http://www.salon.com/news/budget_sho...ng_budget_plan
The Republican response to a new private-sector analysis of their spending bill: "La la la, I can't hear you!"
By Andrew Leonard
Are House Republicans attempting to wound the U.S. economy on purpose? On Monday, economic forecaster Mark Zandi released a report for Moody's Analytics detailing the likely negative economic consequences of proposed GOP budget cuts.
Mark Zandi was an economic adviser for John McCain's 2008 presidential campaign. He's not the kind of guy normally accused of being a Democratic pawn; he makes his living providing economic analysis to the private sector, which places a premium on being, you know, right, rather than politically correct. Nor is his prediction, like the warning released by Goldman Sachs earlier last week, particularly controversial. When governments cut spending in economies ravaged by high unemployment and characterized by a clear shortfall in aggregate demand, some amount of economic contraction is perfectly normal.
Republican leaders, however, are responding with a display of hand-waving that would be remarkable if it was so boringly consistent with their rhetoric for the last decade. Dave Weigel reports House Majority Leader Eric Cantor's response:
I think it's overstating the case to call Zandi "the chief architect" of the stimulus, but there's no question that he supported it, or that he, like other private forecasters, believes that the stimulus contributed to economic growth in 2009-2010, and kept unemployment from rising even higher than it ended up reaching. We don't have an alternate reality timeline to provide what economists like to call the "counterfactual" so Keynesian stimulus-backers will never be able to prove beyond the shadow of a spurious politically motivated partisan doubt that the U.S. economy would have been even worse off had Obama not marshaled a rescue plan as his first order of business. But notice the lack of anything resembling an argument based on economics or data? Cantor offers no prediction of what will happen to the economy, or what might happen to the unemployment rate, if the Republican plan is implemented. Instead, all we get is this:
From The Hill:
Let's be clear here. To reach a balanced budget that would permanently remove such "uncertainty" -- without ever raising anyone's taxes ever again -- would require budget cuts so deep that the U.S. economy would immediately flat-line. In fact, the only sensible response to the Republican spending plan from the private sector is to be even more cautious. Standard economic theory suggests that sharp budget cuts will slow the economy -- why would any company react to that by expanding hiring?House Republicans argue that their bill should become law as part of a "cut and grow" strategy that they say, by removing uncertainty about higher taxes to pay for government spending, would spur spending by businesses.
The only honest case Republicans can make about their current agenda would be that some short-term pain now might pave the way for later sustainable growth. If Boehner or Cantor came out and said, yes, we understand and appreciate the analysis put forth by Zandi and Goldman Sachs and we realize that subtracting demand in the short term will deliver a hit to the economy, but we are nonetheless convinced that it is the right long-term strategy, that would be a defensible, perhaps even honorable, position.
But the Republican leadership can't do that, because they are cons utionally unwilling to admit that their policies will cause any short term pain at all. Because if you open up that can of worms, you risk changing the debate topic to the question what the appropriate economic policy for this particular juncture in time should be. Even worse, would mean taking responsibility for what happens to the economy between now and Election Day 2012.
Which brings us back to the original question, a rephrasing of a theory that we're hearing more and more of from the left side of the blogosphere: The Republicans know exactly what the likely impact of their cuts will be, and they're fine with it, because the worse the economy does, the better their chances are of taking the White House in 2012.
I don't know. It's not that I wouldn't suspect politicians of such foul Machiavellianism, but I find it hard to buy the thesis that this bunch of Republicans are consciously attempting to damage the economy for political reasons. I think that they just really don't understand or care about economics. The crew that is in power now has distinguished itself by its ability to reject any kind of objective scientific or economic analysis that doesn't fit into their political schema. Whether it's the link between greenhouse gas emissions and global warming or the negative impact of subtracting demand from a weak economy is irrelevant. From the contemporary Republican point of view Obama's policies must be "job-killing" because, well, he's Obama!
And the converse simply can't be true. So no matter how impossible it is to make Republican numbers add up, that's not a problem for the Republican leadership, because reality just isn't something they are willing to accept.
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I am honestly not sure if the GOP leadership would be willing to sacrifice jobs to win an election. I hope not, but all the "win at any cost" things that the Republicans pull all the time worries me.
The cynicism is deserved, but would not any plan which aims to reduce the deficit through some combination of spending cuts and tax increases (not saying the GOP is offering the latter) result in near term job losses? That is, when does the stimulus stop, if ever?
Repugs were campaigning snarkily against Barry with "Where are the jobs?".
The voters swung against the Dems because of "It's the economy, stupid" and joblessness.
Once in office, the Repugs, having run up huge deficits 2000-2008, are intent on increasing the jobless ranks by 100s of 1000s, as if that were the 2010 mandate, with the pretext reducing the deficit.
Show me a poll, any poll (well, not Rasmussen), of the general population that shows voters want deficient reduction before job creation.
Further, this is why any serious effort to improve the fiscal outlook for Uncle Sam isn't going to get anywhere. The political age we are in puts ideology and party first, the country second (or fourth, maybe sixth after "American Idol"). This, of course, is not to say that this is the first time politics have been acrimonious in American history. Yet somehow in the not too distant past both sides have managed to work something out (ie Reagan/House Dems on Social Security, Bush41/Dem Congress on the budget, Clinton/House Repubs on the budget). There's something different about this age, as if ideology and partisan politics have finally won out. One reason I can think of has nothing to do with ideology, politics, the markets, the economy, conspiracy theories, etc...the leadership we have now are baby boomers and younger. Yes, Clinton and Gingrich were boomers, but there were plenty of the 'Greatest Generation' still in the Congress. This new bunch, now the elders in our society, are a bunch of spoiled brats (channeling my inner old man), without any sense of duty beyond themselves. The generations after them are even worse (mine and yours included). Both presidents after Clinton have been far more ideologically rigid and -bent on doing what they want, the rest of the country be damned. At least with the old guard there was a sense of something more important than just politics, power, and $. Duty, honor, and country, as it were.
Both prospective spending reductions and tax increases are demagogued or flat out dead on arrival despite the unsustainability of the deficit and debt. This leads me to my second reason, building on the first...politics is now a religion for many.
It's not enough to think that the opposing side is wrong, or perhaps offers a less appealing agenda. Now it must be that they are fundamentally wrong, with no hope at redemption. Fundamentally evil, not just wrong. Perhaps this is a result of the explosion in ideological framed media outlets. The way you attract eyeballs is through greater hyperbole and distinction, not less. Forget about getting something accomplished for the good of the country, that makes you a sellout, a RINO, a secret Republican, whatever. Perhaps it's the result of successive generations brought up to believe in one thing: themselves. How do you validate that belief? Well, the people who disagree with you can't be people of good faith and sufficient intellect, they must be evil idiots. Political iden y is part of one's personal iden y which is what a large number of people worship these days.
Anyways, I digress. I think we'll have to accept at some point that improving the fiscal standing of Uncle Sam is not going to be cookies and ice cream, but it has to be done.
I repeat, the polarization, wedge-issue politicking, inflammatory speech has come almost exclusively from the right. To say both parties are equally guilty is yet another right-wing false equivalence, an outright lie.
The deficit is almost totally due to Repug botched wars, Repug tax cuts for the super-wealth, the Repug-deregulated financial sector crashing the world's economy and cratering tax revenues at all levels.
To cut spending (no, they won't do it. Repugs are all bark, no bite) now is to repeat FDR's choking the 1930s Keynesian recovery by cutting spending/stimulus in 1937. The US economy was saved the fiscal stimulus of WWII.
Cutting federal govt spending now will simply prolong the pain of citizens for many more years, and it won't get the economy moving, because the deficit isn't what cratered the economy. The deficit is both a false problem and false solution, typical lies from the VRWC. The VRWC's real agenda is to get govt out of the way so the VRWC can pollute air, land, water (kill EPA), put employees at risk (kill OSHA), and defund SEC/CFPA (let Wall St run wild), defund IRS (VRWC tax avoidance/evasion), with the ultimate goal removing govt as a restraint on VRWC's predations and avarice.
Recovery, Taxes, Government Spending and Astonishing Stupidity
The current economy is routinely and universally referred to as the worst recession since the Great Depression.
It makes sense, therefore, to look back at government tax and spending policies during the Depression and what the results were.
1932 -- Hoover raises the top tax rate from to 25 to 63 percent.
1933 -- Roosevelt comes into office. He begins spending at the same time that new tax hike comes into effect. The Depression bottoms out.
1934 -- Recovery begins. The GNP rises 7.7 percent, unemployment falls to 21.7 percent.
1935 -- New government spending on public works and rural electrification. A push to strengthen labor and raise wages. New taxes through the creation of Social Security.
The GNP grows another 8.1 percent, and unemployment continues to fall.
1936 -- The top tax rate is raised again. This time to 79 percent.
GNP grows a record 14.1 percent; unemployment falls even further.
1937 -- Roosevelt is afraid of deficits! He cuts spending for 1937.
There's a new recession. It continues for a year.
1939 -- The U.S. borrows, resumes deficit spending, this time on a military build-up. The recession ends.
1941 -- America enters World War II.
In economic terms, it's the New Deal on steroids. The top tax rate goes up to 91 percent. Nonetheless, government spending is so high that by 1945 the deficit is 123 percent of GDP. Unemployment is ended by employing 16 million people directly in the armed forces and millions more are employed producing war material and supporting the military.
The Great Depression is finally over.
When taxes were raised the economy improved. Every time. Deficits had no negative effect on the economy. Indeed, when deficits were at their highest, the economy boomed.
After spending was cut -- to balance the budget -- a recession immediately followed. When taxes were raised and government spending resumed -- with deficits -- that recession ended.
When taxes were raised again, and government spending went sky high, the Great Depression finally ended.
So here we are. We refused to raise taxes. The recession continues. Now, we're going to cut spending.
http://www.huffingtonpost.com/larry-...tml?view=print
Deficit reduction is more important than job creation at this point. Regardless of what the voting population thinks.
The reality is, if we ever want our budget back under control, jobs will be lost and taxes will be risen.
The only problem is, neither the oliphaunt nor the ass will be pressed for a long term, safe solution. So it goes thanks to their allegiances to each other and the corps and the lobbyists and the rest of $-America, their fear of the people, and their outright inep ude when faced with the vast, ever expanding problem-web of 310 million people.
Welcome to the United Neoliberal States of America, a place "in which there can be only one kind of value, market value; one kind of success, profit; one kind of existence, commodities; and one kind of social relationship, markets."
Left Behind? American Youth and the Global Fight for Democracy
Thats not the reality. Jobs lost do a lot to grow the deficit. Thats something people need to realize. Its both a loss of income and an increase in cost.
Exactly.....reducing spending is stupid and counter-productive and could slide us into a double-dip recession depending on the future of oil prices....raise taxes on the rich.... at least get rid of the Bush tax cuts and anything to do with Bush while we are at it....like Iraq and Afghan wars..So here we are. We refused to raise taxes. The recession continues. Now, we're going to cut spending.
The headline tends to refute this contention:
1937 all over again? We'll see. It must be vexing for pink-diaper Keynesians that the political will for more stimulus has all but vanished.The GOP's job-killing budget plan
On the other hand, there's still hope for right-wing Keynesians who believe WWII pulled us out of the depression. They're already beating the war drums for Libya...
Oh and btw it is only partially accurate to say "we refused to raise taxes." It's more accurate to say we cut taxes.
Last edited by Winehole23; 03-01-2011 at 11:44 AM.
but the GOP would win in 2012.. they then can blame the democrats who were in office before them... pretty good political strategy if you ask me.. kill the economy and then blame the other guy..
or bankrupt the country in pursuit of ideology and blame the other guy for the negative impacts of measures taken to improve the federal government's fiscal situation.
except GDP as it stands now is a ty indicator of the "economy." We're still in a recession, its just been papered over. It's like putting a bandaid on a gunshot wound. You'll stop the bleeding for a while, but you're still gonna die because there is a bullet in your leg.
Not to mention what impact has running trillion dollar deficits actually had on private-sector employment? Presumably if it works and the result of greater indebtedness is minimal relative to whatever bubble it can inflate, why stop at $1.5 trillion? Let's run a deficit of $5 tril!
Pity Obama didn't focus harder on jobs in 2009 and 2010. That was his/the Dem party's big chance to do something about it. Perhaps they didn't wish to draw undue attention to the the real human cost of the 2008 financial panic at such a sensitive time, knowing that blame for a y or anemic recovery would be hung around their necks.
Something similar seems to obtain now. Knowing full well the absence of any political will for the government to put a serious dent in unemployment, jobs will tend to be de-emphasized by policymakers.
Last edited by Winehole23; 03-02-2011 at 04:07 PM. Reason: and 2010
We're all Keynesians now and we're going to reap the whirlwind for it. Naturally it will end up being a left-wing or right-wing plot, depending on your religion.
Ideology trumped all. Not surprising. When the GOP had control of the executive and legislative branches earlier the same happened.
Still correctable by raising taxes and cutting spending. Using a fear of higher defecits resulting from increased unemployment to justify current defecits is a fundamentally flawed arguement.
A few desultory efforts toward this end appear to be underway. So far they do not impress.
"I am honestly not sure if the GOP leadership would be willing to sacrifice jobs to win an election"
nah, no problems those mofo's. They won 2010 by deepening and prolonging the depression and jobs criis, etc pain by blocking Barry's stimulus attempts. They plan to win 2012 with exactly the same strategy.
They'll blame their Banksters' Great Depression, blame the deficit, blame both wars exclusively on Barry, because they know the UCA sheeple are too ing stupid, disengaged, and apolitical to see what's going on.
Last edited by boutons_deux; 03-01-2011 at 01:38 PM.
I thought the headline was a clever retort to the name of the recent bill that attempted to repeal Health Care reform.
"Not to mention what impact has running trillion dollar deficits actually had on private-sector employment"
How many jobs lost to the deficit?
Emulation is the sincerest form of flattery.
Except if you are worried about the deficit, getting people to work means that you are incresing revenues, and decreasing expenditures.
That would mean job creation as a means to reduce the deficit should be one of the priorities.
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