My Great Depression

As it seems pretty likely now that we will have a Republican House with a Democratic Senate and President starting late January and I’ve begun to think about the economic impact. Obviously, even if the party predictions are spot on, there are some big unknowns, so I’ll start by outlining a couple of the most significant, and what influences they will have.

I’ll preface this by stating that this is only a prediction based on the evidence I have seen to date.

First, will Obama be willing to stand up to the Republican House the way that Clinton did? Up to now, he has at least given numerous indications that he was willing to entertain the notion of working with Republicans. Then again, from where I sit it looks as if the Republicans have been unwilling to negotiate in good faith, and I expect winning the House to embolden them to be even less willing to negotiate. So we could be looking at a Government Shutdown II. Or Obama could let the House stomp all over him. It’s too soon to tell.

Second, what will the Tea Party members of the House do when they discover that they can’t actually get their bills through the process? I see three possible immediate options:

  1. They could withdraw and refuse to be part of the process, which would relegate them to irrelevance in terms of Congressional influence.
  2. They could throw tantrums in public, hoping to get the public rallied behind them in a Republican coup attempt, which would have an unknown outcome.
  3. Or they could become part of the Borg collective, which is the path most members of Congress take, even while publicly denying that they are doing so.

Based on history, I’d bet on the last option, though the second option would be the most entertaining from a purely anthropological perspective.

It’s pretty much going to be various forms of sound and fury and no appreciable legislation. I have yet to hear anyone credibly suggest otherwise.

So what will happen to the economy? It’s pretty clear that money from the US Treasury won’t be sent to the states to fill their budget gaps. Given the size of the states’ revenue declines, it’s all but guaranteed that there will be state government layoffs and service reductions, which will increase unemployment and allow infrastructure not covered by existing ARRA funds to fall further into decline. I suppose some states could raise taxes to compensate, but I find that hard to believe.

We’re certainly not out of the woods until we see unemployment drop below 7%, and that’s not happening anytime soon. At the same time, I doubt unemployment insurance would be extended, so we’re probably looking at more bankruptcies and foreclosures than we would have had without the divided government. If more people end up on or over the edge, tax revenues will decline further, which will further reinforce the government layoffs and service reductions. As with most economic forces, each individual case has a cascading effect, which diminishes relative to the distance one looks from the source. In other words, someone who has less income will spend less, which will have a smaller effect on those businesses that would have otherwise received the business from that person, which will reduce their revenues by some (smaller) amount, which may trickle out another layer or two in a measurable way.

As long as those initiating economic forces are relatively few in number and/or infrequent, the economy absorbs them without too much damage. If they are large in number and/or frequent, they can create positive feedback loops (a strange term to use for something negative, but you see the point). The impact of the real estate meltdown had a significant direct impact on a huge number of people, and the resulting layoffs were significant enough to cause cascading effects that have only recently stabilized. Part of the support for that stability is money being pushed through the economy via safety net programs.

If we lose the safety nets that are stabilizing the economy, it is hard to see how that won’t create a new set of similar cascading effects. We can certainly reach a new equilibrium without those safety nets, but that would probably include significant homeless camps. After all, where do unemployed people go when they’ve had foreclosures? Some go to family or friends (who may or may not be in the same boat), but that only works if they have that social safety net available. If they don’t, they live in tents and the like. This is what happened on a grand scale in the 1930s.

I’m not at all trying to imply that a Republican House necessarily translates to another Great Depression. It is more likely, however, to translate into a drop to a new equilibrium, more due to inaction than due to action. The question is one of degree, not one of direction.

This all sounds like doom and gloom. Frankly, I’m gloomy about the economy. Banks aren’t lending, even though they have the cash. Businesses aren’t investing, even though they have the cash. The economy depends on money moving (a topic for a later date), and these large cash eddies are hurting our ability to have a speedy economic recovery. I see no indication that a divided Congress will be able to produce anything that will address this.

Am I missing something big here? Is it possible that the next Congress will produce legislation of beneficial consequence to the economy? Please, somebody, give me a reason to have hope.

 


About Michael Weiss

Michael is now located at http://www.logarchism.com, along with Monotreme, filistro, and dcpetterson. Please make note of the new location.
This entry was posted in Uncategorized and tagged , , , . Bookmark the permalink.

101 Responses to My Great Depression

  1. shiloh says:

    Define hope as it’s possible Reps would/could act rationally, but unlikely given the teabagger rhetoric where they contradict themselves, sometimes in the same speech lolYour post was an excellent analysis of cause and effect. While reading, a constant theme kept materializing ~ Republicans/Teabaggers, be careful what you wish for ie you got the ball, don’t drop it! Or as Colin Powell would say, You own it!One of my dad’s favorite axioms:You can’t get blood out of a turnip!Another re: Reps if they take control of the House.You stepped in what? ;)and so it goes …

  2. robert verdi says:

    Its worse then you lay out. In the first place their is no internet boom around the corner to skyrocket the economy. The nineties were all but defined by that massive shift and the massive profits they entailed until the dot com bubble burst in the late nineties. As for state bailouts, yes they will be done and heaven forbid they behave in a prudent manner such as Christie in Jersey. As for the Tea party and those who get elected, we are well aware that reform doesn’t start till 2013. Anyway the ball is in the hands of the voters who will decide the size of the majority (or not) and Obama.

  3. shrinkers says:

    Here’s something that may figure into the equation:http://hosted2.ap.org/WTICAM/b7538a1b675b4d059de3e728edc01923/Article_2010-10-29-US-Popular-Taxes/id-171f0026015d4c4c9d80990d9fef8c04

    Forget all the talk about voters being fed up with high taxes: In hundreds of cities and counties across the country, they are raising them.An Associated Press review of local election results found they boosted taxes to help pay for schools, public safety and other services they believe are essential to their communities.

    This may be important not only as regards people’s attitude toward taxes, but even as regards the election on Tuesday. Since the Republicans are running primarily on a platform of “Taxuz BADD!”, since people are seeing the necessity of paying for services they want, this message may not really be resonating with voters the way the R’s and the pundits think it is.

  4. shrinkers says:

    I’m not at all trying to imply that a Republican House necessarily translates to another Great Depression.You’re correct that this is not a necessary conclusion. However, the scenario you’re describing is exactly what caused the first Great Depression. The policies of FDR were starting to bring us out, and then he listened to the voices advocating austerity and reductions in taxes and spending. Then we had a decade of depression.

  5. Bart DePalma says:

    Michael:If you are thinking about writing horror fiction for a living, I would keep the day job. Let’s break this down more rationally.THE SITUATION: There is no indication that Obama has any more intention of following the voters’ mandate in 2010 than he did of following his promises to act like a fiscal hawk in 2008. On the other side, we in the Tea Party will be in the faces of our representatives and senators to ensure they do what we sent them to do. The wild card are the 20 some Dem sentators up for reelection in 2012.THE LAME DUCK SESSION: With the tsunami, the Senate Dems up for reelection will be terrified and the Obama plans to ram things through during this period will die. The Bush tax cuts will be extended two years past the 2012 elections for the next administration to deal with. An enormous amount of business uncertainty will vanish.DEFICIT: Given the Obama veto, the new GOP House can be most effective simply refusing to spend and borrow. The GOP House can sidestep an Obama shutdown of the government by breaking up the omnibus into far smaller appropriations bill and then zero out spending items or ad legislation to sections of the government which affect Dems far more than the new GOP base.Beyond fiscal sanity, reducing spending and borrowing can accomplish two things economically – (1) stabilize the dollar and reduce inflation of the prices of oil and imports and (2) free up investment capital.HOUSE RULES: The GOP House can also change its rules to require that the bills go through committee and are made public throughout the process. That will prevent economy killing legislature from being slipped through in the dark of night. Holding sessions to amend legislation to cut spending will allow the Dems to gore some of the GOP’s spending cows and keep them honest.STATE GOVERNMENT BAILOUTS: The enormous Porkulus and Son of Porkulus Transfers simply delayed the inevitable shrinkage of state governments. The last Congress could not extend them so the GOP Congress will represent a status quo. The best thing the GOP could do for the states is to offer a bill allowing the states to reduce Medicaid funding while requiring the Feds to match the lower funding and to adjust the treatment provided to the reduced funding. This is not on any GOP to do list, though.

  6. Bart DePalma says:

    Continued…REGULATORY REFORM: The most important item on the GOP pledge which no one is talking about is proposed legislation requiring any regulation costing the economy $100 million or more to be passed by Congress as legislation. This would require nearly all of Obamacare, CO2 and finance regs to be approved by the new GOP Congress. The Dems know this and will viciously oppose this legislation like the anti-democratic progressives they are. If this reform is enacted, all business uncertainly will vanish and economic growth will explode as it did during the Reagan deregulation effort. The GOP might want to consider a deal where it will not zero out Obamacare and other regulatory funding in exchange for enacting this reform. It is that important.OVERSIGHT: The most immediate Obama threat to the economy is the developing EPA CO2 regime. The GOP needs to force the Administration to make public all documents from NASA and EPA concerning climate change and then start grilling officials about the junk science. This will give the suits against the EPA for using junk science all the information they need.I could go on, but I have to get to work now.In sum, a GOP Congress which does what it was sent to Washington to do can reduce spending, borrowing and business uncertainty to a substantial extent. The rest remains to be seen.

  7. Bart DePalma says:

    The initial estimate of Q GDP is 2%. Given how nearly every Obama GDP estimate has been high, we are probably looking at real growth closer to 1%.Nearly anything the GOP does will be better than the utterly failed spend, borrow and regulate policies of the current government.

  8. shortchain says:

    Since Bart had to go to work, he didn’t have time forTAX CUTS: making the Bush tax cuts permanent will give the wealthy far more money to invest, initiating a new bubble to drive the economy, and economic growth will explode, just like it did under Bush.

  9. Bart DePalma says:

    shortchain wrote: “TAX CUTS: making the Bush tax cuts permanent will give the wealthy far more money to invest, initiating a new bubble to drive the economy, and economic growth will explode, just like it did under Bush.”You are going to make me late!Extending the Bush tax reforms simply maintains the status quo. The economy will avoid being driven into a deeper recession by avoiding a massive tax increase, but simply extending the status quo will not increase economic growth.The GOP might want to consider a twofer bill proposing a fundamental tax reform to be paid for by repealing Obamacare.Heck, I might be onto something with that one.

  10. NJModerate says:

    Remember a year ago when the Democrats were projected to gain 1 seat in the Senate and lose only 10-15 house members. I said that if ObamaCare passed, the carnage in November 2010 could make November 1994 seem tame by comparison. Everyone laughed but since I have seen many political cycles it was entirely predictable. The radical leftist bent of Pelosi/Reid pulled Obama too far leftward which will cost our party up to 65 House seats and probably cost us the House for a decade after redisticting. What we need is to clean our our corrupt, bankrupt party and have the Republican equivalent of a tea party or else we will suffer a 36-year period in the wilderness just like the Republicans had after Hoover and, believe me, Obama will go down in history as the Democratic version of Herbert Hoover. Some significant pieces of legislation passed .. almost all of which adversely affected America.

  11. shrinkers says:

    Thanks Bart. You outlined exactly how the GOteaPers can make Michael’s scenario come to pass.

  12. filistro says:

    Ahhh.. “NJ Moderate” has arrived. What we need is to clean our our corrupt, bankrupt party and have the Republican equivalent of a tea party I assume you mean “have a Democratic equivalent of a tea party?” Poor dear, it’s so hard not to slip up occasionally when you’re pretending to be something you’re not… right?Yes, I recall your noisy opposition to anything resembling health care reform. (From the “Democratic” POV, of course ;-)So do tell, “NJ Moderate”… even your GOP colleagues agree healthcare needs reforming. The bill won’t just be repealed. It will, I gather, be “repealed and replaced.”Since your party is going to be in charge now, tell us which parts will be repealed.. .and what you will replace them with.And drop the “we” crap, okay? YOU ARE NOT A DEMOCRAT, everybody knows YOU ARE NOT A DEMOCRAT and it is SO SILLY for you to pretend you are.

  13. Mr. Universe says:

    NJ Con in the house. Welcome.Just so everyone knows, we think of NJ Con as a conservative and a con artist because he’s masquerading as ‘one of us’.Your still welcome here

  14. shrinkers says:

    @BartThe economy will avoid being driven into a deeper recession by avoiding a massive tax increase, But it will, unfortunately, add another $700 billion to the national debt over the next ten years.Ah, well, Dick Cheney said that Reagan proved deficits don’t matter. Apparently the Republicans still believe that.

  15. Mule Rider says:

    “And drop the “we” crap, okay? YOU ARE NOT A DEMOCRAT, everybody knows YOU ARE NOT A DEMOCRAT and it is SO SILLY for you to pretend you are.””NJ Con in the house. Welcome.Just so everyone knows, we think of NJ Con as a conservative and a con artist because he’s masquerading as ‘one of us’.”I have to laugh at comments like these. As if it’s some kind of thought crime (or lie) to show a little introspection and concern about the direction of one’s party. As a quick exercise, how many people have we seen in recent years say something akin to “Ugh. I’ve been a lifelong Republican and I’m utterly disgusted with the corroption, bad policies, and lack of direction of my party. And until they fix the problem, I’m going to continue to call them out and either sit out come Election Day or vote Democratic.”And how do you lefties respond? “Well hell yeah your party is corrupt, backwards, and off track! Glad you can see the light!” In other words, you don’t question his affiliation because he’s in (at least temporary) disagreement with the people you disagree with, so you play the enemy-of-my-enemy card. Seems like a double-standard to me.Furthering the point, I’ve seen plenty of other people in recent years associating with labels such as “moderate” and “centrist” yet, unlike NJ Moderate, reserve nearly all of their scathing criticism for Republicans/conservatives. Taken at face value, it’s kind of hard to believe their really that middle of the road. Anyway, how about we cut out the ad hominem attacks over something as silly as how somebody identifies themselves on a political blog and pay more attention to what they specifically have to say and address that.

  16. Bart DePalma says:

    NJ Moderate:Fili is correct. The Dems do not want you, they only want your vote. Come on over to a Tea Party meeting and see if we are more of your cup of tea. You might be surprised.

  17. MoldyMe says:

    Michael, your comments are eloquent and, unfortunately, are what I also see happening. BDP’s comments notwithstanding, frankly, I cannot see how we can avoid a further deepening of the recession. Like you, I am a Keynesian. With no relief in sight in the form of additional government spending to stimulate the economy, we’re in for a long, hard slog. Cons talk about tax cuts and private industry being the economy’s savior. Sorry, but I don’t see it. Tax cuts simply won’t work to stimulate demand, and, other than foreign markets (read: China), who exactly will private business sell to? Last I checked, Europe, Japan, and South Korea weren’t looking at robust economic growth.I disagree with you about one thing: Option #2 seems most likely to me: Most of the TPers are both fanatical and strident and will continue being so. After all, they have a mandate! Overreaching is inevitable, but it will take a long time for this country to recover, even (as I anticipate) with the Ds retaking both houses and reelecting our President.

  18. filistro says:

    I apologize for being discourteous to a new arrival. Welcome, NJ Moderate. (Have I mentioned that I’ve always found your “I’m a Democrat” schtick really adorable? ;-)And isn’t it interesting that Republicanism has become “the love that dare not speak its name.” Bart is a Republican but calls himself a “libertarian” even though he is opposed to personal reproductive choice, marriage rights and separation of church and state, and strongly in favor of foreign wars and adventurism.NJ Moderate is a Republican but calls himself a “Democrat” though he hates all Democratic politicians and is opposed to all Democratic policies.C’mon guys… admission is the first step on the road to recovery. “I’m a Republican.” Just say it. How hard can it be?Though reading Michael’s piece, which is justifiably bleak, I can understand how nobody would want to acknowledge being a member of the party that is committed to blocking progress, destroying the middle class, and reducing America to a country of luxurious walled enclaves for the rich and squalid teeming ghettos for the poor… with nothing in between.

  19. shiloh says:

    Bartles, you don’t actually work for a living do you?Rhetorical question.You just (((masquerade))) around like MR er Shots er Michael er shilohbuster er Undeniable er whatever Mule’s alias was on a particular day.Too funny MR would step in it 😉 re: masquerading as he has been doing nothing but that his whole frickin’ life lol.’nuf said!

  20. dr_funguy says:

    OT but,Speaking of Tea Party eccentricities, Eugene Robinson has an entertaining columnn summarizing so of it in today’s Washington Post.http://www.washingtonpost.com/wp-dyn/content/article/2010/10/28/AR2010102805899.html?hpid=opinionsbox1

  21. filistro says:

    Bart… the Dems have never had NJ’s vote. Anybody with enough motivation to be a dedicated concern troll for TWO YEARS is a dyed-in-the-wool partisan.And I have no objection to thoughtful introspection or self-examination… (in fact, I would like you much better if you tried it sometime ;-)I do, however, dislike the hypocrisy and dishonesty of concern trolling… especially when it’s done badly and blatantly. It’s just so… so 2007!

  22. GROG says:

    @Michael Weiss,Banks aren’t lending, even though they have the cash. Businesses aren’t investing, even though they have the cash. The economy depends on money moving (a topic for a later date), and these large cash eddies are hurting our ability to have a speedy economic recovery. I see no indication that a divided Congress will be able to produce anything that will address this.Banks aren’t lending and business aren’t investing because there is too much economic uncertainty right now. Banks are holding on to cash because they have no reason to lend. Interest rates are too low and have no where to go but up. A bank originating a new 30-year mortgage at 5.3% is taking significant interest rate risk. Remember, the bank has to borrow short to fund the mortgage. Today that means selling a 1.6% one-year CD, for instance. But since rates have nowhere to go but up, one-year CDs are likely to get more expensive for the bank over the 30-year life of the mortgage. What looks like a healthy interest rate spread today (5.3% – 1.6% = 3.7%) is likely to get much tighter over time.

  23. Scott says:

    Welcome NJ Moderate – I seem to remember you from wayyy back in the day.Just watch your head – the volleys go fast and furious around here.

  24. GROG says:

    Basically, until interest rates go back up banks are going to continue to hold onto their money.

  25. shrinkers says:

    Banks aren’t lending and business aren’t investing because there is too much economic uncertainty right now. If this is true (and I have seen no evidence that it is — other than conservative repetition of this meme), the thing that would have created more certainty would have been if the Republicans in Congress had allowed the needed financial regulatory changes and tax changes to be enacted — and for this to have happened much, much quicker.So, IF this is true — that banks and businesses are “hesitant” because of “uncertainty” — we can thank Republican obstructionism.

  26. Bart DePalma says:

    MoldyMe/Michael:The United States has engaged in the largest Keynesian stimulus with over 3.5 Trillion in borrowing and spending and at least another Trillion in printed money from the Fed to the Banks from FY08 to FY10. The result has been a dreaded L recession where the economy free falls than then bounces along the trough instead of recovering. The United States has not seen one of these since the last grand Keynesian experiment called the New Deal.How on Earth can either of you justify continuing this policy?

  27. shortchain says:

    GROG,A few seeming internal contradictions in your comment that I’d like to understand.1. Banks are holding onto cash but they have to borrow short to fund a mortgage? Either they’ve got money or they don’t.From what I understand, banks can borrow money for next to nothing — but what they’re doing is turning around and buying treasury bills, with a guaranteed profit. The reason they’re not lending money to people is because the people with good credit aren’t borrowing — they’re paying off credit card and other debt, because they’re worried about their jobs. The people with bad credit would like to borrow, but the banks tightened up on that after the big debacle.2. Banks make money on the difference between what they pay in interest and what they get in interest — and if they don’t loan, they don’t get anything in. Since banks are not just dropping right and left, the successful banks are obviously loaning money to somebody. Who would that be?

  28. Bart DePalma says:

    Good heavens! Nader’s PIRG and the Taxpayers Union are coming together to come up with $600 B in spending cuts.http://www.huffingtonpost.com/nicole-tichon/post_1167_b_775664.htmlSince he savings are spread over six years, they only amount to a relatively small $100 B per year, but getting anyone from the left to accept anything less that ongoing spending increases is nothing short of amazing.

  29. GROG says:

    @shortchain,Banks are holding onto cash but they have to borrow short to fund a mortgage?Yes. Banks take in deposits and pay a certain rate (short because they must give the money back on short notice) and lend it long term (say a 30 year mortgage). They’re not as likely to lend the money when they have no idea what they’re going to have to pay for the money in 5 years, and they know the rates have no where to go but up.

  30. GROG says:

    @shortcain,Banks make money on the difference between what they pay in interest and what they get in interest — and if they don’t loan, they don’t get anything in. Since banks are not just dropping right and left, the successful banks are obviously loaning money to somebody. Who would that be?No, not necesarily.It’s called “deleveraging”. Banks are calling more loans than they’re making which allow them to stockpile cash.

  31. shrinkers says:

    @Bartbut getting anyone from the left to accept anything less that ongoing spending increases is nothing short of amazing.You’re amazed because you don’t have the first clue about how liberals think.Do remember that Obama imposed a freeze on Federal discretionary spending. And remember that Obama created a bipartisan commission on debt reduction (which the Republicans were for before they were against it). Do remember that Bill Clinton balanced the budget, and even created a surplus (and don’t give me that bull about it being the Republican Congress — two short years after Bush cam into office that SAME Republican Congress oversaw the biggest deficit in America’s history up until that point. The only difference between FY2000 and FY2002 was a Republican in the White House).Democrats know when it is necessary to run a deficit and when it is not. Republicans, it seems also know — and then they do the opposite. The Republicans actually must know, because they get it wrong 100% of the time.

  32. shrinkers says:

    The United States has engaged in the largest Keynesian stimulus with over 3.5 Trillion in borrowing and spending and at least another Trillion in printed money from the Fed to the Banks from FY08 to FY10. More bullshit. The TARP money was not “stimulus” money. And the ARRA money was a very complex affair, and only a portion of it was “stimulus” money. Go back and re-read Michael’s article.

  33. shortchain says:

    GROG,Excuse me, but you can get 5-year CD’s. When you want to cash them in early, there’s a penalty. The bank hardly needs to worry about “short notice”, as the percentage of early withdrawals is minuscule.In a 30 year mortgage, the bank recoups its money well before the 20-year mark. Also, banks have a pretty good idea what they’re going to pay in interest, because they set the rates.So now “they’re not as likely to lend the money”. In your earlier comment, “banks aren’t lending”.So — banks are lending, but not as readily as before. Does anyone believe that, if they were guaranteed that they could get by with 3 percent or below CD rates for the next 10 years they would go back to loaning money to people with bad credit?Business aren’t investing in new plants, hiring new people, etc, not because they can’t borrow money, but because there isn’t demand for their products. There isn’t demand for their products because people aren’t spending money — they’re paying down debt.If, as Bart proposes, the federal government goes all austerian and does like all the private citizens, it’s not likely to rev up the economy.

  34. shortchain says:

    GROG,I’d like to see some evidence for “Banks are calling more loans than they’re making”.I don’t track the financial industry, not being that interested, but that’s a new one on me — and it doesn’t appear sustainable, from the standpoint of the bank…

  35. shrinkers says:

    Precisely, shortchain. The Republican plan is a prescription for disaster.Here’s a question : If the R’s get their way — if they can reduce taxes, cut spending or hold it constant, and reverse some of the new financial regs — two years from now, when the economy is in far worse shape than it is today, who will the Republicans blame then? Anyone have any speculation? Will they claim the problem is that taxes and spending were not cut enough? … that there are still too many restrictions on credit card companies and banks and oil companies? … that we have to relax worker safety laws, and eliminate FICA deductions? … that we have to encourage more outsourcing and offshoring? What do you think?

  36. Michael Weiss says:

    Step away for a few minutes, and look what happens…I’ll start with Bart’s comments:”The GOP House can sidestep an Obama shutdown of the government by breaking up the omnibus into far smaller appropriations bill”And yet that didn’t happen in 1995. Why is that?”reducing spending and borrowing can accomplish two things economically – (1) stabilize the dollar and reduce inflation of the prices of oil and imports and (2) free up investment capital.”Right now, borrowing money has almost no impact on the value of the dollar. Fed policy has a far more significant impact. Similarly, borrowing money has almost no impact on the cost of oil.Moreover, I assume you are implying that it is the greater availability of government debt that is taking money away from other investments. Given that government debt is paying around 2 1/2%, that notion is pretty laughable.”The GOP House can also change its rules to require that the bills go through committee and are made public throughout the process.”They can. I even hope they will. But I seriously doubt it will happen. I will happily give them credit if they do it.”The most important item on the GOP pledge which no one is talking about is proposed legislation requiring any regulation costing the economy $100 million or more to be passed by Congress as legislation.”This is one of the more absurd proposals, designed to prevent pretty much all regulation. $100M is 0.0006% of the GNP. Regulations that have that much impact on the economy pretty much encompass all of them. It’s an attempt to take regulatory power away from the executive branch, as a power grab.”start grilling officials about the junk science”This is one of those opinions masquerading as fact. Incidentally, I’m perfectly OK with the notion that AGW, like all science, should be challenged seriously at all times. I don’t think members of Congress are the people qualified to do it, though. “Testifying before Congress” is really an opportunity for political grandstanding, not scientific debate. It’s like discussing advanced calculus to people whose understanding of mathematics ends at arithmetic.”Nearly anything the GOP does will be better than the utterly failed spend, borrow and regulate policies of the current government.”Not necessarily. They can always make things worse.

  37. Michael Weiss says:

    One more from Bart:”The economy will avoid being driven into a deeper recession by avoiding a massive tax increase”Here’s what’s so fascinating about this Republican meme. Personal income tax increases on the top tiers (particularly at the rate’s we’re talking about) do not have a significant impact on the economy. Business taxes may. But what we’re talking about here is a return of personal income tax to their earlier levels.

  38. Bart DePalma says:

    BD: “…but getting anyone from the left to accept anything less that ongoing spending increases is nothing short of amazing.”shrinkers: “Do remember that Obama imposed a freeze on Federal discretionary spending.”Give me a break. Obama increased discretionary spending enough for a decade than then offered to temporarily freeze portions of it. Then the liar demanded an enormous Son of Porkulus.shrinkers: “And remember that Obama created a bipartisan commission on debt reduction”Commissions are the favorite way for Dems to raise taxes to pay for their past spending increases. The Dems have super bipartisan majorities any time they want to propose a genuine cut in spending on anything apart from funding the war. The fact is that Dems have never actually cut government spending since Grover Cleveland took an ax to the corrupt Civil War veteran spending. The GOP is only marginally better, which is why the Tea Party is cleaning house there as well.shrinkers: “Do remember that Bill Clinton balanced the budget, and even created a surplus (and don’t give me that bull about it being the Republican Congress — two short years after Bush cam into office that SAME Republican Congress oversaw the biggest deficit in America’s history up until that point.”Hero, Clinton signed off on the Gingrich balanced budget plan which slowed the growth of spending below GDP growth. There was no spending cut there either. Gingrich and many of his revolutionaries were gone when Bush and that later GOP Congress spent like drunken Dems.

  39. Michael Weiss says:

    GROG, you said:”Banks aren’t lending and business aren’t investing because there is too much economic uncertainty right now.”And you know this how?”A bank originating a new 30-year mortgage at 5.3% is taking significant interest rate risk. Remember, the bank has to borrow short to fund the mortgage. Today that means selling a 1.6% one-year CD, for instance. But since rates have nowhere to go but up, one-year CDs are likely to get more expensive for the bank over the 30-year life of the mortgage. What looks like a healthy interest rate spread today (5.3% – 1.6% = 3.7%) is likely to get much tighter over time.”Mule Rider must be quietly cringing, waiting for someone from the left to take this. :)Lending, like any market, has competing forces. The going rate for borrowing money will necessarily have built into it a hedge (a bet, if you will) against future rates. If, collectively, the banks think that the rates are going to go up substantially during the term of the loan, they will charge higher rates for the loan. So if the going rate for a 30-year fixed is 5%, this means that the banks either believe that the interest rates won’t go up much in the next 30 years, or they have a long-term borrowing hedge against that interest.Incidentally, were you aware that banks can lend the same dollars more than once? Perhaps Mule Rider would care to step in and elaborate on this one. I’d like to hear his take on it.

  40. Michael Weiss says:

    shrinkers, you said:”Bill Clinton balanced the budget, and even created a surplus”I’m tired of hearing this meme, too. A more accurate statement is “the budget balanced itself.” Spending wasn’t cut. Tax rates weren’t increased. What happened was a huge economic expansion, brought about by the relaxation of rules on the Internet, permitting for-profit use of the Internet. This economic expansion generated massive increases in tax receipts.That is what balanced the budget.The longer Democrats and Republicans pat themselves on the back for that, and use that notion as a partisan talking point, the further we drift from real solutions to budgetary concerns.

  41. GROG says:

    @shortchain,”In 2009, banks effectively called in $432 billion more in loans than they made — something bankers call “deleveraging.” By this summer, as many banks were reporting big profits, the loss of credit got even worse. In the quarter ended June 30, credit disappeared at an annual rate of $574 billion.” http://dyn.politico.com/printstory.cfm?uuid=9D52F880-BE31-F9FD-0AC3589912A16A27

  42. Bart DePalma says:

    BD: “The GOP House can sidestep an Obama shutdown of the government by breaking up the omnibus into far smaller appropriations bill”MW: “And yet that didn’t happen in 1995. Why is that?”Good question. It was a major strategic error.BD: “reducing spending and borrowing can accomplish two things economically – (1) stabilize the dollar and reduce inflation of the prices of oil and imports and (2) free up investment capital.”MW: “Right now, borrowing money has almost no impact on the value of the dollar.”Hurtling toward sovereign insolvency hardly helps the confidence in the currency. See the Euro.MW: “Moreover, I assume you are implying that it is the greater availability of government debt that is taking money away from other investments. Given that government debt is paying around 2 1/2%, that notion is pretty laughable.”The government does not pay a risk premium (yet). The investors are buying safety because the government is artificially increasing the risk of investing the the United States private economy. If we remove that artificial government risk, the private cash business is sitting on flows in and any money that government is not borrowing flows in after it.BD: “The GOP House can also change its rules to require that the bills go through committee and are made public throughout the process.”MW: “They can. I even hope they will. But I seriously doubt it will happen. I will happily give them credit if they do it.”These were the Gingrich rules in effect during the entire GOP Congress before Pelosi shit canned them as one of her first acts as the new Speaker.BD: “The most important item on the GOP pledge which no one is talking about is proposed legislation requiring any regulation costing the economy $100 million or more to be passed by Congress as legislation.”MW: “This is one of the more absurd proposals, designed to prevent pretty much all regulation…It an attempt to take regulatory power away from the executive branch, as a power grab.”OMG. A power grab? Which branch of government does Article I grant sole legislative power? On what basis in the Constitution does the executive exercise any legislative power? This reaction is what I meant when I posted that progressives hate democracy and wish for rule by progressive “experts.”BD: “start grilling officials about the junk science”MW: “I’m perfectly OK with the notion that AGW, like all science, should be challenged seriously at all times. I don’t think members of Congress are the people qualified to do it, though.”How are our elected representatives in any way unqualified to pose questions to the bureaucracy to justify their actions? We elect Congress to run our government. Yet another example of how progressives hate democracy.

  43. Michael Weiss says:

    Bart, you said:”The United States has engaged in the largest Keynesian stimulus with over 3.5 Trillion in borrowing and spending and at least another Trillion in printed money from the Fed to the Banks from FY08 to FY10. The result has been a dreaded L recession where the economy free falls than then bounces along the trough instead of recovering”There are two things wrong with this.First, you are applying the false-cause fallacy, that B happened after A, and therefore A caused B.Second, you are flat out wrong about both the amount of money spent on the stimulus and that it is the largest ever. The United States spent over $6T in economic stimulus (in today’s dollars) in getting out of the Depression.

  44. Bart DePalma says:

    Michael:Gingrich and Clinton balanced the budget by slowing the growth of spending below that of GDP / tax revenues. The increase in tax revenues plus some was spent before then, thus the deficits.

  45. Michael Weiss says:

    Bart, you said:”The investors are buying safety because the government is artificially increasing the risk of investing the the United States private economy.”And you know this how?”Which branch of government does Article I grant sole legislative power? On what basis in the Constitution does the executive exercise any legislative power?”So you are opposed to the four-tier model of Constitution, legislation, regulation, and interpretation?We have long had a system whereby Congress determines the “what,” and the executive branch determines the “how.” The check on this is that if the “how” goes too far away from the intent of the “what,” Congress has the remedy of passing a new law to further scope the “what.”

  46. Bart DePalma says:

    BD: “The United States has engaged in the largest Keynesian stimulus with over 3.5 Trillion in borrowing and spending and at least another Trillion in printed money from the Fed to the Banks from FY08 to FY10. The result has been a dreaded L recession where the economy free falls than then bounces along the trough instead of recovering”MW: “First, you are applying the false-cause fallacy, that B happened after A, and therefore A caused B.”Perhaps it would be more accurate to argue that the Bush/Obama three year stimulus failed utterly to pull us out the the L recession and may have contributed to the failure to return to economic growth by redistributing investment capital to nonproductive uses.MW: “Second, you are flat out wrong about both the amount of money spent on the stimulus…”How so? Obama equates stimulus with deficit spending. From FY 08-10, we have borrowed and spent roughly $3.5 trillion.The Fed equates flooding the economy with cheap money as stimulus. Although it is a mystery, it has been reported that the Fed flooded $1 trillion or so into the banks.MW: “…and that it is the largest ever. The United States spent over $6T in economic stimulus (in today’s dollars) in getting out of the Depression.”Please substantiate this? Also, limit your time frame to three years to compare it to our recessionary current borrowing and spending spree.Thanks.

  47. Bart DePalma says:

    BD: “The investors are buying safety because the government is artificially increasing the risk of investing the the United States private economy.”MW: “And you know this how?”The uncertainty of the costs of Obamacare, EPA CO2 regs, financial regs and taxes as well as any arbitrary decisions like abusing the bankruptcy system to take the auto makers from their secured creditors.The literally hundreds of anecdotes reported in the media of why businesses are sitting on over $2 trillion.BD: “Which branch of government does Article I grant sole legislative power? On what basis in the Constitution does the executive exercise any legislative power?”MW: “So you are opposed to the four-tier model of Constitution, legislation, regulation, and interpretation?”My opinion is immaterial. That anti-democratic progressive invention is nowhere permitted in the Constitution.BD: “Congress has the remedy of passing a new law to further scope the “what.”Congress does not require a remedy as it is not some bystander to the legislative process. We elect Congress to enact law, not an unelected bureaucracy.

  48. Michael Weiss says:

    Bart, you said:”Gingrich and Clinton balanced the budget by slowing the growth of spending below that of GDP / tax revenues. The increase in tax revenues plus some was spent before then, thus the deficits.”Funny thing about that. The rate of growth of the US budget averaged 7% when Clinton was President and Democrats held the House and Senate.The rate of growth of the US budget when Clinton was President and Republicans held the House and Senate? 7%.See for yourself here: http://www.gpoaccess.gov/usbudget/fy05/hist.htmlThey slowed that growth an awful lot, didn’t they?

  49. shiloh says:

    Bart, as you’ve been very busy at work this morning, take a break … I insist 🙂

  50. shrinkers says:

    Michael:We have long had a system whereby Congress determines the “what,” and the executive branch determines the “how.” Precisely. And the whole point of regulatory agencies is that Congress specifically grants them the responsibility to determine “how.” So, in other words, Congress has already approved the decisions of the regulatory agencies, before-the-fact, by giving them the mandate to make these decisions. What Bart is proposing is to have Congress second-guess both itself and the agencies it creates.So, bart, to answer your question, the regulatory agencies are already following the law and the Constitution. What the Republican plan does is attempt to alter prior laws to strip regulatory agencies of the abilities — which Congress had previously granted them — to determine how best to implement and execute various laws.I understand that, to you, the idea of crippling government so that it cannot perform its functions is an attractive concept. And if your people can convince enough Americans that we should try this, then we will. That’s how democracy works.On the other hand, We the People have previously felt that government should actually function, adn should perform a number of roles — including regulatory roles. That, too, is how democracy works. Bleating that “elected officials are not following the will of the people” simply because We the People have decided something you don’t like is a serious misunderstanding of the functions of a representative democracy.This is a perfect example of the Republican strategy of making sure government doesn’t work, so it can later complain that government doesn’t work.

  51. shrinkers says:

    Fixing italics. Sorry.

  52. shrinkers says:

    Why do italics always slant to the right?.

  53. shortchain says:

    GROG,The link you cite has this: “Vincent Reinhart, a former Federal Reserve economist, said the unprecedented lack of lending comes from a vicious circle of low expectations by the banks that the economy will improve, which further deters lending and thus lowers hopes for growth even more.”Oh and there’s the usual gratuitous jab from the AEI guy at “uncertainty in how the recent regulations will be implemented” — but that would be true no matter what. Please note that said uncertainty is waning.Finally, please note that this business plan is not sustainable. You can’t keep calling in loans without making new ones and remain in business as a lending institution.

  54. shrinkers says:

    @BartObama equates stimulus with deficit spending.You are free to document this extraordinary claim. You say he “equates” these concepts. Pleas eshow us:1) … where Obama has specifically said that all stimulus comes from, adn only from, deficit spending, and2) … where Obama has specifically said that all deficit spending, of any type, and at any time, regardless of economic conditions, is always stimulative.Or else, you are free to withdraw this statement and promise not to repeat it.

  55. Michael Weiss says:

    Bart, I said: “And you know this how?”To which you replied:”The uncertainty of the costs of Obamacare, EPA CO2 regs, financial regs and taxes as well as any arbitrary decisions like abusing the bankruptcy system to take the auto makers from their secured creditors.The literally hundreds of anecdotes reported in the media of why businesses are sitting on over $2 trillion.”The first is essentially a reiteration of your earlier assertion, with no additional data to back it up. The second, by virtue of being anecdotal, is meaningless.”We elect Congress to enact law, not an unelected bureaucracy.”So when there is ambiguity on “how” to implement the “what” that Congress passed, who should answer that question?

  56. MoldyMe says:

    @BDP 0834:How can I justify additional stimulus funding? The recession has been *much* deeper than anyone expected. Pres Obama, as you may recall, wanted a substantially larger stimulus package, but the Rs balked. In my view, a larger stimulus package with funding to help state govts would have reduced the pain. Is contributing to the deficit an issue? Of course, but the problem is in the future, not immediate. In the future, with increased prosperity, tax revenues will go up. In addition, the economy will be strong enough to support increases in taxes to reduce the deficit and keep inflation in check. I know you don’t support tax increases, but there is a place for them when the economy is strong.Instead of what we now have, we could have had massive spending programs, building up the nation’s aging infrastructure and supporting public education (and higher ed), while reducing taxes on small businesses. A win for the American people, great for our future, *but* not good for Republican prospects, so it was a non-starter.Bart, Keynesian solutions only work when they’re done on a grand scale.

  57. Mule Rider says:

    “You can’t keep calling in loans without making new ones and remain in business as a lending institution.”The idea that “banks aren’t lending money” is false. They are. People are just being lazy with a figure of speech. Banks just aren’t lending at nearly the same rate as they have in the past. Money is still being loaned, just to the most uber-creditworthy customers and sound ideas.

  58. Mule Rider says:

    I got a loan earlier this year. Helps that I have a max credit score in the low 800s and an average of about 790.

  59. Bart DePalma says:

    Michael:You left half of my equation out. Gingrich/Clinton slowed spending growth below GDP/tax revenue growth (not absolutely) to balance the budget. In short, Congress applied the new tax revenues to reducing the deficit.shrinkers wrote: “What Bart is proposing is to have Congress second-guess both itself and the agencies it creates.”How can Congress “second guess” any part of government concerning legislation when Article I of the Constitution makes it the sole legislator?shrinkers: “What the Republican plan does is attempt to alter prior laws to strip regulatory agencies of the abilities — which Congress had previously granted them — to determine how best to implement and execute various laws.”That is correct. Congress is taking back its unconstitutional delegation of legislative power to an unelected bureaucracy.shrinkers: “And if your people can convince enough Americans that we should try this, then we will. That’s how democracy works.”It part of the Pledge platform upon which the GOP is running in 2010.

  60. Bart DePalma says:

    BD: “Obama equates stimulus with deficit spending.”shrinkers: “You are free to document this extraordinary claim.”I saw Obama make this comment to reporters back in 2009 when they asked him why paygo did not apply to the Porkulus. I googled for about ten minutes, but could not find a link. Sorry.In any case, his actions speak louder than his words. Nothing in the Porkulus was paid for by cutting other spending as required under Congress’ own rules. Obama’s Son of Porkulus was also originally all borrowed until the GOP Senate forced the Dems to switch money from the original Porkulus to pay for this one.BD identifying the sources of business uncertainty: “The uncertainty of the costs of Obamacare, EPA CO2 regs, financial regs and taxes as well as any arbitrary decisions like abusing the bankruptcy system to take the auto makers from their secured creditors. The literally hundreds of anecdotes reported in the media of why businesses are sitting on over $2 trillion.”MW: “The first is essentially a reiteration of your earlier assertion, with no additional data to back it up.”What additional data do you need? The requirements and costs of Obamacare, the CO2 regs and the financial regs mostly unwritten and thus unknown. MW: “The second, by virtue of being anecdotal, is meaningless.”No, it called testimony by witnesses with personal knowledge. This is what the vast majority of court cases are based upon.BD: “We elect Congress to enact law, not an unelected bureaucracy.”MW: “So when there is ambiguity on “how” to implement the “what” that Congress passed, who should answer that question?”Courts under judicial review. If the statute is too vague to enforce, the court should find it unenforceable.MoldyMe wrote: “How can I justify additional stimulus funding? …Instead of what we now have, we could have had massive spending programs, building up the nation’s aging infrastructure and supporting public education (and higher ed), while reducing taxes on small businesses.”More massive that $3.5 Trillion? How much more do you have to spend to get from the complete failure of $3.5 Trillion to even historical business cycle recovery level growth in the mid single digits?”Bart, Keynesian solutions only work when they’re done on a grand scale.”My point is that Keynesian stimulus has NEVER created economic growth in excess of that which normally occurs in the business cycle without any intervention. See the New Deal and Japan’s lost decade. The Porkulus is simply the grandest failure of this misbegotten theory top date.

  61. shortchain says:

    Bart,So when and where have austerian policies created economic growth in excess of that which normally occurs in the business cycle?

  62. Michael Weiss says:

    Bart, you said:”You left half of my equation out. Gingrich/Clinton slowed spending growth below GDP/tax revenue growth (not absolutely) to balance the budget. In short, Congress applied the new tax revenues to reducing the deficit”I left that part out to prove a point. It’s easy to change your net cash flow if all you have to do is sit there while more money comes in than before. That doesn’t take leadership; that just takes inaction. To give Gingrich credit for the inaction is pretty silly.I said: “The first is essentially a reiteration of your earlier assertion, with no additional data to back it up.”To which you replied: “What additional data do you need? The requirements and costs of Obamacare, the CO2 regs and the financial regs mostly unwritten and thus unknown.”The costs are not in question. What is in question is the causal relationship between the regulations and businesses being unwilling to invest.Later I said: “So when there is ambiguity on “how” to implement the “what” that Congress passed, who should answer that question?”To which you replied: “Courts under judicial review. If the statute is too vague to enforce, the court should find it unenforceable.”So let me see if I get this straight. Congress passes a law. The executive branch can’t enact it without guidelines, so the executive branch is expected to file suit against Congress, stating that the law is too vague to implement. Then, after winding its way through the courts, the law is expected to be struck down due to being unenforceable. After that, Congress is expected to try again.Wow. You really do want government to be incapable of doing anything. It’s already mighty sclerotic, but this would surely cause it to devolve into anarchy.GROG, Mule, I have to ask…do you two share in this belief?Bart, you then said: “Keynesian stimulus has NEVER created economic growth in excess of that which normally occurs in the business cycle without any intervention.”The expenditures of WWII (~$5T in today’s dollars) were certainly a form of Keynesian stimulus. Do you mean to suggest that the infrastructure built for the war industry had no stimulative impact on the economy in the postwar era?

  63. shrinkers says:

    @BartIn any case, his actions speak louder than his words. So, you were unable to offer any actual evidence of your extraordinary claim. Instead, you merely try to put your silly spin upon policies which were explained, in great detail, in ways that don’t match your paranoid fantasies.Again, Bart, since you are unable to provide a shred of evidence that Obama “equates” deficit spending and stimulus, you are free to withdraw this absurdity and avoid making this inane statement in the future.

  64. shrinkers says:

    @BartCongress is taking back its unconstitutional delegation of legislative power to an unelected bureaucracy.If anyone believed regulatory agencies are acting in an unconstitutional manner, that person is free to bring suit in Federal court.You are free to provide a SCOTUS decision which rules federal regulatory agencies to be unconstitutional. Otherwise, you can also twithdraw this absurd statement as well.

  65. Mule Rider says:

    “GROG, Mule, I have to ask…do you two share in this belief?”To be perfectly honest, the discussion has gotten so convoluted, I’m not entirely sure what the question is, and I’m not sure if I have the curiousity to find out. More than likely (without knowing anything else about what you’re asking), while I probably share some of the sympathies of Bart, I’m probably less dogmatic or even a bit skeptical of the position he’s staking out.

  66. shorchain says:

    Muley,I’m with you on how convoluted this discussion has become. Economics. Ew<a href="http://www.The“>www.The question is whether you agree with the (IMO ridiculous) item in the GOP contract on America that calls for all regulations promulgated by the bureaucracy which cost more than a certain amount to implement to be approved by Congress.

  67. Michael Weiss says:

    I’m sorry, Mule Rider, let me clarify the question:Do you believe that the Executive Branch issuing regulations based on laws is a violation of the Constitution?

  68. Bart DePalma says:

    shortchain wrote: “Bart,So when and where have austerian policies created economic growth in excess of that which normally occurs in the business cycle?”??? Austrian? Austerity? Supply side?

  69. Mule Rider says:

    “Do you believe that the Executive Branch issuing regulations based on laws is a violation of the Constitution?”Not necessarily.

  70. Bart DePalma says:

    MW: “It’s easy to change your net cash flow if all you have to do is sit there while more money comes in than before. That doesn’t take leadership; that just takes inaction. To give Gingrich credit for the inaction is pretty silly.”I only wish it was that easy. Congress generally spends everything that comes through the door and then borrows to spend more. That is why we have only had a couple years of balanced budgets over most of my lifetime.BD: “What additional data do you need? The requirements and costs of Obamacare, the CO2 regs and the financial regs mostly unwritten and thus unknown.”MW: “The costs are not in question. What is in question is the causal relationship between the regulations and businesses being unwilling to invest.”When you are projecting out a ROI over several years of an investment, of course business costs make a difference. If you do not know those costs, you cannot calculate your ROI.MW: “So let me see if I get this straight. Congress passes a law. The executive branch can’t enact it without guidelines, so the executive branch is expected to file suit against Congress, stating that the law is too vague to implement.”Ideally, the President will decline to sign a law which is too vague to implement. Usually, a President will attempt to enforce the law and the folks against whom the law is enforced will file suit.MW: “Then, after winding its way through the courts, the law is expected to be struck down due to being unenforceable. After that, Congress is expected to try again.”That is how laws are stricken for being void for vagueness.MW: “Wow. You really do want government to be incapable of doing anything.”Somehow Congress managed to govern for a century and a half as the United States became the most powerful country on Earth without delegating away its legislative power. I want a government which is accountable to to the People.BD: “Keynesian stimulus has NEVER created economic growth in excess of that which normally occurs in the business cycle without any intervention.”MW: “The expenditures of WWII (~$5T in today’s dollars) were certainly a form of Keynesian stimulus.”How? I really hate the idea that you can grow an economy through war. War production is good for nothing else and is generally destroyed in the war or scrapped afterward. 20 million men and women were put to work in uniform with the purpose of killing others and did not produce anything approximating wealth. 250k of them died, removing their production from the economy permanently. x3 were maimed, often making them a net drain on the future economy. The nation itself was left with an enormous debt of 120% of GDP. Please tell me how this constituted Keynesian stimulus of the private economy?

  71. shortchain says:

    Bart,Austerian = either Austrian or austerity. What you are proposing.

  72. Bart DePalma says:

    shrinkers wrote: “If anyone believed regulatory agencies are acting in an unconstitutional manner, that person is free to bring suit in Federal court.”These cases were litigated successfully for years until FDR threatened to pack the Court and then managed to load the court through attrition with progressives who rewrote the Constitution by fiat.

  73. filistro says:

    It’s slowly beginning to dawn on me that Bart really is INSANE.I mean, not just dogmatic, stubborn or politically simplistic… but technically, clinically nuts.Or perhaps he’s a time-traveller who has strayed from Galt’s Gulch into a parallel universe. Bart, check here and there about your person. Do you have a coonskin cap there somewhere? Perhaps a flintlock pistol?You are a walking anachronism. It’s really fascinating.

  74. Bart DePalma says:

    shortchain:I was not proposing anything, but rather delivering a critique of Keynesian stimulus as a recession remedy.If I were King, I would simplify the tax code by eliminating all federal taxes in favor of the FAIR tax, which would eliminate tens of billions in compliance costs and catch taxes from the grey and black economies.Next, I would sunset all regulations and require them to be reenacted by Congress. All new regulations can be generated by the bureaucracy, but would need to be enacted into law by Congress.Next, cap federal government spending at 20% of GDP and require either a declaration of war or a super majority of congress to borrow or raise the spending limit.Next, eliminate the due process right to promised government charity – i.e. entitlements. A recipient is only entitled to that which is funded by the Congress or the state legislatures.I guarantee, the economy would grow like China’s.

  75. Bart DePalma says:

    Filli:Clinically nuts for proposing freedom?You are sounding unattractively like a Soviet commissar sending a dissident to a psych ward to learn to love big brother.

  76. shrinkers says:

    @BartI want a government which is accountable to to the People.Hmmm. I thought we already had the right and power to vote.Your outrageous hyperbole is showing, Bart. You may want to have it removed.

  77. filistro says:

    Clinically nuts for proposing freedom?But I’m waffling. I’ve already downgraded “nuts” to “anachronistic.”I suppose Samuel Adams would seem a bit nuts in today’s setting, too. (Especially if he insisted on running around in knee breeks and that ratty old powered wig.

  78. shrinkers says:

    @BartThese cases were litigated successfully for years Again, Bart, you are free to present us with a SCOTUS decision that ruled the concept of regulatory agencies to be unconstitutional. You may stop your deflections at any time.

  79. Bart DePalma says:

    Fili:I prefer buckskins and a long rifle…;^)

  80. shortchain says:

    Bart,And where and when did what your preferred economic policies create growth (the kind that you claim Keynesian stimulus never did)?

  81. filistro says:

    @Bart.. I prefer buckskins and a long rifleOh dear. Just as I suspected…

  82. Michael Weiss says:

    Bart, you said:”Congress generally spends everything that comes through the door and then borrows to spend more. That is why we have only had a couple years of balanced budgets over most of my lifetime.”Here we have the false-cause fallacy again. The first sentence is true (at least since 1981), but doesn’t necessarily beget the second.Expenditure growth for the US government has been remarkably consistent over the past 30 years. I gave you the link, so you can look that up for yourself if you don’t believe me.The only thing that changed in the 1990s was the revenue growth.That had nothing to do with Gingrich. It also had nothing to do with Clinton. It had everything to do with the explosion of the Internet.”When you are projecting out a ROI over several years of an investment, of course business costs make a difference. If you do not know those costs, you cannot calculate your ROI.”This is only true to a limited extent. Businesses deal with uncertainty all the time when calculating projections. It’s a normal part of doing business.Moreover, the fact that there is uncertainty does not prove a causal relationship between the PPACA and CO2 on the one hand, and lack of business investment on the other. The fact that people aren’t buying goods, are taking any “found money” and putting toward debt reduction, and have low consumer confidence is at least as good a candidate for a causal relationship.If you disagree with this, then you need to put up hard numbers, not conjecture.”Usually, a President will attempt to enforce the law and the folks against whom the law is enforced will file suit.”Good news! They can do this today! So why do you need to change things?”Somehow Congress managed to govern for a century and a half as the United States became the most powerful country on Earth without delegating away its legislative power.”Really? There wasn’t a single Executive Branch regulation until 1937?”I want a government which is accountable to to the People.”What you describe sounds more like wanting every single government employee to be directly elected.I said: “The expenditures of WWII (~$5T in today’s dollars) were certainly a form of Keynesian stimulus.”To which you responded: “How?”I answered this question in the Re-ARRA-nging the Economy comments a few weeks ago. The long answer is there, but the short answer is that it created a ton of infrastructure that was freely available for private industry to use after the war.”I really hate the idea that you can grow an economy through war.”Me, too. Imagine, instead, taking the same number of dollars that we spent on the war, and putting it entirely toward beneficial things. Imagine if we spent a small fraction of that amount on offsetting amortization costs of carbon-free renewable energy. Or biotechnology. Or water cycle improvements. Or any number of thousands of projects that would pay huge dividends to the entire nation.

  83. Bart DePalma says:

    shortchain wrote: “And where and when did what your preferred economic policies create growth?”The Reagan reforms of taxes, deregulation and breaking the unions followed by the Clinton/Gingrich free trade and entitlement reforms created a generation of nearly uninterrupted economic growth from 1983-2007. A quarter century of economic growth with only one mild and one near recession is unique in American history.Part of the economic political backlash is that almost half the country probably has no memory of anything but prosperity as adults.

  84. shortchain says:

    Bart,Oh, please. Ronald Reagan spent like a drunken sailor, starting with a national debt 32.5 percent of GDP and ending with 53.5 (!) percent of GDP.This is hardly evidence that an austerity program would boost the economy — it’s instead a poster-child for Keynesian economics.

  85. shortchain says:

    Bart,The claim that Reagan “broke the unions” is BS. Only PATCO was directly affected. The effect on other large unions, such as UAW and the Teamsters, was minimal, so the claim that breaking the unions was a factor in producing long-term economic growth is baloney.As for the Reagan tax reforms, the Tax Reform Act of 1986, which increased corporate taxes can hardly be considered as supporting your claims.In summary, I find your example to be an example which demonstrates pretty much the opposite of what you claim.Michael has already demolished your claim for the 1990’s.Apparently you have no evidence to support the theory that cutting government spending will stimulate the economy, only examples that deficit spending does stimulate the economy.

  86. Jean says:

    Michael Weiss,re: Here we have the false-cause fallacy again. The first sentence is true (at least since 1981), but doesn’t necessarily beget the second.Bart tenuous grip on logic seems to be based more on the following statement: “A supposition based on a supposition cannot be refuted”.For instance, “God made the moon, therefore God exists”.Or, “Republicans have never increased the deficit, therefore Republicans are fiscal conservatives”.

  87. shrinkers says:

    @shortchainIn summary, I find your example to be an example which demonstrates pretty much the opposite of what you claim.That’s pretty typical of Bart. He gets practice in linking to websites that say the opposite of what he says they say.

  88. shiloh says:

    @BartlesIf I were King~~~~~Again, Bart and Reps in a nutshell as they don’t want to govern, they want to conquer and rule!@shortchainOh, please. Ronald Reagan spent like a drunken sailor~~~~~Again, sailors spend their own $$$, whereas Reagan spent your $$$ er taxpayer’s $$$.Anchors Aweigh !!!Only PATCO was directly affected.My sister’s 1st ex 😉 was one of the air traffic controllers Reagan fired. He was a GS-13 working out of Islip, L.I. Before Reagan was elected he fully supported the controllers in their effort to update their totally outdated equipment, but once in office he did a 180 and screwed them. Shocking!Speaking of my sister, we were at a family wedding today and the food was great! :)ok, now I sound like I’m on twitter, which I never will be. Never say never …btw, people are still getting married, what’s up w/that!

  89. Bart DePalma says:

    shortchain:1) Reagan changed the tax code on multiple occasions for various reasons. However, the end result was that the code was substantially flatter and reached more people as the loopholes were eliminated. Everything since then has been tinkering around the edges. No one outside of the hard left is talking seriously about returning to the FDR code.2) Union membership started its free fall in the early 80s. Reagan set the stage by firing the PATCO strikers and let it be known the government would no longer protect the unions. This was key to eliminating the wage price cycle fueling stagflation.

  90. shiloh says:

    @Bartles1) Reagan changed the tax code on multiple occasions for various reasons.~~~~~Indeed and feel free to provide documentation supporting your statement.Re: your demigod Reagan …Reagan Raised Taxes At Least 7 Times, Including the Biggest Corporate Tax Hike Everbtw:Reagan raised taxes by $133 billion from 1982 to 1988 take care Bart

  91. shortchain says:

    Bart,I asked for an example of when and where austerity produced an economic recovery greater than that produced by the business cycle.You have, instead, given us the example of Reagan, whose presidency was not an example of austerity, but quite the opposite (I worked for a company that made a barrel of money off SDI). Now, you can, if you wish, believe that it was Reagan’s very mixed signals on tax cuts, which apparently produced instantaneous results — before they were even finalized, apparently — and his anti-union crusade which also, apparently, worked like a dose of drano.The problem you have here is that you cannot transfer your faith in the tax fairy or the union-busting magic wand to others, including me. I look at Reagan and I see a president who engaged in massive deficit spending.BTW, since there were multiple, contradictory tax laws passed, and the NLRB didn’t just disappear, generating tremendous uncertainty, you would seem to be stepping on GROG’s theory that it’s all the “regulatory uncertainty” that’s got the banks and businesses in a coma today.

  92. Bart DePalma says:

    shiloh:::chuckle:::It is amusing to see the left both blame Reagan tax cuts for the deficit and credit him with a Christmas tree of tax increases when they need the “demigod’s” cover to suggest tax increases of their own.Which is it?

  93. shortchain says:

    Bart,You sure can read what you want to into plain, unequivocal statements, can’t you? That must be a tremendous advantage in maintaining your world view.Where did anyone give Reagan “credit” for anything? Pointing out, in the face of your arguments, that he raised taxes on business is hardly “giving him credit” for anything, it’s just pointing out a fact.It’s budgeting 0001 that, if your revenues fall short of your expenditures, which Reagan’s tax increases did, then you’ll mushroom the debt. So, sure, Reagan did do some good things. Satisfied? But he also hugely increased the debt. The bottom line is that he’s NOT an example of austerity.

  94. shiloh says:

    @Bartlesshiloh:::chuckle:::~~~~~Let the record show Bartles did not address my post:Indeed and feel free to provide documentation supporting your statement.but deflected, as per usual, btw Bartles I was not accusing you of anything just asking a question ie to expand on your Reagan changed the tax code on multiple occasions for various reasons. How so?and as per usual, when you don’t have a rational answer or are defensive cut your answers real short w/an inane (((:::chuckle:::))) hence, therefore, ergo losing the argument.Which is too funny indeed, since I wasn’t arguing w/you.And again, I was just pointing out a fact that Reagan raised taxes and you get all defensive and discombobulated!:::chuckle::: indeedtake care, blessings

  95. shiloh says:

    Bartles, you really do have reading comprehension deficit. ;)solo estoy diciendo

  96. Bart DePalma says:

    I am in our local cafe reading the paper and the business headline is screaming that local health insurance costs are spiking nearly 15% and local businesses are talking about fresh layoffs to meet the burden.Thank you Obamacare!€£>%£¥#%!!!

  97. shiloh says:

    As Bartles changes the subject …

  98. Michael Weiss says:

    Bart, you said:”business headline is screaming that local health insurance costs are spiking nearly 15% and local businesses are talking about fresh layoffs to meet the burden. Thank you Obamacare!”Funny thing about that. These insurance companies are raising rates, and yet the reasons they claim behind the increases don’t take effect for a couple more years.Funny thing about that. They increased rates by a similar amount each of the last two years, when there was no PPACA.Funny thing about that. The insurance companies have almost always been opposed to the PPACA. Should it be a surprise that they’d use the bill they don’t like as an excuse for increases they would have made anyway?

  99. Bart DePalma says:

    Michael:Many of the Obamacare mandates are in effect now. Go google Obamacare and insurance increase for the stories of spiking insurance costs around the country. The fact that folks have been getting notices at work that their insurance costs are rising over the past two months is perhaps the most underreported “October surprise” in this election cycle.

  100. Bart DePalma says:

    MW: “Should it be a surprise that they’d use the bill they don’t like as an excuse for increases they would have made anyway?”Health insurance increases have to clear state regulators and the insurers have to justify the increases for each policy. They have been providing exact figures for the portion of the increase due to each Obamacare mandate and the state boards have been approving them to the embarrassment of the Administration bureaucrats who lied about the costs only rising 1-2% during the debate on this predatory legislation.Google it.

  101. Michael Weiss says:

    Bart, let me show you the logic breakdown:”Health insurance increases have to clear state regulators and the insurers have to justify the increases for each policy.”Correct.”They have been providing exact figures for the portion of the increase due to each Obamacare mandate”Correct. They’ve also been providing figures for the portion due to other factors, which you conveniently left out.”and the state boards have been approving them”Correct. Both the factors you listed, and the ones you didn’t.But when an insurance company is speaking to the employer or to the press, doesn’t it sound better to say “We don’t want to raise the rates, but those awful bureaucrats in Washington are making us do it” than to say “Yeah, it’s the same thing as last year. Another 15%. Doesn’t really matter what they do in Washington…it’s going to go up 15% per year regardless.”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s