform" bill relies on Enron-style accounting to keep the 10-year cost projections below a trillion bucks. The notion that it will actually reduce deficits doesn't even rise to the level of being worth laughing at.

[Ansley]

Originally Posted by discreetgent

Ansley, if you start one they may follow.

Looks like y'all are pretty deep into this. I'll continue reading.