News What are the potential impacts of public confidence on the economy's recovery?

[mheslep]

The theory also suggests reducing spending when the economy recovers.

Well yes, though actually in later years Keynes himself said deficit spending to stimulate an economy in a temporary downturn would likely not work at all. It only had hope with chronic, long term low demand. One reason he gave was that the government could not move fast enough nor with sufficient accuracy, exactly as we have seen so far.

 

[mheslep]

http://www.forbes.com/2009/10/14/unemployment-efca-health-care-opinions-contributors-steven-j-davis.html" to work from Chicago school economist Steven Davis, my summary:

1. Roll back benefit mandates for health insurance. They act as a 'drag on job creation'. A bigger step wold be to eliminate interstate commerce barriers on health insurance.
   
2. Suspend federal minimum wage mandates. Current unemployment among teenagers is 26%, just the demographics where min. wage applies.
   
3. Kill the the Employee Free Choice Act lingering in Congress. It threatens employers with higher costs, freezing them in the headlights.
   
4. Experiment. Job search assistance, interviewing skills, counseling, education, training. Some of these work, some don't. Measure them and throw out the losers.

And things not to do. These are current proposals in Congress:

• Extend unemployment benefits. They are expensive, maybe $100B/year, and they weaken, rather than strengthen incentives to get a job.
• Tax credits to employers to create jobs. Even more costly than unemployment benefits, maybe $250B

Sounds very good to me.

 

[Astronuc]

Buffet makes a big move. He believes in the future of BNSF. How about a $24/share premium?

http://www.nytimes.com/2009/11/04/business/04deal.html

 

[Astronuc]

Could the 'recovery' stall?

At some point interest rates will have to increase and taxes will have to increase. Debt has to be paid down.

http://www.nytimes.com/2009/11/23/business/23rates.html

More than $1.6 trillion is due by March 31, 2010!
http://www.nytimes.com/imagepages/2009/11/23/business/20091123_RATES2_graphic.html

and the US government is still running a huge deficit.


I suppose they could cancel social security and cut back on Medicare and Medicaid.

 

[mheslep]

...
I suppose they could cancel social security and cut back on Medicare and Medicaid.

The latter will happen, it is unavoidable now, sometime within the next 15 years I expect, the US government will default on its Medicare liabilities.

 

[Nebula815]

And yet they're going to try and add a huge new healthcare entitlement on top of this (?)

 

[russ_watters]

And yet they're going to try and add a huge new healthcare entitlement on top of this (?)

But don't worry, they won't screw up the nationalized healtchare the way they screwed up Medicare!

 

[WhoWee]

But don't worry, they won't screw up the nationalized healtchare the way they screwed up Medicare!

Their strategy revolves around Medicare, Medicaid, and SS. It's a mixing of funds - muddy the water.

 

[Astronuc]

Economy is still wobbly.

Foreclosure buyer demand dips as supply mounts
http://news.yahoo.com/s/nm/20091215/ts_nm/us_usa_housing_foreclosures

Defaults and forclosures may continue to rise, although there has been some apparent slowing down recently.

 

[mheslep]

Economy is still wobbly.

Foreclosure buyer demand dips as supply mounts
http://news.yahoo.com/s/nm/20091215/ts_nm/us_usa_housing_foreclosures

Defaults and forclosures may continue to rise, although there has been some apparent slowing down recently.

Wobbly? As in it is standing up? 10% unemployment leaves it still on its butt, my view. I'm saving wobbly for 6-8%

Edit: unemployment still climbing in California
http://www.google.com/publicdata?ds...employment_rate&idim=state:ST060000&tdim=true

 

[Nebula815]

One thing I think may be holding back the economy to some extent is a lot of business owners are probably uneasy about hiring as they do not know about the following four things:

1) How this healthcare issue will play out

2) How the carbon regulation issue will play out

3) Minimum wage increase

4) Bush tax cuts expiring

I'm not saying these are literally holding back the economy, but probably a concern for quite a few business owners. And then there's also probably concern over the nation's debt and deficit right now.

 

[Astronuc]

Wobbly? As in it is standing up? 10% unemployment leaves it still on its butt, my view. I'm saving wobbly for 6-8%

Edit: unemployment still climbing in California
http://www.google.com/publicdata?ds...employment_rate&idim=state:ST060000&tdim=true

Wobbly, as in on it's knees or stumbling trying to get up.

On it's butt would be something like 20-30% unemployment. We were probably headed that way if AIG, Merrill Lynch, Wachovia, Morgan Stanley, Goldman Sachs, Citigroup, and others had been forced into bankruptcy. As it is, they've had to write down hundreds of billions of $ in troubled assets.

 

[mheslep]

Wobbly, as in on it's knees or stumbling trying to get up.

On it's butt would be something like 20-30% unemployment. We were probably headed that way if AIG, Merrill Lynch, Wachovia, Morgan Stanley, Goldman Sachs, Citigroup, and others had been forced into bankruptcy. ...

I slightly agree, but there's a good argument (by e.g. economist John Taylor) that says the government's involvement helped create panic and uncertainty by, e.g., Paulson going to Congress with OMG the world will end scenarios if you don't give us $1T right now.

 

[Astronuc]

I slightly agree, but there's a good argument (by e.g. economist John Taylor) that says the government's involvement helped create panic and uncertainty by, e.g., Paulson going to Congress with OMG the world will end scenarios if you don't give us $1T right now.

Andrew Ross Sorkin addressed that in his book, "Too Big to Fail". The inconsistency in dealing with Bear Stearns (rescued before bankruptcy), then Fannie Mae and Freddie Mac, followed by the collapsed of Lehman Bros (bankruptcy) caused a lot of turmoil in the markets.

On the other hand, the weekend Lehman went insolvent (Sep 15, 2008, at 0100 EST), Bank of America stepped into rescue Merrill Lynch (Sep 14, 2008). Merrill would have been next to file bankruptcy followed by Morgan Stanley, AIG, and probably Goldman and Citigroup, and then Wachovia and others - simply because clients and hedge funds were pulling money out of the investment banks, and their liabilities greatly exceeded their cash, and the commercial banks covered by the FDIC would have lost their loans. It was a liquidity crisis that could have blown up into a full scale crash. JP Morgan Chase and Citigroup were pressuring the investment banks for cash and collateral, but much of the collateral was fastly becoming worthless.

AIG has insured huge amounts of debts with their CDSs, but they didn't anticipate that all the CDOs and derivatives would go bad simultaneously.

Barclays might have been able to save Lehman, but they couldn't do it that weekend. They needed to work through British regs and shareholder approval. Had Lehman started a month or so earlier, they might have been saved without government intervention.

There were various attempts at deals going on during the weeks before the Lehman collapse, but the due diligence revealed 10's of billions of $ of bad assets in Lehman, Merrill, MS, GS, Citi, AIG, Wachovia, . . . . that deals couldn't get done.

Read Sorkin's book. It's stunningly surreal.

Paulson, Bernanke and Geitner had their hands tied in the beginning because they weren't set up to deal with catastrophic failure of the US financial industry.

Edit: I forgot to mention that short sellers (e.g., David Einhorn) were slamming Lehman, Merrill and other institutions. The downturn in stock hurt their capitalization and caused other financial institutions to make collateral calls. Einhorn made ton of cash off the short selling, and so did others. There were also allegations the individuals in companies like GS were talking down Lehman and others, which added to the decline in equities.

 

[Nebula815]

I think the bailout of the U.S. financial industry, whether necessary ultimately or not, was the right thing to do. IMO, it would have been irresponsible in the highest for President Bush to wake up, have Ben Bernanke, the Chairman of the Federal Reserve and a man who has spent his entire professional career studying the causes and effects of the Great Depression, come in and say, "Mr. President, if you do not bail out the financial system, this nation could end up in an economic depression worse than the Great Depression," and for President Bush to essentially flip a coin and decide to "Let them fail."

If they were allowed to fail and the economy didn't crash, well great, but if they did end and then anarchy is ensuing because the entire economic system was collapsing, well OOPS.

The Great Depression itself is what led to the rise of Adolf Hitler, Mussolini, and so forth.

 

[mheslep]

I think the bailout of the U.S. financial industry, whether necessary ultimately or not, was the right thing to do. IMO, it would have been irresponsible in the highest for President Bush to wake up, have Ben Bernanke, the Chairman of the Federal Reserve and a man who has spent his entire professional career studying the causes and effects of the Great Depression, come in and say, "Mr. President, if you do not bail out the financial system, this nation could end up in an economic depression worse than the Great Depression," and for President Bush to essentially flip a coin and decide to "Let them fail."

If they were allowed to fail and the economy didn't crash, well great, but if they did end and then anarchy is ensuing because the entire economic system was collapsing, well OOPS.

Hindsight as to what was coin flip and what was not. I don't recall Bernanke/Paulson offering guarantees that the TARP would work, that is TARP was also a coin flip. I know other financiers / economists were offering opinions that it would not - only nationalizing the banks would work, etc. As to what Bernanke's studies of the Great Depression, he also well knows the http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021108/default.htm" (not the '29 panic). Hopefully he could keep that in mind when ordering drastic Federal Reserve action.

I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.

The Great Depression itself is what led to the rise of Adolf Hitler, Mussolini, and so forth.

The Depression is only part of what led to the rise fascism.

 

[Galteeth]

The other aspect of the bailout that was problematic is the misallocation of resources. Money as a technology is suppossed to give resource access to those who are the best fit to produce what is in demand. When the government interferes with this process and starts picking winners and losers, resources wind up misallocated.

 

[mheslep]

The other aspect of the bailout that was problematic is the misallocation of resources. Money as a technology is suppossed to give resource access to those who are the best fit to produce what is in demand. When the government interferes with this process and starts picking winners and losers, resources wind up misallocated.

Good point. An appropriate time to tally the all the pros and cons. My take:

TARP ~$800B
Pros:
o Stopped a catastrophic credit collapse (?). Likely, but not for certain.

Cons:
o Huge moral hazard established. Become too big to fail, and you won't fail. Therefore take even more risks next opportunity.
o Government interference in the market - picking winners and losers, breeds corruption.
o Bad precedents for control of government spending - money clearly allocated to credit institutions, but was redirected to the auto industry without Congressional authority.
o Breeds misplaced confidence that the government can somehow continuously and forever solve financial crisis with taxpayer money.
o Edit!: $200-$300B of tax money spent, or borrowed.

 

[Astronuc]

o Bad precedents for control of government spending - . . . .

Erm - what control?

 

[Nebula815]

Hindsight as to what was coin flip and what was not. I don't recall Bernanke/Paulson offering guarantees that the TARP would work, that is TARP was also a coin flip. I know other financiers / economists were offering opinions that it would not - only nationalizing the banks would work, etc. As to what Bernanke's studies of the Great Depression, he also well knows the http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021108/default.htm" (not the '29 panic). Hopefully he could keep that in mind when ordering drastic Federal Reserve action.

True, but the Fed caused the Great Depression because it did NOT bail out the financial system at the time, letting the banking system fail. Also the Smoot-Hawley tariff which ground global trade to a halt and some massive tax increases.

EDIT: Bernanke's main concern was that since the Fed allowed the banking system to fail after the crash of '29, which played a large role in causing the Great Depression, that if the federal government allowed the financial system to outright fail this time, it would create an even worse problem.

TARP ~$800B

Cons:
o Huge moral hazard established. Become too big to fail, and you won't fail. Therefore take even more risks next opportunity.

I'd say the government needs to either subject these institutions to much more severe regulations and oversight than smaller financial institutions, this being the price they pay for having a taxpayer bailout very likely should they ever fail because otherwise it could bring down the system, or, break them up into smaller institutions (what I would do).

 

[Galteeth]

True, but the Fed caused the Great Depression because it did NOT bail out the financial system at the time, letting the banking system fail. Also the Smoot-Hawley tariff which ground global trade to a halt and some massive tax increases.


QUOTE]

Although that is the popular view, I think it is relevant to consider that the Fed's actions in the twenties lead to a speculative bubble in real estate and agriculture.


Also, my point about misallocation of resources could be put a different way. If the economy was on the brink of collapse, one could infer that was because the underlying structure of resource and labor organization was fundamenally unsound. By simply patching up the existing system without allowing the full corrective processes, it stands to reason that fundamental unsound structure is still in place.

 

[mheslep]

True, but the Fed caused the Great Depression because it did NOT bail out the financial system at the time, letting the banking system fail.

The point was that the Federal Reserve by both action and inaction, the caused the Depression by cutting the money supply of the US by by one third from 1928 to 2932:

[...]monetary forces caused the Great Depression, Friedman and Schwartz revisited the historical record and identified a series of errors--errors of both commission and omission--made by the Federal Reserve in the late 1920s and early 1930s. According to Friedman and Schwartz, each of these policy mistakes led to an undesirable tightening of monetary policy, as reflected in sharp declines in the money supply. Drawing on their historical evidence about the effects of money on the economy, Friedman and Schwartz argued that the declines in the money stock generated by Fed actions--or inactions--could account for the drops in prices and output that subsequently occurred.2

http://www.federalreserve.gov/boarddocs/speeches/2004/200403022/default.htm
Four Fed contributing actions:
1. 1928: Fed raised interest rates with economy coming out of recession, started cutting the money supply.
2. 1931: Fed raised interest rates to stem a run on the dollar by speculators.
3. 1932: With deflation seriously under way, making borrowing very expensive, Fed cuts rates for awhile, but not nearly enough given the deflation. Later the Fed reversed even these cuts.
4. 1930-33. Fed refused to lend cash to banks (normal Fed window lending), following a "the weak ones need to fail" philosophy, though the reality was the Fed had largely caused the weakness in 1-3 by reducing the money supply. The banks closed/failed by the thousands.

Also the Smoot-Hawley tariff which ground global trade to a halt and some massive tax increases.

Yep, but that was Hoover and Congress not the Federal Reserve.

 

[Nebula815]

The point was that the Federal Reserve by both action and inaction, the caused the Depression by cutting the money supply of the US by by one third from 1928 to 2932:

http://www.federalreserve.gov/boarddocs/speeches/2004/200403022/default.htm
Four Fed contributing actions:
1. 1928: Fed raised interest rates with economy coming out of recession, started cutting the money supply.
2. 1931: Fed raised interest rates to stem a run on the dollar by speculators.
3. 1932: With deflation seriously under way, making borrowing very expensive, Fed cuts rates for awhile, but not nearly enough given the deflation. Later the Fed reversed even these cuts.
4. 1930-33. Fed refused to lend cash to banks (normal Fed window lending), following a "the weak ones need to fail" philosophy, though the reality was the Fed had largely caused the weakness in 1-3 by reducing the money supply. The banks closed/failed by the thousands.


Yep, but that was Hoover and Congress not the Federal Reserve.

One other thing Friedman also said was there was some major anti-Semitism within the Federal Reserve at the time, and that they purposely allowed what was the largest bank in the nation at the time to fail, I think it was called the Bank of the United States, which just happened to be Jewish-owned.

The problem was many in the general public thought it was THE central bank of the nation, and so the Fed was warned, "DO NOT let this bank fail, it will panic people and start runs on the banking system," but they allowed it to fail and thus the runs began.

 

[Galteeth]

One other thing Friedman also said was there was some major anti-Semitism within the Federal Reserve at the time, and that they purposely allowed what was the largest bank in the nation at the time to fail, I think it was called the Bank of the United States, which just happened to be Jewish-owned.

The problem was many in the general public thought it was THE central bank of the nation, and so the Fed was warned, "DO NOT let this bank fail, it will panic people and start runs on the banking system," but they allowed it to fail and thus the runs began.

? Could you provide a source for this.

I don't think Paul Warburg was an anti-semite...

 

[Nebula815]

? Could you provide a source for this.

I don't think Paul Warburg was an anti-semite...

It's either in Milton Friedman's Free to Choose or Capitalism and Freedom.

 

[Ivan Seeking]

Got this from my buddy, David Plouffe, today.

http://img19.imageshack.us/img19/34/021610roadtorecovery.jpg

 

[WhoWee]

Got this from my buddy, David Plouffe, today.

http://img19.imageshack.us/img19/34/021610roadtorecovery.jpg

Are you bragging or complaining?

I heard a report yesterday that we now have more government jobs (mostly union) than we have manufacturing jobs - looking for a link.

The chart doesn't indicate that anyone who lost a job has gotten a new job - only that job losses have peaked and slowed.

 

[OmCheeto]

Are you bragging or complaining?

I heard a report yesterday that we now have more government jobs (mostly union) than we have manufacturing jobs - looking for a link.

The chart doesn't indicate that anyone who lost a job has gotten a new job - only that job losses have peaked and slowed.

The chart indicates to me that we are headed in the right direction.

I actually didn't believe the graph was real until I ran the numbers myself.

change in unemployment from Jan 2008 to Jan 2010
inverted to match Plouffe's graph
smoothed a bit as the actual numbers jump all over the place
source of data: http://www.bls.gov/"

If anyone would like to make their own graph --> 5.0,4.8,5.1,5.0,5.4,5.5,5.8,6.1,6.2,6.6,6.9,7.4,
7.7,8.2,8.6,8.9,9.4,9.5,9.4,9.7,9.8,10.1,10.0,10.0,9.7

 

[mheslep]

The chart indicates to me that we are headed in the right direction.

Then be sure to forward it to some friends who are out of work so they can see how grateful they should be with ~10% unemployment.

 

[Skyhunter]

Then be sure to forward it to some friends who are out of work so they can see how grateful they should be with ~10% unemployment.

!0% is much better than 25%.

 

[Ivan Seeking]

The runaway Republican freightrain had to be stopped before we could begin to recover. By all accounts, the recession is now over and we are into recovery. When Obama took over we were losing almost 800,000 jobs a month. But soon after he took over, the job losses began to drop precipitously.

Great job Obama!

The loss of manufacturing jobs goes back in part to insane free-trade agreements. Also, Obama wants to cut the Republican tax benefits for companies that oursource their labor or move overseas.

For Republican corporatists to complain about the loss of manufacturing jobs is absurd.

That is your free market at work. How do you like it?

Nevermind that other countries don't have OSHA, the EPA, child labor laws, or other liabilities to consider like the skyrocketing cost of health insurance. No, we must let the free market operate no matter how great the imbalance of liabilities. Don't worry about the job losses - the ideological imperative is what matters. Right?

 

[edward]

Are you bragging or complaining?

I heard a report yesterday that we now have more government jobs (mostly union) than we have manufacturing jobs - looking for a link.

The chart doesn't indicate that anyone who lost a job has gotten a new job - only that job losses have peaked and slowed.

That shouldn't be a surprise we have been off shoring manufacturing jobs since the 90's. Our manufacturing base is now toilet paper and processed foods.

 

[Ivan Seeking]

Since it's the one-year anniversary of the stimulus plan, a look at the GDP would be appropriate as well.

http://www.tradingeconomics.com/Temp/United-States-GDP-Growth-Rate-Chart-000001.png?6304a66d-f5a7-4cce-8bba-6b5d2527ddf9
http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=USD

......BUSH..........OBAMA......

 

[Ivan Seeking]

The DOW

http://img43.imageshack.us/img43/1223/dowt.jpg
......BUSH...OBAMA............

 

[CRGreathouse]

Since it's the one-year anniversary of the stimulus plan, a look at the GDP would be appropriate as well.

Yeah, we'd better get something for dropping all that money into the economy. I'll be paying for it for a long time...

 

[Ivan Seeking]

Yeah, we'd better get something for dropping all that money into the economy. I'll be paying for it for a long time...

As you can see, as a fraction of the GDP, which is what counts the most, Obama's spending barely registers as more than a blip on the map. The debt as a fraction of the gdp began to increase quickly, for the first time since WWII, under Reagan [and his tax cuts]; continued under Bush I; was reduced under Clinton [the only time since WWII]; began to rise again under Bush II.

 

[WhoWee]

The runaway Republican freightrain had to be stopped before we could begin to recover. By all accounts, the recession is now over and we are into recovery. When Obama took over we were losing almost 800,000 jobs a month. But soon after he took over, the job losses began to drop precipitously.

Great job Obama!

The loss of manufacturing jobs goes back in part to insane free-trade agreements. Also, Obama wants to cut the Republican tax benefits for companies that oursource their labor or move overseas.

I believe you are referring to NAFTA? Better check your facts.

 

[CRGreathouse]

As you can see, as a fraction of the GDP, which is what counts the most, Obama's spending barely registers as more than a blip on the map.

I certainly dispute that.

The debt as a fraction of the gdp began to increase quickly, for the first time since WWII, under Reagan [and his tax cuts]; continued under Bush I; was reduced under Clinton [the only time since WWII]; began to rise again under Bush II.

This is true (well, except that 43 wasn't a II), although more than a bit unfair to give Clinton credit for the bubble and Bush the blame for same.

 

[OmCheeto]

!0% is much better than 25%.

Now, now. Let's not exaggerate. If Plouffe's graph had not reversed itself, we would only be sitting at about 19% unemployment today.

We wouldn't have hit 25% until this coming July.

 

[mheslep]

This is true (well, except that 43 wasn't a II), although more than a bit unfair to give Clinton credit for the bubble and Bush the blame for same.

Look at the Congress during those periods, the Congress, the Congress...

 

[mheslep]

Debt in absolute terms by 2019 using current Obama-Reid/Pelosi Congress per CBO which works out to nearly 100% of GDP by 2019.

Numbers above match CBO report here
http://www.cbo.gov/ftpdocs/110xx/doc11014/Testimony_Frontmatter_Senate.shtml

 

[Astronuc]

Muni Threat: Cities Weigh Chapter 9
http://finance.yahoo.com/taxes/article/108866/muni-threat-cities-weigh-chapter-9

Just days after becoming controller of financially strapped Harrisburg, Pa., in January, Daniel Miller began uttering an obscure term that baffled most people who had never heard it and chilled those who had: Chapter 9.

The seldom-used part of U.S. bankruptcy law gives municipalities protection from creditors while developing a plan to pay off debts. Created in the wake of the Great Depression, Chapter 9 is widely considered a last resort and filings under it are more taboo than other parts of bankruptcy code because of the resulting uncertainty for everyone from municipal employees to bondholders.

The economic slump, however, is forcing debt-laden cities, towns and smaller taxing districts throughout the U.S. to consider using Chapter 9. As their revenue declines faster than expenses, some public entities are scrambling to keep making payments on municipal bonds. And that is causing experts to worry about the safety of securities traditionally considered low risk.

Oh well.

It's time for a national austerity program. Time to cut state and federal expenses, and probably raise taxes.

 

[mheslep]

Muni Threat: Cities Weigh Chapter 9
http://finance.yahoo.com/taxes/article/108866/muni-threat-cities-weigh-chapter-9



Oh well.

It's time for a national austerity program. Time to cut state and federal expenses, and probably raise taxes.

It's time for an austerity program, but not for everyone. Many states and municipalities are in good shape, have been prudent, including mine. North Dakota, New Mexico, Wyoming have no deficits at all. The federal government needs one, and so do many drunken sailor states and cities. I'm completely opposed to having N.D, N.M. citizens bail out everyone else.

Here's the kind of path I favor, from newly elected Gov. Christy in NJ, who's finances are a disaster.

In total, I am cutting spending in 375 different state programs, from every corner of state government.

I doubt that many will be popular. I will use my executive authority to implement them now, because I must.

Taken as a package, they will achieve the required savings and eliminate our $2 billion budget gap.

Does he plan unfair cuts to government employees? I don't think so:

]One state retiree, 49 years old, paid, over the course of his entire career, a total of $124,000 towards his retirement pension and health benefits. What will we pay him? $3.3 million in pension payments over his life and nearly $500,000 for health care benefits -- a total of $3.8m on a $120,000 investment. Is that fair?

A retired teacher paid $62,000 towards her pension and nothing, yes nothing, for full family medical, dental and vision coverage over her entire career. What will we pay her? $1.4 million in pension benefits and another $215,000 in health care benefit premiums over her lifetime. Is it “fair” for all of us and our children to have to pay for this excess?

http://www.nj.com/politics/index.ssf/2010/02/chris_christies_speech_on_budg.html

 

[Skyhunter]

It's time for an austerity program, but not for everyone. Many states and municipalities are in good shape, have been prudent, including mine. North Dakota, New Mexico, Wyoming have no deficits at all. The federal government needs one, and so do many drunken sailor states and cities. I'm completely opposed to having N.D, N.M. citizens bail out everyone else.

Why?

Every single one of those states receives a lot more federal money than they pay in taxes.

New Mexico gets better than 2 to 1. It is easy to be prudent when someone else is paying your bills.

http://www.taxfoundation.org/taxdata/show/22685.html

 

[mheslep]

Gov. Christie iinterview, excerpt on raising taxes:

Quick: Other people would say raise taxes too, bring in higher revenue and cut spending. Are you going to have to do both?

Christie: No, we're not raising taxes. That's it. Our income tax when it was established in 1977 at 2.5% top rate. Under Governor Corzine, 11% top rate on income tax.

Quick: What about property taxes?

Christie: Property taxes are the highest in the nation.

Quick: You're not raising those either?

Christie: No. We can't. You know, we have had in the last four years under Governor Corzine, study came out, that $70 billion in wealth left the state of New Jersey. And it left it because we are the most overtaxed people in America. So there will be plenty of democrats down if Trenton saying, just raise taxes a little bit more, Governor, just a little bit to get us through this crisis. We've done enough of that already. It is time to get tough and to say no.
[...]
Christie: [...] You just have had an abundance of taxation and everybody always has that same attitude, just raise taxes this time. Well, people are now fed up. What's happening is you see an enormous flight from our state. Even if you raise tax rates, revenue continues to go down. Governor Corzine raised tax rate last year. Revenue is down by $2 billion.

http://www.state.nj.us/governor/news/news/552010/approved/20100218a.html

 

[OmCheeto]

too little taxes and too much spending.

http://www.cbo.gov/ftpdocs/110xx/doc11014/MainText_HseVersion.28.1.3.png
percentage of GDP

I'd say it's a classic example of; We have met the enemy...

And I love the fact that the difference for the average is less than 3%.

 

[OmCheeto]

I certainly am having fun with these graphs

Debt added each year since 1977
Green tick marks are party affiliation: +100 = Republican, -100 = Democrat

Here's one that goes back to 1960.

Debt added each year as a percent of GDP.

There must be something magical about that 3% mark that Obama seems to be targeting.



references:
http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt.htm"
http://www.cbo.gov/ftpdocs/110xx/doc11014/Testimony_Frontmatter_Senate.shtml"
http://www.bea.gov/national/nipaweb/DownSS2.asp?3Place=N"
http://en.wikipedia.org/wiki/List_of_Presidents_of_the_United_States"

 

[mheslep]

Why?

Every single one of those states receives a lot more federal money than they pay in taxes.

New Mexico gets better than 2 to 1. It is easy to be prudent when someone else is paying your bills.

http://www.taxfoundation.org/taxdata/show/22685.html

Three reasons:
1. Much of that money going back to the states was borrowed, recently nearly half was borrowed. It is not as if all the federal government spending in NM came from the tax payers of other broken budget states like California.
2. http://en.wikipedia.org/wiki/Moral_hazard" , i.e. having NM bail out Ca encourages Ca do more of the same, and worse, in the future.
3. It is not clear to me how much of the federal spending labelled as spent in a state such as NM actually ends up back in the hands of taxpayers of that state. Large chunks of that money are allocated, for instance, to sprawling military bases in NM, Wy, etc. Certainly some of that military base spending works its way into the local economy. However, it is unclear how much money spent from the Kirkland AFB budget to buy, say, a http://www.renewableenergyworld.com/rea/news/article/2008/06/sandia-kirtland-air-force-base-eye-30-mw-wind-farm-52590" made in NY or Fl is actually returned to NM.

 

[Ivan Seeking]

[cover] America's Back! The Comeback Country[/cover]

How America pulled itself back from the brink—and why it's destined to stay on top.

In the wake of the 2008 financial meltdown and the deep, long recession that followed, the decline of America has become the preferred intellectual preoccupation of the elite—left, right, and center. Joseph Stiglitz, the Nobel-winning economist, has argued that the Obama administration's tepid response to the recession and the financial meltdown will sandbag the U.S. recovery. Historian Niall Ferguson has made the case that high debt and profligate spending will cause the downfall of a once mighty empire. Harvard economist Ken Rogoff frets that the U.S. could become the next Greece. In January, French President Nicolas Sarkozy, once dubbed l'Americain, delivered a blistering speech at the World Economic Forum in Davos that criticized the U.S.-led model of global capitalism...

http://www.newsweek.com/id/236190

Dan Gross [Newsweek writer] explains the headline
http://www.businessinsider.com/henry-blodget-americas-back-2010-4

 

[mheslep]

[...]So what accounts for the pervasive gloom?

One or two people might be having a hard time dealing with unemployment and foreclosures:

o http://www.bls.gov/news.release/empsit.nr0.htm". 50,000 census worker hirings does not hold out much of long term improvement prospect.

o http://www.forbes.com/2010/02/26/real-estate-advisor-personal-finance-housing-defaults.html"

Edit: The interview with the author sounds much, much more reasonable than the article itself. Most of the hyperbole of the article is absent in the interview. Sounds like some heavy editing afoot.