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Fri Feb 1, 2013, 04:25 PM

The Urgency of Growth - E.J. Dionne - WaPo

a very good article by a very good writer. He's getting a good deal of flack from jack-ass conservative schmucks, in case anybody would like to add some rational comments to his article.



http://www.washingtonpost.com/opinions/ej-dionne-its-about-growth-not-the-deficit/2013/01/27/d71fa160-68ba-11e2-af53-7b2b2a7510a8_story.html


If you care about deficits, you should want our economy to grow faster. If you care about lifting up the poor and reducing unemployment, you should want our economy to grow faster. And if you are a committed capitalist and hope to make more money, you should want our economy to grow faster.

The moment’s highest priority should be speeding economic growth and ending the waste, human and economic, left by the Great Recession. But you would never know this because the conversation in our nation’s capital is being held hostage by a ludicrous cycle of phony fiscal deadlines driven by a misplaced belief that the only thing we have to fear is the budget deficit.

Let’s call a halt to this madness. If we don’t move the economy to a better place, none of the fiscal projections will matter. The economic downturn ballooned the deficit. Growth will move the numbers in the right direction.

Moreover, the whole point of an economy is to provide everyone with real opportunities for gainful employment and economic advance — the generational “relay” that San Antonio Mayor Julian Castro affectingly described at last year’s Democratic convention. When we talk only about deficits, we take our eyes off the prize.

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Reply The Urgency of Growth - E.J. Dionne - WaPo (Original post)
Bill USA Feb 2013 OP
dkf Feb 2013 #1
Bill USA Feb 2013 #2
dkf Feb 2013 #3
RainDog Feb 2013 #6
AdHocSolver Feb 2013 #7
dkf Feb 2013 #8
RainDog Feb 2013 #10
dkf Feb 2013 #12
RainDog Feb 2013 #13
Bill USA Feb 2013 #15
Bill USA Feb 2013 #14
RainDog Feb 2013 #17
RainDog Feb 2013 #4
dkf Feb 2013 #9
RainDog Feb 2013 #11
Bill USA Feb 2013 #16
KoKo Feb 2013 #5

Response to Bill USA (Original post)

Fri Feb 1, 2013, 04:50 PM

1. Why do we equate growth with public spending?

 

Is there no other way?

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Response to dkf (Reply #1)

Fri Feb 1, 2013, 05:21 PM

2. when in an economic recession/depression businesses and people hang onto their money.

People don't spend (unemployed or afraid of becoming unemployed) and businesses don't add workers and don't spend on capital investments and even keep inventories low. This will continue until things 'bottom out' and demand slowly increases and employment starts to pick up - leading to more consumer spending and growth.

As it is right now, people don't have much money to spend. Those who are unemployed aren't going to be spending much, and those employed are watching how much they spend because times are not good and there is a certain amount of anxiety about whether they will have their jobs in six mongths or so. Businesses aren't going to hire back more people until they see sales going up. But sales won't go up until people start spending again.


To speed this up (and to avoid letting the downturn go even lower) we can act through the public sector by spending and creating more demand. Spending can be for unemployment insurance and for investments in infrastruture (which is in a very bad state after years of under-investment in this area). This can help encourage businesses to not lay off as many people and even hire back people sooner. As people get hired back they will spend more. Businesses seeing sales increase will hire people back to meet the demand.


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Response to Bill USA (Reply #2)

Fri Feb 1, 2013, 05:32 PM

3. What scares the people with the money who could be spending is the idea of so much government debt.

 

What happens when government spending causes people to pull back?

If people with means were thrilled with the idea of government borrowing and spending, it would have been done.

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Response to dkf (Reply #3)

Fri Feb 1, 2013, 09:00 PM

6. The problem is that the very rich need to be taxed at much higher rates

But those who have made some money think they're in the same boat as those who hold more wealth than many small nations... combined.

Allowing private persons to hold that much wealth and power is dangerous for democracy.

History provides ample lessons of the problems of highly stratified societies. They are much more unstable and, ultimately, less profitable for more people because such circumstances create an economy based upon protecting the wealth and health of a few at the expense of most everyone else.

So, when people reach a breaking point - and who knows what will be a tipping point at any one place in time - but when that happens, those who have accumulated a little wealth are the first to suffer... well, after the poor first turn on one another.

Revolution is nearly always followed by despotic regimes that confiscate wealth and destroy many lives in the attempt to consolidate power/change.

The other option is evolution, which, in the case of financial issues, is resolved by taxing those who are among the most powerful to reduce their power somewhat, but not entirely undo it.

I know I prefer evolution.

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Response to dkf (Reply #3)

Sat Feb 2, 2013, 01:39 AM

7. What keeps people from spending is NOT government debt, but PERSONAL debt.

"The only debt we have to fear is debt that cannot be paid off." to paraphrase FDR.

So long as debt can be paid off, it is not only not to be feared, it is a staple of modern economies.

The economy would be far smaller without debt. If there were no credit cards, many purchases would never occur. Using a credit card is another way of incurring debt.

The most important group that sustains an economy is the middle class. The middle class relies on jobs for its ability to spend money as most purchases are made on credit. So long as the middle class holds on to their jobs, they can buy goods and services since they have a source of income (revenue) to pay off their debt.

The one percent super wealthy stash their money in financial instruments, often outside the U.S., such as in the Cayman Islands, where it does nothing good for the U.S. economy.

The two main causes of the current ongoing recession and the current government deficits are the outsourcing of jobs AND the tax cuts for the corporations and the wealthiest one percent.

Outsourcing jobs created unemployment among the biggest spending group, namely the middle class, and reduced government revenue since unemployed people don't pay taxes.

The only solution to our current economic problems is for the government to spend money on activities that will provide a useful payback in the future. That is, spend money on education, infrastructure, research and development, and further health care reform toward a universal single payer health insurance system. This will give more income to the middle class, the main spenders, who are the mainstay of any economy.

What would make matters worse is giving more tax breaks to corporations and the wealthy one-percent who will suck that money out of the economy causing a renewed recession.

Another action that would make matters worse is to institute so-called austerity measures. Austerity measures are the same kind of solution to an economy in recession as applying leeches to a bleeding person.

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Response to AdHocSolver (Reply #7)

Sat Feb 2, 2013, 05:44 AM

8. That's not true...

 

I see people who are much more conservative because they believe there are problems to come in the future that are behind their control. They could be using their funds in more productive ways but are leery of doing so. These are people with no debt and a decent amount of assets.

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Response to dkf (Reply #8)

Sat Feb 2, 2013, 04:08 PM

10. these are also outlying nutters

just because the right wing is full of them - it doesn't mean they aren't full of shit.

but, yes, we all should have a way to survive for a week in case of natural disasters. Those who are holing up because of Obama are just off the map of rational thinking.

Obama has demonstrated REPEATEDLY that he is on friendly terms with the large corporations and the voting shareholders who love them.

If you are a small businessperson, you have to have a line of credit. Most all business operates, at least initally, and oftentimes forever if they expand, with debt that they can pay down but probably not pay off in total, by liquidation.

But if that happens, the small businessperson has nothing left with which to build something else - because the cycle of business is investment first and investment to grow.

The reality is that the future is beyond our control, and those who thought they were in control before were operating from an illusion that was fed by having a white guy telling them what was up. Racism makes people do crazy things and the people you know are an example of this.

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Response to RainDog (Reply #10)

Sat Feb 2, 2013, 04:27 PM

12. Racism? Seriously? Wth?

 

We are talking about Hawaii where we are all mostly minorities. Heck being white makes you a minority here.

Racism has become too much of a knee jerk reaction. I don't get it.

And here, going to Punahou kind of defines the "elites" since race doesn't mean much.

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Response to dkf (Reply #12)

Sat Feb 2, 2013, 04:36 PM

13. the only people I know who talk this talk are white republicans

I do remember Y2K and people getting scared because of that.

As far as Hawaii - beats me. Maybe global climate change has them scared.

So, if you know non-white Hawaiians who are talking like this - what reasons do they give?

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Response to dkf (Reply #8)

Sat Feb 2, 2013, 05:00 PM

15. Businesses are afraid to hire more people because of the GOP's threats of causing a U.S. default, or

a shutdown of the Government. Businesses are sitting on over a trillion dollars in CASH but won't hire back more people because they don't know just how far the Repugnants will go. for example Standard and Poor's downgraded the U.S. debt citing "political brinkshmanship" and "America's governance and policymaking becoming less stable":


http://thinkprogress.org/economy/2011/08/05/289861/breaking-s-p-downgrades-u-s-credit-for-the-first-time-in-history-repeatedly-cites-gop-intrasigence-on-taxes/


The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.

It appears that for now, new revenues have dropped down on the menu of policy options.

The act contains no measures to raise taxes or otherwise enhance revenues, though the committee could recommend them.

Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act.
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this is the money (which could be used to hire back people) that is not being spent that matters. Rich people don't spend enough to constitute a potential stimulus to the economy. A Congressional Research Service report (which the GOP suppressed) said that the available economic data show that tax cuts for the wealthy do NOT produce any appriciable economic stimulus.

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Response to dkf (Reply #3)

Sat Feb 2, 2013, 04:48 PM

14. people "with the money" - who own the Republican Party should have shown concern for Gov spending

during the bush regime when the Republicans blew a surplus and created the massive debt we currently have (I'm not talking about projected financial situtations 10 or 20 years out, but what we have right now.) The explosion of spending for a war on Hussein based on lies, and tax cuts which went mostly tothe wealthiest few percent of the population - was not causing any concern on the part of the GOPers then. But these are the policies that contributed enormously to the current deficit and which lead to the Trickle Down -Deregulation Disaster (aka ) which forced emergency actions to save the economy (first by Bush initiating the TARP - then Obama passing (with 3 GOP votes in the Senate, 0 GOP votes in the HOuse) - the American Recovery and Reinvestment Act - which were needed to keep this current REPUBLICAN DYSTOPIA from becoming the Second Great Depression.

All the current debt we have is due to the bush debt funded wars and tax cuts and the spending which is necessary to keep the GOP's Trickle Down - deregulation disaster from becomeing the Second Great Depression. This spending was made necessary by the GOP's reckless spending and tax cuts. As far as concerns for Medicare and other programs these need to be dealt with to preclude problems developiing over the next 10 to 20 years. But putting peoople back to work and getting some growth in the economy needs to be accomplished NOW. This is why the Repugnants are for austerity right now (which doesn't necessarily translate into addressing longer term financial concerns).

Here is an informative analysis showing , for those who don't know,where the current deficit is made up of:
(emphases my own)
http://www.cbpp.org/cms/index.cfm?fa=view&id=3036

Recession Caused Sharp Deterioration in Budget Outlook

Whoever won the presidency in 2008 was going to face a grim fiscal situation, a fact already well known as the presidential campaign got underway. The Congressional Budget Office (CBO) presented a sobering outlook in its 2008 summer update, and during the autumn, the news got relentlessly worse. Fannie Mae and Freddie Mac, the two government-sponsored enterprises (GSEs) that became embroiled in the housing meltdown, failed in early September; two big financial firms — AIG and Lehman Brothers — collapsed soon thereafter; and others teetered. In December 2008, the National Bureau of Economic Research confirmed that the nation was in recession and pegged the starting date as December 2007. By the time CBO issued its new projections on January 7, 2009 — two weeks before Inauguration Day — it had already put the 2009 deficit at well over $1 trillion.

The recession battered the budget, driving down tax revenues and swelling outlays for unemployment insurance, food stamps, and other safety-net programs. Using CBO’s August 2008 projections as a benchmark, we calculate that the changed economic outlook accounts for over $400 billion of the deficit each year in 2009 through 2011 and slightly smaller amounts in subsequent years. Those effects persist; even in 2018, the deterioration in the economy since the summer of 2008 will account for over $250 billion in added deficits, much of it in the form of additional debt-service costs.


Financial Rescues, Stimulus Add to Deficits in Near Term


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In February 2009, the new Obama Administration and Congress enacted a major package — the American Recovery and Reinvestment Act (ARRA) — to arrest the economy’s plunge. Mainstream economists overwhelmingly argued that, to combat the recession, the federal government should loosen its purse strings temporarily to spur demand, with a mix of assistance to the unemployed, aid to strapped state and local governments, tax cuts, spending on infrastructure, and other measures. By design, this package added to the deficit. Since then, policymakers have enacted several smaller measures to spur recovery and aid the unemployed. By our reckoning, the combination of ARRA and these other measures account for $1.1 trillion in deficits over the 2009-2019 period (including the associated debt service). Their effects are highly concentrated in 2009 through 2011 and fade thereafter, delivering a boost to the economy during its most vulnerable period.

Bush Tax Cuts, War Costs Do Lasting Harm to Budget Outlook

~~
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Just two policies dating from the Bush Administration — tax cuts and the wars in Iraq and Afghanistan — accounted for over $500 billion of the deficit in 2009 and will account for almost $7 trillion in deficits in 2009 through 2019, including the associated debt-service costs. (The prescription drug benefit enacted in 2003 accounts for further substantial increases in deficits and debt, which we are unable to quantify due to data limitations.) These impacts easily dwarf the stimulus and financial rescues. Furthermore, unlike those temporary costs, these inherited policies (especially the tax cuts and the drug benefit) do not fade away as the economy recovers (see Figure 1).

Without the economic downturn and the fiscal policies of the previous Administration, the budget would be roughly in balance over the next decade. That would have put the nation on a much sounder footing to address the demographic challenges and the cost pressures in health care that darken the long-run fiscal outlook.




Here's another good article on "Adding to the deficit: Bush vs. Obama"

Since President Obama became chief executive, the national debt has risen almost $5 trillion. But how much of that was because of policies passed by Obama, and how much was caused by the financial crisis, the continuation of past policies and other effects? For this analysis, we worked with the Center on Budget and Policy Priorities to attach a price tag to the legislation passed by Obama and his predecessor. George W. Bush’s major policies increased the debt by more than $5 trillion during his presidency. Obama has increased the debt by less than $1 trillion. Read related article.



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Response to Bill USA (Reply #14)

Sat Feb 2, 2013, 05:56 PM

17. thanks for your posts here! n/t

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Response to dkf (Reply #1)

Fri Feb 1, 2013, 05:47 PM

4. Yes. There is no other way

The experience of the last 3 decades has shown us that reducing the tax burden on wealthy does not create jobs nor does it result in people with illness receiving health care, nor do all children receive an education when this is privatized because schools pick and choose students so that those with special needs are left to rot.

Honestly, how stupid do you have to be when the evidence exists and has existed for decades to demonstrate that the private sector is a failure at the most important tasks that are of national concern.

When people argue for something that's to the right of Adam Smith, maybe they're just stupid. I dunno.

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Response to RainDog (Reply #4)

Sat Feb 2, 2013, 05:51 AM

9. Why is lowering taxes the only other non government stimulus?

 

I think we are stuck in a box here. Frankly both lowering taxes and government spending were tried in the original stimulus and were only moderately successful.

What was truly missing in this recovery was a small business boom. That seems like a structural problem where there is too much of an advantage for big business.

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Response to dkf (Reply #9)

Sat Feb 2, 2013, 04:18 PM

11. Krugman noted the original stimulus was too little

so, the good that you saw demonstrated the rightness of the action.

Small businesses rely upon the middle class to sustain them.

The middle class has suffered for 30 years under the delusions of Reaganomics, then Clinton and the neoliberal's support for outsourcing jobs.

Wages have not kept place with inflation. Jobs have been eliminated by the tech revolution.

Money needs to go toward creating a modern infrastructure with light rail, investment and creation of renewable energy projects that are LOCALIZED so that the energy grid isn't at the whim of a middle eastern nation and the oil cos who love them.

Universal health care would make it possible for more small business people to function, as would taxes on those who operate at the multi-national level.

The problem is that people don't have money to spend or the time to spend it at leisure. Productiveness is up and hiring is down. That doesn't benefit the middle class - that benefits those who want to bring American wages down to the level of the "competition" in China. This is openly discussed among the hoi poloi in the business class.

If they think Americans are not going to get up in their shit when an executive is paid 1000 times what the worker is paid - those people are living in fantasy land. It should be happening already but Americans aren't ones to want to make a fuss.

But if you continue to let the middle class collapse for share holder profits, then, frankly, I will not be shedding any tears when those share holder heads are on metaphorical pikes.

People have tried, for years now, to explain to the "owners" in this nation that they need to stop being such greedy assholes. The only way this will happen if their WEALTH is taxed. They won't do it on their own, unless they're J.K. Rowling, and the CEOs out there aren't J.K. Rowling.

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Response to dkf (Reply #9)

Sat Feb 2, 2013, 05:21 PM

16. Everybody knew the stimulus was not large enough. But they had to go with what the GOP would allow.

Christina Romer wanted a much larger stimulus, but Obama knew the GOP was out to keep any real stimulus from passing - so as to prevent Obama from succeeding in fixing the Republican Dystopia.

34 - 38% of the stimulus was converted from spending to tax cuts to win GOP votes. The GOP demanded tax cuts because they knew, at the outset of a depresssion, when everybody is worried about having a job in six months, Tax Cuts WOULD NOT BE SPENT. People worried about whether they will have a job in six months will hold onto any tax cuts or use it to pay down debt. and that's just what they did. In the end not one GOP vote was gained in the House and only three were picked up in the Senate - so determined were the GOP to make sure Obama failed - despite the cost to Americans and our nation.

the stimulus was NOT $787 Billion but more like $520 billion. Given the severity of the Trickle Down Deregulation disaster it should have been at least twice that size. NOte that at even $1 Trillion it would have been one fifth the deficit created by Bush (including the stimulus bill which wasmade necessary by Bush's policies)

The Dems offered a Small Business tax cut (for small businesses that made new hires) but the Republicans voted en-masse against it. This bill would have produced almoast 1 million new jobs according to a study by an independent analysis.


~~
The private group Regional Economic Models, Inc., estimates the combined impacts of the cuts would be worth about $87 billion added to the GDP and 990,592 jobs. The bill would also boost personal incomes by about $73 billion, according to REMI's analysis.

REMI explained that it did the study using preliminary estimates from Congress' Joint Tax Committee and information from the Small Business Administration to estimate impacts across states and industries.
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Response to Bill USA (Original post)

Fri Feb 1, 2013, 08:21 PM

5. We must have Infrastructure Spending or we will collapse into another recession.

K&R. Maybe they will listen to EJ...since they listen to no one else.

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