The Money Hole

Is it too late to get America out of debt? Not if we stop spending and follow the examples set by Puerto Rico and Canada.

America is falling deeper into debt. We're long past the point where drastic action is needed. We're near Greek levels of debt. What's going to happen?

Maybe riots—like we've seen in Greece?

We need to make cuts now.

Some governors have shown the way. You know about Chris Christie, Scott Walker, Rick Scott, John Kasich, etc. But you probably don't know about Luis Fortuno.

Fortuno is governor of Puerto Rico. Two years ago, he fired 17,000 government workers. No state governor did anything like that. He cut spending much more than Walker did in Wisconsin. In return, thousands of union members demonstrated against Fortuno for days. They clashed with police. They called him a fascist.

Fortuno said he had to make the cuts because Puerto Rico's economy was a mess.

"Not just a mess. We didn't have enough money to meet our first payroll."

Fortuno's predecessors had grown Puerto Rico's government to the point that the state employed one out of every three workers. By the time he was elected, Puerto Rico was broke. So the new conservative majority, the first in Puerto Rico in 40 years, shrank the government.

What was cut?

"Everything. I started with my own salary."

The protesters said he should raise taxes instead of cutting spending.

"Our taxes were as high as they could be, actually much higher than most of the country. So what we've done is the opposite." Fortuno reduced corporate taxes from 35 percent to 25 percent. He reduced individual income taxes. He privatized entire government agencies.

"Bring in the private sector," Fortuno said. "They will do a better job. They will do it cheaper."

Fortuno's advice for leaders who want to shrink the state: "Do what you need to do quickly, swiftly, like when you take off a Band-Aid. Just do it. And move on to better things."

Canada did that years ago.

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  • Fist of Etiquette||

    Is tonight's episode going to be the same one from Sunday? Because if so I already liveblogged it then, so what a gyp. For all of you.

  • Obama||

    Where exactly is this hole full of money?

  • Haydukelives||

    I knew that hole I dug to China as a kid would come back to bite me in the ass.

  • Tim||

    Canada! (snaps fingers) They got money they can loan us!

  • ||

    Loan us? Maybe we should use the new name for Canada, the Libya of the north.

  • Jersey Patriot||

    "My father worked two jobs so he could throw money down the money hole!"

  • Dick Fitzwell||

    "I love the money hole!"

  • 35N4P2BYY||

    Does one do a money shot down the money hole?

  • DLM||

    I bet Puerto Ricans are sooooo glad now they didn't become a state and don't have to pay federal taxes.

  • ||

    in Canada we got money to burn

    http://mashable.com/2011/06/15.....ckey-riot/

  • Tony||

    Taxes for pretty much everyone are at their lowest levels in decades. If you are crying about debt, if you don't put taxes on the table then you simply aren't serious about it.

    But we shouldn't be crying about debt, of course, since the problem is high unemployment.

  • sevo||

    Tony|6.16.11 @ 12:31PM|#
    "...If you are crying about debt, if you don't put taxes on the table then you simply aren't serious about it..."

    Whiny adolescents attempting to set the criteria of debate are amusing.
    Go tell it to someone who cares.

  • Doktor Kapitalism||

    Look, Keynes, we've given you the straight talk before. When your total debt and unpayable obligations are greater than world GDP, you've got a problem.

    Maybe unemployment would go away if opening a company were as easy as it is in Hong Kong. Lower taxes would mean more capital available, so more companies possible. As it is, with biggov hoovering up a good chunk of $$$, we've got fewer people hiring.

    As for the lowness of taxes currently: your dream is probably the 90% maximum bracketts after WW2. The thing different about WW2, was that gov't shot a lot of $$$ into the economy for four years, but there was very little to spend it on. People had a lot of capital built up, looking to be spent. We don't have that now.

  • sevo||

    Tony is also obviously ignorant enough to believe that any increased gov't revenue would *ever* be spent to lower the debt.
    Hint, ignoramus: It won't. Any increase will be spent and then some, adding to the debt.
    Increased gov't revenue is like more smack for a skid-row junkie.

  • Tony||

    Since our economy currently suffers from overcapacity, I don't think you're focused on the right problem. We've tried the supply-side con job, and it hasn't worked. I don't know how many more decades of experience you require before it counts as evidence.

    You're the one worried about debt. So put all debt-servicing policies on the table, including on the revenue side of the ledger. Otherwise debt seems like just a convenient excuse for social engineering the way you want it.

  • sevo||

    "...So put all debt-servicing policies on the table, including on the revenue side of the ledger."

    Only ignoramuses believe that increasing revenue will *ever* be used to lower debt.

  • ||

    Interesting discussion. You should post your viewpoints about this on www.whitehousevoice.com!

  • jackrungh||

    I have a hard time believing that any leftist could be as dedicated to a libertarian community and not be sullen and quiet in the corner as his ridiculous arguments are constantly countered. They can only survive so much probing of their assumptions.

    Perhaps "Tony" is akin to the Dread Pirate Roberts, and every so often a fresh progressive comes in to bear the burden until he too is despondent.

  • Joe M||

    I like it!

  • Hooha||

    +1. It actually makes more sense than assuming it's just one really, REALLY thick-headed moron!

  • ||

    Well, Tony, in Canada, taxes are high on the poor and middle class, but low on corporations. Is this the model we should move to?

    Federal bottom rate is 15% (higher than US's 10%); top rate is 29% (much lower that US). Provincial taxes vary but are less progressive than e.g. California; Alberta has a 10% flat income tax.

    Canada also doesn't have gimmicks like the EITC which effectively mean half of the US pays no taxes or pays "negative" taxes.

    Canada also doesn't have job-killers like double taxation of dividends or taxation of foreign income of foreign residents.

  • Tony||

    I'm just trying to get us through the first roadblock of disingenuous, hypocritical anti-tax zealotry that always seems packaged with debt hysteria, even though it's pretty much a contradiction. There are lots of things that should be done to improve our tax code. I'll not hold my breath waiting for for sane policy from people who aren't even truly interested in solving the problem they claim to care about.

  • sevo||

    Tony|6.16.11 @ 2:05PM|#
    "I'm just trying to get us through the first roadblock of disingenuous, hypocritical anti-tax zealotry that always seems packaged with debt hysteria,..."

    No, you're not. You're trying to convince others that the same policies that got us here will somehow get us out.
    And you're doing it in a way which should embarrass you and is guaranteed to insult most of us.

  • ||

    Tony,

    Do we then agree that taxes need to come to a more Canadian model where lower marginal rates are higher, there are fewer deductions, and top marginal rates, corporate rates, and dividend rates are less?

  • Tony||

    I don't know. Does that result in more or less progressivity?

  • ||

    Canada is less progressive than the U.S. in terms of income taxation.

    They also do a better of job of serving up socialist sacred cows like single-payer medicine and free childcare. I'd think you would adopt our taxation proposals merely from a pragmatic perspective in the sense it would give you more government revenues to fund all your favourite programmes.

  • Tony||

    I'm sure it's a more sensible code than the US's.

  • ||

    I'm glad you agree that lower taxes on corporations and divdends, lower top marginal rates, and higher bottom marginal rates are sensible.

  • Mr. FIFY||

    I thought The Problem was not raising taxes from 35% to 39.something% on The Rich.

  • Troll||

    So Canucks and 'Ricans are the role model now? Only ten AM here, how can I wait two whole hours to starting drinking?

  • OMABA2000&12;||

    Deficit spending grows the economy and economic growth is whats needed to solve our debt problem. Why is it only democrats that seem to understand economics and math.

  • ||

    You might have been able to flim-flam people with that line in 2008, but we've had two and a half years to put that hypothesis to the test. We've been doing deficit spending on steroids all that time. And flooding the economy with inflated dollars to boot. How's that worked out? Has economic growth returned? Is employment growing at a robust pace? Is the trend toward accelerating growth or are reasonable people debating between a "soft patch" and a "double dip"?

  • Tony||

    The economy responded pretty much in line with what economists were saying given the level of stimulus spending--they all said it wasn't enough to go to robust growth. If you want to appeal to the evidence, the evidence says that this was the correct action.

    What the evidence also says, in abundance, is that supply-side theory is a total failure. The only thing the massive tax cuts of the last decade have done is explode the debt. They've not created any jobs, as I'm sure you would agree.

  • sevo||

    Tony|6.16.11 @ 2:07PM|#
    "The economy responded pretty much in line with what economists were saying given the level of stimulus spending--"

    Bull........................
    shit.

  • ||

    Deficit spending as a tool for economic growth is not falsifiable.

    If we don't engage in deficit spending, it's our fault for not trying.

    If we do engage in deficit spending, the reason the economy isn't better is because we didn't do enough of it.

    How many trillions of dollars of "stimulus" will be enough?

    If 70% marginal rates are the cure for our ills, why was the economy in the dump in 1980?

  • Tony||

    How many trillions did the economy hemorrhage? More than we spent on stimulus. If we want robust growth we probably should spend a couple trillion more than we have. Of course, there is the rest of the world, so it's not quite that simple. What you fail to offer is any solution for ending economic stagnation, or for unemployment, at all. Just fairy stories.

    Understand that I'm not too concerned with taxes, since I'm OK with deficit spending. I do think we could go a long way toward funding some of that spending by raising top tax rates, since that doesn't have much of a negative effect (contrary to supply sider claims). The overall point though is that if you are hysterical about debt, then you are only being honest if you let tax hikes on the table.

  • ||

    Where are we supposed to get the trillions of dollars to continue deficit spending?

    Please answer the question. You just keep saying it's the right thing to do, but without identifying the source of the money.

    I also don't hear a plan to pay it back; nobody's going to want to invest in American business if the prospect of 70% tax rates looms on the table once the economy 'recovers', which is how you're proposing to pay back all this debt (through higher taxes).

  • Tony||

    I'm not sure why we should worry about high tax rates "looming" when for some reason it's acceptable not even to consider them now. Of course 70% isn't on the table, but that doesn't mean we can't go higher than where we're at, which is historically low.

    Deficit spending by definition isn't paid for. As long as our credit is good, what's to stop us? The point isn't to run up deficits for shits and giggles, it's to decrease long-term debt by increasing economic growth now. Otherwise we continue to stagnate and revenues stay depressed. Worrying about debt alone when the problem in the economy is reduced demand, thus high unemployment, thus lower government revenues, is to be counterproductive.

  • ||

    You say 'as long as our credit is good'; what happens when our credit is no longer good because nearly all revenues are consumed with paying interest? Greece no longer has any ability to borrow other than at junk bond rates.

  • Tony||

    I say we're lucky we're not Greece.

  • Dick Fitzwell||

    These spoofers are getting good.

  • sevo||

    Tony|6.16.11 @ 2:18PM|#
    "How many trillions did the economy hemorrhage? More than we spent on stimulus...."

    Tony, do you have the least bit of knowledge or any sort of claim to an ethical view, or are you just throwing crap around in the hopes you won't get caught in your bullshit?
    The "economy" didn't "hemorrhage" X trillions; those trillions were never there. Those trillions were 'hoped for' returns on bogus promises by various government agencies inflated by government control of interest rates.
    Now you bemoan the failure of the government to continue the process in at least equal amounts.
    How deep of a hole do you need to dig before you put the shovel aside?

  • Tony's muse||

    If you think we're in bad shape now, think how bad it would have been if we hadn't spent all those trillions.

  • Mr. FIFY||

    Tony continues to ignore the fact that there isn't enough accumulated wealth in America to fill the debt holes.

  • WTF||

    How many trillions of dollars of "stimulus" will be enough?

    18th century doctor: We've bled the patient, but he has gotten sicker!
    Colleague: Clearly we didn't bleed him enough! Get the scalpel!

  • ||

    The economy responded pretty much in line with what economists were saying given the level of stimulus spending...


    No, not really.

    http://blogs.reuters.com/james.....lchart.jpg

  • ||

    I recently saw an ARRA "putting America to work" sign in front of a dry cleaning establishment that's been there for years. There are no visible signs of roadwork nearby, although some road work was done about 5 years ago (before ARRA).

    In Ohio, ARRA funds were spent to replace the typefaces on lots of road signs since road projects were otherwise well-funded and on track and swapping out signs was "shovel ready". (ARRA wasn't allowed to replace other federal or state dollars already allocated for road projects, so states that had planned ahead got punished.)

  • Dick Fitzwell||

    Hahahahahahahahahahahahahahahahahahahaha...(inhale)...Hahahahahahahahahahahahahahahahahahahah...(inhale)...Hahahaha...ahahaha...ahhhhh...ok...I'm ok now................Ahhhahahahahahahahahahahahahahahahahahahahahahaha!!!!!!

  • ||

    I should also note that the current recovery is mostly notable for just how anemic it is. We have had much more robust recoveries with much government spending.

  • Joe M||

    There is no recovery, period. The increase is GDP is solely due to massive deficit spending. Counting government expenditures as part of GDP really lets them fuck with the numbers.

  • sevo||

    "Counting government expenditures as part of GDP really lets them fuck with the numbers."

    Exactly the same process which allowed the East German thug-government to claim near equality with West Germany.
    Ask the Germans how the two compared.

  • ||

    I like how Paul Krugman's solution to a debt problem is more debt. It's sort of like curing a morning hangover by getting drunk.

  • WTF||

    It's sort of like curing a morning hangover by getting drunk.

    That does sort of work, you know. It's just that much worse once the 'hair of the dog' wears off.

  • ||

    If you pointed this out to Krugman, he'd say the problem was that you only drank a fifth of Jack instead of a gallon of Everclear.

  • Joe M||

    It's Everclear all the way down.

  • ||

    It's never clear on the way back up.

  • Emperor Wears No Clothes||

    "It's sort of like curing a morning hangover by getting drunk."

    You mean that doesn't work? My boss is gonna kill me in the morning.

  • ||

    Henderson added, "We need to move more quickly than the Canadians did. Unfortunately, we're moving more slowly than the Canadians did."

    If we're moving at all.

    Oh, we're moving all right. We're increasing spending at an almost geometric rate. We live in a country where proposing multi-year, trillion dollar deficits is "risky, radical spending cuts".

    And the rhetoric works. I had a conversation with a coworker yesterday who is extremely concerned about all the radical spending cuts they've been making the last couple of years. She's convinced that those massive tax cuts for the wealthy have caused all of our problems, and they need to quit making such radical cuts in government spending and raise taxes on the rich fatcats. Seriously. She hangs out on Kos and HuffPo all day, so she's got all the facts. And she's far from alone in her assessment.

  • ||

    The rich fat cats are either (a) in China in the first place, (b) moving their businesses and jobs to places like Canada, or (c) have given up on productive investment and plan to just squander their wealth on consumption, which is the only thing the U.S. government provides incentives for anymore.

  • 4chan||

    http://www.ncsl.org/?tabid=13308

    Puerto Rico's current unemployment rate is at 16.4%. It is odd that John Stossel notes about Futuro's focus on cutting government spending (linking it to the fact that the government at one time employed about 33% of the work force), but then doesn't mention the impact so far on the workforce in PR. Then he jumps right into what happened in Canada.

    It would be one thing if Stossel was using Canada to show that because of what Canada did in the 90's lead to their economic success today, but he's not making that argument, at least directly. Stossel is saying that Puerto Rico is already an success for doing so.

    If your end result you want is more people working in the private sector, don't you have to post the actual results of that?

  • ||

    Government jobs don't count as "job creation", because that money has to be stolen away from someone else who could be creating 2 or 3 private sector jobs.

    If they did, the government simply needs to hire 100% of the population and there will be zero unemployment. Problem solved!

  • 4chan||

    That's the current theory yes. But that 16.4% unemployment rate still exists in PR, and has been up there for years. If Stossel was right about PR, the private investment PR has been seeking for years would have already made a dent in the unemployment rate.

    Fortuno policies has been in effect for years, we should have already seen an impact on PR.

  • ||

    You need to start by including that 33% of government workers in your prior unemployment figures. By that standard, the private sector has created a lot of jobs to fill the void left when the bloated ranks of state workers were sacked.

  • 4chan||

    That's on Stossel to prove that assertion though.

    Stossel is being particularly inarticulate here about his comments on Puerto Rico without any data to back him up.

  • ||

    His first reform took effect in May of 2009. 2 years is not nothing, but it certainly isn't enough time for multinational corporations to gain confidence in a changed government and move operations to a new country. Plus, there's a lot more to fixing what ails PR than a few budget cuts.

    As for the effect, apparently Fortuno expects that his cuts will negatively impact unemployment in the short run. He's projected unemployment to increase to over 17% due to government layoffs. I have no clue about the politics of PR, but it is pretty rare to hear a politician saying "these policies will make things worse before they get better".

  • ||

    Canada is probably the most conservative nation in North America right now.

    It's also one of the most business-friendly, which explains why multinationals are flocking to regions such as Ontario and Vancouver. Low corporate taxes, business-friendly (read: lack thereof) regulation, and flexible immigration policies make it easy to hire workers and expand.

    Current political rhetoric in America seems to be that we should be more like the moribund Canada of the 1990s.

  • jacob||

    I cannot figure out if that is just sad, or shit yourself scary.

  • ||

    There's a limit to how much deficit spending small countries like Canada, Australia, or New Zealand can do until they experience a crushing currency devaluation.

    There's a limit for big countries too, but you can continue unsustainable demand-side policies a lot longer before anyone notices that your dollar doesn't buy anything anymore. When I was a kid in Australia, our buying power per Aussie dollar went from over one US dollar to 50 cents in about a week. That kind of "change" motivates voters to dismantle uneconomic socialist programmes.

  • jacob||

    We are on the same happy glideslope that leads to Weimar Germany, Peron's Argentina or Mugabe's Zimbabwe. The only question is where on that scale will we land.

    Things, unfortunately are going to 'boink' real hard when it all hits the fan.

    Back when the Aussie dollar did lose 50% of its value, what happened to the employment number?

  • ||

    Unemployment stayed high because the cost of doing business skyrocketed as you had to pay double for things that were imported at the time, like electronics or certain commodities. Markets responded to these signals and eventually adapted.

    Thanks to a policy of deregulation of financial markets, though, the economy eventually recovered, and is now one of the strongest in the western world.

  • Emperor Wears No Clothes||

    Where in Canada is this lack of regulation you refer to?
    We're smothered in regulation.
    Sure, we've dropped our pants to immigrant slaves so that businesses can fill their ranks with cheap labor. Call me in 15-20 years when that massive immigration influx has over-run Vancouver, Toronto and Montreal, taxing all our social programs and education system.
    Look to Europe to see how well that worked out.

  • jacob||

    I think we have passed the point were we can change the direction before we go off the cliff. We are collecting $2.2T/yr in taxes. We are spending $3.6T. Not one politician is talking about decreasing spending by $1.4T/year, which is what it will take to zero out the deficit. Then we need to cut some more in order to retire the debt before the 22nd century.

  • DDT||

    Since our economy currently suffers from overcapacity, I don't think you're focused on the right problem.

    Tony, are you refering to overpopulation? Please dont tell me your a Malthusian and a Keynesian...

  • Tony||

    No. Overcapacity. The ability to create more supply exists. The problem is a lack of demand.

  • ||

    How is there a lack of demand and overcapacity when we are importing commodities like crazy?

  • ||

    Lack of demand because we are de-leveraging, as we should after a credit-fueled boom. Americans need to get their balance sheets together, and that takes time and (gasp!) some economic pain. The notion that we can have a painless de-leveraging by ordinary Americans simply by driving the government into massive debt is ludicrous. It not only hasn't worked (see the employment chart above) but simply delays and deepens the ultimate reckoning with reality.

    Also, have to love the stuff about debt "hysteria" -- as if debt is nothing to worry about. That you can say this as Greece begins to implode, possibly taking the Eurozone with it, is amazing. I guess the debt is no big deal until we have to sell T-bills at 6%, 7%, then who knows where. At those levels -- which are only just above historical averages -- the interest burden alone will crush us. Right now we are keeping the rates below those averages by just printing the money. It is not at all clear that this country could afford to borrow at a prevailing market rate even now, to say nothing of what the market will do to that rate later on as our debt deepens. Once you become Greece -- and people will lend you money only at 20% -- all you have to look forward to are the riots.

    But again, nothing to see here, right?

  • ||

    DEM, the funny thing is that the U.S. already tried wage/price controls and unchecked deficit spending in the 70s under Nixon and Carter. The result was T-bills in the teens, unpleasant commodity price inflation, and high unemployment.

    The only reason we're staying afloat is because China keeps making sacrifices to continue to lend us cheap money for fear that we'll start rioting like the Greeks. They're effectively our IMF.

  • ||

    I have read that since QE II, the Fed is buying 85% of all T-bills at the auctions. I think even China would be bidding up our rates now if the Fed weren't skewing the auctions.

  • sevo||

    Appalachian Australian|6.16.11 @ 2:59PM|#
    "DEM, the funny thing is that the U.S. already tried wage/price controls and unchecked deficit spending in the 70s under Nixon and Carter. The result was T-bills in the teens, unpleasant commodity price inflation, and high unemployment..."
    The term for that was (is) "Stagflation". And, boy, was it ever!

  • Tony||

    I fail to see why the wealthiest are exempt from any and all pain.

  • ||

    I fail to see why the wealthy should be subject to theft.

  • Tony||

    Taking away guaranteed healthcare subsidies from poor people is OK because they didn't "earn" it, right? But burdening the wealthy NOT A SINGLE IOTA is evil theft, because they "earned" it, correct?

  • sevo||

    Tony|6.16.11 @ 4:44PM|#
    "Taking away guaranteed healthcare subsidies from poor people is OK because they didn't "earn" it, right?"
    Yes. Subsidies are not "earned".

    "But burdening the wealthy NOT A SINGLE IOTA is evil theft, because they "earned" it, correct?"
    Sleazy liar:
    "The top 5 percent pay well over half the income taxes."
    http://www.american.com/archiv.....-the-taxes

  • ||

    Interesting that you change the subject from deficit spending as a growth tool to what you are really concerned about -- redistribution in the name of fairness. I did not tackle the issue of how we should bring the deficit down, I just said that it is ridiculous to claim, as you have, that our credit is good and debt doesn't matter.

    But it's interesting how quickly you drop the disguise. You don't care if spending if "effective" economic policy. You want to spend in pursuit of equality. It apparently matters not a whit to you if the spending will stop -- harshly and abruptly -- when the bond market says "enough."

  • sevo||

    "You don't care if spending if "effective" economic policy."

    Tony argues from an infantile-ego POV: "I WANT it! I should HAVE it!".
    Financial/economic reality simply doesn't register.

  • jacob||

    DDT, are you telling me that we are NOT spending too much?

    If you are not a Keynesian, then you can see the benefit in letting things correct?

    Consider what agent has caused our current bubble burst? This agent is the architect of the 'overcapacity' you speak of. What is the remedy if not to cut the spending?

  • jacob||

    Tony, we have increased the debt by ~$5T since 2008. What is enough in your universe?

  • ____||

    So Canada did well in the 90s. Big deal. We all did well in the 90s.

    If want to give credit to Canada, then give it where it's due. They were barely touched by the housing bubble and didn't start two wars.

  • ||

    Did you actually read the article? Their economy was in the dumps in the 90s and they underwent significant reforms. They are doing much better than the U.S. now.

    It may be true that part of the reason they are doing better is because (a) they chose to only engage in 1 foolish war, not 2, and (b) they avoided dumping trillions of government dollars into the housing bubble.

  • Emperor Wears No Clothes||

    And.....that's where you'd be wrong again.
    The federal government (nominally Conservative but in reality a tax&spend; party like the others) bought all the toxic mortgages from the Canadian Chartered Banks via the CMHC (roughly our Fannie and Freddie). In other words, taxpayers are on the hook for toxic mortgages. It remains to be seen whether our housing market blows up like it did in the U.S.

  • Mike in ATL||

    Regardless of how I feel about the rest of your article, John... The Greeks are rioting because of the cuts. Not the debt.

  • ||

    If the Greeks weren't loaded up with debt, they wouldn't need the cuts. The rioting is directly caused by deficit spending.

  • ||

    They are caused by the fact that deficit spending in Greece simply cannot continue. That why they are cutting spending -- there is no money left to spend. Greece can't borrow money anymore. No one will lend it to them at rates Greece can possibly afford.

  • 4chan||

    So they're pissed off that their government fucked things up.

  • sevo||

    4chan|6.16.11 @ 2:52PM|#
    "So they're pissed off that their government fucked things up."
    Yes. By promising free stuff that they can't afford. See Tony, above, for example.

  • ||

    If they hadn't engaged in Keynesian economic voodoo, they'd still be able to keep their socialist sacred cows.

    Canada hasn't had to slash their socialist spending thanks to sensible policy on deficit spending and "stimulus". Ideology matters to much to progressives, though, so they avoid policies that would result in more government revenue and more spending on their favourite programmes because they'd rather soak the rich and print money.

  • Emperor Wears No Clothes||

    Man, I don't mean to ride you, but the federal government just passed a budget that's tens of billions of red ink, and that wasn't their first.
    We are spending our way into oblivion. Our per capita debt is scary awful.
    We're just peddling so much on the commodity markets that we aren't being held to account right now.
    Just wait.

  • Appalachian Australian||

    Yeah, the current situation is kind of sad, especially since it's being presided over by a "conservative" government.

    It's better to look at what Canada did in the 90s (during the commodity doldrums) to find solutions that wuold work in the U.S. today.

  • jacob||

    The correct response is to print more money. Right?!? (squints real hard, drooling)

    Oh. Wait, I meant to say - "loosen the money supply, and spend it on infrastructure"

    Doesn't bullshit sound and work so much better when you couch it in a scholarly way.

  • ||

    Tony keeps saying we have "overcapacity of supply", so I'm not really sure why he wants us to build more infrastructure.

    Hasn't anyone noticed that increases in personal disposable income which would be expected from a stimulus just go to buying more imported goods or commodities (which only seems fair, since the Chinese or Saudis are lending the money in the first place)?

  • Tony||

    No I'm in favor of infrastructure spending. That's not a contradiction. I want government to fill in the demand gap. It's not like there's not plenty to do, as you may have noticed if you've traveled on one of our half-century old interstates lately.

  • ||

    In Ohio the "demand gap" was filled by using ARRA funds to change the typefaces on all the road signs on interstate highways.

    How is this a productive use of deficit spending? Should we not just build pyramids, as your prophet Keynes suggested?

  • Tony||

    Employing people to build pyramids is more economically useful than giving millionaires another check.

    But you're not interested in what's economically useful, you're interested in doling out rewards for those you deem virtuous.

  • ||

    Certainly, doling out rewards to friends would never be the dirty business of politics, so having the government fill the "demand gap" is sure to avoid that sort of nasty business. Right?

    In any case, filling this gap might be worth considering, if we had the money. We don't. That little incovenience is routinely brushed aside. Oh, that and tha fact that we've already spent everything we could borrow or print and it hasn't worked, because the demand "gap" is in fact the elimination of a credit-fueled demand mirage.

  • Tony||

    the demand "gap" is in fact the elimination of a credit-fueled demand mirage.

    True, but that mirage took the place of what would have been depressed demand as a result of lower spending power on the part of most people. Easy credit buttered over this for a while, but that isn't the underlying problem. Less money in people's pockets to buy the products of the businesses they work at is the essential issue. You can eliminate the underlying lack of spending power and the too-easy credit that made up for it by redistributing wealth downward. We do, in fact, have the money. It's just in the pockets of a tiny elite, to whom it's been funneled for decades.

  • sevo||

    Tony|6.16.11 @ 4:45PM|#
    "Employing people to build pyramids is more economically useful than giving millionaires another check."
    False dichotomy. Shut up.

  • ||

    Tony, who said anything about giving millionaires another cheque? Stealing less of a millionaire's money is not the same as "giving them a check".

    The bottom 50% of the U.S. are the ones who either don't pay taxes or pay negative taxes through tricks like the earned income tax credit.

  • Tony||

    You can't just keep repeating this evil lie. Our tax code is almost totally flat, when you factor all taxes in.

  • Appalachian Australian||

    Consider a single parent with 3 kids who earns $16,500, lives in Delaware, and pays $3,000 in FICA (employer contribution included in above figures).

    He'll get back $5,600 in federal EITC, another $1,130 in state EITC.

    This is a balance of the federal & state government paying this family $3,000 just to exist. Delaware doesn't have sales tax and it is doubtful that $3,000 will entirely be spent on other taxes like property taxes. We'll leave out of discussion the fact that FICA taxes paid are eventually paid back to the worker in retirement (or are supposed to be).

    Now how, exactly, is this a "totally flat" tax?

  • Dick Fitzwell||

    In MS, too.

  • sevo||

    Tony|6.16.11 @ 3:51PM|#
    ..."I want government to fill in the demand gap."
    How?

  • jacob||

    Tony is engaging in a classic Keynesian economic fertilizer distribution. This is to be then followed by the old planned economy high colonic for the masses, it is the order of the day.

    This despite the fact that even GW was another Keynesian douche bag, somehow the current uber-goof in the WH will save us even though pumping $5T into this rat hole an economy has not worked thus far.

    The current planned disaster is brought to you, and jammed up your 401K, by a bipartisan commission. Thanks guys.

  • ||

    Spend? Don't you mean "invest it in infrastructure"?

  • DDT||

    There is no demand for pyramids, so how would it be economically usefull to build them? If full employment is the only goal we can always hire people with spoons to dig ditches...

  • Tony||

    Presumably we could be smarter than that and build useful things, like modern transportation and energy infrastructure. Or maybe we should do nothing and wait for the private sector to do these things. How long do you suppose that will be?

  • sevo||

    Tony|6.16.11 @ 4:59PM|#
    "Presumably we could be smarter than that..."
    Yep, the USSR, Mao's China, No. Korea and Cuba show exactly how 'smart' governments are at figuring out what people want to buy.

  • ||

    I'll add Bush and Obama's America to that list. Apparently, the "smart" thing to do is build up a massive military and then start picking fights in random spots of the globe like Afghanistan.

  • Emperor Wears No Clothes||

    That always sounds great on paper.
    In the real world, where the non-Keynesians live, overpass from the middle of nowhere to the middle of nowhere get build in ridings where the sitting MP needs a boost. Demand on labor gets artificially squeezed for a while, driving up wages that private sector companies have to pay, which means higher house prices, etc.
    Jeebus, Tony, if you're not going to go away, grab at least one or two clues.

  • Shorter Tony||

    God, I fucking HATE the private sector.

  • Barack Obama||

    Patience, Tony. I'm working on destroying it as fast as I can.

  • DDT||

    I have no idea how long that will be and niether can anyone else. Business will determine that through risk analysis. Or maybe we should all be forced to "invest" in something that we will not all use.

  • Tony||

    The answer is never. Infrastructure is not something the private sector does. Especially not a private sector motivated exclusively by quarterly returns.

  • Colonel_Angus||

    Canals, railroads, early highways, electricity, telecommunications, urban transit, aviation, and gas infrastructure all started out as private sector initiative. They were all massively manipulated and fucked up by government. You don't know what the fuck you're talking about.

  • sevo||

    Tony|6.16.11 @ 5:16PM|#
    "The answer is never. Infrastructure is not something the private sector does."
    Ignoramus or liar? You decide.

  • Emperor Wears No Clothes||

    "Ignoramus or liar? You decide."

    Not enough options.

  • ||

    The private sector is not motivated exclusively by quarterly returns. Mutual insurance companies invest with a 30+ year outlook. Private equity invests according to its own agenda.

    The only entities that are obsessed with quarterly returns are SEC-regulated, publicly traded companies that are required to be that way by the SEC.

    Isn't government regulation great?

  • DDT||

    There is a constant threat that if the government does not provide a good or service then no one else will. We dont need the public sector building sports stadiums, the private sector can handle that. And why will they do so? Because they are motivated by quarterly returns. Incentives matter.

  • ||

    I, for one, would welcome a future without public stadiums being built to the tune of billion dollar losses.

    I have to pay $10/day for the privilege of driving a rental car in Cleveland so that two stadiums could get built. The city of Cleveland then wonders why there are no jobs and businesses are fleeing, but never thinks to look at how expensive they make doing business in the first place.

  • Emperor Wears No Clothes||

    That's another thing that's back on the agenda up here after being soundly rejected by Canadians in the 90s: publicly funded sports stadiums.
    I'll give Stossel credit for citing the 90s as a time of fiscal prudence in Canada, but that's not the current reality. We have a government that is spending us into the poorhouse just like you guys.

  • Appalachian Australian||

    Why is it Conservative governments (or Republican) are just as bad about spending us into oblivion as the leftist parties?

  • COINTELPRO||

    Because despite their claims that of being against wasting money on useless programs, in reality, they're against wasting money on useless programs they don't like. When it comes to defense spending or farm subsidies, they'll happily waste it on these useless programs so they can court their red state constituents.

  • Colonel_Angus||

    "Our taxes were as high as they could be, actually much higher than most of the country."

    Puerto Rico's taxes are much higher than in most of Puerto Rico?

  • ||

    Puerto Rico is a territory, not a country. Puerto Ricans generally consider their country to be the U.S. I found this out the hard way when I made a comment under the assumption Puerto Ricans thought of themselves as part of some other "nation".

    (One of my favourite real life trolls is to get someone with anti-immigrant sentiments to complain about anchor babies of Puerto Rican "immigrants".)

  • Fist of Etiquette||

    Sigh. Team Stossel, assemble.

  • Fist of Etiquette||

    There's that regulation stack. Forced perspective makes Stossel look like a midget in comparison.

  • Fist of Etiquette||

    Isn't this what ritalin is for?

  • Fist of Etiquette||

    Lawyers: Protecting Weirdos Since Shakespeare

  • Fist of Etiquette||

    You're out of order, Stossel! This whole show is out of order! The Coke machine in the lobby is out of order!

  • Fist of Etiquette||

    John Edwards getting booed by both Americas.

  • Fist of Etiquette||

    Look how young Stossel looks in that flashback.

  • Fist of Etiquette||

    A hot tub and 9/11 reference in the same segment. Only Stossel could pull that off.

  • Fist of Etiquette||

    Commercials for retirement investments and stair lifts. I'm beginning to suspect I'm not FoxBiz's expected demographic.

  • Fist of Etiquette||

    Brickman is a law school professor = Brickman is a lawyer!

    Booooooooo!

  • Fist of Etiquette||

    Well, I wouldn't go so far as to say she looks healthy. She could stand to drop a few pounds. (The horse concurs.)

  • Fist of Etiquette||

    That was footage of Stossel driving his free golf cart.

  • Fist of Etiquette||

    Are they blurring the horse's face, too?

  • Fist of Etiquette||

    Colbert is killing with the audience.

  • Fist of Etiquette||

    Maybe we should hire Paul's investigators to find Obama on job creation.

    Boom! That just happened.

  • Fist of Etiquette||

    I was pro at riding my bike when I was a kid.

  • Fist of Etiquette||

    What kind of bank rents safety deposit boxes to dogs? No wonder they all went tits up and needed bailed out.

  • Fist of Etiquette||

    The contest did not wake people up.

  • Fist of Etiquette||

    Warning: Sign Ahead

  • Fist of Etiquette||

    DDT!

  • Fist of Etiquette||

    Loser pays!

  • Fist of Etiquette||

    That's dumb. Batman couldn't fly, cape or no.

  • Fist of Etiquette||

    Stossel upstaged by a sugar-fueled kindergartner.

  • Fist of Etiquette||

    HFS! Bloomberg lets you have squirt guns in the studio?

  • Fist of Etiquette||

    The dude in the purple shirt voted twice.

  • Fist of Etiquette||

    Sunset provisions for the win!

  • Fist of Etiquette||

    Seal tosses a softball.

  • Fist of Etiquette||

    The Stoss-man gets a shout out.

  • Fist of Etiquette||

    Trial lawyers: the anchorbabies of the legal system. Hate them.

  • Fist of Etiquette||

    This whole episode was a figurative punch in the face to John Edwards. If only it could have been a literal one.

  • Fist of Etiquette||

    Seacrest out.

  • jacob||

    Meds may fix your problem, Fist. If you want it fixed

  • Appalachian Australian||

    Fist's main problem was that he liveblogged Stossel alone, which has similar esteem to drinking alone in one's underwear.

  • Fist of Etiquette||

    What makes you think I didn't do both those things at the same time?

  • زفات||

    thank you

  • air max||

    is good

  • قبلة الوداع||

    thank u

  • AARRGH||

    First of all the reason that the Canadian dollar is appreciating against the greenback is because of the oil sands, which would have been developed whether the government was conservative or liberal. Stossel failed to mention the excellent Canadian Health care system, which is much better than ours, and seems to be functioning just fine within the context of their booming economy. Privatization of certain vital government functions, such as military logistics and supply, is much more inefficient and expensive. We only need to look at the actions of "Black water" during the second Gulf war.. Our prison systems should not be privatized. The prisoners are being horribly abused and it is much more expensive under private companies. Medicare is so expensive because private companies are abusing the system.

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