By Edward Harrison
This quote from President Obama comes via Brad DeLong:
We’ve got a long- term structural deficit that is primarily being driven by health care costs, and our long-term entitlement programs. All right? So that’s the baseline.
Now, if we can’t grow our economy, then it is going to be that much harder for us to reduce the deficit. The single most important thing we could do right now for deficit reduction is to spark strong economic growth, which means that people who’ve got jobs are paying taxes and businesses that are making profits have taxes — are paying taxes. That’s the most important thing we can do.
We understand that in this administration. That’s not always the dialogue that’s going on out there in public and we’re going to have to do a better job of educating the public on that.
The last thing we would want to do in the midst of what is a weak recovery is us to essentially take more money out of the system either by raising taxes or by drastically slashing spending. And frankly, because state and local governments generally don’t have the capacity to engage in deficit spending, some of that obligation falls on the federal government.
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Yes he gets it. Doesn’t surprise me. But unlike writers and observers like us, Obama is forced to deal with politics and compromise. So any choices he makes, however less than ideal, have this factored in.
We can debate the compromises, but we must be clear that they are compromises. It’s pointless to approach criticism of policy from a perspective of idealism (i.e. what is the best possible policy? And if that best choice is not enacted, it’s a FAILURE) which I see far too much of.
I agree with what you’re saying but i think the role of the critic (a Paul Krugman for example) is to hold the Administration’s feet to the fire on promoting the best policy. Often, political concerns become of overriding interest and the policy is a muddle that doesn’t get the job done. Politicians will be more courageous if they understand that a large part of the electorate is behind their position.
Multimillionaire Attorney Eric C. Conn Now Dating Obama Girl. barack you are dumped.
So the POTUS has proven he has the macroeconomic understanding of an ECON 101 1’st semester student. For this we are supposed to be grateful???
What are the *policies* required to achieve a “sustainable” fiscal position?
How does a nation with a $500B+ current account deficit run a surplus, let alone a balanced budget, without plunging the U.S. and the world into a depression?
How does the workforce pay for the health care costs of an aging population that incurs a large and increasing share of medical expenses but doesn’t have the income or savings to pay for it?
We have yet to hear a single substantive discussion of these two very obvious points for policy action from the POTUS. There are many more.
Given the lack of content in President Obama’s statement and the respect accorded to it by Mr. DeLong, it must be true that post-GWB the standard for Presidential economics knowledge is very low.
Either that, or Mr. DeLong is a cheerleader for the Administration.
“So the POTUS has proven he has the macroeconomic understanding of an ECON 101 1’st semester student. For this we are supposed to be grateful???”
Yes – it’s a lot better than we get from most politicos.
Of course Obama talks a good game. The problem is that his actions don’t match his words. Larry, Timmy and (now) Benny are his picks.
“or Mr. DeLong is a cheerleader for the Administration”
No one familiar with DeLong would ever question that.
I think this is the right attitude here: watch what I do, not what I say.
At least we have confirmation that he understands that raising taxes or cutting spending is what leads to a double dip recession.
Remember the nonsense he was spouting before about deficits was predicated on cutting spending and/or raising taxes to avoid another recession. This time he has it right.
I will except that not everyone thinks we should avoid recession if it means more government spending.
None of this holds together right now because the President is all over the map. First he talks about deficit reduction to avoid a double dip. Then he increases a troop commitment in Afghanistan which is more deficit spending. Now he says the opposite – that we need to keep up demand.
You can’t have your cake and eat it too. He needs to tie these threads together into a coherent policy. No one is going to hire more workers when they have no idea what government is up to.
For now I am satisfied he has admitted that for better or worse a deficit reduction of cutting spending and increasing taxes leads to recession.
If his understanding about cutting spending is the same as yours, you are both wrong. One of the major ways the government gets money is by selling treasury bonds, and in doing so they attract capital that would otherwise remain in the private sector. Years ago an analysis at University of Chicago demonstrated that the same dollars in the private sector generated more than twice as many jobs. This does not include the productivity factor, since few government jobs produce anything and few government employees actually do any real work. Only a small percentage goes into anything useful like roads and bridges, and with open bidding (as opposed to political payoff) we would receive several times the mileage. Keynes was wrong.
“Growing” the economy in an attempt to afford the huge entitlement expenses coming down the pike is a last vestige of New Economy-era thinking.
Brad DeLong is a total cheerleader for the Administration. That Mr. Harrison is associating his good name with an article title that Obama gets it is disturbing.
Yes Mr. Harrison. Politics is the art of compromise. But you cut Healthcare costs by INCREASING competition in the private sector. In the USA, regional monopolies exist, no different than Ma Bell prior to the telcom divestiture of 1984. In a capitalist society, you have anti-trust laws that prevent monopolies. I hope you do not become a shill for Washington because your now getting some attention Mr. Harrison.
Lastly, let me say that job creation should have come FIRST specifically by focusing on national energy plan of which from Dr. Chu we basically have one: Buy more expensive products by not creating competition. Sounds a lot like mercantilist politics of old. Same game, new name in a new fading era.
Just as many Republicans became justifiably disillusioned with their Leadership so to will the Democrats.
Yes we have a structural deficit… We spend and BORROW way beyond our capacity to repay. Our system of governance is corrupt to the bone and beholden to special interest groups. Until honest discourse backed by said actions returns I would ask that you spare me the patronizing headlines. “Obama gets it” but perhaps not as much as Tiger!!
An obvious economic stimulus would be significantly reducing military expenditures and using say half the savings to reduce deficits/pay off national debt and the other half to reduce taxes.
Improving the fiscal situation would be a boon to confidence and reducing taxes would be stimulatory.
“We understand that in this administration. That’s not always the dialogue that’s going on out there in public and we’re going to have to do a better job of educating the public on that.”
Hahahaha, hahahaha, hahahaha
The public gets it, his administration doesn’t. The public has been saying this for decades, and our elected representatives ignore it. I don’t need any educating from Obama, Tiny Tim, Larry Summers, et al.
Obama talks of structural deficits, but the stimulus by its very nature is not part of the structure. So he is really just blathering nonsensical drivel.
Edward, you are smart, in fact very smart, but this conventional wisdom that we need lots of spending to keep us from a double-dip is not necessarily true, and I suspect you know it. The second dip may happen soon, or it may happen 3 years from now, but it will happen nonetheless. If we engage in excessive spending and borrowing we will just make the next dip far far worse. That is what we just experienced.
Zimbabwe Ben has told us that he and the Fed saved us, when in fact they created the mess. Obama is telling us he is saving us from what he inherited, but he is rebooting the perpetual motion machine of boom-bust, and it will happen again, and they are hoping that we will once again ask them to save us, not from ourselves, but from them.
More words. Fantastic. Let’s by all means judge Obama by his words. That’s worked out so well so far.
The biggest economic decisions he has made have been to bail out the bankers and protect them from any kind of serious regulation. His nomination of Bernanke, who is essentially advocating a middle class cramdown to pay for the Obama-Bush bailouts, tells me more about what Obama’s economic policies will be than an interview designed to placate criticism.
The WH is on a PR push to convince us Obama cares about the jobless. But so far their actions don’t match up with their rhetoric.
Exactly! So when David Mercanus said
I don’t buy into that at all. The President has laid out in very clear terms what the economic philosophy he has is. It’s right here in black and white. He gets it. Now comes time to show that these are not just words but that actions are behind this.
Remember this post because we can always come back to this if and when we get the song and dance about political realities and what’s feasible. Obama has the biggest majorities in Congress in decades. This is a better deal than Reagan, Clinton or the Bushes had. If he can’t succeed in crafting his agenda and getting it passed in this environment, then he should be deemed a failure.
LOL, you dinkle. There was no “Bush-Obama” bailout. There was a FED bailout that the ENTIRE government was ok with. It is simple as that. Obama has the political ability to deal with the hand he is given. Ditto for Bush, but he was a zealot. Even Reagan wasn’t that.
You sheep act like such knowitall’s, but you know very little in reality, just your baseless whining over problems, that go beyond your brain power to understand.
The problem is democracy and its repression of the natural elite. The Merchant Caste wants to make the laws and replace the State, a classic Evola-ian sign of the Kali Yoga. The lower caste’s need for power over the strong is so old, people forget. Free Market Totalitarianism is pure death. America got a whiff of it in the last quarter of the 19th century when millions starved or killed by the Bourgeois out of pure materialistic lust. But now will it be far far worse. Countries will collapse, the bourgeois will go through excess labor like cattle.
Until the State returns the power of laws and infrastructure that the US and its enlightment past struggles to deal with, the country will collapse at some time. The natural elite must be allowed to rise and save America, but this type of nonsense will assure bleak tryanny.
Ed,
The person who wrote his speech GETS IT. Obama is a true believer (communist) just like Chavez. If you look at the policies he has put in place ( and the ones he is trying to put in place) , you will notice they are all designed to damage businesses and grow government. Now even a first year economics student knows ( per Cristina Romer) that a dollar invested in the government sector at best will return just one dollar in value. Whereas one dollar invested in the private sector can return three dollars in value. So if he gets it, why is he trying to destroy the private sector? Explanation, he is a far left socialist, and thus believes that the government can do a better job. Well so did Stalin, Mao and Castro. Now who wants to live in a country like what their system produced?
If Obama is a “far left socialist,” what is a liberal? So all those who appreciate democratic government assistance for deep economic problems are communists? Wha? You lost me boy. The private sector didn’t do too well for itself or the country recently, because of its own self-destructive features. Gov’t got involved to try and save it. You do a lot of unjustified lumping of concepts and people together in your comment.
May be he gets it, but he is wrong. Europe’s entitlement outlays, a four letter word for social security and medicare, are way higher that ours. They have higher retirement payments, 6-12 months maternity leave and easier and higher disability. Yet, the European don’t cry like offended toddles all day long. Furthermore our health care, as we well know, is an outrage.
What exactly does he get?
But Europeans don’t have to spend half of their tax revenues on a mindless defense budget.
Vinny
so, gov’t spending = good, but not military spending?
why should europe spend on defense when they can free ride on our’s?
still, wouldn’t want to be them when the next world war breaks out. but I suppose you don’t think we’ll ever see that again, despite the fact that this is pretty much all we have ever known throughout the history of man, save for a few moments of respite.
F*ck Edward Harrison and President Zero. You want to know a President who got it? Warren G. Harding.
You don’t prevent and treat economic contractions by growing the government.
http://www.lewrockwell.com/orig4/powell-jim4.html
http://dailyreckoning.com/macro-for-dummies/
Well, at least a few are beginning to catch on to this administration and this President and the fu##k over he is giving the American people. Oregon guy you are right on. I voted for this dweb, sent him money, and in my ignorance and innocence bought into his bull-shit.
He, Timmy, Larry, and Ben (the cat, the rat, and the pig) have just about brought us down and the fudged employment figures be damned.
I voted for this dweeb too. What a major disappointment he turned out to be. I have been voting for presidents since 1988, and all my choices turned out to be disappointments, although the alternative would have been clearly worse.
Voting is a thing of the past for me. I’m not wasting my time like that anymore.
Vinny
“We’ve got a long- term structural deficit that is primarily being driven by health care costs, and our long-term entitlement programs. All right?”
Obama gets nothing. Just translate what he is really saying here. “health care costs, and our long-term entitlement programs” are Medicare and Social Security. Two weeks before he rolled out his healthcare initiative in March he had a fiscally responsible ways to reduce the deficit conference which took aim at Social Security. Pete Peterson was involved although his participation got a little dicey and he was cut out at the last minute, but for those who remember back this was when Orszag trotted out his suggestions to cut Social Security benefits. It all fell flat. Obama went on to the healthcare debate but the biggest area Obama (and Orszag) wanted to cut on the government side was Medicare to the tune of hundreds of billions.
You have to filter this all through the neoliberal (in economics) and neocon (in foreign affairs) perspectives that dominate this Administration. They run huge deficits (mostly for ineffective ends) but use deficit cutting as a means to slash entitlements (you know those socialist programs which just happen to be the most popular with ordinary Americans). The goal is to cut Medicare and Social Security so that the government can have the money to do more important things like run its little imperial wars.
Notice that Obama only talks about entitlements as being part of the structural deficits not a gold-plated military and our endless, and unnecessary, wars, or tax cuts and low tax rates that favor the wealthy. You see those things Obama doesn’t like are poof! part of the structural deficit; the things he likes don’t even rate a mention in the discussion.
If you want to understand Obama, see him as a Blue Dog corporatist defender of the status quo. Look at him that way and everything he has done to date becomes coherent and comprehensible. It is only when we take his populist and progressive rhetoric and apply them to his actions that everything goes haywire and contradictions arise.
“If you want to understand Obama, see him as a Blue Dog corporatist defender of the status quo.” Absolutely.
The question from an energy flow = the size of economy point of view is this: How do you grow (let alone sustain) an economy if oil production has peaked? Classical Economic thinking assumes alternative energy sources will appear when price rises; a corollary is that the earth’s resources are virtually infinite because technology will ultimately save us. The arrival of scalable, environmentally sustainable, net energy sufficient alternatives has not happened. Hence we’re contracting.
So Obama in this context is going after the little guy to perpetuate the status quo. Entitlements is a propaganda terms; taxes were collected for SS and the government has “borrowed’ this money to fund the military and other unproductive boondoggles. All cutting Medicare and SS will do is to impoverish most of the nation. When a paradigm goes into crisis it can no longer solve problems, or the solutions it produces are ineffective and create other problems. Greed and corruption are tolerable in a world of economic growth -the Mafia model- but not in a world of shirking energy and other resources. Neither DeLong or team Obama would deign to consider this point of view. I like Harrison, but he’s out to lunch on this issue, probably because our situation is dire.
I agree with your last statement:
“If you want to understand Obama, see him as a Blue Dog corporatist defender of the status quo.”
Given the viscerally negative reaction from most, I will follow this up with another post and a poll on whether he does get it.
Let me put my view in context.
During the election campaign his handlers did a marvelous job of packaging him as “change you can believe in.” It helped that we were in crisis, that he was visibly different than those that preceded him, and that he was short on inside-the-beltway experience.
However, Barack Obama is really ‘pro-business’ in the blue dog corporatist status quo sense as you correctly pointed out. That’s why he chose Geithner and Summers over Volcker. That’s why he allowed the banks to lobby their stress test results BEFORE they were released. That’s why he is escalating in Afghanistan to support the military industrial complex. That’s why he did the secret deal with healthcare lobbyists. That’s why he sold out the public option on healthcare (and I know because I had good info here in DC that he was not committed to it and was going to use it as a bargaining chip as far back as June).
If you look at him in this light, ALL of his decisions make sense. At heart, he is — as his pastor Jeremiah Wright claimed — a politician. And he is beholden to the corporate interests who have backed him.
That doesn’t mean that he doesn’t get it intellectually. Barack Obama gets it as this statement makes clear. We do have confirmation that he understands that raising taxes or cutting spending is what leads to a double dip recession. He just chooses to do something different depending on the political landscape and the wishes of the corporate interests he is beholden to. This is why he is all over the map, depending on the political situation at the time. Call it leadership by polling (something Clinton and Tony Blair also mastered).
I will accept that not everyone believes we should avoid recession if it means more government spending because of the enormous debt loads in the private sector and the unfunded liabilities in the public sector. Fair enough. That is an ideological debate about the role of government.
But on the merits of this particular debate, his statement is correct: over the short-to-medium term, deficit reduction via reduced government spending and/or increased taxes leads to recession. Again, whether to avoid recession because of the longer-term repurcussions is an ideological debate that is beyond the scope of this discussion.
But, to the degree we think the public has ANY influence on this system, we should take his statement at face value and hold him to it as firmly as possible. It reminds me of George H.W. Bush’s statement of “Read my lips. No new taxes.” So, I say “Barack Obama gets it. Now what is he going to do about it?”
If we get get more of the same, it won’t be because we have publicly challenged him to follow a certain course he himself outlined. It will be because he has chosen to deviate from that course for political purposes. And you will know how to vote or abstain from voting accordingly.
I think you are slyly suggesting that Obama is more intelligent than Bush. So is the average twelve year old. This is not enough to keep him from being an empty suit. Where is the evidence that he is not an empty suit and an opportunist first and last?
I disagree with all of this. Bill Clinton left a 300 billion surplus despite failing to reform health care. The reason we have trillion dollar deficits now are 1. WARS 2. Bush’s tax cuts for millionaires and 3. Asset bust which the reasons of which are well documented elsewhere. 4. MORE WAR
You can’t seriously talk about the U.S. deficit without talking about military spending and military occupation. It’s draining the country dry.
Ed,
Has it occurred to you that debt can’t increase exponentially. Debt will deflate because it has too. Recessions will occur because productive resources are not properly deployed, and it takes painful restructuring to fix that.
You can’t solve that by printing some money and asking people to go to the mall. If the administrations plan is to stimulate until we are right back at $700B CA deficits and huge asset bubbles then its not going to work. It will deflate just like the last bubble because things that go up must eventually come down.
Shifting debt from the private balance sheet to the public balance sheet doesn’t solve our national problem of having too much debt. Nor does it solve our production issues. A double dip recession will occur because its inevitable, regardless of what the administration desires. Because when it comes right down to it the endgame for any stimulus that tries to avoid a recession that has to happen is hyperinflation, and they aren’t going to let that happen. They will have to raise rates and cut back spending to prevent a currency rout, then we go right back to recession because we’ve done nothing to address the fundamental issues that caused the recession in the first place.
I’d like to see some solutions to our problems with debt, finance, health care and all I’ve gotten are porker stimulus, an incredibly mismanaged bank bailout, and a Frankenstein of special interest lobbying that is the health care legislation.
It´s rather sad to see such a shallow and wrong message from an US President. It is obvious that a growing economy can cover the deficits although the magnitude of the multiplier effect is questionable if existing at all.
There are other ways to booost demand which the “Liberal” President doesn´t even dare to mention : Higher taxation on the rich. The FDR New Deal included a 90% marginal taxation which stayed around until the 60 . Such a measure is imperative since the marginal prospensity to consue of Buffetts and alike is rather low. “Liberals” can keep on advocating for stimulus plans but by the end of the day it will proved as a rather conservative idea.
“Words! Words! Words! I’m so sick of words!
I get words all day through;
First from him, now from you!
Is that all you blighters can do?”
“Show Me” from My Fair Lady
Vinny
Since infinite growth is impossible on a finite planet, Status Quobama gets nothing.
We’re not going to grow our way out of the problem of growth.
We’re not going to consume our way out of the problem of consumption.
Which are but two ways of saying, we’re not going to debt our way out of the problem of debt.
An incisive mind recently observed, “The Democrats want to restore what is now past. The Republicans’ plan is to restore a past that never was.” (Where is Obama’s vision for America now?, Tim McCown, Examiner.com, 11/18/2009)
But this reality–at the end of empire, during the century of contraction, in our culture of make believe–is as heretical as the earth revolving around the sun.
So back to snake-oil, dog-and-pony and bread-and-circuses.
Move along people, nothing to see here.
—
Postscript: Let us not forget that the recipients of the most destructive and unconscionable “entitlement” programs are Plutocratic Lemon Socialists (as astutely pointed out on these very pages, Guest Post: Capitalism, Socialism or Fascism, George Washington, nakedcapitalism.com, 10/25/2009)
Addendum: Let us also not lose sight of the fact that Status Quobama is a liar, thief and thug.
All you need for proof are eyes to see, ears to hear, and a heart to feel.
—
“What really matters in our lives–the wars in Iraq and Afghanistan, the steady deterioration of the dollar, the mounting foreclosures, the climbing unemployment, the melting of the polar ice caps and the awful reality that once the billions in stimulus money run out next year we will be bereft and broke–doesn’t fit into the cheerful happy talk that we mainline into our brains. We are enraptured by the revels of a dying civilization. Once reality shatters the airy edifice, we will scream and yell like petulant children to be rescued, saved and restored to comfort and complacency. There will be no shortage of demagogues, including buffoons like Sarah Palin, who will oblige. We will either wake up to face our stark new limitations, to retreat from imperial projects and discover a new simplicity, as well as a new humility, or we will stumble blindly toward catastrophe and neofeudalism.”
– Chris Hedges, Addicted to Nonsense (November 30, 2009)
Th3 brief DeLong quote contains an internal contradiction. First:
The single most important thing we could do right now for deficit reduction is to spark strong economic growth . . .
Then:
The last thing we would want to do in the midst of what is a weak recovery is us to essentially take more money out of the system either by raising taxes or by drastically slashing spending. And frankly, because state and local governments generally don’t have the capacity to engage in deficit spending, some of that obligation falls on the federal government.
WHAT IS IT THAT HE GETS? HAVE IT BOTH WAYS, HAVE IT BOTH WAYS AT BARACK-LAND.
MY COMMENT:
First, please note that the healthcare bill imposes a tax increase for several years before the “benefits” kick in.
The President is good at trying to appease everybody. Unlike Pres Roosevelt and Reagan (successfully transformative Prez’s in crises) and even unlike the less successful Jimmy C and GWB, this Pres tries to swing both ways.
He “gets” nothing economically. He has by far the lowest % of key people with private business experience of any Pres in the past 100 years.
Unlike some of the prior commenters, I never believed any of the hope-change BS. McCain would have been a better Pres to deal with the hopeless Dem Congress. We need a Pres who takes a stand, fights for his position, and either wins, loses or draws. Not this slippery outside shooter.
How does the workforce pay for the health care costs of an aging population that incurs a large and increasing share of medical expenses but doesn’t have the income or savings to pay for it?
———
There is money to pay for a lot of it but it needs to be redirected.
1. For example, the US needs to start valuing certain types of services more than cars and huge houses. So much energy has gone into these 2 to the detriment of the rest of the economy. There is more to quality of life than affording a car that is 10K more in your driveway. The forces in the economy are still keeping the car and housing beasts alive when these should shrink and let other industries grow.
2. Then you will say that too much money is already being spent in healthcare. True. But the allocation of money is totally inefficient. Instead of paying your doctors 500K more per year, maybe the US should look at other developed countries to see how much they pay their doctors and specialists. These countries have a lot of amazing people working for much less than that. Obviously for the real pros, money is not the most important criteria. In many cases, you don’t need more 500K doctors, you need more nurses or more other types of health care providers. For each 500K doctor, you can have 10 50K employees! Even here in Canada, I don’t understand why doctors who are paid 150K per year are vaccinating my kids when this could be done by a 50K nurse. If there is room for efficiencies in Canada where costs are low, imagine in the US.
Unfortunately, in the US those with the money (i.e. Doctors) are going to fight like crazy for the status quo. It does not help that the young ones probably took on huge debt to get there because everyone thought the future would offer more of the same.
Somehow, we’ve been talking about the boomers for over 50 years but the deomographics table has never been incorporated into any business plan!
There is a lot of untapped potential in the US but as long as the wealth is concentrated in the top 5%, probably those of the problematic zombie industries, and these current owners of the wealth fight for the status quo, it’s going to be painful to implement the needed shifts in the economy.
but doesn’t have the income or savings to pay for it?
———————
If you look at the population table, you will see that the number of 0-20 drops to 51% of the working age population in 2015, from 55% today.
The 65+ group grows to 18% from 17% and while this group probably costs more in health care than the younger group, it also generates more income than the younger group.
What the US needs is a paradigm shift. It needs to value its people more than STUFF. Resources need to be reallocated ASAP.
51% of the working age population in 2015, from 55% today.
———–
Not today but 2000.
To think that Obama gets anything at all, and that he is now going to take America toward a glorious future of prosperity and harmony is utterly ridiculous. It is too little, and far, far too late. He gets nothing about jobs, about health care, about social justice, about anything at all. He’s just good with words, that’s all. All style and no substance.
To me, as a doctor, the idea that in 2009 the US Senate is debating whether to vote universal access to health care is just laughable. Hello!!! It is 2009, almost 2010. All other developed nations passed universal health care laws 50 years ago. Even some not so developed nations, such as those in Eastern Europe have decent universal health care access. To me, it just shows how ridiculous the American people have become in their 18th centurysh division along ideological lines. Just ridiculous. Why even bother changing the healthcare at this point, when that money could instead just be used on another pointless war somewhere, killing innocent children and women in order to enrich the bombs makers of America. I’m sure the average American red-neck could use another flurry or irrationally exuberant patriotism before he could use access to healthcare.
As far as jobs go, this too is an area where it is way too late to do anything that can change the course. This is a deindustrialized nation with failing schools and a functionally illiterate young generation. Most Americans prefer to watch Dancing with the Stars rather than get an education or read a book. I am sorry, but I just don’t see how any of the jobs shipped to China will ever return.
Obama gets nothing.
The fact is, America is the Titanic that already ran into the iceberg, and is now sinking. Let’s just say, it’s taken in so much water, at this point it’s too heavy to float. Those that have any common sense would be wise to establish a second residence abroad, and take proper measures to protect their families when all hell breaks loose in the US, and this steady decline turns into a nosedive. I for one, plan to watch the upcoming American collapse on my extra-large flat screen TV at my condo in Greece.
Vinny
Import penetration, Bush’s tax cuts, inneffectual wars and out-of-control defense spending, monopolies in the health care industries, and criminal banking account for all of today’s problems.
Reversing each is the agenda back to fiscal sanity and preservation of our democracy. Anything else is a lie.
EU votes to allow US to monitor all its citizens’ bank transactions
http://joshfulton.blogspot.com/2009/12/post-libson-treaty-eu-votes-to-allow-us.html
Yes he understands claptrap Keynesian economics 101
We will fix the deficit using massive deficit spending.
This could be the last word in this string, so I’ll write it that way. The view that US presidents are paid for by corporate interests seems to have much truth to it unfortunately. And if indeed Obama is one of them, so much the worse for us – the deception is astounding. Well I say increase the deficit a smidgen, merely to completely fund all national political campaigns, presidential as well as congressional. That’ll create a level campaigning field. It’s really the public’s responsibility to insist on and accept this. Otherwise we’ll continue to be jerked around like puppets, to often evil ends.
Any idiot knows the primary drivers of the deficit. The least we can expect from the President is that he knows at least as much as the average idiot.
OregonGuy nails it. Obama “gets” Econ 101, where the variables are limited to “taxes,” “government spending,” and “money supply.” The same could be said of Prof. DeLong.
The problem is distributional. Mainstream economists are *so* reluctant to talk about the distribution, being indentured cheerleaders for the establishment that has produced the current state of extreme income and wealth inequality. (Emmanual Saez excepted–but then of course he’s at “Beserkley.”)
The current collapse of effective demand is due to the rich getting too much, and everyone else not getting enough and going into debt to try to keep up. See my reference rant on this at http://animalspiritspage.blogspot.com/2009/05/income-inequality-debt-crisis-and.html.
We need to raise taxes on the top 1%-5% and use the money to provide a poverty-level dole to the unemployed (so they can look for new jobs without damaging their children) and health care for all Americans. The rich won’t suffer, and the money will enter the spending stream at a higher rate than any other way. Current tax rates on the rich are at generational lows.
Until we recognize that the problem is the *distribution* of income and not the level, we are guaranteed to dig ourselves into deeper and deeper deficit holes. Pouring fiscal stimulus onto an economy so rigged in favor of the rich is like pouring jet fuel into a car engine that’s only hitting on one cylinder. Just look at the Wall Street bonuses. Are you blind, Brad? It’s time to tax that.
See also http://animalspiritspage.blogspot.com/2009/08/further-results-on-income-inequality.html
so, raising taxes and/or cutting deficit spending would cause a double-dip recession. so our home team econ profs and our president ‘get it’, and they will do neither.
what will they do if (when) the double-dip occurs anyway? despite their insightful actions? i’m betting more deficit spending. until the marketplace for american sovereign debt/weakening of the dollar by quantatative easing round two forces them to stop.
“The single most important thing we could do right now for deficit reduction is to spark strong economic growth, which means that people who’ve got jobs are paying taxes and businesses that are making profits have taxes — are paying taxes. That’s the most important thing we can do.”
The problem is that he doesn’t know how to spark economic growth. He’s discouraged average Americans by bailing out businesses which formerly thrived, and then collapsed through a combination of mismanagement and fraud. He’s discouraged small and medium sized business with the threat of new mandates, energy taxes, insurance costs, and higher taxes in general. The government, through deficit spending, is sucking up most of the capital that might be available for investment. Many of his policies (the Porkulus stimulus for example) have protectionist overtones.
He’s provided debt relief for all except those who need it most. To Big To Fail is saved and Joe the Plumber just fails. Debt is the problem, and a lot of it has to be written off before the economy can thrive again.
Those who have committed fraud in the offering of real estate liar loans, those who flipped those loans to the securities market knowing full well they were garbage, whose who AAA-rated the toxic waste, those who wrote tricky derivatives on those MBS, etc. — these folks are not being prosecuted. Come to think of it, current bank accounting standards and the “stress tests” are a form of fraud as well. It is hard for folks to have any confidence in the future of the system under these conditions of lawlessness and dishonesty.
Friends, we live in a kleptocracy, under a criminal enterprise consisting of an incestuous combination of big government and big business. Does Obama get that? From the amount of campaign contributions he received from Wall Street firms, my guess is that he most surely gets it. And he doesn’t give a damn.
It’s all a game, and these are just words. You can’t fool all the people all the time. That is what Obama doesn’t get.
if by ‘gets it’ you mean knows how to spit some convincingly mean rhetoric all the while contradicting his words with opposite actions, i completely agree.
In a nutshell;
“GAME OVER MAN! GAME OVER!”