Comments on: A lost chance to overturn Keynes with the fiscal cliff http://blogs.reuters.com/nicholas-wapshott/2012/11/09/a-lost-chance-to-overturn-keynes-with-the-fiscal-cliff/ Wed, 26 Nov 2014 19:47:54 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Sanity-Monger http://blogs.reuters.com/nicholas-wapshott/2012/11/09/a-lost-chance-to-overturn-keynes-with-the-fiscal-cliff/#comment-119 Wed, 14 Nov 2012 17:39:37 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=57#comment-119 How many remember the hoopla in the late 80’s and early 90’s about the deficit? And although I am too young to remember, it was there following WWII as well. In 1992, Ross Perot took these concerns as well as trade agreement backlash to a 19% share of the popular vote in the US Presidential race on a third-party ticket. The Concord Coalition was founded over deficit concerns also in 1992. A deficit counter was displayed in Times Square to try to scare the bejeezus out of us. What happened? Clinton implemented a tax increase that I personally didn’t even realize had happened until some years later and a pay-as-you-go policy and voila, we grew our way out and into a surplus. Similar minor tweaks got us out of the WWII deficit as well. Let’s keep our heads and focus on what will get us to widespread prosperity and the deficit will take care of itself.

Clearly, lower taxes for the rich do not trickle down. Can we at least get agreement on basic facts?

“My problem with Keynesianism is that the government has a long track record of being lousy spenders.” — examples please. How do they compare to Enron, Goldman Sachs, BP, Madoff, Country Wide, Global Crossings, Lehman Bros, NECC pharmacy, and on-and-on-and-on. Sure, there are examples of government waste, largely resulting from the defense department running up against the profit motive in the entities it contracts with, but the Social Security Administration and Medicare are two of the largest and best-run organizations the planet has ever seen. So please let’s dispense with that trope as well.

Chip_H : 15% sounds pretty reasonable. How long do you think you’ll be retired for? If you work 40 years, saving 15% of your income and assuming the savings can keep up with inflation, you might reasonably expect to fund ~7-1/2 years of retirement, perhaps 10 if you cut your expenses in retirement. But perhaps your concern is that the government, in a panic about deficits, will cut the benefits that you have been paying into? Join the club.

]]>
By: dwinfield10 http://blogs.reuters.com/nicholas-wapshott/2012/11/09/a-lost-chance-to-overturn-keynes-with-the-fiscal-cliff/#comment-107 Tue, 13 Nov 2012 01:22:08 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=57#comment-107 This article seems to be a total muddle. It supports 3 ideas from Keynes while failing to mention, as seemingly all Keynesians do, that in order to run deficits the government should NORMALLY run balanced budgets or surpluses. Only under that arrangement should deficit spending be attempted. Then he goes on to support the “first prescription” of low interest rates and then tries to stand that up as something we somehow aren’t doing or haven’t been doing. There are many economists that believe Greenspan’s prolonged cheap money approach was a primary cause of the problem we got ourselves into. At the very least, we were following this “prescription” for the decade leading up to 2008 and look where that got us. Then the author recommends slashing taxes, but raising them for those families making more than $250K/year as if that extra revenue will somehow dent Obama’s 4-billion-dollar-per-day borrowing binge. Finally, of course, the “third prescription” of government spending, as if the trillions we’ve spent under Bush/Obama in bailouts and stimulus wasn’t enough which begs the obvious question: if liberals/keynesians believe so firmly in government spending, slashed taxes and cheap money then why not have the fed government spend 4 trillion we don’t have, cut the tax rates in half for everyone so we can’t pay for the government further, and then have a negative interest rate (and pay the banks no interest on excess reserves)? We’ve had 12 years of excessive government borrowing/spending, cheap money, and low interest rates (the ultimate Keynesian “prescription”),and this is where we are because of it…here’s looking to another 4 years of it.

]]>
By: jambrytay http://blogs.reuters.com/nicholas-wapshott/2012/11/09/a-lost-chance-to-overturn-keynes-with-the-fiscal-cliff/#comment-103 Mon, 12 Nov 2012 20:50:29 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=57#comment-103 Hey, all I ask is that people talk slowly and use small words.

]]>
By: Gordon2352 http://blogs.reuters.com/nicholas-wapshott/2012/11/09/a-lost-chance-to-overturn-keynes-with-the-fiscal-cliff/#comment-100 Mon, 12 Nov 2012 19:41:29 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=57#comment-100 @ jambrytay —

After my “close encounter” with you, I have learned that the venue does not permit much more than a “bumper sticker” approach — no offense intended — which means I simply try to state the minimum to be effective and nothing more.

There is no point in expanding on a subject, when the majority don’t want to hear it anyhow.

That way I get my point across and it is up to the individual to pursue the thought if they so choose.

So, in a very big way you have made your point with me.

]]>
By: jambrytay http://blogs.reuters.com/nicholas-wapshott/2012/11/09/a-lost-chance-to-overturn-keynes-with-the-fiscal-cliff/#comment-99 Mon, 12 Nov 2012 18:33:42 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=57#comment-99 4 lines? that’s a bit skimpy for you.

]]>
By: Gordon2352 http://blogs.reuters.com/nicholas-wapshott/2012/11/09/a-lost-chance-to-overturn-keynes-with-the-fiscal-cliff/#comment-98 Mon, 12 Nov 2012 17:38:00 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=57#comment-98 @ jambrytay —

You state, “I was using Keynesianism in the commonly used and non-pedantic sense of the word, i.e. govt as the spender of last resort”.

That is the commonly misunderstood meaning, and invariably carries negative connotations, which is wrong no matter how you look at it.

]]>
By: jaham http://blogs.reuters.com/nicholas-wapshott/2012/11/09/a-lost-chance-to-overturn-keynes-with-the-fiscal-cliff/#comment-97 Mon, 12 Nov 2012 17:17:13 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=57#comment-97 Obama’s plan to tax the rich is a farce:

The centerpiece of President Obama’s plan is to raise taxes on the rich (households making $250.000 or more). The only problem with this “solution” is that it is dishonest. President Obama likes to give the impression that his plan to tax the rich can significantly reduce the deficit, a claim which is false and which Obama knows is false.

Everybody knows that the rich have a lot of money, so it may appear reasonable to non-economists that taking some this wealth can fill the hole in the budget. What the public doesn’t know, and what President Obama will not tell them, is that there are just too few rich people in America for this plan to work.

According to the CBO, over the next 10 years the Obama budget will produce a deficit of $10.900 billion, or 5.3% of GDP on average. (cbo(dot)gov/publication/22061)

According to the left’s own calculations, Obama’s plan to raise taxes on the rich will generate $700 billion in additional revenue over the next decade, or just a pathetic 0.3% of GDP. (cbpp(dot)org/files/1-31-07tax.pdf)

In other words, the plan to raise taxes on the rich will only cover one out of fifteen dollars of deficit spending. Where is President Obama going to get the other fourteen out of fifteen?

To the $10.9 trillion in deficits we need to add the unfunded liabilities of Medicare and Social Security. According to the Trustees of these programs, the unfounded liabilities are a staggering $52 trillion. (cga(dot)ct(dot)gov/2010/rpt/2010-R-0197 .htm)

Again, any honest economist who knows the facts can tell you that a measly $70 billion in revenue per year from the rich will not come close to cover America’s fiscal hole of at least $63000 billion dollars.

]]>
By: jambrytay http://blogs.reuters.com/nicholas-wapshott/2012/11/09/a-lost-chance-to-overturn-keynes-with-the-fiscal-cliff/#comment-96 Mon, 12 Nov 2012 16:33:50 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=57#comment-96 Gordon2352-

I was using Keynesianism in the commonly used and non-pedantic sense of the word, i.e. govt as the spender of last resort.

]]>
By: deLafayette http://blogs.reuters.com/nicholas-wapshott/2012/11/09/a-lost-chance-to-overturn-keynes-with-the-fiscal-cliff/#comment-95 Mon, 12 Nov 2012 13:04:26 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=57#comment-95 NOT QUITE YET

{jr: Based on our extremely high unemployment rate and especially the lack of upward mobility for the newly graduated and basically anyone who makes less than $250k a year, our American life is not only under attack, it’s almost DONE and GONE.}

Not by any stretch of my imagination (issuing from an economist’s mind) would I paint Hayek as even with a taint of socialism. But that is not the point.

Discussing personalities such as Hayek or Keynes is child’s play for students of EC101 classes. As if what these savants had to say was biblical scripture – which it aint.

And the above remark about “over and done” is wide of the mark. Ever hear of business cycles?

What is over and done is a period-of-time, call it post-WW2 (or call it what you will). It was a period of, for the most part, world-peace and sustained economic momentum that was purchased initially by the Marshal Plan and the reconstruction of Europe.

Followed by a period that we did not quite expect – that is, the American Plan for reconstructing economically China with a massive import of cheap-goods bought with T-Notes – that the Chinese were and still are happy to keep. (Talk about having Uncle Sam by the short ‘n curlies.)

The Chinese reconstruction started, unbeknownst to most of western leaders, in the early 1990s when China shucked its centrally planned economy and embarked upon free-enterprise. Overnight literally, the world’s supply of Labor was doubled. We should have known then that the tide was turning and American jobs (un- and semi-skilled) were imperiled and destined to be exported to the Far East.

But no, rather, we remained fat, dumb and happy with the status quo. To take our minds of a humdrum existence we invented a couple of wars and carried on with business as usual. Jobs were aplenty and profits were pretty darn good.

Business-as-usual, however, was a connivance between Main Street (realtors and banksters) and Wall Street Investment Banks. It washed fraudulent subprime debt and their derivatives, abracadbra!, with Triple-A detergent from cronies at the Credit Agencies and securitized it by sales to some pretty stupid investors.

Thus stoking the Credit Mechanism Seizure in 2008 and the Great Recession of 2009 from which millions of unemployed Americans have yet to see the light at the end of the unemployment tunnel.

Which brought us to our present context. This cycle will come to its end as all cycles do. Our impatience, however, is unacceptable. Who went binging on cheap-credit beyond their means of repayment should unemployment occur?

We, the sheeple, harking to the consumers siren-song of “I want it all and I want it NOW!”

Well, NOW is time to pay the piper. It’s not the end of life-as-we-know-it-on-earth. That is yet to come – but, rest assured, are consummate silliness about the earth’s ecology, will assure that it does happen.

Not quite yet though. But coming soon enough to an atmosphere near you!

]]>
By: LEEDAP http://blogs.reuters.com/nicholas-wapshott/2012/11/09/a-lost-chance-to-overturn-keynes-with-the-fiscal-cliff/#comment-94 Mon, 12 Nov 2012 09:42:16 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=57#comment-94 China’s economy is growing. It slowed down a bit since the Big Recession. But that centralized economy is growing. How do the Tea Partiers, Austrian Schoolers, Trickle-Downers, and Free-Marketiers reconcile that one? I suppose we just have to wait a bit and their economy will crumble before our eyes. I just wonder if their economy will crumble before ours.

Seriously, I think we have something to learn from China and it’s not how to build a coal fired power plant. I think it is that if something isn’t working, try something different. And it seems to me that history has not been kind to the theory that cutting tax rates has leads to sustained job growth. It has been kind to investment in education and transportation. And that is worth considering.

]]>