Stag Lord said:

Curious as to what the 'revisionist history' you are referring to is. Hayek was a contemporary foil of Keynes - and the theory that FDR's spending programs prolonged the Depression is really nothing new amongst economist/financial people - it just gained even more traction as Japan's situation added even more data/evidence supporting it. If the conclusion that FDR wasn't the great savior is revisionist - maybe 'history' was written too early or inappropriately on that.

Payroll tax cuts would be good. Still think the media/masses are underestimating the impact and swiftness of a Corporate tax rate cut. I can virtually guarantee that would have reduced the number of job cuts we've heard of so far - and those are jobs and spending $$$ to middle and low income earners/spenders generally

welll, to start with - conventional economic wisdom at teh time (conservative and liberal) was to rasie taxes and implement protectionsim to alleviate the cirsis of the Depression. Roosevelt resissted both these impulses - he was looking for a total break with the failed economics of the past (Smoot-Hawley was enacted under Hoover). Roosevelt was also against entitlement programs - he resissted a lot of his advisors on teh left who wnated to immedaitely pay the Great war bonuses and to start getting money immediately into teh hands of the poor to stimulate spending.

The great exception fo course was Social Security, which Roosevelt made sure was tied to employment.

One of the failings of the New deal was that it was focused almost solely on public works, without attendant tax cuts. see Alter pp 153-158. Given the intellectual climate of the time though, it would have been nearly impossible to do anything else. More to follow.

Stag Lord said:

Great, and underappreciated point ( I'd contend the 'intellectual climate' had a lot to do with they way Bush Jr governed also, and obviously many people despise him)- I'm waiting for more

LordofBrewtown said:

I am not sold on corporate tax rate cuts, for the same reason it didn't work with banks. They will use the funds to shore themselves up, or buy competitors that are really stuggling, ~or heck - pay out silly bonuses All are not bad (other than the consolidation, something that CERTAINLY isn't needed any further), but won't help in the remotely near future.

Payroll taxes might be better, but I was under the impression those funds are more tied to Social Security? And we don't need to mess that up any worse than it is already.

Infrastuture and strong spending on the 'general good' projects I like, and things being put out like credits for buying homes (as long as they GO AWAY phasing out) and R&D i can get behind. And, I still think a credit for buying a Prius or whatever isn't a horrible thing - two birds with one stone (three actually - dependance on foreign oil, the environment, buying cars).

And personally, I don't think the New Deal was a life-saver (WWII was, ironically), but it put a TON of people to basic work - which wasn't bad. As bad as things are now, they are not even remotely close to how bad things were then. Plus, I agree with the basic change in business practices and regulation that came out of it...much of which was (surprise!) repealed only in the last 5-10 years when hubris came back.

LordofBrewtown said:

I don't think it's going to last a few more years. We've been "in it" longer than the average bear market as it is, and I'm also intensely conscious of all the analysts that say we'll start coming out of the recession six months before it becomes really clear that we have.

I'm not pinning any hopes on the politicians, because that's not how recessions have been ended in the past. What will happen (and may be already) is that you have a lot of people that were making big salaries, and have capital and creativity, but no jobs. Those people will get together with others who are out of work, or connections they had through jobs, and more than a few will start up new small businesses. Those businesses will create goods or services that improve lives or create wealth. Over time, those small businesses will need to expand in order to keep up with growing orders, and they'll hire people to sell, manufacture, deliver, etc..

They'll need new buildings for their facilities, and that will lead to a resurgence in the real estate or construction industries.

Thing is, people eventually get fed up (little pun their) with waiting for some false messiah(s) to come along and save them, and they finally get the message they're going to have to do it themselves.

That's how recessions really end.

rings said:

I think you give the Corporations more credit than I do. They are going to pay out the silly bonuses, and buy competitors regardless - even if it means cutting jobs to pay for them. Those things are likely already in their plans/budgets for the year. I think a Corp Tax cut would simply allow the Corps to not make the job cuts we've been seeing.

I thought I'd quote this Q&A from Obama's first news conference. Just an amazing answer. No doubt a large chunk of the world is temporarily grateful simply to have someone there who's articulate & intelligent. More will be expected later, of course... but for now just check out the eloquence.

Question : Thank you, Mr. President. You have often said that bipartisanship is extraordinarily important, overall and in this stimulus package, but now, when we ask your advisers about the lack of bipartisanship so far -- zero votes in the House, three in the Senate -- they say, "Well, it's not the number of votes that matters; it's the number of jobs that will be created."

Is that a sign that you are moving away -- your White House is moving away from this emphasis on bipartisanship?

And what went wrong? Did you underestimate how hard it would be to change the way Washington works?

Obama : Well, I don't think -- I don't think I underestimated it. I don't think the -- the American people underestimated it. They understand that there have been a lot of bad habits built up here in Washington, and it's going to take time to break down some of those bad habits.

You know, when I made a series of overtures to the Republicans, going over to meet with both Republican caucuses, you know, putting three Republicans in my cabinet -- something that is unprecedented -- making sure that they were invited here to the White House to talk about the economic recovery plan, all those were not designed simply to get some short-term votes. They were designed to try to build up some trust over time.

And I think that, as I continue to make these overtures, over time, hopefully that will be reciprocated.

But understand the bottom line that I've got right now, which is what's happening to the people of Elkhart and what's happening across the country. I can't afford to see Congress play the usual political games. What we have to do right now is deliver for the American people.

So my bottom line when it comes to the recovery package is: Send me a bill that creates or saves 4 million jobs. Because everybody has to be possessed with a sense of urgency about putting people back to work, making sure that folks are staying in their homes, that they can send their kids to college.

That doesn't negate the continuing efforts that I'm going to make to listen and engage with my Republican colleagues. And hopefully the tone that I've taken, which has been consistently civil and respectful, will pay some dividends over the long term. There are going to be areas where we disagree, and there are going to be areas where we agree.

As I said, the one concern I've got on the stimulus package, in terms of the debate and listening to some of what's been said in Congress, is that there seems to be a set of folks who -- I don't doubt their sincerity -- who just believe that we should do nothing.
Now, if that's their opening position or their closing position in negotiations, then we're probably not going to make much progress, because I don't think that's economically sound and I don't think what -- that's what the American people expect, is for us to stand by and do nothing.

There are others who recognize that we've got to do a significant recovery package, but they're concerned about the mix of what's in there. And if they're sincere about it, then I'm happy to have conversations about this tax cut versus that -- that tax cut or this infrastructure project versus that infrastructure project.

But what I've -- what I've been concerned about is some of the language that's been used suggesting that this is full of pork and this is wasteful government spending, so on and so forth.

First of all, when I hear that from folks who presided over a doubling of the national debt, then, you know, I just want them to not engage in some revisionist history. I inherited the deficit that we have right now and the economic crisis that we have right now.
Number two is that, although there are some programs in there that I think are good policy, some of them aren't job-creators. I think it's perfectly legitimate to say that those programs should be out of this particular recovery package and we can deal with them later.
But when they start characterizing this as pork, without acknowledging that there are no earmarks in this package -- something, again, that was pretty rare over the last eight years -- then you get a feeling that maybe we're playing politics instead of actually trying to solve problems for the American people.

So I'm going to keep on engaging. I hope that, as we get the Senate and the House bills together, that everybody is willing to give a little bit. I suspect that the package that emerges is not going to be 100 percent of what I want.

But my bottom line is, are we creating 4 million jobs? And are we laying the foundation for long-term economic growth?

This is another concern that I've had in some of the arguments that I'm hearing. When people suggest that, "What a waste of money to make federal buildings more energy-efficient." Why would that be a waste of money?

We're creating jobs immediately by retrofitting these buildings or weatherizing 2 million Americans' homes, as was called for in the package, so that right there creates economic stimulus.

And we are saving taxpayers when it comes to federal buildings potentially $2 billion. In the case of homeowners, they will see more money in their pockets. And we're reducing our dependence on foreign oil in the Middle East. Why wouldn't we want to make that kind of investment?

Now, maybe philosophically you just don't think that the federal government should be involved in energy policy. I happen to disagree with that; I think that's the reason why we find ourselves importing more foreign oil now than we did back in the early '70s when OPEC first formed.

And we can have a respectful debate about whether or not we should be involved in energy policymaking, but don't suggest that somehow that's wasteful spending. That's exactly what this country needs.

The same applies when it comes to information technologies in health care. We know that health care is crippling businesses and making us less competitive, as well as breaking the banks of families all across America. And part of the reason is, we've got the most inefficient health care system imaginable.

We're still using paper. We're still filing things in triplicate. Nurses can't read the prescriptions that doctors -- that doctors have written out. Why wouldn't we want to put that on -- put that on an electronic medical record that will reduce error rates, reduce our long-term costs of health care, and create jobs right now?

Education, yet another example. The suggestion is, why should the federal government be involved in school construction?
Well, I visited a school down in South Carolina that was built in the 1850s. Kids are still learning in that school, as best they can, when the -- when the railroad -- when the -- it's right next to a railroad. And when the train runs by, the whole building shakes and the teacher has to stop teaching for a while. The -- the auditorium is completely broken down; they can't use it.

So why wouldn't we want to build state-of-the-art schools with science labs that are teaching our kids the skills they need for the 21st century, that will enhance our economy, and, by the way, right now, will create jobs?

So, you know, we -- we can differ on some of the particulars, but, again, the question I think the American people are asking is, do you just want government to do nothing, or do you want it to do something? If you want it to do something, then we can have a conversation. But doing nothing, that's not an option from my perspective.

I guess that depends on how big a fan you are of President Obama. I find the spin that those who oppose that giant piece of junk/pork 'want to do nothing' deceitful/standard old Washington two-party politics. That bill is appalling to me. Ghastly.

Economists that I respect and that have done outstanding work, are tearing it to shreds. And the President's comment that he won't include tax cuts because they are tired old ideas/have been tried and don't work isn't even factually correct. I suppose you could argue it hard to prove what is causal in economics; however, the GNP has improved markedly for at least the two subsequent years each time after a corporate tax cut (see results after Reagan and Kennedy cuts, -even Bush's worked). So, for him to dismiss those as not having short-term effects was incredibly disappointing to me.

And I'm seeing zero 'change of Washington ways' coming from him. Zero. Just more of the same. Wow, so he chose a couple of Republicans for cabinet posts- mostly designed at getting another Senate seat, and increasing own power (census - another prospect that terrifies me, that borders on dictatorial).

I'm not surprised, just disappointed.

LordofBrewtown said:

Well it would be spin to say that anyone who opposes the package wants to do nothing, but you might want to revisit the quote if you think Obama is saying that. And the package includes about $280 billion in tax cuts, by the way.

LiquidIce said:

Eloquent words, yes.

Actions to match, no.

Eventually, one would think, the press will get around to reporting on it.

Well -

He's been in office less than a month and he has doen everything but beg the deafeted, marginalized republicans for their support and input, and um, they're still not ready to play under the new rules yet.

Obama has taken the elimiantion of Bush's tax cuts off the table

he had Rick Warren give the invocation at his Inaugural

he has three GOP members in his cabinet.

He is continuikng and expanding Bush's faith based initiatives program

I'll cite these as examples of his actions mathcing his rhetoric and imagine what he will do when he is in office a whole entire month!

Stag Lord said:

or even a year.

I think it took 5-7 years before the country at large really started to dislike Bush. If only Obama got half of that period of time for a honeymoon...

Stag Lord said:

While he may have said the Repubs could have a say, he extraordinarily naiively gave the ball to Pelosi/Reid who cut all their deals behind closed doors without zero input from anyone except the lobbyists.

On the tax cuts, Warren and faith based, that's what anybody should've expected who followed the campaign (i.e. actually followed the campaign and did not rely on the press to report it).

Mainly, though, I'm very, very dissapointed in the champion of HOPE doing nought but leading from a position of fear and terror. ("The worst global recession ever will be hear if you don't spend the trillions I tell you we must!!!! NO YOU MAY NOT READ THE BILL!!!!")

I'm most disappointed in his thus far not following through on 'changing the way government works' and 'having an open process'.

Releasing a 1,000 page bill full of pork the night before the vote is being 'open'? I really don't understand how any Congresssman/Senator could vote for that in good faith - as it's clear there's no way they could have read it.

And sticking the first steps to socialized healthcare in there where it would be harder to see is exactly the opposite of 'Shedding light on the process' - & it's exactly the way his former cabinet pick- Daschle- advised to get socialized healthcare through, so I don't think the President can claim ignorance on that one.

LiquidIce, the man just signed a bill that's added $10,000 in debt to every American taxpayer, you'll pardon us if his vaunted "eloquence" is worth as much as the hot air coming out of him.

To think, that the party and President that complained about $79 billion to finance a war in Iraq has managed to spend nearly ten times that in under a month...

~Oh yes, imagine what the man will do over the course of the remainder of his term (shudders).

Yep, fiscal prudence hasn't exactly been on the menu for the US since... ? Cinton? When was the last time you ran a surplus over there? Got to be getting on for 10 years. Look on the bright side- at least the money will be spent in America. (I think Iraq has cost closer to a $700 billion than $79 billion- with the 2008 funding totalling about $120 000 for every person living over there).

Obama is smart enough to string sentences, & comprehend some level of the economics involved. That alone holds promise for improvement.

LiquidIce said:

That's what I had hoped. Unfortunately the bill that has passed shows no evidence of any economic understanding at all. Or, if there is some economic understanding there, he sacrificed it to forward a partisan agenda.

For the record (since I didn't respond before) - the vast majority of the 'tax cuts' included in the plan are not tax cuts - they are a form of income redistribution (since people who don't pay taxes are getting credits), and historically, do nothing to improve the economy. Another example of why I don't like the bill: Milwaukee is getting 1 billion for building new schools. Only 1 problem, Milwaukee currently has excess capacity/empty schools - and current school admins do not cite infrastructure/repairs as a need. However, several suburban districts could use the money - however, since they accept schools vouchers (voucher program), they do not qualify for the money.

The bills not really about improving the economy at all - it's a bunch of stuff like that, and a bunch of pork. I'd be for the spending if it really went to bridges/roads/infrastructure. In Milwaukee, they just redid the I-94, I-43 interchange, and that cost 1 Billion. Using that as a base, there's actually not near enough in the bill for those kinds of projects ( could probably easily find 300 such projects that need to be done in the US - but there isn't 300 Billion stictly for this).

All that said, the bill passed, so I hope I'm wrong, and that somehow this bill bucks the trend of history for these kinds of spending packages and actually works. However, I'm not holding out a lot of hope/will personally now be doing my financial planning as if we are going into a depression.

I'm getting a tax cut - and so is everyone else in the middle class who pays payroll taxes. yes - its about 13 dollars a week, which doesn't sound like much, but will actually apy my transporation costs to the office.

Plus unemployment benefits are being extended - which strikes me as a very important provision.

And again - what is being called "porK" in the GOP outlets seems to be direct aid to the states. Thsi money is supposed to be sued to help states and municpalities meet theri budgets and keep civil servcie workers like cops, firemen and teachers from getting laid off.

The infrastructure spending won't kick in until next year, really - but I have long advocated more spending in this area. This will eb a long temr benefit, and we won't see dividends rigth away, but that is fine . If we don't start doing this now - when will we ever?

I'm optimistic. It looks like they cut most of the egregious stuff and if government spends money, even conservative economists agreee we will see a bost in teh economy. Thsi question is for how long. My beleif is that thsi is the wya to go. Tax cuts for the middle class and public sector spending - heck, this is why I voted Democratic last year.

LiquidIce said:

So your figure of $700 billion (wikipedia estimates just over $600 billion, BTW) for the total cost of the Iraq war over a 5 year period almost equals the amount the current Congress has spent in one month. Thank you for helping me put things in even more glaring perspective.

And don't forget that a good deal of that cost for Iraq is spent on US citizen-soldiers, their medical care, and US military upgrades and equipment replacement. So in reality, a good chunk of that "Iraqi war cost" is spent over here in the U.S. at the factories stateside that produce the Humvees, retrofit and repair Abrams tanks, etc..

I just find myself thinking of some of the lessons from high school history class, concerning other countries that tried to spend their way out of debt and crisis. Anyone remember the Germany of the early 1920s , and a little thing called hyperinflation? Granted not an equal set of parallel circumstances, but more than a few similarities between then and America now...

Stag Lord said:

Let's set aside any purely speculative and highly questionable talk of how this package is going to "stimulate the economy", and look at things from another angle. That $787 billion has to come from somewhere, and with the trillions in debt we're already running, that means it is more future debt for us (around $10,000 per taxpayer).

I broke it down, and if I'm getting $14/week, and I spent all of that just to pay down the $10,000 share of government debt that falls to me, it's going to take 14.8 YEARS collecting my $14/week and paying zero interest to do that. Sorry, but that is a really bad bargain, and nothing for which I'm going to be thankful.

The bill (which I think is a horror) aside, I think as much damage was done to the economy in getting it passes as the bill itself will inflict.

I speak specifically of Obama taking the bully pulpit and, rather than declaring it to be "morning in America" loudly, clearly and in all ways possible declared it to be midnight with very faint hope of a dawn. Perception is so much in the economy and his oh-so- eloquent -and-constant drumbeat of fear (never hope!) these past weeks were a million body blows to the economy.

I thought his promised message of hope would be the thing to spur a recovery. I got just the opposite.

I'm as big a sucker as all the lefties expressing shock over Rick Warren, a troop surge in Afghanistan and the fact that nothing will be done to end NATO.

Don't you think a message of hope would ring pretty hollow in this day of skyrocketing firings, grim economic forecasts, a crashing housing market and mass bankruptices?

On the other hand, things were worse in '33 and roosevlet, while admitting the grim reaility, did manage to inspire hope in the public, which translated pretty quickly inot a rebound in the stock market by the early summer of '33. But he' no Roosevelt., and given his alck of expereince, not likely to be one...despite the Obamamnaiacs.

To his credit, Obama has stimulated one sector of the economy: Obama apparel. I was at the courthouse in Oakland last week, and I was amazed at the variety and the proliferation of Obama apparal of every kind. T-shirts, hats, beanies, pins... every size, shape and color.

outside 30th st. station in phiilly the phillies world series "bootleg" garb was soon replaced by aforementioned obama garb.

http://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009#Assessments_by_economists

The economists are pretty divided, perhaps the package needs to work through the system before its value can be judged?

The inter bank lending rate appears to be settling down a bit which is the first indication that the first obstable to recovery (seized up credit markets) might be overcome. If that doesn't work out there may have to be extreme measures taken to get credit flowing- even down to the government using its new controlling interest in some of the institutions to force them to grant credit to businesses that need it for their regular operations. Certainly no recovery can happen (meaning the spending package will have been for nothing) if credit markets don't unkink.

Art, I think you'll find Congress is less profligate in future months. This was no ordinary month. Also, the recession you're in now partly goes back to Iraq. The drain of $100+billion a year into operations in Iraq weakened the US economy & pressed the Fed to cut interest rates lower to compensate, which in turn made the housing bubble bigger & built up the current mess. Yes Haliburton got rich but even allowing for that the real cost of the Iraq war is going to be far beyond $700 billion.