Maybe it’s time to try something else . . . or try doing nothing at all

Our friends on the left seem to think that if a government program isn’t working as advertised, then we obviously need to double the size of the program! Friday’s unemployment numbers will probably “inform” them that we need more and more stimulus spending, ’cause what’s been done so far hasn’t worked. From the editors of :


It Isn’t Working

Three years of spending and monetary stimulus haven’t helped jobs.

Another month, another mediocre jobs report from the Department of Labor. This is consistent with the rest of the economic evidence that this is a lackluster recovery that so far is not turning into a durable expansion.

The economy shed 131,000 jobs in July and the number of jobs created in May and June were revised downward to 221,000 lost jobs. The unemployment rate held steady at 9.5% but that does not reflect the fact that the number of discouraged workers is also up 389,000 from a year ago.

Private employment did inch up in July by 71,000 positions, with a nice 36,000 pick-up in manufacturing jobs, but even that number is deceptive. The vast majority of those jobs were in the auto industry. Alas, not every struggling manufacturing plant in America can have a lifeline to the federal Treasury.

The average work week lengthened by 0.1 hours and wages bumped up by 4 cents an hour in July to $22.59. This means things are getting better if you already have a job. The amazing thing is how weak the recovery remains after so much fiscal and monetary stimulus.

The problem is if you’re still looking for work, because the private sector isn’t feeling confident enough to create new jobs. The declines in the household survey tend to reflect small businesses better than does the payroll survey, and small businesses in particular aren’t creating new jobs the way they have in other recoveries. The shrinking size of the labor force is helping to keep the official jobless rate below 10%, but that’s mostly because some one million workers have dropped out of the labor force since April.

And here’s the most damning paragraph:

So far the Obama team has thrown the entire Keynesian playbook at the economy. We have paid people to buy cars, purchase homes, pay off their mortgages, weatherize their homes and put solar paneling on their roofs. And of course there was the original stimulus package of $862 billion, though some of that remains unspent. None of it has put America back to work.

Much more at the link. But the editors understand what President Obama and his advisors don’t: that economic recovery and job creation in the private sector requires confidence by private entrepreneurs and investors that they can make money by expanding their workforce.

One thing that the editors left out of their article is the health care reform bill. For all of the efforts by the Obama Administration to encourage businesses to expand payrolls, the great unknown is how much the health care plan is really going to cost business. An employee is supposed to be an asset to a company, but the government mandate that companies must provide health insurance, coupled with the restrictions which do not allow insurance companies to deny coverage due to pre-existing conditions, coupled with the Administration’s tilt towards trade unions and laws which might make discharging employees more difficult, also turns every employee into a liability. If companies see additional employees as additional liabilities, they are going to be more reluctant to add employees. Additional efforts by the Administration to encourage private sector hiring would seem to me to be fruitless until employers have a better idea as to what kinds of increased liabilities additional hiring would bring.

If, as the editors wrote, the Obama Administration “has thrown the entire Keynesian playbook at the economy,” and it still hasn’t worked, the answer isn’t to just throw more (borrowed) money into the same Keynesian plays, but to do something else . . . or do nothing at all, and let the economy take care of itself. Politicians have a problem with doing nothing at all — or at least being perceived as doing nothing at all — but that is probably the wiser course. Borrowing more and more money, whether for more fruitless Keynesian attempts or some other method of attack means that there will be less money available for private enterprise once businesses do see an advantage in increasing production and payrolls.

76 Comments

  1. So far the Obama team has thrown the entire Keynesian playbook at the economy

    This is, of course, a lie.

    When the doctor tells you at the start to take two of the pills four times a day, and you take one of the pills three times a day, then you can’t blame the medicine as useless because it doesn’t get the results promised.

  2. Yes, the situation was stated wrong. What’s been done has worked, but enough wasn’t done, so enough improvement didn’t happen.

    You can’t try to paint your house with one gallon of paint, and when it doesn’t turn your whole green house blue, state that painting a house doesn’t work. Buy more paint. It’s bloody cheap right now!

  3. PB, can you explain to us, from the depths of your economic wisdom, what has happened to Japan over the last couple of decades?

  4. Hitchcock, Japan failed to spend in the face of a lack of demand and that is why they are where they are now. If we continue to have ignorant politicians voting against spending measures, then we will make Japan look like the happy ending of a fairy tale.

    And as I’ve stated before, numerous times, there was no 1920′s depression. There was a market adjustment and a small recession. nothing even remotely close to the great depression, long depression or what we’re facing now. Continuing to speak about a depression in the 1920s just makes you sound ignorant, so please stop it.

  5. JW:
    And as I’ve stated before, numerous times, there was no 1920?s depression. There was a market adjustment and a small recession. nothing even remotely close to the great depression, long depression or what we’re facing now. Continuing to speak about a depression in the 1920s just makes you sound ignorant, so please stop it.

    http://www.thefreemanonline.org/featured/the-depression-youve-never-heard-of-1920-1921/

    P. Murphy
    The Depression You’ve Never Heard Of: 1920-1921

  6. Yes, NZT, Keynes caused Japan to have “the lost decade” and then some.

    Proof, liar?

  7. As I said in the very first sentence: “Our friends on the left seem to think that if a government program isn’t working as advertised, then we obviously need to double the size of the program!” For them, there is never enough evidence that a program simply doesn’t work, because the argument is always that not enough was spent, that the program wasn’t big enough. The only notable exception comes in military programs, where any failures at all mean that the entire program is a waste.

  8. For them, there is never enough evidence that a program simply doesn’t work, because the argument is always that not enough was spent, that the program wasn’t big enough.

    No – if the amount that was stated was required had been spent, and then it failed, that would be evidence against the idea.

    Again, when the doctor tells you at the start to take two of the pills four times a day, and you take one of the pills three times a day, then you can’t blame the medicine as useless because it doesn’t get the results promised.

    I realise that you’re not interested in actual facts, Dana, but look at this from Jan 2009:

    Finally, compare this with the economic outlook. “Full employment” clearly means an unemployment rate near 5 — the CBO says 5.2 for the NAIRU, which seems high to me. Unemployment is currently about 7 percent, and heading much higher; Obama himself says that absent stimulus it could go into double digits. Suppose that we’re looking at an economy that, absent stimulus, would have an average unemployment rate of 9 percent over the next two years; this plan would cut that to 7.3 percent, which would be a help but could easily be spun by critics as a failure.

    And that gets us to politics. This really does look like a plan that falls well short of what advocates of strong stimulus were hoping for — and it seems as if that was done in order to win Republican votes. Yet even if the plan gets the hoped-for 80 votes in the Senate, which seems doubtful, responsibility for the plan’s perceived failure, if it’s spun that way, will be placed on Democrats.

    I see the following scenario: a weak stimulus plan, perhaps even weaker than what we’re talking about now, is crafted to win those extra GOP votes. The plan limits the rise in unemployment, but things are still pretty bad, with the rate peaking at something like 9 percent and coming down only slowly. And then Mitch McConnell says “See, government spending doesn’t work.”

    Krugman clearly underestimated how bad the depression was going to get, but was right on the money by stating that the stimulus was too weak.

    But never mind. With a bit of luck, you people will be able to scream Obama out of a job in 2012 and implement your austerity schemes. And the US will follow Japan straight off the cliff.

  9. Sharon has a story on just how wonderful the Porkulus Plan spending was:


    Wasting Taxpayer Money

    Rational people have known all along that the so-called Stimulus Bill was nothing but Democrat payback and pork. But this story on port barrel spending hits close to home.

    But to former Republican presidential nominee John McCain, spending $454,200 in federal stimulus funds to replace lighting at Softball World, a city park in Euless, is a prime example of how the government is wasting taxpayer dollars.

    “Playing in the glow of stimulus funded lights — now that’s something completely new,” according to a “Summertime Blues” report written by Sens. McCain, R-Ariz., and Tom Coburn, R-Okla. “One would think that the teams using the fields should just pay higher fees for the light renovations instead of the American taxpayer, most of whom will never see Euless, Texas, no matter how bright the new lights are.”

    But many who live in the Northeast Tarrant County city said that more than 100,000 people use or visit the city park each year and that the lighting is a proper use of stimulus funds.

    “This is ridiculous,” said Richard Hopkins, who plays outfield with the Diamond Softball Club at the park about three nights a week. “A lot of people go to the park to play or watch, and this is a need.

    “The lights are definitely antiquated, they are more than 25 years old. This will help make them energy-efficient,” he said. “It’s unfair that they singled out the one park in Euless.”

    Is this how we define a “need” these days? A bunch of people like playing softball, so they “need” taxpayer funds to upgrade the lighting system?

    At a time of economic hardship, paying for new lighting at a softball field seems wasteful and trivial. And worse, look at the “jobs saved or created” numbers:

    At No. 99 was Softball World, a project expected to be finished within a year and save or create 2.8 jobs.

    That’s something over $162k per job. For softball lights. And they wonder why Americans are angry?

    Sharon gets it: she understands the difference between what’s nice and what’s necessary. The lights are nice, but they weren’t necessary; the public would have still survived without the project. And the 2.8 jobs “saved or created” at a cost of $162,000 per job? Once the project is completed, then what do we do, light up a new soccer field to keep those guys employed?

  10. Of course, we have to ask: just what are we paying for the money we’re borrowing? The last public auction of 10 year Treasury Bills was in May of this year. The median yield was 3.51%, and the price was $990.598723 for a $1,000 par value TNX.

    That means, to finance the $454,200 softball field lights Sharon noted, assuming that the TNX was used, the United States actually sold $458,510.59 in face value bonds. Then the government is obligated to pay the T-Bill holder $16,093.72 every year, for ten years, at which point he still holds $458,510.59 in a then-mature TNX. We obtained $454,200 to put lights on that softball field, but we increased the national debt $619,447.79 to do it.

    Of course, that’s just peanuts, right? The final number for the 2009 Porkulus Bill was $787 billion. Assuming it was all done at the May 10 year T-Bill auction rates — an oversimplification, but it makes the point — then the face value of the T-Bills issued to cover the $787 billion were $794.5 billion, and the annual payments owed the bond holders was $27.9 billion. Total it all up and the $787 billion Porkulus Plan actually added $1,073.4 billion — that’s $1.073 trillion — to the national debt.

    At some point, that $1.073 trillion has to come back out of government coffers. Some of it will go to the Social Security Trust Fund, some will go to wealthier Americans, the ones with enough disposable income to invest in T-Bills in the first place (y’all do realize that deficit spending by the federal government only makes the wealthy wealthier, right?), and some will go to overseas investors, leaving our economy entirely.

    And, in another irony, if y’all get what you want, significantly higher taxes on the wealthy, you’ll force the yield on Treasury Bills higher, and the par value discount larger, because the wealthy will need higher returns to pay the increased taxes. And if foreign bidders manage to keep the yields lower, to the point where wealthy Americans decrease their participation, then you wind up sending more of the debt repayments abroad, removing it from our economy entirely.

  11. That means, to finance the $454,200 softball field lights Sharon noted, assuming that the TNX was used, the United States actually sold $458,510.59 in face value bonds. Then the government is obligated to pay the T-Bill holder $16,093.72 every year, for ten years, at which point he still holds $458,510.59 in a then-mature TNX. We obtained $454,200 to put lights on that softball field, but we increased the national debt $619,447.79 to do it.

    I’ve got an idea – instead of selling T-Bills to those rich enough to afford them, why not simply tax the rich instead?

  12. Dana: “Sharon gets it: she understands the difference between what’s nice and what’s necessary. The lights are nice, but they weren’t necessary; the public would have still survived without the project. And the 2.8 jobs “saved or created” at a cost of $162,000 per job? Once the project is completed, then what do we do, light up a new soccer field to keep those guys employed?”

    With all due respect, Sharon doesn’t get it, and neither do you, Dana. Krugman did/does, as per PiaToR’s cite.

    The idea behind the 2.8 jobs, and the many more like it, is that the effort is win-win, that is, stimulating the economy further, which grows jobs and creates more demand, and which further grows the economy. The funding for the 2.8 jobs is a risk investment, aimed at growing more jobs once the positive cycle is started. It makes good sense to me.

    If we do nothing, as you have recommended before, then demand does not increase, nor do jobs, nor does GDP growth. Is this rocket science, or what? Answer: It is simple logic that even the roper can understand.

    And note well the criterion you expressed for stimulus decisions: If the public “would still have survived without the project”, then we should not support it. You were kidding when you wrote that, weren’t you? Oh I know, it must have been a typo. Come on, Dana, that is not even close to being a reasonable criterion, although I will say, it fits your desire to do nothing. So you are consistent, consistently wrong on this issue, in my view.

    Krugman accurately predicted the outcome of too small a stimulus. Maybe now is a good time for you righties to listen to him! Here is what he wrote recently:

    We’re told that we can’t afford to help the unemployed — that we must get budget deficits down immediately or the “bond vigilantes” will send U.S. borrowing costs sky-high. Some of us have tried to point out that those bond vigilantes are, as far as anyone can tell, figments of the deficit hawks’ imagination — far from fleeing U.S. debt, investors have been buying it eagerly, driving interest rates to historic lows. But the fearmongers are unmoved: fighting deficits, they insist, must take priority over everything else — everything else, that is, except tax cuts for the rich, which must be extended, no matter how much red ink they create.

    The point is that a large part of Congress — large enough to block any action on jobs — cares a lot about taxes on the richest 1 percent of the population, but very little about the plight of Americans who can’t find work.

    Well, if Congress won’t act, what about the Federal Reserve? The Fed, after all, is supposed to pursue two goals: full employment and price stability, usually defined in practice as an inflation rate of about 2 percent. Since unemployment is very high and inflation well below target, you might expect the Fed to be taking aggressive action to boost the economy. But it isn’t.

    It’s true that the Fed has already pushed one pedal to the metal: short-term interest rates, its usual policy tool, are near zero. Still, Ben Bernanke, the Fed chairman, has assured us that he has other options, like holding more mortgage-backed securities and promising to keep short-term rates low. And a large body of research suggests that the Fed could boost the economy by committing to an inflation target higher than 2 percent.

    But the Fed hasn’t done any of these things. Instead, some officials are defining success down.

    For example, last week Richard Fisher, president of the Federal Reserve Bank of Dallas, argued that the Fed bears no responsibility for the economy’s weakness, which he attributed to business uncertainty about future regulations — a view that’s popular in conservative circles, but completely at odds with all the actual evidence. In effect, he responded to the Fed’s failure to achieve one of its two main goals by taking down the goalpost.

    He then moved the other goalpost, defining the Fed’s aim not as roughly 2 percent inflation, but rather as that of “keeping inflation extremely low and stable.”

    In short, it’s all good. And I predict — having seen this movie before, in Japan — that if and when prices start falling, when below-target inflation becomes deflation, some Fed officials will explain that that’s O.K., too.

    What lies down this path? Here’s what I consider all too likely: Two years from now unemployment will still be extremely high, quite possibly higher than it is now. But instead of taking responsibility for fixing the situation, politicians and Fed officials alike will declare that high unemployment is structural, beyond their control. And as I said, over time these excuses may turn into a self-fulfilling prophecy, as the long-term unemployed lose their skills and their connections with the work force, and become unemployable.

    I’d like to imagine that public outrage will prevent this outcome. But while Americans are indeed angry, their anger is unfocused. And so I worry that our governing elite, which just isn’t all that into the unemployed, will allow the jobs slump to go on and on and on.

    Krugman was right once, predicting where we are now. Will he be right again? Only if we continue with a stagnant Senate that does nothing more, as Dana and Sharon would like to see.

  13. PiaToR“I’ve got an idea – instead of selling T-Bills to those rich enough to afford them, why not simply tax the rich instead?”

    Bingo!!!

    I guess Dana would never think of that solution.

    Dana, perhaps you haven’t internalized the fact that you might well be unemployed in two years if there is no stimulus money to finance infrastructure like highway/bridge construction, and if consumers have little discretionary spending money, and if small businesses cannot get loans to stay in business, thus little demand for concrete, then what will you do? Paint fences? After all, you do have some recent experience at that!

  14. OK, let’s assume that you get your wish, and we have yet another $787 billion stimulus bill in late 2010. That’ll be another $1+ trillion in national debt, which will have to be paid. At what point do you think that we’ll owe so much, and have so much of our productivity coming out and vanishing overseas, that we won’t be able to sustain high employment here?

    We’re in a hole, and the only tool y’all see to use is a shovel. At what point do you stop digging?

  15. Perry wrote:

    PiaToR“I’ve got an idea – instead of selling T-Bills to those rich enough to afford them, why not simply tax the rich instead?”

    Bingo!!!

    I guess Dana would never think of that solution.

    Since we depend on the wealthy to keep buying T-Bills and financing our deficit, it would be a self-defeating answer; that would mean that all of our debt would head overseas.

    And given that we depend on the better off to invest and create jobs, when you raise taxes to the point that they see no reasonable chance of a decent return after taxes, they stop investing and creating jobs.

    Capitalism is a system which depends upon the idea that someone can be more successful than others, and become wealthy. If you take away the incentive to be a capitalist, you wind up with universal poverty.

    I know that this will seem like a wholly radical idea, but the wealthy and corporations are not your enemies; they are the ones who create jobs for other people.

  16. OK, let’s assume that you get your wish, and we have yet another $787 billion stimulus bill in late 2010. That’ll be another $1+ trillion in national debt, which will have to be paid.

    …by taxing the rich, say at the same level they were before Reagan, when your economy performed better than it is now…

    At what point do you think that we’ll owe so much, and have so much of our productivity coming out and vanishing overseas, that we won’t be able to sustain high employment here?

    You are aware of the difference between the budget deficit and the trade deficit, right?

    Since we depend on the wealthy to keep buying T-Bills and financing our deficit, it would be a self-defeating answer; that would mean that all of our debt would head overseas.

    Dana, dear, if you taxed the rich, you wouldn’t have a deficit to finance – the choice is between taking their money as taxes, or taking their money as a loan. And, again, you seem to be mistaking the budget deficit and the trade deficit.

  17. And given that we depend on the better off to invest and create jobs, when you raise taxes to the point that they see no reasonable chance of a decent return after taxes, they stop investing and creating jobs.

    Why was your economy performing better in the decades before Reagan, when it had a higher top marginal rate, tahn it is now?

  18. PiaToR: “…by taxing the rich, say at the same level they were before Reagan, when your economy performed better than it is now…”

    Not only before Reagan, but during Clinton too. During Clinton we had a tax increase followed by a robust economy and good job growth. During Bush-43 we had two tax cuts, we ended with the largest deficit ever and a Great Recession and no net job growth over his eight years.

    Dana, you have an idealized economic theory which has no historical precedent. Therefore your rationalizations, though plausible, are not the realities that we’ve known. On the other hand, the Keynesian approach has worked, even in Obama’s hands, but not nearly enough. That is why we need more stimulus currently.

    Dana: “… that would mean that all of our debt would head overseas.”

    So what? The Chinese seem to be willing to take more risk in their investment in our economy than our own wealthy bankers and folks. For some reason, the latter are more willing to sit on their trillions, at a time when the economy needs their confidence and their investment. The “unusual uncertainty” is in the minds of our people with money who are full of fear, stoked by the right wing media!

    Dana: “I know that this will seem like a wholly radical idea, but the wealthy and corporations are not your enemies; they are the ones who create jobs for other people.”

    But they are our enemies, unwilling to take risks for the sake of their American economy. They were more than willing to take risks on credit default swaps and on selling short using nanosecond trading vehicles. How about their going long on the American economy, like they advise the middle class investors and pension managers to do?

    [This post was edited, 08/09, to clarify which commenter said what.]

  19. Yorkshire, just because one crackpot calls a recession a depression, doesn’t make it true. Especially when the article is written by someone that is clearly deranged. The guy has previously defended all sorts of obviously faulty practices within financial markets.

    It is widely accepted that we have had two depressions in the history of the US. The first one being in the 1870s and the second one being the great depression of the 1930s. I addressed this in a previous thread.

  20. The Phoenician wrote:

    …by taxing the rich, say at the same level they were before Reagan, when your economy performed better than it is now…

    I guess that you haven’t heard about our economy during the Carter years, have you? We had unemployment near 10% and inflation close to 20%, when President Carter was defeated, and he had defeated President Ford in significant part because our economy was doing poorly then as well.

  21. JW says:
    8 August 2010 at 11:58 pm (Edit)
    Yorkshire, just because one crackpot calls a recession a depression, doesn’t make it true. Especially when the article is written by someone that is clearly deranged. The guy has previously defended all sorts of obviously faulty practices within financial markets.

    Go to Google, there’s lots of crackpots writing about it. So, since you say so, everybody else is wrong.

  22. Dana: “I guess that you haven’t heard about our economy during the Carter years, have you? We had unemployment near 10% and inflation close to 20%, when President Carter was defeated, and he had defeated President Ford in significant part because our economy was doing poorly then as well.”

    I think the main thrust for Carter’s victory was the anti-Nixon sentiment present, due to Watergate and due to Nixon’s deceptive secret bombing war in Laos and Cambodia.

    During his term, Carter was also a victim of the rapidly rising oil prices by OPEC, a situation which was out of his control, and which was the main contributor to runaway inflation, thus to unemployment as well. The Iran Hostage Crisis was another event which Carter actually resolved, but Reagan got the credit as the hostages were returned the very first day of the Reagan presidency. I assume you knew all this, Dana, so I guess you forgot to mention it, as required to give context to your comments.

  23. Dana asked: “We’re in a hole, and the only tool y’all see to use is a shovel. At what point do you stop digging?”

    That’s a good question, of course, and I don’t know the answer. And I have yet to see one expert out there who does know. There are some who say we should do more (Krugman, Zandi, Bernanke, Romer, Reischauer, Davis), and there are some who say we should not (Rubin, Holtz-Eakin, Rivlin, Edwards (Donna), Feldstein, Kos}.

    Here is a quick read reference to the debate pros and cons that is worth the read.

    My personal opinion is that we need another stimulus, which can be financed, at least partially, by letting the tax cuts on the >$250Kers, bringing them back to the Clinton levels, which appeared to have a positive impact on the economy.

    Now please, folks, study this important graph:

    We are now at a debt to GDP ratio of 87.6% of GDP. Note that we were at about that point in 1950, well after WWII, after which the combined tax and spending policies under Truman, Ike, Kennedy, LBJ, Nixon/Ford, and Carter (yes, Carter too!) brought this figure down to about 35% of GDP. Then came Reagan/Bush-41, who doubled the the debt to 70% of GDP, then Clinton lowered it to 55%, followed by Bush-43 who jacked it back up to 80% (and his two wars and Medicare D were off budget, therefore not counted), and now Obama has it up to about 90% (having also absorbed into the budget Bush’s off budget deficits).

    Given this national deficit/debt record, which party would you say is more fiscally responsible.

    In my view, this is where the rubber meets the road concerning fiscal policy and fiscal discipline.

    There is no question, we must raise taxes (on the >$250Kers, and we must cut spending (mainly DoD, but some on entitlements as well). And, to counter the downward spiral in jobs and GDP, we must have a second stimulus, better targeted this time to put more people to work and to make loans available for small businesses.

    The Dem policy on taxes is what I wrote, but the spending cuts have not been spelled out as far as I know. The Rep policy is to go back to Reagan/Bush-43.

    Doesn’t this historically accurate chart tell you wingnuts anything about whose policies to trust more, or are you going to continue to keep your ideological heads in the sand?

  24. Krugman accurately predicted the outcome of too small a stimulus. Maybe now is a good time for you righties to listen to him! Here is what he wrote recently:

    Krugman has about as much credibility as Daffy Duck. Me, I’ll take Milton Friedman and Adam Smith.

  25. …by taxing the rich, say at the same level they were before Reagan, when your economy performed better than it is now…

    Dana beat me to it, but living in NZ, you might not be aware that the Carter economy sucked. Indeed, it sucked through most of the 1970′s.

  26. Again, when the doctor tells you at the start to take two of the pills four times a day, and you take one of the pills three times a day, then you can’t blame the medicine as useless because it doesn’t get the results promised.

    More like: you take the dose recommended by the doctor (the current stimulus) and it doesn’t work at all, so you double the dose, expecting different results.

  27. Not only before Reagan, but during Clinton too. During Clinton we had a tax increase followed by a robust economy and good job growth.

    Except the economy (and the stock market) didn’t really start to seriously improve until the GOP took over Congress in 1994, when Gingrich pretty much forced Clinton to balance the budget. Granted, the deficit then got bigger under Bush, but we here have criticized him and the GOP Congress at the time for getting piggish on spending (never mind we had two wars going on). But nothing Bush did could possibly compare to what Obama is doing to the deficit and debt.

  28. Except the economy (and the stock market) didn’t really start to seriously improve until the GOP took over Congress in 1994, when Gingrich pretty much forced Clinton to balance the budget

    Boy, talk about rewriting history.

  29. More like: you take the dose recommended by the doctor (the current stimulus)

    Except for the teeny tiny fact that economists were saying at the time that the stimulus was inadequate. As shown in the piece I gave a goddamned link to.

  30. But to former Republican presidential nominee John McCain, spending $454,200 in federal stimulus funds to replace lighting at Softball World, a city park in Euless, is a prime example of how the government is wasting taxpayer dollars.

    Me, I don’t care so much about these little spending projects, since it would take several thousand of them to make a real dent in gov’t spending. Still, this project is exactly the sort of thing that should be handled at the local level, there’s no need for the Feds to get involved in something as frivolous as this.

  31. And given that we depend on the better off to invest and create jobs, when you raise taxes to the point that they see no reasonable chance of a decent return after taxes, they stop investing and creating jobs.

    Now you’re demonstrating you are just making things up. Remember, we were talking about taxing the rich rather than selling them T-Bills.

    When the rich buy T-Bills, they’re not investing and creating jobs. The money that they lend to the government is not ALSO being put into the private sector, Dana. The money that the rich has goes to the government in both scenarios; it’s just that in the latter, it is exchanged in return for a permanent burden on the public coffers.

  32. Eric: “Dana beat me to it, but living in NZ, you might not be aware that the Carter economy sucked. Indeed, it sucked through most of the 1970?s.”

    Were you even aware then, Eric? I figure you were a no more than a toddler.

    I was there and very well aware of what was going on. I agree the times sucked then, for many major reasons not under Carter’s control, like the oil supply and escalating cost crises, like the aftermath of a war we lost, like the Iran hostage crisis, just to name a few biggies. Yet Carter gets all the blame from you wingnuts!

    Reagan came in as a tax cutter and big spender, which temporarily boosted the economy, yet compounded the national debt, by which he started the trickle down approach that right now has come home to roost on the backs of Obama and the Dems. And you folks have the audacity to blame Obama and the Dems, when the facts are otherwise.

    But who is to blame doesn’t really matter that much, because we are where we are, which is in a very bad place indeed!

    The ultimate tragedy for our nation might yet be in our future, if you and yours somehow get back in power in 2010 and 2012, thus continuing our free fall, in my view. So far you have no more of a policy than to say cut taxes and cut spending, as if this generalization, without details, is something we can depend on to help.

  33. Except for the teeny tiny fact that economists were saying at the time that the stimulus was inadequate.

    Correction: some economists. There are plenty of free market economists who think this sort of wasteful spending does no good at all. It sure isn’t doing squat now, so why you think doubling the dose will help is a complete mystery.

    PS I don’t waste my time on your stupid links. If you have an actual point to make, then post the relevant part of the article, along with the source.

  34. PS I don’t waste my time on your stupid links

    Yes, Eric, we are well aware that you take great pride in being an ignorant putz.

  35. Perry ignores the spending side of deficit spending (which creates the debt). Perry also ignores the Constitutionally required originator of the federal budget. Perry also ignores who ran the House of Representatives throughout the Reagan administration. Perry also ignores who ran the House of Representatives when the deficit dropped precipitously under the Clinton administration.

    Remember when Reagan’s budgets were declared “dead on arrival” by the Democrat House of Representatives? Remember when Clinton declared “the era of big government is over” as the Republicans regained the House after over 40 years in the minority? Note the huge increase in deficit spending starting around 2007? Which Party held the legislature? Or the monstrous explosion in the deficit since Obama got power?

    It is Perry whose head is permanently stuck in the sand.

  36. Eric: “PS I don’t waste my time on your stupid links. If you have an actual point to make, then post the relevant part of the article, along with the source.”

    Stupid links are they, Eric? Right, determined without even looking. Speaks volumes about YOU, Eric!!!

  37. Hitchcock: “It is Perry whose head is permanently stuck in the sand.”

    Citations please! You rattle off a series of allegations without one citation. That is totally unimpressive and not at all convincing to anyone other than right wing ideologues, you know, Rush Limbaugh lovers.!

    And right, Hitchcock, it’s all the Dems fault. On the contrary, the facts are the facts, as in the Debt/GDP chart I posted. Did you study it? And the trends are there, if one wants to compare performance under Dem vs Repub administrations. So you can nitpick all you want, you cannot refute the facts of this key chart, unless you wish to continue to demonstrate your utter ignorance! Your choice!!

  38. From 1940 well into the 1950s, the industrialized world was in shambles, with the notable exception of North America, giving the US a massive market to fill with their products. Countries behind the Iron Curtain were not given the opportunity to recover, due to Marxist rule.

    Republicans had control of the House in 1947, 1948, 1953, 1954 and not again until 1995 where they held the House until the 2006 elections.

    Bill Clinton’s 1996 State of the Union Address (remember, Republicans took back the House in 1995 on the strength of the Contract for America, a limited-government contract):

    We know big government does not have all the answers. We know there’s not a program for every problem. We have worked to give the American people a smaller, less bureaucratic government in Washington. And we have to give the American people one that lives within its means.

    The era of big government is over. But we cannot go back to the time when our citizens were left to fend for themselves. Instead, we must go forward as one America, one nation working together to meet the challenges we face together. Self-reliance and teamwork are not opposing virtues; we must have both.

    I believe our new, smaller government must work in an old-fashioned American way, together with all of our citizens through state and local governments, in the workplace, in religious, charitable and civic associations. Our goal must be to enable all our people to make the most of their own lives — with stronger families, more educational opportunity, economic security, safer streets, a cleaner environment in a safer world.

    Dead on Arrival:

    Ronald Reagan is under mounting pressure from congressional leaders to agree to a “budget summit” to build bipartisan support for the fiscal year 1988 budget. After the now annual declaration that the President’s budget is dead on arrival on Capitol Hill, Democratic lawmakers, led by the new Senate Budget Committee chairman, Lawton Chiles of Florida, want the White House to agr ee to a “grand compromise.” In this, Congress supposedly would agree to some spending reductions while the White House would give in and accept tax increases.

    Here they go again. In 1982, Reagan bought such a grand compromise. He trusted Congress when it p romised three dollars of budget cuts for each dollar of tax increases. It turned out to be a fake pass. The result: the American public got the tax increase but almost no spending cuts. Ronald Reagan was tricked by Congress in 1982. He should not fall for it a second time.

    In the late 1940s, throughout the 1950s, the US was experiencing what happens when one country has undamaged industrial might and the rest of the world doesn’t. Ike was a Republican. JFK dramatically cut taxes on the “rich” from the 70 percent they were (after they had been previously cut from roughly 90 percent). The Democrat Congress reneged on its deal to cut spending “three dollars for every dollar in increased taxes” it made with Reagan in 1982.

    Clinton was a big-government tax-n-spender before the GOP took the House, such as his 1993 budget.

    Republicans attacked the Democrat’s first budget as relying too heavily on new taxes, rather than real spending cuts, to pare the deficit, and they repeatedly defined the stimulus package as a wasteful spending and pork, rather than real job creation.

    Dole agreed the Clinton budget sets new priorities for government, but said Clinton’s budget offered “biggest taxes, bigger spending, and bigger government. There’s nothing about `change’ in this whopping tax-and-spend budget.”

    And Rep. Smith, the budget committee member designated by the House Republicans as their spokesman, pinpointed a key GOP complaint: About 80 percent of the $151 billion in Clinton spending cuts comes in the last two years of the five-year plan. “If anyone believes that, they believe they’ll see the Easter Bunny on Sunday.” Budget analysts agreed that the history of savings targeted for the “out years” is that they do not materialize.

    Remember, after Clinton’s two years of “grow the government, tax the rich” the US yacht industry almost died. And the American people threw those Democrat bums out of the House, and kept them out until 2006.

  39. The following is from the Washington Examiner, Opinion/Editorial, August 8, 2010.

    “Time to admit Obamanomics has failed”

    “…Predictably, the stimulus bill has proven to be an extraordinary waste of borrowed money that has failed to create jobs, generate economic growth or do much of anything other than line the pockets of White House political allies. That and give $308 million in subsidies to BP before the Gulf oil spill disaster, and subsidize a study on what happens when monkeys snort coke.

    As Romer fades back to her teaching post at Berkeley, Obama is adding to the economic misery by creating an environment of regulatory uncertainty. The Wall Street reform law Obama recently signed potentially requires 533 new regulations, 60 studies and 93 reports, according to the U.S. Chamber of Commerce. Obama’s Environmental Protection Agency has 29 active rulemakings, and there are 100 new rules on the Labor Department’s agenda and 26 at the Transportation Department.

    Add Obama’s determination to raise everybody’s taxes by allowing the Bush cuts from 2001 and 2003 to expire Jan. 1, 2011, and it’s easy to why banks, businesses and consumers are hoarding trillions of dollars that could otherwise spur economic growth. And we haven’t even addressed the destructive effect on economic growth of Obama’s nationalization of major portions of the economy, including the banks, health care and the auto industry.

    The economy is stalling, unemployment seems stuck at European levels of idleness, the federal deficit and the national debt are at historic highs, public confidence in Congress is at its lowest-ever level and big majorities of Mainstream Americans say Obama has the country on the wrong path. Obamanomics has failed miserably and it’s time for everybody in this town to admit it so we can move on.”

  40. Stupid links are they, Eric? Right, determined without even looking. Speaks volumes about YOU, Eric!!!

    What, that I have other things to do besides follow.every link on this and other sites. Besides, on those few occasions I have clicked on one of his links, they’re usually to some far left site, and therefore next to worthless. Dana, myself, York (and Art, when he was healthy) also participate in a private email group, which also takes up my time. Finally, Dana has the right approach. He posts the relevant part of an article, then a link for those who want to read the rest. the rest. Others would be wise to follow this example. In short, now that this site has gotten busier, it’s all I can do to to simply keep up with the various threads plus participating a bit. Unlike some others, I don’t have all day to dig up and track down every link that comes down the pike.

  41. Besides, on those few occasions I have clicked on one of his links, they’re usually to some far left site, and therefore next to worthless.

    So were you too lazy to follow the link to epistemic closure, or simply too stupid to understand it?

  42. PS apologies for punctuation and other errors in the above. I was typing this on my iPhone, which doesn’t always make for good typing skills.

  43. Unlike you, pho, I don’t have endless tiime to post or read crap all over the Internet. Like I said, just post the relevant parts and don’t waste my time on all this other stuff.

  44. Unlike you, pho, I don’t have endless tiime to post or read crap all over the Internet

    Yes, Eric, we’re aware that you’re ignorant and proud of it.

  45. Pho says,”Krugman clearly underestimated how bad the depression was going to get, but was right on the money by stating that the stimulus was too weak.”

    Yes his hindsight is amazing. His foresight, not so much. From a Nov 8, 2008 article by Mr. Krugman in the NY Times,

    “So we need a fiscal stimulus big enough to close a 7% output gap. Remember, if the stimulus is too big, it does much less harm than if it’s too small. What’s the multiplier? Better, we hope, than on the early-2008 package. But you’d be hard pressed to argue for an overall multiplier as high as 2.

    When I put all this together, I conclude that the stimulus package should be at least 4% of GDP, or $600 billion.”

    The stimulus package was $ 787B, more than he said was the minimum. So when Paul says it wasn’t enough it kind of rings hollow.

  46. jcw:

    Re the $600 billion, I think Krugman is referring to the second stimulus we need to have.

    The outcome has proved him right, that the first stimulus was too little.

    Incidentally, an additional 4% of GDP is actually is not too extravagant, considering that our national debt would then be around 90% of GDP, admittedly high, but at the same place we were during Truman in 1951, which was managed well by Ike, Kennedy, Johnson, Nixon/Ford and Carter, bringing it down to about 35% of GDP. Then we got Reagan and then Bush-43, who managed to more than double it. Now we have Obama, with the hope that he, like Clinton was, will be successful in starting our recovery and bringing down our national debt.

    The other point to make is that the European countries currently in serious debt crises are in the 200-300% of GDP range; we are well below that.

  47. Perry, reading comprehension is your friend. You ought to try it some time.

    Yes his hindsight is amazing. His foresight, not so much. From a Nov 8, 2008 article by Mr. Krugman in the NY Times,

  48. You are correct, Hitchcock. I thought the next to the last sentence was jcw’s statement.

    To avoid this problem, posters should use italics or a blockquote, minimizing the likelihood of the kind of error I made.

    However, I do stand by the facts stated in the last two paragraphs of my response, meaning, therefore, that I favor another stimulus, otherwise our chances for early recovery are about nil.

  49. The Phoenician fails to impress me with his economic knowledge:

    When the rich buy T-Bills, they’re not investing and creating jobs. The money that they lend to the government is not ALSO being put into the private sector, Dana. The money that the rich has goes to the government in both scenarios; it’s just that in the latter, it is exchanged in return for a permanent burden on the public coffers.

    When someone buys Treasury Bills (unless he is buying a zero-coupon bond), he will receive a regular interest payment, normally twice a year, through the maturity of the T-Bill. That is an investment for him, and unless you think that money goes into a mattress, it does go back into the economy. When he sells the T-Bill at maturity, he gets his original investment back, plus the discount, so that, too, is an investment for him. You seem to think that an investment only counts if it creates something other than additional money for the investor; not quite the Marxist Labor Theory of Value, but akin to it, and wholly wrong.

    Further, the money he lends the government is put back into the private economy: it pays the wages of government employees and it buys the products the government buys. In that, it operates no differently from taxation.

    But if you increase taxation to the levels you seem to want, you discourage private investment in things which generate income and productivity; risk becomes overwhelming when the rewards are confiscated. It makes much more sense to invest your money abroad, and seek whatever tax shelters you can find; it might even make more sense to emigrate if taxes become too high.

    We know that you just plain resent the wealthy, but that doesn’t mean that your notions make wise policy.

  50. Perry wrote:

    Re the $600 billion, I think Krugman is referring to the second stimulus we need to have.

    Given that you referred to an article Mr Krugman wrote on 8 November 2008, before the first stimulus package was passed, and before President Obama took office, your conclusion seems unlikely.

    The outcome has proved him right, that the first stimulus was too little.

    No, it does not prove that at all; it could just as well indicate that the stimulus was wasted money.

    Mr Hitchcock noted the time error, which you acknowledged, but then wrote:

    However, I do stand by the facts stated in the last two paragraphs of my response, meaning, therefore, that I favor another stimulus, otherwise our chances for early recovery are about nil.

    Yet what you stated was that what you felt was well managed Administrations reduced our national debt; that seems a strange point to make when you are advocating increasing our national debt.

    The fact is that we will have a recovery; we always do. Whether we can have an “early recovery,” which I take to mean a recovery which is somehow hastened by government intervention, ignores the depressing effects on the economy of having to pay the increased debt, and what which would probably mean that the next recession — and we will have another one — might be hastened as well.

    Our debt levels are not to those which necessitated the bailout of Greece, but when we do get there, there is no one who can bail out the US.

  51. You seem to think that an investment only counts if it creates something other than additional money for the investor; not quite the Marxist Labor Theory of Value, but akin to it, and wholly wrong.
    [...]
    But if you increase taxation to the levels you seem to want, you discourage private investment in things which generate income and productivity; risk becomes overwhelming when the rewards are confiscated.

    You seem to think that money that gets loaned to the government is also available to be loaned to the private sector. It is not. To run a deficit soaks up just as much money away from private investment as actually taxing that money.

    Further, the money he lends the government is put back into the private economy: it pays the wages of government employees and it buys the products the government buys. In that, it operates no differently from taxation.

    But it creates an obligation burdening further generations of tax-payers, Dana. If it operate no differently from taxation in respect to being plowed back into the economy, but taxation doesn’t create long-term obligations, why not tax the money instead?

  52. The Phoenician wrote:

    You seem to think that money that gets loaned to the government is also available to be loaned to the private sector. It is not. To run a deficit soaks up just as much money away from private investment as actually taxing that money.

    The interest payments the lenders earn are available for that. Further, since not all of the deficit is financed through American investors, where taxing away the money would come wholly from Americans, some of it actually is available for investment in the US. Overseas investors create their own set of problems, but the situation is not as you described it.

    But it creates an obligation burdening further generations of tax-payers, Dana. If it operate no differently from taxation in respect to being plowed back into the economy, but taxation doesn’t create long-term obligations, why not tax the money instead?

    If the added tax burden was spread evenly, among everyone, I’d object less, but the fact is that the American people vote consistently for lower rather than higher taxes. The real solution is to reduce the deficit by reducing government spending.

  53. Hitchcock: “Remember, after Clinton’s two years of “grow the government, tax the rich” the US yacht industry almost died. And the American people threw those Democrat bums out of the House, and kept them out until 2006.”

    Your post was filled with selected micro facts. The normal approach is to see what was accomplished, positively and negatively, during different President’s time in office, acknowledging that outcomes are due to a combination of the activities of the three branches of the federal government. Thus, we look at overall trends.

    For example, the national debt over time, see here again , suggests that Dem administrations have been better at controlling it than the Repubs.

    On growing the economy, see here:

    “For the forty years from 1961 to 2000, the president was from the Democratic Party half of the time and from the Republican Party for the rest. Each side had four presidents in those 40 years. During the administrations of the four Democrats, real GDP expanded 4.1% per annum, 1.2 percentage points faster than the average growth during Republican administrations of 2.9% per annum. Growth over the 7.5 years that George W. Bush has been president has averaged just 2.3% per annum.”

    Overall, these data indicate that Dem administrations do a better job of governing than Repubs. As a side issue, it was telling that only two House Repubs voted for the bill to save 161,000 jobs of police, firefighters, and teachers, indicating to me that they could care less if we have chaos in out streets; it’s all about their political goal to make Obama and the Dems fail. What about the country Hitchcock??? Did you support this bill?

  54. Did you support this bill?

    I absolutely positively did not support that scam of a bill which only served to pad unions and feed Democrat sycophants. It was economically idiotic, nothing honest about it at all.

  55. The editorial from the Washington Examiner (excerpt at my comment at 9 August at 8:29pm) was their most read editorial ever. It was linked by Drudge, which accounts for a much of the attention it received. However Drudge has linked Examiner editorials before without causing such a high volume of traffic. Likely it was a combination of the link and the title, which hit the nail on the head.

    It is time to admit the truth, conservatives have been pointing out the obvious fact for well over a year, but Obama’s true believers have stubbornly closed their eyes and closed their minds to the reality unfolding before us all.

    Could Obama’s failures be any more clear, could his attempts to blame GWB be any more revealing, could the emergence of the TEA Party make the public’s opposition to Obama’s policies any more evident?

    The following is part of Mark Tapscott’s reaction.
    Editorial Page Editor, August 10, 2010

    Most-read ever Examiner editorial: ‘Time to admit Obamanomics has failed’

    “Sunday’s Examiner editorial entitled “Time to admit Obamanomics has failed” was the most-read editorial ever published on this site. It’s not hard to see why, considering two of the latest economic indicators made public at the same time.

    First, there is the continuing plummeting of consumer confidence, as seen in Rasmussen Reports latest Consumer Index:

    “The Rasmussen Consumer Index, which measures the economic confidence of consumers on a daily basis, slipped on Monday to 69.7.

    “That’s down nine points since release of Friday’s disappointing jobs report and the lowest level of confidence measured since December 2, 2009. Eight percent (8%) rate the economy as good or excellent while 55% say it’s in poor shape.

    “Looked at on a month-by-month basis, consumer confidence increased on four of the first five months in 2010 and held steady in the fifth. However, it has fallen in the past two months, June and July.

    “The Rasmussen Investor Index, which measures the economic confidence of investors on a daily basis, also fell to a new 2010 low on Monday at 75.8.”

  56. the Roper: “It is time to admit the truth, conservatives have been pointing out the obvious fact for well over a year, but Obama’s true believers have stubbornly closed their eyes and closed their minds to the reality unfolding before us all. “

    This statement simply is not true. Obama, the Dems, and their supporters, I being one, have taken activist positions in attempting to right our nation and it’s economy, only to be obstructed at every turn in the Senate by the most frequent use in history of the filibuster threat.

    “Could Obama’s failures be any more clear, could his attempts to blame GWB be any more revealing, could the emergence of the TEA Party make the public’s opposition to Obama’s policies any more evident? “

    Oh, but the TRUTH is that the party in power during the GWB era are largely to blame. To pretend to be in denial of that fact is to attempt to distort history for current political gain. That simply does not wash in the mind of any honest, informed observer!

    ““The Rasmussen Investor Index, which measures the economic confidence of investors on a daily basis, also fell to a new 2010 low on Monday at 75.8.””

    The reason for this, I believe, is that we are in really hard times, and it is going to take a long period before the situation satisfactorily improves, according to the experts. We have allowed systemic weaknesses since Reagan to get worse for decades, like deregulation, skewed wealth distribution upwards, and too high personal and national debt build-up, that it has all come home to roost BIG TIME. For this, there is no quick fix other than to be creative, work hard, live within our means, and take care of those who suffer.

  57. only to be obstructed at every turn in the Senate by the most frequent use in history of the filibuster threat.

    Except that, until Scott Brown’s election, there WAS no filibuster threat. Nice try. And how pathetic is it that with considerable majorities, the Dems — like Perry — whine and cry about “obstruction.” What that really shows is that the policies wished to be enacted have NO — NONE — bipartisan appeal. If you cannot garner even ONE GOP senator’s support, this shows your policies suck. Period.

  58. Overall, these data indicate that Dem administrations do a better job of governing than Repubs. As a side issue, it was telling that only two House Repubs voted for the bill to save 161,000 jobs of police, firefighters, and teachers, indicating to me that they could care less if we have chaos in out streets; it’s all about their political goal to make Obama and the Dems fail. What about the country Hitchcock??? Did you support this bill?

    But why is this a job for the Feds? These are local and state functions, and should be paid for by those entities. Maybe if the Federal tax burden weren’t so high, towns and states would have more money to spend.

  59. Oh, but the TRUTH is that the party in power during the GWB era are largely to blame.

    More like the collapse of the housing market was to blame. Bush tried to reform Freddie and Fanny back in 2005, before the shit hit the fan, but Dems like Barney Frank and Chris Dodd would have none of it.

  60. This statement simply is not true. Obama, the Dems, and their supporters, I being one, have taken activist positions in attempting to right our nation and it’s economy, only to be obstructed at every turn in the Senate by the most frequent use in history of the filibuster threat.

    Will you get off this whine already? The Dems used the filibuster plenty in their time, especially in blocking Bush’s judicial appointments. Good for the goose, and all that.

  61. The reason for this, I believe, is that we are in really hard times,

    No thanks to Obama. He’s had a year and a half to fix things, and so far nada. Other than blaming Bush, of course.

  62. More stupid remarks from Eric, therefore any other response than this would be a waste of time. We’ve covered all this Eric. Try to keep up!

  63. No, Perry, you denied that Dodd and Frank did exactly what Dodd and Frank did, despite the fact Dodd and Frank did in fact do what they did. What is stupid is making claims that Democrats did not prevent Republicans from trying to fix FM2 years before FM2 collapsed, when in fact, Republicans tried to fix FM2 and Democrats would not allow it.

  64. Ya don’t need a weatherman to know which way the wind blows.

    Obama’s serial failures are accumulating at an alarming rate, his record is so bad Democrat candidates in the mid-terms are running away from him as fast as they can manufacture excuses, plausible or not, to be somewhere else when he comes calling.

    Obama’s equally shameless wife has just made herself a laughing stock, her prancing low-brow display of tawdry nouveau riche conspicuous consumption on the taxpayers dime rendered both her and her husband the unending subject of richly deserved public ridicule.

    A man who’s self-destructive adherence to the failed creeds of collectivism married to a wife so insecure she can’t stop obsessively wrapping herself in the absurd costumes of a vaudeville clown, both spending taxpayer’s money making themselves ridiculous trying to fill the voids in their empty souls, these are our elected leaders. This is the promise of the Democrat Party and this is the reality their media enablers have visited upon the American people.

    May they pay for their crimes, each and every one of them.

  65. Obama’s equally shameless wife has just made herself a laughing stock, her prancing low-brow display of tawdry nouveau riche conspicuous consumption on the taxpayers dime rendered both her and her husband the unending subject of richly deserved public ridicule.

    Don’t forget, ropelight, to mention she has a big ass, big lips, nappy hair…

    You know you want to.

  66. More stupid remarks from Eric, therefore any other response than this would be a waste of time. We’ve covered all this Eric. Try to keep up!

    The only thing stupid is the way you stick your head in the sand and refuse to admit the Dems’ role in the housing collapse. Read John H’s comments, he speaks the truth on this issue.

  67. Eric:

    Like I said, we have dealt with this issue, which developed when your party was in total control of all three branches of government. Do you care to debate this fact?

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