Government Spending

The Absolute Unreality of Budget & Debt-Limit Debates (Austerity Edition)

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Over at The New York Times Reason contributor Bruce Bartlett frets that it's beginning to look a lot like 1937—and not just because the Giants are killing it in the National League. In '37, federal spending was cut in absolute terms, taxes were raised, bank reserve requirements were raised, and the Fed tightened the money supply. The result was a slide into recession that extended the Depression years. Bruce (whose work I often disagree with but always benefit from reading), is worried that Obama, conservatives, and everyone else are pushing for big budget cuts, which might stall the so-called recovery in 2011:

Given President Obama's endorsement of large budget cuts, the only question now appears to be how much fiscal policy will tighten and how fast. If it is back-loaded and mainly involves cuts in transfer programs, the impact on growth may be modest. But if – as I suspect Republicans will demand – the spending cuts are front-loaded and involve reductions in government consumption and investment spending, the impact could be severe.

While it's unlikely that the Fed will repeat its error of 1936-7 and raise reserve requirements or the federal funds rate, it has already begun de facto tightening by moving from monetary stimulus to a more neutral stance. Moreover, with interest rates on Treasury bills hovering near zero, there is little it can do to stimulate growth on the monetary side.

Whole thing here.

Let's leave aside for the moment any and all questions about the causes of catastrophe in the 1930s (though if you're interested in that topic, go here and here). Precisely who is calling for actual budget cuts right now? The correct answer is zero. That's certainly true in the near term and all the trims (believe 'em when I see 'em) are from future increases in spending. The two budgets that are being debated remain Obama's, which grows federal spending from about $3.8 trillion this year to $5.7 trillion in 2021, and Paul Ryan's, which grows it to $4.7 trillion. Even factoring in the current arguments over the debt limit, nobody is talking about taking this year's budget and cutting from it. That's why they keep yapping about "deficit reduction," which will take place somewhere down the road, at the intersection of Bushwah and Malarkey.

The reality is that no one in DC is talking about what would pass for austerity around any kitchen table in this sweet land of liberty. Faced with an incredible, long-term mismatch between revenue and expenditures, even "the adults" are still living in a land of denial, expecting to spend far more than they earn forever and ever amen.

Contra Bruce, there's a strong case to be made that government austerity is precisely the tonic our sick economy needs. But whether you agree with that, there's currently next to no chance that we'll ever get a chance to find that out. If the first step of getting out of a jam is to use basic descriptive language, well, we're not even talking yet.

NEXT: Reason Morning Links: Casey Anthony Shakes Mitch McConnell's Faith in America, Debt Talks Drag on, Italy Flirts With Financial Disaster

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  1. U.S. Dollar = the new Peso

  2. To paraphrase Monty Python: EVERY agency, program, subsidy, transfer payment, grant and wasteful/useless outlay IS SACRED!
    http://www.youtube.com/watch?v=fUspLVStPbk

  3. I have more respect for David Frum, who continues to love George W. Bush policies even as the GOP has turned a bit away from them, and thus blasts the Republicans for any movement away from GWB, than for Bruce Bartlett, who apparently hated GWB so much (for some understandable reasons) that he opposes everything that Republicans do to the extent that he now takes positions the opposite of his prior views.

  4. If I’m looking for Depression-era parallels, I’m seeing it more in the last stages of the rally after the ’29 crash.

    When that rally ended (in another crash), the Great Depression was really on.

    From a pure stock market/charting perspective, so far the parallels are spot on.

    1. Mellon had the plan to get the country out of the depression, but just like today, no one wanted to make the tough decisions.

  5. Glad Bruce B. agrees with Draco in this case.

    Short term, deficits need to be much, much bigger. Austerity would destroy the recovery, throw more millions out of work, and shrink GDP. The best way to achieve these deficits is via tax cuts.

    Longer term, you pull back the deficits during times of strong growth and low unemployment. That’s the hard part – tightening when everything is on a roll. But it has to be done.

    1. What if the problem is not fiscal or monetary in nature?

      1. If not fiscal or monetary, what would you suggest is the nature of our budgetary dilemma?

        1. I was referring to the poor economy, not the federal budget. Which is obviously a case of reckless out of control spending.

    2. Tax cuts have a postive multiplier, you are correct on that part.

      However, we dont need deficits. We could slash taxes and slash spending even more to balance and the same result (actually a better one, since spending’s multiplier is less than 1) would be achieved.

      1. And by “postive” I mean “positive”. And by “positive” I mean “greater than 1”.

    3. I agree with Bruce B. and Draco in this case, too.

  6. The reality is we’ve only actually tried austerity. We were able to use sound economics to stabilize things, but government has actually shrunk by half a million workers since before the crisis–Obama has shrunk government. You have your champion, and he was the last guy you’d suspect!

    We’ve kept tax rates low, and state cuts have pretty much totally offset federal stimulus spending. Much of the stimulus was tax cuts–a Republican Keynesian stimulus deal. Now they want to maintain that half of Keynesianism for the wealthy and corporate interests and impose austerity on everyone else. What side is reason on again? Real austerity (meaning cutting spending AND hiking taxes) or have you signed onto Grover Norquist’s fiscal terrorism pledge?

    1. If deficits of 10+% of GDP and government spending accounting for 40+% of GDP is austerity what does extravagance look like on your planet?

      1. On Tony’s planet government is 100% of everything because government is god.

        1. No, no. Anything less than 100% is austerity. Government’s normal function is to provide 110% of the economy. Because of the multipliers, see.

          1. No, the government provides 1200% of the economy.

            I wrote that the multiplier is 12, damn it!

    2. but government has actually shrunk by half a million workers since before the crisis

      You have a citation for that? And further, there is no rational way to call tripling the deficit and running up more debt in two years than all previous administrations combined “austerity”. Jesus Christ Tony, get some help and face reality. Living in Tony world while pleasant for you, is highly annoying to those of us stuck in reality.

      1. I hate to break it to you, but where you live in no way resembles reality, evidenced by the lame Republican talking points you employ as arguments. Most of the debt problem in this country happened under Bush, including the recession.

        1. It’s all Bush’s fault!!!! WAH!!!

          What’s the unemployment rate today? What was the unemployment rate when Obama took office? How about the public debt?

          1. Why do you care who is to blame? There is sure a lot of “Bush is old news” bullshit on this site. Facts do matter.

            1. “Facts do matter.”

              Which is why you don’t.

              Because you have never been an authority on the facts.

              1. Note how he places absolutely no blame on Obama, when in reality it must be placed on him AND Bush.

                1. When we’re talking about debt, it’s mostly Bush.

                  1. Bush debt total for eight years: $2 trillion.
                    Obama debt total for three years: $4.36 trillion.

                  2. HAHAHAHAHAHAHAHAHAHAHAHAHA

            2. Why do you care who is to blame?

              What?

              Dude you were the asshole who brought Bush into this.

              1. So, bitch at Bush AND Obama, because they’re both to blame.

                This ain’t rocket science – then again, thanks to Barry, we don’t need rocket scientists anymore.

        2. Bush had eight years to rack up $2 trillion in total deficits. Obama has already passed that total in two years.

          1. None of the debts under Obama are attributable to Bush? The federal budget starts with a clean slate with every new president?

            1. Okay, let’s see. The deficit in 2008 was $455 billion. So we’ll just subtract $455 billion from the next three years, a total of $1.365 trillion, and call that Bush’s fault. $4.36 trillion – $1.365 trillion = ~$3 trillion. $2 trillion (Bush’s eight years) + $1.365 trillion = $3.365 trillion. So, our new totals:

              Bush: $3.365 trillion in eleven years.
              Obama: $3 trillion in three years.

              Still looks like Obama is spending a lot harder and faster.

              1. Don’t get me wrong. No matter who the next president is, Republican or Democrat, unless it’s Paul or Johnson, they will spend ever faster than Obama is currently.

              2. Tony conveniently ignores this now that he’s been thoroughly debunked.

                1. Tony ignores the shitloads of debt Barry has racked up. Intellectual dishonesty abounds.

      2. Here is your citation:
        http://www.politifact.com/trut…..llen-half/

        Course these were State and Local jobs.

    3. but government has actually shrunk by half a million workers since before the crisis

      You have a citation for that? And further, there is no rational way to call tripling the deficit and running up more debt in two years than all previous administrations combined “austerity”. Jesus Christ Tony, get some help and face reality. Living in Tony world while pleasant for you, is highly annoying to those of us stuck in reality.

      1. If you look at the numbers, I do believe Tony is right, but not for the reason he claims. States have been cutting workers because they can’t simply print more money to get out of a deficit. They have to make real cuts. The Feds have been adding jobs, but not as fast as states have been cutting them. To claim that the Feds have tried austerity is bullshit.

        1. That is why I asked for a citation. I would not be surprised if you counted state workers total government employment has gone down. But the feds can’t do much to stop that. And there is no way to call the spending orgy we have been on for the last three years “austerity”. But Tony like many liberals is insane and refuses to accept the reality that they have finally run out of other people’s money.

          1. If we aren’t employing more government workers to DO things, then we aren’t doing much of a stimulus. You guys want to deem stimulus a total failure when we haven’t really had one.

            I bet you a million dollars you never said a goddamn word about Bush’s spending–which is most of the problem here.

            1. Tony, even Keynes admitted later in his life you are better off cutting checks to people than you are doing projects with stimulus money. And more importantly, even if you wanted to do such projects the environmental and planning laws make depression era sized projects like the Hoover Dam virtually impossible. Thanks to liberals there is no such thing as “shovel ready” anymore.

              Get help Tony.

            2. If we aren’t employing more government workers to DO things, then we aren’t doing much of a stimulus.

              This has to be a spoof. Otherwise, you would have to believe that a program that increased private sector hiring by millions, but cut government payrolls, was not “stimulative”.

              Here’s a hint: “Stimulus” is supposed to help the economy, not the government, grow.

              1. I like Sugar Free’s theory that the real Tony was murdered by a trick years ago and the Tony we have now is just a collective spoof. Sometimes I really wonder. But then I read other blogs with liberal commentators and see that if anything Tony is actually sane compared to them.

            3. I bet you a million dollars you never said a goddamn word about Bush’s spending

              Oh, how I wish this challenge had been thrown at me. I’d be a million dollars richer.

              1. But it was thrown at John, the worst kind of partisan shill (a Republican).

                1. We will just ignore that you were screaming about Bush’ deficits Tony. Seriously Tony, denying reality doesn’t change it. You have run out of other people’s money. Liberalism is dead. The quicker you realize that the better off you will be.

                2. and the second worst partisan shill is a Democrat? A pox on both houses.

              2. Everyone on here would be richer Joe R. But beyond that, even if they weren’t, not saying something about Bush’s spending just means that you were wrong then. It doesn’t mean Obama is right. Tony like every other liberal has limited ability to think beyond the ad homonym.

                1. John nobody here is convinced. I am partisan, but I have a reason to be. You just hate anyone Ann Coulter hates.

                  1. Once again Tony, you like every other liberal have a difficult time thinking beyond the ad homonym.

                    1. Like every conservative you have issues with the English language.

                    2. Well I guess that’s Latin, technically.

                    3. I forget sometimes how stupid liberals are. So I make points that require second order thinking forgetting that is beyond them. So I will put it in simpler terms that even you can understand. Attacking the person making the argument says nothing about the validity of the argument itself.

                2. Your misspelling has gone meta.

                  +1

                  1. @John 10:39

                    1. “Therefore they sought again to take him: but he escaped out of their hand?”

        2. If you look at the numbers, I do believe Tony is right, but not for the reason he claims. States have been cutting workers because they can’t simply print more money to get out of a deficit.

          The relevant question is how government employment compares today to what it was ten years ago.

          Government employment bloated in the bubble years along with construction employment and housing prices. Unlike the latter two it has not fallen back to the reality of the pre bubble years. Using 2008 as the baseline is inherently dishonest.

      2. Anyway, how does having less workers matter, if the spending is still up?

    4. Why does “real austerity” include hiking taxes?

    5. That’s not even a good start on trimming the government workforce.

    6. Real austerity (meaning cutting spending AND hiking taxes)

      Hiking taxes worked well in 1932 and prevent my defeat by FDR.

  7. The beginning of everything is difficult,just like you start to run a store.Obama government is not just like his beginning,but so difficult now.

  8. In ’37, federal spending was cut in absolute terms, taxes were raised, bank reserve requirements were raised, and the Fed tightened the money supply. The result was a slide into recession that extended the Depression years.

    I went ahead and took the liberty of bolding the most important part.

    At this point, you would have to be the most moronic of morons to think that raising taxes in a depression is a good idea. Yeah, no shit Sherlock, it didn’t work for F.D.R. any better than it worked for Herbert Hoover when he did it! Duuuuuuuuhhh.

    I believe in having taxes as low as possible, but if you absolutely, positively HAVE to raise taxes, you do it when the economy is humming along, not when it’s already crippled.

    1. Same with cutting spending, then. You can’t be a half-Keynesian!

      1. You entirely missed Nick’s point – no one is calling for actual cuts in federal spending. The debate is over reductions in future spending.

        Even if the GOP gets what they are asking for, spending in 2012 will be more than 2011. 2013 spending will be more than 2012 – repeat, repeat, repeat.

        Again, spending is not going to be cut.

      2. How is that half-Keynsian? Seems pure Austrian, if anything.

        1. Because the argument for keeping taxes low is that tax cuts are stimulative.

          Never mind that the excuse for the cuts in the first place was a healthy economy and a budget surplus.

          1. “Because the argument for keeping taxes low is that tax cuts are stimulative.”

            No. The argument for keeping taxes low, is because increasing taxes is punitive.

            1. That’s not the Republicans’ excuse. I expect more from libertarians of course, such as not being half-Keynesians when it’s convenient.

              1. No. Republicans have been arguing that raising taxes during a recession will cause more damage to job growth.

                The only person arguing for maintaining tax cuts, because they are stimulative, is Obama.

                1. That’s the same argument. What do you think the point of stimulus is?

                  Republicans can’t say tax hikes damage job growth but spending cuts help it. It makes no sense, and is not part of any economic theory. It’s simply wanting your cake and eating it too. Austerity for poor people, welfare for rich people.

                  1. I don’t that anyone is seriously arguing that cutting spending is going to create an economic boom. Spending doesn’t need to be cut to create jobs, spending needs to be cut so that we still have a fucking independent country ten years from now. See Greece, etcetera.

                    1. No, spending “needs” to be cut because Republicans are using the economic crisis as an excuse to enact their neverending plan to gut the welfare state and turn the country into a Randian “paradise.” Don’t believe their lies, it is beneath you. Every single problem they are worried about is not a real problem–the only problem that matters right now is unemployment. You can’t solve the debt problem until you solve that anyway.

                    2. now who is being partisan? This reads like something out of DU or Kos.

                    3. I am a partisan, because Republicans have a stated goal to destroy the country and loot its resources for their friends. It’s a radicalizing thing.

                    4. You could say the same with the Democrats, wanker.

                    5. Not really. Democrats still believe in facts and evidence to a large extent, whereas Republicans believe both that tax cuts for the wealthy create jobs and that Jesus had a pet dinosaur. That is bad enough all by itself.

                    6. Democrats still believe in facts and evidence to a large extent, whereas Republicans believe both that tax cuts for the wealthy create jobs and that Jesus had a pet dinosaur.

                      [Citation Needed]

                    7. God damn! I gotta start voting republican to get in on this action!

                      How did I miss that press release?

          2. Tax hikes are stimulative, not tax cuts.
            Ideally taxes should be 100% and all money be distributed according to political whim.

            1. Tax hikes aren’t stimulative of course, but they are useful for bridging the gap between revenues and spending. Do you care about debt or employment? Can’t really care about both.

              1. No Tony, the cause of the recession is that stupid civilians do not know how to properly spend their money.
                We need 100% taxation. That way wise government bureaucrats decide how all money is spent.
                With the correct policy determining what people do for work, how much they are paid (which doesn’t really matter since it will all be confiscated anyway), what is bought and sold, everything will run according to plan.

                How could it not? Government is god.

          3. They’re stimulative in that the money is being kept in more useful hands. Spending cuts also do that in that investment money goes to more productive investments than government. Not all spending is the same.

            1. The fact that this supply-sider stuff has been proven a dismal failure doesn’t matter to you?

              We’ve had low Bush-level tax rates for a long time. Where are the jobs? It’s not like the top 2% has gotten any poorer. Why aren’t they creating jobs?

              1. Back at you. The the stimulus hasn’t worked either, doesn’t that matter to you.

                1. That was a deflection from the question, which you should be able to answer if you are interested in aligning your economic policy beliefs with facts. Money has only gone upward. Where are the jobs they’re supposed to create?

                  I explained above that the stimulus hasn’t worked because it was barely a stimulus at all after all was said and done. No economist thought it was enough to return to full employment. When we actually try stimulus, then you can judge.

                  1. Real communism hasn’t been tried either I hear.
                    To answer your question the jobs were lost because of too much debt in all areas government, housing, credit cards, the finacial system. At some point that becomes unstainable and the house of cards fell. The system needs to work out the hangover. Adding government debt doesn’t resolve that. The best way forward at this point is to let the people including the rich keep their money. As Hayek in the Keynes vs Hayek rap said “I want plans by the many not by the few.”

                    1. The crisis was caused by a bubble in housing fed by rampant speculation on exotic financial products sanctioned by lax underwriting standards.

                      Debt is a result of things:

                      Unpaid-for wars
                      Unpaid-for medicare expansion
                      Un-offset tax cuts to the tune of several trillions of dollars
                      And the aforementioned economic crisis.

                      This is not a problem of too many poor people having it too good. That is an ideological position and a shameful attempt to shift the blame from where it belongs. And adding government debt is the only known solution to an economy that is suffering from reduced overall demand.

                    2. And adding government debt is the only known solution to an economy that is suffering from reduced overall demand.

                      That is correct. It is evidenced by the fact that the world came to an end every time that there was an economic downturn and the government did not step in. So many times that the economy never recovered because the government didn’t step in to stimulate it. I mean, the world had come to an end. It didn’t even exist until stimulus came along.
                      All those recessions which recovered in less than two years didn’t exist. Never happened. Couldn’t have because there was no stimulus to bring the economy back to life.
                      Then there was the Great Depression which lagged on and on and on despite all that stimulus. And now the Great Recession which keeps lagging on and on despite all this stimulus.
                      I mean, quick recoveries without stimulus and prolonged recessions with stimulus are proof positive that the world would come to an end without government stimulus.
                      Yup!

                    3. It’s the only solution known to you.

                      Not sure where you got the poor people have it too good from me. Must be from some other thread you’re arguing.

                    4. The crisis was caused by a bubble in housing fed by rampant speculation on exotic financial products sanctioned by lax underwriting standards.

                      And the way to sort things out is to not allow the market to reallocate resources, but to use government to prop up politically connected losers.
                      Politics should decide matters of economics.
                      Politics should decide everything because government is god.

                    5. The crisis was caused by a bubble in housing fed by rampant speculation on exotic financial products sanctioned by lax underwriting standards.

                      But it’s not the root cause, Tony. We’ve had a massive, parabolic run-up in credit issuance for over 35 years. Housing was merely the latest step in that decades-long trend; the current one taking place now is the Fed buying up most of the government’s debt via primary dealers, since housing was one of the last bullets on the consumer credit side that could be used (right now, it’s student loans, which will likely be the last one when the tuition bubble pops).

                      You act as if this is all something recent–it was inevitable when inflation set in during the 1970s, more women piled into the workforce, and manufacturers realized they didn’t have to stay in the country to make money.

                  2. Money has only gone upward.

                    I want!
                    Someone else has something and I want it!
                    I wan it!
                    I waaaaaaan!
                    Ah waaaaaaaaaaaaan
                    waaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa

                  3. I explained above that the stimulus hasn’t worked because it was barely a stimulus at all after all was said and done. No economist thought it was enough to return to full employment. When we actually try stimulus, then you can judge.

                    Again Tony,

                    If deficit spending that is 10+% of GDP is not stimulative what level would be?

                    I think you mis understand Keynes idea of stimulus, which is that government borrows and spending on anything is stimulative. Even burying bank notes in winebottles to be late dug up.

                    All of the it was the wrong kind of spending propaganda is contradicting the theory that proponents use to justify it.

                    Face it, calls for more stimulus at this point, by those people is just and open attempt at graft.

                    1. Keynes certainly specified types of programs that had more of a multiplier effect. Deficit spending is best done on things like infrastructure, basic research, and education–things that stimulate long-term private investment.

                    2. I explained above that the stimulus hasn’t worked because it was barely a stimulus at all after all was said and done.

                      Wait a second–you’ve been claiming for quite some time that the stimulus kept things from getting worse and couldn’t be judged a failure based on that metric. Now you’re claiming that there wasn’t actually a stimulus?

                      Well, shit, if the only problem is that we didn’t spend enough, then by your logic no amount was too large. Why cap the amount–after all, if $1.5 trillion in debt is better than $800 billion in debt, than $10 trillion should have really done the trick!

                    3. I’ve said all along that it was the right policy but it wasn’t big enough. I have specific numbers to back that up. You just have the amorphous assumption that the debt is too much. Why? How much debt will cause a crisis? Exactly what we have now? Why?

                    4. I’ve said all along that it was the right policy but it wasn’t big enough. I have specific numbers to back that up.

                      Bullshit. You don’t have jack shit to back it up and you know it.

                      You just have the amorphous assumption that the debt is too much. Why? How much debt will cause a crisis? Exactly what we have now? Why?

                      Well, Tony, if the debt we have now isn’t “too much,” then it’s pointless for you to be fucking whinging that the markets will tank if we default on what we have, isn’t it? We can just issue a whole $50 trillion in new debt to cover it and it’s all good.

                      You seem to have the amorphous assumption that the debt doesn’t matter, except when you’re crying like a bitch about the markets potentially tanking if we don’t raise the debt ceiling.

                      What you’re essentially crying for is for Obama and the Republicans to keep kicking the can down the road, without even considering that if the debt ceiling isn’t raised, that’s a tacit admission by the government that we have too much debt, and it will really be time to ramp back the Leviathan. Maybe that’s what you’re really afraid of, considering your unabashed worship of The State.

                    5. —“I’ve said all along that it was the right policy but it wasn’t big enough”—

                      Blah, blah, blah.

                      All of the “right” people were in charge for the most recent round of stimulus. Apparently, everybody but Tony thought it was the right size. The, when it didn’t work as advertised, the claim went out that it just wasn’t large enough to have the desired effect.

                      This is the same argument as “We know it’s bad now, but imagine how bad it would have been if we had done nothing”.

                      Bullshit.

            2. They’re stimulative in that the money is being kept in more useful hands. Spending cuts also do that in that investment money goes to more productive investments than government. Not all spending is the same.

              The thinking is still Keynesian there. Instead of stimulus of giving money to people via projects, it’s stimulus of not taking money from people via tax cuts.

      3. Now lowering taxes is Keynesian?

        The lowering taxes part (or at least not raising them) works. The shoveling piles of money at random jobs programs does not.

        Government spends on inefficient programs (spoon ready projects!). Either the money will eventually run out and the jobs will end, or we will be stuck with spending on a jobs program forever (that, over time morphs into something that produces less and less of anything that anyone actually wants).

        Letting people keep more of their own money encourages them to invest and spend efficiently, expanding the economy, and building businesses and jobs that will last.

        1. Tax rates and employment have no correlation. Otherwise things would be good now and they would have sucked under Clinton when taxes were higher.

          You can’t beat this dead horse forever. Eventually people are going to realize it’s just a flimsy excuse to gut the welfare state and send the proceeds to the very rich. At least be honest and stop pretending that you can be a half Keynesian. Everything has a multiplier associated with it. Tax cuts for the rich are virtually useless as stimulus, since they have the luxury and tendency to save rather than spend. This is elementary. The house of cards you’re trying to maintain will only last for so long.

          1. Cutting welfare is theft, because not giving money to someone is the same as forcefully taking money away from them.

            Tax cuts are a gift, because not forcefully taking money away from someone is the same as giving money to them.

            Yup. Cutting welfare is theft and tax cuts are a gift.

            1. Because obviously a meaningless semantic difference makes it OK to take away from the poor and working class and give to the rich in a time when people are supposed to be suffering for the sake of the greater good.

              1. Not taking money from the rich and giving it to the poor is the same as taking money away from the poor.
                Not taking money from the rich is the same as giving money to the rich.
                It all makes sense now!

              2. Because obviously a meaningless semantic difference makes it OK to take away from the poor and working class and give to the rich

                1) What’s your definition of rich?

                2) The Bush tax rates applied to everyone, not just the “rich.”

                3) Since Bernanke and Obama have demonstrated that all they need to do is exchange Treasury debt by the shipload to keep the government running, what’s the point of taxing anyone at all?

                1. Balancing the budget with real money is your obsession. I just want you to admit that austerity means raising taxes too, because that’s what it means.

                  1. Balancing the budget with real money is your obsession.

                    Classic non-sequiter from a devious little fuck who can’t deal with basic math.

                2. 2) The Bush tax rates applied to everyone, not just the “rich.”

                  Don’t you know people making more than 15k a year are rich????

      4. Same with cutting spending, then. You can’t be a half-Keynesian!

        I’m not at all a Keynesian, I’m a supply-side economist, for the simple reason that there is little to no evidence that government spending has any appreciable impact on the structural economy. And furthermore, it doesn’t work whether or not you have a tight monetary policy as in Japan, or a loose monetary policy as here in the U.S. The big government spending of recent years has failed dismally in both places.

        1. So as a supply-sider you ought to be pleased with recent US attempts at stimulus, since they’ve been majority tax cuts.

      5. half-Kenyan? That’s racist!

      6. Cutting taxes isn’t “Keynesean” and you aren’t the least bit capable of proving the case is otherwise.

        1. Keynesianism does not equal always raising taxes. It is not the ideological opposite of Republicanism (always cut taxes). It says raise taxes in good times to pay down debts. It says cut them in bad times to help with consumer demand. What the Republicans are proposing isn’t anyone’s theory, left or right. It’s just fiscal terrorism dressed up with talking points they think are convincing.

    2. The only stimulus here is you guys giving the boring twit the attention he wants.

  9. The beginnig of everything is hard.Obama governmemt is not just like his beginning ,but now so difficult.

  10. Bruce Bartlett: shill for Big Hysteria.

    Okay.

  11. we’ve only actually tried austerity

    HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA

    1. And, may I add, “HAHAHA!”

  12. If it is back-loaded and mainly involves cuts in transfer programs, the impact on growth spending may be modest fictional.

    How stupid do they think we are?

    1. I’ll assume your question was hypothetical.

  13. I don’t think Obama cares about the effect of all of this on the economy because I don’t think he has any clue how economies work and is utterly dumbfounded that the golden goose stopped laying eggs after he cut its head off.

    This fight is about the level of spending and government. Obama’s plan all along was to raise the baseline spending through the roof and then use the deficit as an excuse to raise taxes to pay for it. Obama is to put it gently extremely intellectually limited. He doesn’t have a lot of imagination and he has very little understanding of the country or empathy for those who disagree with him. He comes from Chicago where you just put your head down and by any means necessary shove what you want down the other side’s throat. Obama has no clue that you can’t do that in Washington. Washington is too evenly divided for that to work. He also has such a poor understanding of the country he has no idea that most of the country will not tolerate the taxes necessary to support the government he wants no matter how many times he tells them they have to do it or else. A real statesman would understand that the 2010 elections meant something and make a deal that gave the other side real concessions but also cut his own side’s losses. But Obama is not a statesman. He is a party hack from Chicago and part time faculty lounge intellectual. So he doesn’t have the imagination or the understanding of the country to make such a deal. He really thinks he can through sheer stubbornness get the kind of tax rates and giant government he wants.

    I am starting to think there may not be a deal. That the ceiling might not get raised at all.

    1. I am starting to think there may not be a deal. That the ceiling might not get raised at all.

      I’m hoping beyond hope, but not optimistic.

    2. You’ve got a pretty good read on Obama, and how politics work in Chicago.

    3. He also has such a poor understanding of the country he has no idea that most of the country will not tolerate the taxes necessary to support the government he wants no matter how many times he tells them they have to do it or else.

      It’s not even a matter of tolerance. The economy itself cannot support the tax levels he wants.

  14. http://money.cnn.com/2011/07/1…..?hpt=hp_t1

    Timothy Geithner wants a deal by next week, or he’s going to hire a couple of hard, pipe-hitting niggas to go to work on the Republicans.

    1. Shorter Obama “pay for the government I demand or I will destroy the credit worthiness of the country”. These people are willing to unleash murder and mayhem to further their political goal of gun control. I have no doubt they are willing to default to get what they want here. They are just criminals.

      1. You incorrigible partisan slimeball. The Dems are all perfectly willing to vote for a clean bill. It’s Republicans–after voting to raise the debt ceiling 7 times under Bush without a peep of controversy–holding it up now over petty ideological and anti-Obama motivations.

        1. A clean bill that keeps spending where it is. The choice is either keep spending where democrats want it or they will destroy the credit worthiness of the United States.

          1. Where is it written that voting to raise the ceiling has to be paired with anything? Can’t we just vote on a clean bill in order not to spook the markets (you know, be patriotic and responsible), and then get to Republican social engineering at a later date?

            1. Because the markets will be spooked if we don’t do something about spending. You lost the 2010 elections Tony. And you lost them badly. Obama needs to face up to that reality and give the people who won them something. You cannot tell the country to fuck off forever. The country is not paying for a government that eats up 24% of the GNP. So it is either cut spending or default. Which will it be?

              1. Or raise taxes. Why is that never an option?

                1. That is not an option Tony because the country spoke in the midterms and said quite clearly that they were not paying for your giant government. Had you won the election, you would have a point. But you didn’t. And elections have consequences.

                  1. I thought we were debating policy. Since you think elections have consequences, what the hell are you complaining about with Obama?

                    So the Republicans get to completely gut civilized society and the last 70 years of American progress, and justify it with appeals to absolute insanity that no economist, not even Republican ones, could buy with a straight face, because they won a single midterm election.

                    1. Yeah Tony because taking spending back to pre stimulus levels would “gut society”. That is just insane. And we have a real problem in this country in that about 30+% of the country are like you and believe really crazy shit and cannot be reasoned with.

                    2. I’m just going by their voting record. Nearly all House Republicans voted for the Ryan plan to destroy Medicare. This isn’t about fiscal responsibility–they’ve never cared about that before, after all–it’s about engineering an excuse to gut the welfare state. They’ve been perfectly clear on this for many years.

                    3. get to completely gut civilized society and the last 70 years of American progress,

                      Drama much?

            2. No, because you junkies never voluntarily meet your appointment at the rehab clinic on your own.

              Now go to your room and don’t come out until you’ve gotten it through your little pea brain once and for all that we’re not going to allow you guys to bankrupt and destroy the country the way they have all over Europe.

            3. Where is it written we have to raise the debt ceiling in order to get our house in order, Tony?

              1. Where is it written we have to raise the debt ceiling in order to get our house in order, Tony?

                Ask any economist in the world what the consequences of failing to raise it would be. (Michelle Bachmann doesn’t count as an economist.)

                The only reason the debt ceiling exists is because it served as political cover in 1917 when spending was appropriated for WWI. It was never sound policy, and now that Republicans are taking it to its reductio ad absurdum, we’re all gonna suffer for it.

                1. If consequences are that bad Tony, raise the debt ceiling and live with the spending cuts as the least bad option available. Where is it written than only liberals can ever get their way? That is the heart of it isn’t it? You just can’t accept that anyone who is not a liberal can have any say whatsoever in the government, you fascist little fuck.

                  1. Liberals are getting a shit sandwich no matter what happens John. Only Republicans are being uncompromising. Obama has offered cuts to Medicare and SS for Christ’s sake. What about this situation tells you that liberals are the ones being obstinate?

                    If you ask me it was a compromise even to give in to the narrative that debt was the biggest problem right now. Just having the conversation is a compromise for liberals. You are describing congressional Republicans–they have not been willing to budge ONE INCH. So are they fascist little fucks?

                    1. Just having the conversation is a compromise for liberals.

                      That pretty much says it all doesn’t it? Even talking about not getting their way on everything is hard for liberals. Thanks for proving my point Tony.

                    2. It’s a compromise because liberals are right in that debt is not the most important problem right now. Unemployment is, and the American people overwhelmingly agree with them, so put that in your appeal-to-popular-sentiment pipe and smoke it. Fussing over debt will only make unemployment worse, and no Republican has ever offered an explanation as to how it helps. So even allowing the conversation to be about debt is a compromise.

                      What have Republicans compromised, since they’re such model statesmen?

                    3. It’s a compromise because liberals are right in that debt is not the most important problem right now. Unemployment is, and the American people overwhelmingly agree with them, so put that in your appeal-to-popular-sentiment pipe and smoke it.

                      LOL at this.

                      You just don’t get it, Tony. Neither do the rest of your fellow travelers.

                      The closest we’ve come in the last 54 years to paying down the debt resulted from a U3 that was at historic lows, the result of a massive credit bubble in the late 90s that simply could not be sustained. Prior to that, the government did not require unprecedented low unemployment, and for decades didn’t even require an income tax, to pay down debt in some years.

                      We are not getting back to the U3 levels of the late 90s without some sort of economic miracle. Period. Where the fuck are the industries that will not only provide the foundation for ALL the people who lost their jobs the last 4 years, but all of the NEW workers resulting from college graduates and immigration?

                      THEY JUST DON’T EXIST, and no one wants to deal with that reality, particularly on the left–because the hard truth is that, to bring back the 1950s economy you so long for, we’d have to annihilate roughly 25% of the world’s population and infrastructure, shut down the borders and deport 12-20 million Hispanics, legitimize cultural segregation once again, eliminate the entire legacy of the Great Society, and wipe out roughly 99% of current consumer debt. The prosperity of those years wasn’t solely built on 90% tax rates and union labor, and you can’t recreate that society without recreating the social and economic conditions which existed at that time as well. They were unique for that time, and that place, and they simply aren’t coming back.

                      Face it, the party’s over.

                    4. As with everything liberal, compromise only goes one way.
                      Compromise means liberals get their way and the other guy gives in.
                      Tolerance means liberals don’t have to tolerate disagreement and the other guy gives in.
                      Inclusion means liberals exclude those who disagree and the other guy gives in.
                      Equality means liberals are better than anyone who disagrees.

                      Liberals are perfect and government is god.

                    5. sarcasmic you aren’t paying attention. Liberals (once again) are being asked to not only reduce debt when it’s a bad idea, but do so by accepting cuts to social safety net programs. The Republicans meanwhile won’t raise taxes a single cent to help with the debt. Who is being uncompromising here?

                    6. You’re right Tony. You’re always right. Borrowing is the only answer.
                      I don’t know about you, but I pay my mortgage with a credit card.
                      When I can’t pay all the bills, cutting back is never an option.
                      Never! I don’t have to cut back! I’m an American!

                    7. Why don’t the wealthy have to cut back in order to pay the bills?

                    8. Good point Tony. It’s not fair that the wealthy aren’t paying other peoples’ bills. it just isn’t fair. I mean, you are so right to envy those evil wealthy people who don’t go around paying bills for other people. We should institutionalize that envy and give it a better name. I know, equality! That’s it, we’ll call envy equality. It has a much better ring to it.
                      In the name of equality we should force the wealthy to not only pay their own bills, but the bills of other people as well!
                      Great idea!
                      Institutionalized envy EQUALITY!

                    9. So in other words you’re full of shit.

                      Are people meant to sacrifice for the greater good (reducing debt) or not? What possible reason is there that only the poor and old should have to make cutbacks?

                    10. What possible reason is there that the wealthy should be allowed to keep their wealth?
                      They should be forced to sacrifice!
                      Taxes are not only for revenue, but for fairness and envy equality.
                      It isn’t fair that the poor and the old have to make cutbacks when there is all that wealth out there.
                      We should just TAKE it!
                      If they won’t give it willingly we’ll just TAKE it!
                      Yeah! Envy Equality rocks!

                    11. Yes sarcasmic tax policy is a function of government. If taxes can go down, sometimes they can go up. It’s not an injustice, it’s not unfair, it’s just the way things have always been. You are incapable of providing an honest answer and you seem to be aware of it.

                    12. I will inform Captain Obvious of this as soon as I see him.

                      Carry on.

                    13. Government doesn’t have an income problem, it has a spending problem.

                      Seriously, you want to increase the debt limit so more stimulus can be sent off to ACORN, Unions, La Raza, and all the other leftists on the government teat so they can send it back to him in time for 2012 and just say heck, sure, hard working americans will just pay for it.

                      Fuck you and the miserable failure of a president you rode in on.

                    14. —“Obama has offered cuts to Medicare and SS for Christ’s sake”—

                      Reductions in the level of growth do not equal cuts.

            4. Where is it written

              Government is god and the Federal Registrar is its holy scripture.

              Let us pray.

              Our government who are in heaven, hallowed by thy name…

              1. Jesus, Tony, you’re really engaged in some seriously disingenuous shit today. Even Ryan’s plan is far from gutting anything. How does increasing annual spending by another trillion dollars at the end of ten years considered austere? And these SS cuts are pure accounting fiction. Then again, I suppose accounting fiction is all anyone in Washington is capable of at this point.

                1. You don’t get it Joe.
                  Not raising taxes on the rich is the same as giving them money.
                  Not raising payments to the poor and old is the same as taking money away.

                  Not taking is the same as giving.
                  Not giving is the same as taking.

                  See?

                  1. There is no ideal baseline of tax policy. Some think a fair system is flat, some thing a fair system is progressive. The simple fact is that given the status quo (wherever that sits in your mind as a function of fairness), giving the wealthy a tax cut is essentially the same as giving them a handout. Who gives a fuck? All you’re claiming is that any increase on the wealthy’s taxes is always unfair looting. You’re never going to change that opinion regarlness of the economic circumstances.

                    1. “Who gives a fuck?”

                      Honest people. That is something you would know nothing about.

                    2. Honest people want to base economic and fiscal policy on a convenient twist of semantics?

                    3. Dishonest people twist semantics to justify coercion.

                      For example a dishonest person will say that since not coercing money from someone results in them having more money than if they were coerced, not coercing is the same as giving.

                      A dishonest person may say that since a person has less if they are not given some of that coerced money than if they were given coerced money, not giving coerced money is a gift.

                      Theft is giving and not giving is theft.

                      That is the twisted semantics.

                    4. *not giving coerced money is a gift theft

        2. Yes, the insane out of control spendaholism started under Bush and the republicans, before Obama picked up the ball and sprinted downfield as fast as he possibly could.

          Every junkie eventually has to hit rock bottom before he can get better. We’ve decided it’s time to put you guys into a rehabilitation program for your own good, whether you like it or not.

          1. Obama plays runningback? Is that’s some racist shit?

        3. “petty ideological”

          The Republicans are fucking opportunists, in addition to being opportunists themselves. So, you’re wrong for saying “ideological.”

          But, in the rare instances where it is a consistent, principled opposition (which really only applies to the Pauls), it is far from “petty.”

          So, somehow, you managed to be entirely right and entirely wrong at the same time. Typical liberal 😉

          1. No, I think that’s just being wrong twice.

      2. Why do you argue with this boring little twit?

      3. Shorter Obama “pay for the government I demand or I will destroy the credit worthiness of the country”.

        He’s too dumb to realize that a lot of his opponents see that as a feature, not a bug.

        1. IT is not even a default. A default is when you renounce the debt. This would be not paying the debt for a few days or weeks. That is different. And further, the markets would wait and see. If the crisis actually resulted in real spending reform, the markets would gladly keep buying US debt even if the US was late on a few payments.

          1. Oh, I can totally see Obama shafting bond holders to force the issue.

            He doesn’t get that a lot of the people in the country are saying fuck it go ahead. You’re not raising our taxes no matter what.

            If default leads to higher interest rates that suck up a larger portion of the federal spending, well you know what? I’d rather Uncle Sam pays more interest if that’s what it takes to stop government metastasizing.

            So go ahead cocksucker, default.

            1. That is the irony. Liberals have more to lose here. How do they think they will keep all the New Deal and Great Society programs they love if the US defaults?

              1. Hold their breath until they turn blue ?

                1. So that’s how the reds became TEAM BLUE.

    2. I loled at Tuff Gai Timmay when I saw that this morning.

    3. In a just world, Geithner would be trapped in a room with The Gimp.

      1. I thought he was The Gimp.

  15. Can’t we just vote on a clean bill in order not to spook the markets (you know, be patriotic and responsible),

    A clean bill would signal to the markets that there will be no progress of controlling our deficit in the foreseeable future. I don’t think they would react favorably.

    1. I’m sure the markets are smart enough to know that even if we do have a deal on deficits it will be mostly symbolic–a means to save face in time for 2012 rather than a serious attempt at controlling deficits.

  16. http://dailycaller.com/2011/07…..-stimulus/

    Even Krugabe is admitting the stimulus was a failure.

  17. It’s all Eric Cantor’s fault!

    “During the high-stakes summit at the White House on Sunday evening, Eric Cantor was the primary voice speaking on behalf of Republicans interests, according to several accounts of the meeting. A senior Democratic aide briefed on Monday’s talks told TIME that Cantor again “dominated” much of the negotiations on the Republican side, while Boehner “hardly spoke.””

  18. I’m pretty much convinced that our current political class is utterly incapable of dealing with the current mess.

    If so, then the longer the inevitable is put off, the worse it will be.

    Given that the Euro seems slightly ahead in the Currency Collapse Sweepstakes, the dollar is probably safe for a year or two (people fleeing the Euro will support the dollar as a “safe haven” currency). Once the Euro is dead, though, and that support goes away, the dollar is next.

    Plus, I don’t think we’ll actually see a for-reals default this year, regardless. Assuming the Repubs hang tough and there’s no deal, then its under Obama’s control whether we default or not, and he’s got options for not defaulting when its clear he would get the blame. He can kick the can down the road, regardless. So he will.

    Perhaps the best outcome would be a Repub collapse leading to a bill with real tax increases in it. That will kill the Republican Party, as the Tea Partiers and hard-core fiscal conservatives leave for a third party. At this point, I think Obama in office for another term is the quickest way to hit the wall and get it over with.

    1. You can’t deal with a problem when one side tells the majority of the country to go fuck themselves. Obama actually proposed his own budget and called it a compromise. We need a statesman. A statesman is someone who manages to represent both his own side and the other side to some degree. If Obama were a statesman, he would, like Clinton did in 1995, recognize the results of the midterms and make a deal that let the other side feel like they got something in return for winning the election. But Obama is not a statesman. And his solution is to just pretend the midterms never happened. And you that is a very bad thing for the country.

      1. The Obama plan was more than a compromise… it was like 4/5 in the GOP’s favor. It’s only the GOP who has “no compromise” as a mantra. And they may have won the House in 2010 but there are still 2 other political branches controlled by Democrats. Obama has been more of a “statesman” than his liberal base can stomach. Compromise doesn’t mean “give Republicans everything they want” you know.

        1. Sure he has been more of a statesman than his liberal base can stomach Tony. But his liberal base is insane and thinks any spending cut is “destroying civil society” as you said above. I honestly feel kind of sorry for Obama for having supporters like you. And the Obama budget was not 4/5ths Republican. Again, how are we supposed to have a country when so many people are like you and believe utter nonsense?

          1. You are claiming that Obama offering cuts to Medicare and SS in exchange for a pittance in tax hikes is being uncompromising. You are essentially saying that the way for Obama to be a compromiser and a statesmen is to give Republicans everything they ask for right now. And I’m in the realm of nonsense?

            Cutting spending will only slow economic growth, it’s econ 101. But given how dishonest you and your party are, I have no reason to believe that they have any concern for helping the economy before 2012. Why would they? It’s not like they’ve once demonstrated concern for the well-being of the American people in this process. Unless you own a private jet, that is.

            1. Tony, spending hasn’t produced any economic growth as evidenced by the dismal economy. So it is unlikely that we are going to lose much growth by cutting it. And further, raising taxes will kill growth even more. So that leaves cutting spending or defaulting because things cannot continue as they are.

              And offering to kill grandma to save the bureaucracy and the SEIU is hardly a compromise. Why does Obama love government employees more than old people and poor people?

              1. John the easiest way to see if someone is being a partisan shill rather than a serious person is when they adopt the half-Keynesian approach you’ve outlined here. There is simply NO evidence that top-tier tax rates have a meaningful effect on economic growth or employment. If that were so, why were things good under Clinton but bad under Obama’s historically low tax rates? Answer the question. Someone.

            2. Cutting spending will only slow economic growth, it’s econ 101.

              That is correct.
              Government removing money from the economy through taxation and borrowing has a stimulative effect.
              Government crowding out private investment has a stimulative effect.
              Government punishing success and rewarding failure helps the market to allocate resources.

              Government is god and liberals are angels.

    2. “I’m pretty much convinced that our current political class is utterly incapable of dealing with the current mess.”

      Did people in the 1850’s feel like this: a huge national issue that Must be resolved, and a political class inadequate to the task.

      Kinda makes my stomach hurt all the time.

  19. “In ’37, federal spending was cut in absolute terms, taxes were raised, bank reserve requirements were raised, and the Fed tightened the money supply. The result was a slide into recession that extended the Depression years.”

    I remember reading a Wall Street Journal editorial a while back that debunked the claim that government spending cuts caused the downturn back then.

    They pointed out that the cost of labor was increased significantly and there were a lot of labor strikes resulting from the enactment of the National Labor Relations Act.

    Spending wasn’t actually cut significantly anyway.

    Not that it matters because Keynesean govt spending policies have never had anything to do with improving any economy anywhere at any time.

  20. So let’s imagine that the debt ceiling deal never happens and that Obama and Geithner are stupid enough to decide to stop paying interest in lieu of a government shutdown. The Debtpocalypse ensues.

    From a “I hate the government” perspective, is that really a bad thing? Doesn’t that force the hand of the politicos? Don’t they then have no choice but to do austerity now instead of punting it down the road and implementing more “long term” (i.e. PUNT!) solutions?

    Let the Debtpocalypse come.

    1. You must not have a stock-based retirement plan. But I’m sure all the Americans who do are grateful for your advice.

      1. Fuck it. Let’s get all of the devaluation and inflation out in the open. Until the bad money is driven out, the good money can’t be allocated efficiently.

      2. As long as it’s only the poor people that suffer, I’m OK with it.

      3. You mean the same grateful Americans who benefited from TARP when their inflated house prices were kept above the market price, thereby helping to extend the housing crash because inventory wasn’t getting flushed?

        I have a stock portfolio. I’ll get screwed. Too bad. This country needs is an enema.

        1. I agree. I wasn’t being sarcastic or anything. Fact is, we’re all poor because our fucked up government has made us that way.

      4. You must not have a stock-based retirement plan.

        Putting all your eggs in one basket doesn’t work. Oldest advice in the world.

        So if your retirement plan is 100% stock-based you increased your chances of getting screwed from the beginning. IOW, you may not deserve to get screwed personally, but you DO deserve to get screwed intellectually.

        1. Agreed that stock-based retirement plans are for the birds. That’s why we need beefier government-backed guarantees.

          1. government – is there anything it _can’t_ do? (brought to you by Nabisco!)

            1. Well there are clearly things the market can’t do, so what else is gonna fix its problems? We don’t have to call it government if you like, so as not to trigger the pavlovian hatred. We can call it the market police.

              1. Police, government… does your tongue ever get tired licking so much boot?

          2. Backed by what???

            If it’s just money-printing, it’s the exact same result as paying pennies on the dollar which is exactly what a default is. Where’s the, uh, “beef”?

            So Tony’s solution is to default but call it a pennies-on-the-dollar guarantee. He’s either evil or brainless. I’m still leaning toward brainless but I’m beginning to have my doubts.

  21. I think the GOP should call Obama and the Dems bluff and refuse to raise the debt ceiling.

    All the administration’s screeching about “default” and “catastrophe” for the economy was never anything but pure bullshit to begin with.

    The August 2nd deadline is also purely a political stunt.

    The government collects more than enough revenue to pay interest on the outstanding federal debt. They will be forced to pay that first and cut elsewhere.

    As for the screeching about spending cuts being a “catastrophe” for the ecomony, well that’s just more Keynesean bullshit. Government spending has never helped the economy to begin with. It is merely a forced transfer payment. There is absolutely nothing that government could do with that money that would ever be any better for the economy than whatever those who had it before the government took it away from them would have done with it otherwise.

    The world hasn’t come to an end in Minnesota with the state government shutdown. And I remember the last time the federal government supposedly “shut down” during the Clinton administration. I never noticed any differnce whatsoever in my life or well being as a result of it.

    1. Exactly, Gilbert. And as I said above, even if that criminal Timmay refused to pay the debt, that would not be a default. It would just be the US being late on a payment, which is something the markets would gladly forgive if this resulted in real spending reform.

    2. So when the economy really does suffer awful consequences, you’ll refudiate everything you’ve just written? Or will you just come up with more bullshit excuses for licking Republican cock?

      1. Shut up and get back to work, Tony. Breaktime’s over.

  22. Tony wants to know “where are the jobs” after 10 years of Bush (i.e. lowered) tax rates?

    It’s not all and only about tax rates Tony. It’s about regulation.

    If you really, really want unemployment to shrink to near zero, and you want everyone happy, productive, and earning and spending and saving, then agree to a gutting of the Regulatory State. Forget the Welfare State for a moment. That’s not actually the biggest or most immediate problem.

    Get the government completely separated from business, and watch the boom. Dodd-Frank. Sarbanes-Oxley. All of it. Gone. Then watch all boats rise with the rising tide.

    1. They always talk about how you cannot keep Social Security and Medicare as they are without a “productivity miracle”. It never occurs to the dumb bastards that if they gave up their love of regulation, they might just get one.

    2. The market has not proved itself to be an especially rational creature when left to its own devices. This country’s problem has nothing to do employer uncertainty. It is weak consumer demand.

      1. The market has not proved itself to be an especially rational creature when left to its own devices.

        When was the last time we tried?

        1. The Stone Age. If it’s never been tried, as you imply, where is the evidence that it works?

          1. Didn’t you just feel dirty writing that comment?

            1. Requiring evidence for a humongous claim about how the world works? I feel rational.

              1. That’s not what I meant. ‘We can’t try it because it hasn’t been shown to work before’ is the Burkean motto. You’re not saying ‘Where’s the evidence?’ You’re saying ‘We can’t run the experiment.’

                1. Which, I don’t need to point out, isn’t rational. Now, please, present the evidence that your way works.

      2. “The market has not proved itself to be an especially rational creature when left to its own devices.”

        It’s proved to be less irrational than the government, which is all that matters for this question.

  23. “Precisely who is calling for actual budget cuts right now?”

    Sen. Rand Paul, for one.

  24. “Faced with an incredible, long-term mismatch between revenue and expenditures, even “the adults” are still living in a land of denial, expecting to spend far more than they earn forever and ever amen.”

    How do they worry about our spending even as Italy is being crushed under the weight of its own spending?

    Italy’s national debt is at about 120% of GDP.

    The United States’ national debut is crossing the line over 100% of GDP this year.

    Isn’t it interesting that people are coming out against austerity–even as Italy no long has any choice in the matter?

    Italy can’t slash its budget fast enough–to avoid getting dragged into the hole–how much better would it have been if they had slashed their budget when they wanted instead of when they no longer had any choice?

    Those are the alternatives we’re facing now. We’re where Italy was a few years ago, and if we want to avoid Italy’s fate, then we need to make the hard choices now.

    As Italy is now painfully aware, there is no avoiding austerity. Trying to avoid austerity is like trying to avoid gravity. The only question is whether we want to make the choices about how bad austerity will hurt us–or whether we want to wait until all those austerity choices are made for us. …like what’s happening to Italy.

    Greece is a tiny little economy–there isn’t enough money in the EU to bail out Italy. There isn’t enough money in the world to bail out the U.S. either.

    Our debt is at 100% of GDP now–and with Social Security, Medicare, Medicaid and ObamaCare set to expand for reasons of demographics and stupid policy choices–we are headed down the the Appian Way!

    The choice isn’t between austerity and Keynes–the choice is between limited, voluntary austerity now or forced and dramatic austerity later.

    Choose fiscal sanity now or fiscal insanity will chase us down and put us in a choke hold. It’s as simple as that.

    1. The Tonys of the world will never forthrightly acknowledge the current situation of Europe in a million years, because they’re a bunch of dishonest, lying hacks.

      1. They certainly seem to want to emulate Europe in terms of social safety nets, etc.–right up until it becomes inconvenient for them to use European examples.

        I was looking at Sweden the other week–and it was really interesting.

        We–or I anyway–tend to think of Sweden as being essentially Socialist. …and being a model of what Barack Obama’s idea of what America should look like. And in terms of social services, safety nets and high taxation, I suppose that’s true.

        But there was some stuff I was unaware of too.

        Sweden doesn’t use the Euro. And there are two big ingredients for why they’ve done so well compared to the rest of Europe.

        For one? They borrowed a page out of Milton Friedman’s playbook, and their central bank is obsessed with keeping inflation at 2% per annum. They don’t really worry about anything else but keeping inflation to 2%. Their fed doesn’t focus on jobs or anything like that.

        The second thing? They had a budget surplus as of a couple of years ago! They’ve engaged in more spending and tax cutting during the economic crisis, but they had a budget surplus as of a couple of years ago. So when they wanted to spend more money to stimulate the economy–and slash taxation rates (which they did)–they had a strong footing from which to do that.

        All of which is to say that even if they want to look at European models of countries that are doing well–a healthy economy is about fiscal conservatism and slashing taxes to stimulate economic growth.

        Even Sweden is smarter about that stuff than the Obama Brigade.

        Just because Sweden wants more social services than Americans are comfortable with doesn’t mean they’re stupid about fiscal sanity–doesn’t mean they stupidly try to raise taxes in the middle of economic doldrums like Obama is trying to do.

    2. Ken, you are making a big error when, in the current context, you compare Italy with the United States. From the perspective that matters, which is that of a sovereign issuer of fiat currency which can deficit spend at will, Italy is more like Pennsylvania or Ohio than like the United States. Italy cannot increase its money supply by increasing its deficit, as the money supply and deficits aren’t entirely under its own control. The United States doesn’t have this problem, and in consequence, and pace Nick Gillespie and Matt Welch and Tim Cavanaugh, it can never “run out of money.” The only risk to the United States and other issuers of fiat money is hyperinflation (which we are nowhere near, in fact rather the opposite) not solvency.

      Well, there is one more risk and I hinted at it the other day in another thread: that we’ll be so ill-informed and stupid that we’ll throw away one of the strongest tools at our disposal and neglect to raise the debt ceiling, thereby stopping the continuation of fiscal deficits which, in my view, are absolutely necessary for economic recovery.

      1. Hyperinflation isnt the only risk associated with deficit spending, Draco, its just the only one you choose to acknowlege

      2. This is a myth that I see the Krugnutters pushing more and more nowadays, that’s it’s basically impossible to go insolvent as long as you can print your own money.

        It’s simply not true; countries can (and have) gone bankrupt and defaulted even when they have controlled their own currency.

        The reason why is because the ability to pay back your debts is meaningless if you have devalued your own currency so much that the creditors decide that they’re no longer going to accept your currency as a valid form of payment.

        I can already hear some people out there thinking to themselves, “Screw the creditors; they’ll either take our currency or they can stick it.” Well, that’s all fine and dandy, until everyone else decides that they’re no longer going to lend you money or do any business with you in your currency. Then you’re screwed; the end result is still a de facto default and insolvency. Being economically isolated from the rest of the world simply isn’t a realistic scenario for any significant country in the modern era.

      3. I appreciate that we have more of a cushion.

        I don’t think Gillespie, Welch or Cavanaugh argue that we’ll ever run out of money either. The question is if and when borrowing becomes impossible–for all practical purposes.

        And the U.S. can hit that just like Italy has.

        “LONDON (Dow Jones)–Spanish and Italian borrowing costs reached new record highs before stabilizing Tuesday as investors fled to safer havens amid growing fears of euro-zone contagion.

        Although talk, so far unsubstantiated, that the European Central Bank might have stepped in the market later helped support prices, the premium investors demanded for Italian and Spanish bonds over German bunds remained near dangerous levels not seen since the euro zone’s inception.

        Meanwhile, the cost of insuring European debt with credit default swaps also hit fresh records before pulling back slightly.”

        http://online.wsj.com/article/…..04818.html

        Look in there, and you’ll see statements like this too:

        “Euro-zone finance ministers Monday signaled a willingness to boost the size of the euro area’s rescue fund and possibly allow it to buy bonds in the secondary market, although policy makers appeared no closer to an aid deal for cash-strapped Greece.”

        They may not have as much control over their money supply as we do–but they have a central bank that comes to their rescue periodically and they have a bond market!

        I’m seein’ tons of similarities and meager differences.

  25. I am sympathetic to all manner of perversion and disgusting sexual habit–from the humble foot fetishist to the poo-smeared piss-swimmers… But I will never understand the urge you people have for wasting time on the Tony-puppet.

    1. It’s like taking batting practice for when we talk to people in real life. No, the home runs don’t count in batting practice, but practicing for the real thing really does help!

      He makes a great stand in for some of the people we talk to every day who believe and say the same things.

      I know he always disappears whenever anyone hits him with some facts. Against facts, he’s completely defenseless, and I can understand why some people would see talking to him as a pointless exercise because of that.

      But being oblivious and impervious to facts makes for great real world practice! That kind of thinking represents a real chunk of the American people. Being able to talk to the oblivious and impervious–that’s the kind of practice we need!

      We should learn to reach them all.

      1. wellgoddammit…i never thought of it that way.

      2. What facts? Are tax rates not the lowest they’ve been in more than half a century? Where are the jobs those cuts are supposed to create?

        Just ONE fact from you guys and I’ll concede your point. Not theories, not convenient excuses, a fact that justifies the half-Keynesian bullshit you’re spewing.

        1. Start with these, Tony…

          Italy’s national debt is at about 120% of GDP.

          The United States’ national debut is crossing the line over 100% of GDP this year.

          http://www.usgovernmentspendin…..chart.html

          Are you ignoring the real world?

          “ROME?The Italian parliament is working on approving a ?40 billion ($57.05 billion) austerity plan by Sunday, officials said, a fast timetable aimed at keeping Europe’s debt crisis from infecting the continent’s third-largest economy.

          “In what will seemingly help the government’s hoped-for timetable, opposition politicians seemed on board with the plan. Anna Finocchiaro, opposition chief whip in the Senate, said her colleagues would propose “very few” amendments to the budget plan in order to speed the bill’s passage.”

          http://online.wsj.com/article/…..63550.html

          They don’t have a choice, Tony. …even the opposition understands that.

          We still do have a choice.

          We may not always have a choice. Like Italy doesn’t. If we don’t change course, we’re heading into the same trap Italy has already fallen into.

          Don’t you see the irony of pursuing the same policies that Italy and others pursued–even as those countries have already fallen into the traps we want to avoid? If we keep pursuing the same policies as Italy, why won’t we end up in the same traps?

          Italy was where we are one year ago in terms of debt to GDP. Those are the facts.

          1. The United States’ national debut is crossing the line over 100% of GDP this year.

            So? It was 120% of GDP during WWII and the economy only boomed as a result. We have the luxury of not being Italy or Greece–how have European austerity programs worked out for them? Why aren’t they recovering?

            1. Greece has only started enacting their cuts.

              Italy hasn’t even voted on theirs yet.

              “It was 120% of GDP during WWII and the economy only boomed as a result.”

              You want to start a war, Tony?

              World War II was different for a number of reasons. There were huge efficiency gains as industrialization and technology started to hit their stride.

              Also, it’s important to remember that during World War II, most of the people who were drafted–were never sent overseas. One of the reasons there wasn’t much opposition to the draft in World War II was because being drafted usually meant taking unemployed and desperate people and giving them a good paying job in a factory making munitions and supplies somewhere.

              They were taking non-consumers and making them consumers–Keynesian economics isn’t anywhere near as stupid as Barack Obama and company make it out to be. And if they weren’t completely incompetent, the stimulus might have actually done some good–rather than harm. They’ve pissed that chance away though. There’s no way we could absorb another $700 billion in debt like that again–not without igniting some serious inflationary pressure.

              If government spending were the solution to Greece and Italy’s problems, all the Obama style spending they’ve done would have already solved their problems.

              I haven’t seen anyone in the world suggest that the solution to Greece’s and Italy’s problems is that they aren’t spending enough. I’ve seen everybody in the world point to the obvious–that Greece’s and Italy’s problems were caused by government spending though.

              1. How is inflation a threat when unemployment is near 10% and wages have not risen in years? What do you mean the stimulus caused harm? Do you mean it hasn’t fixed everything yet, or do you mean, contrary to the facts, that it caused a deeper recession?

                1. “How is inflation a threat when unemployment is near 10% and wages have not risen in years?”

                  We were talking about what would happen if the government did yet another $700 billion stimulus.

                  Do you know where inflation comes from, Tony?

                  What’s the general consensus on what happens when the money supply grows faster than the rate of economic growth?

                  I’m gonna go out on a limb and say that the likelihood of initiating inflationary pressure would be relatively high.

                  1. Well there’s inflation and there’s runaway inflation. You seem to be worried about the latter. But it is simply not something to fear when wages and prices (except for commodities) are not, in fact, inflating. We have the opposite problem–a risk of deflation.

                2. How is inflation a threat when unemployment is near 10%

                  You mean like the U.S. in the 1970’s?

        2. Are tax rates not the lowest they’ve been in more than half a century?

          As usual Tony is 100% dishonest and looks only at federal income tax rates and ignores the deductions that vanished as well as ignoring local sales and property tax rates.

          The average person pays a higher percentage of his overall income in taxation and other government-forced spending now than at any other time in US history.

          1. What a great argument for more progressivity in the tax code.

            Usually it’s you guys who ignore all the other taxes, so thanks for bringing it up.

            1. There’s 2 ways to do tax progressivity – lower it on the lower classes or raise it on the upper classes.

              Only one of those ways actually HELPS the lower classes directly. Let me guess – you only want to help them indirectly.

      3. I take such delight in this place, I never understood the people who wander away, especially the hard-core regulars. But I understand now. It’s because years of the same arguments being used on the same idiots is boring.

        Even if you enjoy whack-a-hole, wouldn’t a different mole–or even a real mole to beat occasionally–be a refreshing change of pace?

        1. If you’d like a mole, one of the dogs just brought a dead one into the house last week. I can mail you the next one. Whacking it won’t get you much, though.

          Wait, was there a metaphor in there?

        2. It’s because years of the same arguments being used on the same idiots is boring…wouldn’t a different mole–or even a real mole to beat occasionally–be a refreshing change of pace?

          I concur that Tony is a sockpuppet, albeit one that simply pushes Democratic Party PR.

          But I disagree that he’s boring because he uses the same arguments. What’s boring is the lack of an actual argument. The nature of the interaction consists solely of the assertion that Democrats should be in positions of power and that their political policies should be implemented – over and over, re-worded in various ways, no matter how contradictory to previous talking points.

          For example: The argument that GWB started an unjust and wasteful war in Iraq, which is contradicted by the assertion that spending on WWII caused the economy to boom.

          Either war spending positively affects the economy or it doesn’t, but Tony doesn’t actually take either position. His position is that he likes Democrats, which isn’t an argument at all, but a constant stream of PR bullshit poorly disguised as ‘argumentation’.

          For those looking to ‘hone their skills’ at argumentation, my response it they’d be better off talking to a billboard advertisement, because that’s all this is.

    2. A) Echo chambers are boring.

      B) Solidifying your argument is a good mental exercise, even if the other side has a history of poor reasoning.

      I know that your preference isn’t to “feed the troll”. But is the extra pigeon shit that comes from throwing seeds out from the park benches really that annoying?

      1. If it was just a bit, I wouldn’t mind as much. But when pretty much every thread is covered in shit, it doesn’t really encourage me to participate.

      2. I can’t even imagine spending time at a place where most agree with me. What’s the point? You get tired of ideological masturbation so you want it to be mutual?

        1. You’re such a fucking liar.

      3. It’s still an echo chamber; there’s just two voices. If you haven’t noticed this conversation is downright Groundhog Dayesque in its ability to be repeated ad nauseam across different threads.

        The idea that libertarians are so ideologically homogeneous as to necessitate a hearing of kos/freeper views is laughable. We’ve been hearing that same old tired bullshit our entire lives; it’s why many of us are libertarian in the first place.

        1. I’d love to hear from an actual libertarian who understands the economic arguments. For the most part all we get are people regurgitating Frank Luntz-tested GOP talking points as fact.

          1. Don’t give me shit about umderstanding economics, Tony. I have never once seen you, or anyone else, use any sort of mathematics to back up your bullshit.

            Besides, economics isn’t a science that’s falsifiable anyways. It’s the attempted quantification of politics and opinion.

            1. Still waiting on those math skillz, Tony.

              I’m pretty good at math, but don’t understand economics so I’ll sit here and wait for your explanation. Unless you don’t understand mathematics well enough to make a quantified argument. In which case you should really stop wasting everybody’s time.

    3. Have you seen the guy’s poo-smeared feet? They’re to die for.

  26. You really need to review the editors and contributors to your “libertarian” magazine. Ronald Bailey is a proponent of global carbon taxes, and Bartlett is against government spending cuts. We can read Slate, TNR, NYT, or Ezra Klein for that kind of shit.

    1. “Ronald Bailey is a proponent of global carbon taxes.”

      I’m a proponent of getting rid of income taxes, corporate taxes, capital gains taxes–and replacing them all with a carbon tax too. …it would essentially amount to replacing income, corporate and capital gains taxes with a sales tax–and why wouldn’t a real libertarian support that?!

      “Bartlett is against government spending cuts. We can read Slate, TNR, NYT, or Ezra Klein for that kind of shit.”

      Libertarianism isn’t monolithic conformity in support of whatever the group thinks. If we wanted conformist group-think, we could go to the Progressives, the Mormons or the Objectivists for that “kind of shit”.

    2. Judges?

      (mumble, mumble, mumble, whisper)

      Drink!!!

  27. “If we aren’t employing more government workers to DO things”

    This is frighteningly similar to Ed Schultz’ “union workers are superior to non-union workers” bullshit.

  28. Somewhere upthread Tony wrote:

    I explained above that the stimulus hasn’t worked because it was barely a stimulus at all after all was said and done. No economist thought it was enough to return to full employment. When we actually try stimulus, then you can judge.

    This is a poor excuse for an excuse. Liberals claim that either the stimulus was not big enough or that the economy was worse than they thought (which led to an insufficient stimulus program.)

    Now that 2 1/2 years have passed since the stimulus was enacted, do we have a better idea of how bad the economy is now? Certainly we can look back and see exactly what shape the economy was in for these last 30 months. Giving liberals the luxury of using hindsight, can Tony (or anyone) tell us what the right amount of stimulus spending would have been, and why, specifically, is that the right amount?

    1. Easy. There was about a $3 trillion hole in the economy caused by the recession. Stimulus spending amounted to about $800 billion. It prevented the recession from continuing, but job growth to make up for the losses incurred would require even more economic growth than good normal economic times. Every single person on the left will tell you that $800 to fill a $3 trillion hole wasn’t enough. Yet the economy did stabilize–so all evidence suggests that stimulus spending was the right medicine but we didn’t take a high enough dose.

      1. How did you arrive at the 3 trillion dollar figure?

        1. A couple years ago I commented that it was minimally $4 trillion and possibly as much as $10 trillion. I went by the insured deposits at the top 10 banks and the top 100 banks.

          The problem with creating $4 trillion in new cash all at once is the market will raise the interest rates – and FedGov can’t possibly repay even at these miniscule interest rates. And no incumbent wants to be in office when that inevitably happens. Thus we get can kicking.

    2. Dick, Krugman’s written about this extensively (I know, I know). Economists concur that there was a hole far more massive than the $800B.

      The fact of the matter is, as hard as it is for me to say because I really can’t stand the guy, but Krugman was right about this one. But only in principle – in practice, his stimulus plan would have been as bad or worse than the Democrats.

      OTOH, my stimulus plan would have been pro-growth: massive tax cuts (complete repeal of FICA taxes), massive cuts in business regulation, and a massive, multi-year roads/infrastructure program. Whoever didn’t get a job on the private sector would have been fixing our aging highways and bridges, cutting fire breaks in forests, etc. America would have been richer, people would have been employed and spending money, businesses would have expanded.

      Instead, we took half measures. And failed.

      1. I’m not saying that we weren’t in bad shape. I’m just trying to find out how much money Tony thinks we should’ve spent. From his response, it looks like he would have spent an additional $2.2 trillion. As if a $3 trillion hole was sucked out of the economy and you could just dump another $3 trillion in the hole to make it right.

        Also, where did that figure come from? I was just wondering because last week he stated that the Bush tax cuts represented $3 trillion in lost revenues. Coincidence?

        1. This stuff about a “three trillion hole” in the economy is nothing but another Tony lie; it’s a figure that he pulled out of his ass.

          Three trillion dollars is more than twenty percent of our GDP for crying out loud. Even at the absolute deepest point of the recession, tax revenues were only down by half a trillion dollars from where they were at the peak. Now granted, $500 billion is a lot of money, but it’s nowhere near three trillion. Furthermore, total GDP only went down by around $250 billion! If there were truly a $3 trillion hole in the economy filled with $800 billion in stimulus, then GDP should have gone down by a lot more than just $250 billion.

          Someone is lying here, and you can probably guess who it is.

  29. Where are the jobs those cuts are supposed to create?

    I am perfectly willing to abjure claims of a causal relationship between low taxes and high employment, if you are willing to do the same for high taxes and high employment.

    There were many other variables in play during the Eisenhower years; high employment in the fifties was not a “result” of confiscatory marginal tax rates.

    I believe low taxes are a discrete benefit, based on their own merits.

    1. That’s the answer I was looking for, thank you. I don’t make any causal claim about high taxes and employment; I’ve said over and over that the data suggest that there isn’t even a correlation between tax rates and macroeconomic indicators like employment. My only point regarding taxes is that if you are actually concerned about the debt then the honest thing is to accept that higher revenues is part of the equation. I’d be fine leaving rates where they are and adding to the debt in order to attempt to stimulate aggregate demand, rather than depressing it by reducing spending power on the part of lower-income people even more than it already is.

    2. Practically no one was paying taxes at an EFFECTIVE rate anywhere near what the NOMINAL tax rate was in the 1950’s anyway,

      The liberals who keep yammering about the “good old days” of the 50’s in conjunction with the tax rate always skip right over that inconvienent little fact.

      The only tax rate that counts is the EFFECTIVE tax rate after all the tax shelters, deductions and credits are taken into account.

      There were far more tax shelters and deductions avaialable back then than there are now.

      1. and therefore plenty more “old rich” than “new rich”.

      2. and no Medicare or Medicaid.

  30. if you are actually concerned about the debt then the honest thing is to accept that higher revenues is part of the equation.

    If ALL current government spending were equally important (or useful), there would be some validity to this claim. Unfortunately, this is not the case.

    1. You’d have to cut about 10% of gov’t spending to get a balanced budget. I think that might interfere with programs a lot of people find useful. You admit above that low top-tier tax rates are not justifiable in fiscal policy, but only I presume on moral grounds.

      But this is the thing: being hysterical over national debt and saying we have to do something is to be concerned with something libertarians don’t usually care about: the greater good. I fail to see how you can call for sacrifice from the poor and elderly but none from the people whose lifestyles won’t be impacted a single bit. Your moral excuses fail once you start concerning yourself with shared sacrifice for the greater good.

      1. It’s easy when the things you are asking people to sacrifice were obtained through illegal and immoral means (i.e. redistribution of wealth). I don’t feel bad for asking a criminal to give up his loot.

        1. So since the only redistribution that’s been happening for 30 years is upward, who exactly do you want to haul into jail for looting here?

          1. Apparently in your world Social Security and Medicare don’t exist. And even though you’re a dishonest fuck, you know damn well everyone here is opposed to all subsidy schemes.

            1. But you seem unwilling to acknowledge or unaware of all the ones that benefit people who aren’t old or poor.

              1. That’s because you’re a dishonest fuck, like I said. Feel free to peruse the archives here.

                1. It’s all in theory. For the poor and old, you have specific things in mind. The general assumption is that any rich person or entity earned that wealth unless proven otherwise. That way you can ignore all the structural factors that led to that accumulation and pretend that it’s a fair and free market–until it’s inconvenient to do so.

                  1. Feel free to name those factors. Corporate subsidies, ag subsidies, bailouts, Federal Reserve policy, etc are easily identifiable.

                    1. See, I have specific policies in mind for everyone. Now stop lying.

                    2. Good, now go tell your Republican cohorts that they’re being evil looting socialists for refusing to address tax code loopholes and corporate subsidies.

                    3. Like I said, read the archives here, you dishonest fuck.

      2. Cut the benefits at the TOP end, and you won’t have to worry about the truly-needy at the BOTTOM end.

        How much X poverty level do you want as a threshold, anyway?

  31. What’s the TSA’s budget?

    We could tell all those worthless motherfuckers to not come to work tomorrow.

  32. You admit above that low top-tier tax rates are not justifiable in fiscal policy

    Like fuck I do.

  33. You’d have to cut about 10% of gov’t spending to get a balanced budget.

    Funny, I thought we were borrowing 40% of our spending.

    1. Sorry I meant to say 10% vs. GDP–a massive and unrealistic cut.

    2. Which is to say, you want to take 10% out of GDP in order to get spending in line with revenues, and the alleged resulting “confidence” will create more than 10% GDP growth? The claim is laughable on its face.

      I just want one honest libertarian to admit that fiscal policy for the greater good (debt reduction) is not the goal here. You want to force a crisis for the purpose of enacting your social spending agenda (gutting it). Just admit it.

      1. If you don’t think tax cuts accelerate the pace of economic growth, you’re out of your mind.

        Barack Obama is fighting to raise taxes in the face of tepid growth–and he’s completely out of his freaking mind.

        1. Tax cuts do have some multiplier effect, so thank you for acknowledging Keynes, even though you’re only doing it when it’s convenient for you. The biggest bang per buck is on cuts to lower-income people. Cuts (or hikes) on the wealthy have practically no effect on economic growth, which is a fact backed up not just by economic theory but common sense–the point is stimulating aggregate demand by increasing consumer spending. Tax cuts for the wealthy mostly go into savings or other personal investment, not spending.

          Obama is only calling for raising taxes (the wealthy’s taxes–the ones with negligible effect) because the GOP is screaming hysterically over debt. He’s asking them why only Medicare and Social Security recipients should have to sacrifice and no one who can actually afford to.

          1. “Tax cuts do have some multiplier effect, so thank you for acknowledging Keynes, even though you’re only doing it when it’s convenient for you.”

            I’ve acknowledged the wisdom of Keynes several times in this very thread–the resemblance to Keynes of what Geithner and Obama have done is only cosmetic. Keynes was nowhere near as dumb as Obama’s economic policies make him seem.

            “the wealthy have practically no effect on economic growth, which is a fact backed up not just by economic theory but common sense”

            Patently absurd.

            The wealthy you’re talking about are the people I raise money from to do real world economic development.

            They’re the entrepreneurs who start or shut businesses–who hire more people to expand. They’re the people who buy the boats and luxury cars and RVs and airplanes that so many people depend on for manufacturing jobs and for working as mechanics, etc.

            Class envy isn’t an economic policy. It’s just class envy.

            I haven’t raised a dollar yet from an investor who didn’t want to know what his return was likely to be before he invested. Why wouldn’t slashing their take home pay effect how willing they were to make riskier investments?

            The closer you shave the return on a relatively risky investment to the return on a relatively sure thing like a treasury? The less money there will be invested in hiring enterprises by investors.

            Expanding your business by hiring more people or opening a restaurant? Is inherently riskier than buying a treasury. Why actively discourage investors from making the investments that hire more people?

            Answer #1: He’s a callous politician who’s playing to the class envy of the idiot masses.

            Answer #2: He’s really so dumb that doesn’t know what he’s doing–and that it will hurt the unemployed and marginally employed.

            1. All of your anecdotal evidence for why cutting taxes on the rich spurs job growth is obviously contradicted by the plain facts of the world. Taxes are low, very low–where are the jobs?

              No realistic tax change will alter a wealthy person’s lifestyle OR hiring practices a single bit. Employment goes up when there is demand for workers. A few more pennies in the pockets of the CEO has nothing to do with that.

              1. Taxes aren’t very low.

                It costs more than $50,000 a year for an employer to pay someone $35,000 in take home pay–and because of ObamaCare those costs are set to rise.

                The question on the table isn’t even slashing taxes to spur job growth either. The question is whether to keep tax rates where they are–or to raise them! …which is what Barack Obama is trying to do.

                That’s why he’s holding up the budget cuts. Because despite the unemployment rate and tepid economic growth, Obama insists on raising taxes.

                He’s either a demagogue or a moron.

      2. So, Tony, you propose a conundrum

        (1) We can’t run a balanced budget, because doing so would require either (a) massive spending cuts that would crater the economy or (b) massive tax hikes that would crater the economy.

        However,

        (2) We can’t run a deficit forever, because of the mathematical fact that the interest on an ever-increasing debt will eventually eat the economy.

        So, thanks to deficit spending, we are now officially, inevitably, and completely fucked.

        Is that about it?

        1. No. Fix unemployment (with increased short-term deficit spending) and you go a long way toward fixing debt. A lot of the budget imbalance is due to decreased revenues (and increased spending, i.e. unemployment checks) from all the people out of work.

          1. Unemployment isn’t fixed by government spending. Those people need to be doing productive work. …work that adds to the economy. Work that customers will willingly pay for.

            The stimulus was mostly used by the states to plug their budget gaps–and keep unproductive government workers on payrolls.

            Ultimately, the solution to unemployment isn’t a proliferation of parasites. It’s people being hired to do productive work–by productive companies with customers.

            One way to accomplish that is by tax cuts. Not just corporate tax cuts (although that’s necessary), but by taxes on marginal rates–which make unemployed people less expensive to hire.

            Slashing capital gains taxes to encourage investment makes a lot of sense too–President Obama is fighting right now to effectively raise capital gains taxes by sun setting the Bush tax cuts. …which is unbelievably stupid.

            He’s either so callous, that he’d rather play to his base and raise taxes on the wealthy–even if ends up hurting the unemployed? Or he’s so dumb, he doesn’t realize how destructive what he’d fighting for will do. By calling him callous and calculating, I’m giving him the benefit of the doubt.

            1. Unemployment isn’t fixed by government spending. Those people need to be doing productive work. …work that adds to the economy. Work that customers will willingly pay for.

              This is an ideology-based opinion. What does the demand picture of the overall economy care if the buyer is private citizens or the US government? I’d rather more private hiring and thus more private demand was happening, but it’s not, and that’s why government’s job is to fill in the hole. No amount of tax cutting for the rich will accomplish this–they’re already at historic lows and they aren’t causing any uptick in employment.

              Obama is only proposing raising those taxes that don’t matter with respect to economic growth, and that’s only because Republicans are insisting on budget austerity (which necessarily entails raising taxes, despite their lunatic assertions).

              The benefit for Obama is we get to go into 2012 with Republicans defending tooth-and-nail every last cent of tax cuts for the rich when THEY are the ones telling us we have to sacrifice for the greater good. Of course it’s a political boon to Obama.

              What’s left out of this conversation is the fact that Republicans know this, and the primary factor behind their unwillingness to raise the debt ceiling is that they don’t want to give Obama a political win.

              1. I’d rather more private hiring and thus more private demand was happening, but it’s not,

                Yeah, because taxes and regulations are high.

                We are 180 degree from where the country started – low regulation on everything but banks has morphed into high regulation on everything but banks. The FIRE economy, which is nearly as unproductive as government is still too large a sector.

                Government may be necessary, but from an accounting perspective it is 100% overhead. If you increase overhead more than everything else you get lower productivity.

              2. “This is an ideology-based opinion.”

                There’s nothing ideological about it.

                Government employees’ salaries come from money that was skimmed off the salaries of people who were doing productive work for willing customers.

                That’s a fact–not an opinion.

                Here’s another fact: If you have too many parasites and not enough host? The host dies. …and then there’s nothing left for the parasites to feed on.

                I talked about Sweden upthread on that count. You should take that to heart. There’s an economy run by parasites–parasites who aren’t so dumb. Parasites who are obsessed with keeping the host alive–unlike Obama who doesn’t seem to realize there’s any connection at all.

                1. Government employees’ salaries come from money that was skimmed off the salaries of people who were doing productive work for willing customers.

                  Used to believe this myself years ago… now freely admit I was wrong.

                  Money (post 1971) comes from government spending. The money we use to buy bonds and pay taxes comes from government spending. The money we use to hire employees and buy food comes from government spending.

                  However, the real goods and services that underpin the economy are a different story entirely. Those are not, and should not be, primarily derived from government action.

                  But it’s unfair (and wrong) to say that government workers are merely parasites, “taking money away” from private sector employees and other taxpayers. Say, rather, that they are involved in an enterprise which, however inefficiently, attempts to increase overall welfare or solve particular problems at a national level.

                  Now, you and I will have stark disagreements with Tony as to how many problems exist for which a government program is the best solution. But that’s not the same as saying that government employees are taking money away from people in the private sector.

                  If there is massive unemployment, and I start a new federal program to fix a road, and pay a new ditch-digger for a week’s effort, and the ditch-digger spends that money at the local grocery store, everyone is better off. There is a question as to whether everyone could have been even more better off with a different balance between public and private endeavor… but that’s a different question.

                  1. If there is massive unemployment, and I start a new federal program to fix a road, and pay a new ditch-digger for a week’s effort, and the ditch-digger spends that money at the local grocery store, everyone is better off.

                    False. Otherwise, why not just make everyone a government employee, digging ditches and filling them back in?

                  2. Say, rather, that they are involved in an enterprise which, however inefficiently, attempts to increase overall welfare or solve particular problems at a national level.

                    That is not a given at all, since politicians respond to political incentives.

                  3. “But it’s unfair (and wrong) to say that government workers are merely parasites, “taking money away” from private sector employees and other taxpayers.”

                    I might agree if we were speaking about government employees and their jobs throughout the history of mankind.

                    I might agree if I had been talking about all government employees everywhere.

                    But I was talking about the government employees who were kept on the job for the sole reason that the stimulus money was coming in.

                    Those state government employees who were laid off once the stimulus money stopped coming in?

                    They were parasitic organisms from an economic perspective.

                    They have value as human beings, and Jesus died for them. …but they weren’t adding to the economy–they were parasites on the economy.

                    They were economic leeches.

                    There’s no doubt that economic leeches are better off when they’re overpaid and add nothing to the economy.

                    There’s also little doubt but that hundreds of thousands of more could be laid off–and their absence would be good for the economy. Instead of that tax money going to pay for unproductive government work? It would be kept by the entrepreneurs who would expand their businesses and invest more of their money in economically productive activity.

                    Some people are better off when they’re overpaid to do work that isn’t particularly beneficial to the economy–but overpaying people to do work that isn’t particularly beneficial to the economy is not the long term solution to our unemployment problems. …like Tony was apparently advocating.

                    That’s the road to making the economy worse from a long term unemployment perspective.

                    1. Teachers and firefighters are useless parasites? But hedge fund managers are virtuous producers? Strange planet you’re on.

                    2. I didn’t say firefighters or teachers were useless parasites–I said that skimming the productive output of hardworking economic contributors and squandering it on government employee parasites by way of government largess…

                      Is not the solution to unemployment–despite your insistence to the contrary.

              3. Government buying shit from itself = no net gain, Tony.

                That would be like hiring yourself, but not paying yourself anything for it.

              4. “What does the demand picture of the overall economy care if the buyer is private citizens or the US government?”

                What does the demand picture matter if it doesn’t match up with some sort of notion of utility, if not justice?

        2. You’re wrong about #2 Dean. You can continue to run deficits forever as long as the economy keeps growing. In fact, you must do so, or cause a depression. Fiscal deficits produce the monetary expansion necessary for a growing economy. A BBA would be a disaster because it would cause a deflationary depression (and running a surplus would be even worse).

          Every dollar of deficit is one dollar of net financial assets injected into the economy. By contrast, every dollar in surplus is one dollar removed from the economy. That’s axiomatic. Misunderstanding here leads to all kinds of fiscal policy errors.

          1. Deflation is not to be feared. The “death spiral” is superstitious bullshit.

          2. You can continue to run deficits forever as long as the economy keeps growing.

            That implies leverage is constant or decreasing. Once leverage begins increasing you cut into productivity and you have to reduce deficits to increase productivity.

          3. “Every dollar of deficit is one dollar of net financial assets injected into the economy”

            Really?

            Exactly where was the money that was borrowed to finance that deficit residing beforehand?

            1. Gilbert, I hate to break it to you but the US government creates money out of thin air. It really, really, really doesn’t need Chinese money, or American investor money, to borrow in order to spend. Go on over to http://www.moslereconomics.com and read the mandatory readings there.

              Money in a modern economy is like “points” at a bowling alley. You can make as many of them as necessary; more players come to play, more points are made available. You just have to guard against 1) cheating/theft, and 2) inflation.

              1. “Gilbert, I hate to break it to you but the US government creates money out of thin air. ”

                Indeed it does – but it doesn’t create any actual wealth.

                And since it doesn’t create any actualy wealth, all printing money does is reduce the real value of the currency. And that is not one iota different than financing something with a direct tax.

          4. Bullshit. Without government intervention, there is a natural decentralized counter-cyclical measure called “savings”. Times are good, people save. Times are lean, they bite into savings. Until government fucks around with the system, and then tries to replace it with an artificial organ that is a complete failure.

  34. The sad story of the federal budget is online here:

    http://www.whitehouse.gov/omb/budget/Historicals

    Looking at the past decade, the problem is clearly spending, not taxes.

    FY 2011 receipts are $2.17 trillion, $20 billion higher than they were in FY 2005. FY 2011 spending is $3.82 trillion, $1.35 trillion higher than they were in FY 2005.

    Federal spending as recently as FY 2001 was “only” $1.86 trillion. Spending for FY 2011 will be more than double that. Federal receipts during that time have increased by $180 billion, despite the Bush tax cuts and a massive recession.

  35. Shorter Tony:

    “I don’t hate those fucking evil rich people! What ever gave you that idea?”

    1. They don’t need my hate, and they certainly don’t need your undying support. They will be fine. You guys ever gonna put aside your ideological slavishness to wealth to concern yourself with someone else’s welfare for a change?

      1. At first they came for the wealthy and I did not speak up, because I was a slave to envy and greed and, frankly, was hoping I might get a cut of the take.

  36. To all those who hate on Tony:

    Tony is actually a rather intelligent and articulate spokesman for the dominant (i.e. statist) viewpoint in most things. And he is a reasonably polite interlocutor. In fact (and I suspect many of you would admit this after some introspection), we need people like Tony here to argue with – to strengthen our arguments for liberty and prosperity.

    I like to think of Tony as a “friend” in the sense of someone who is intelligent and engaged enough to dispute with us about these important issues, and who we can count on to show up and take the other side.

    I think the Reason comment boards would be a worse place, not a better place, without Tony.

    1. Much appreciated. What I often fail to acknowledge is that often I’m merely playing devil’s advocate. I try not to have too many deeply held beliefs, if I can help it.

    2. Oh please. Tony is throughly dishonest. All his opponents are either evil or stupid or lying. Count the number of times he accuses people of regurgitating Republican talking points on this thread, or “licking Republican cock” as he put it.

      1. You could be arguing with shrike or the derider, or, god forbid, rather. Tony seems positivly pleasnt in comparison.

    3. Tony is actually a rather intelligent and articulate spokesman for the dominant (i.e. statist) viewpoint

      I thought that was role you played here.

    4. Now you’re starting to come off like a concern troll.

  37. Considering your slavish devotion to the idea of running the printing presses at top speed forever, your affection for little Tony is unsurprising.

  38. I think the Reason comment boards would be a worse place, not a better place, without Tony.

    My concern is for my family and friends liberty. I couldn’t give a fuck about the health of the Reason comment board.

  39. Every dollar of deficit is one dollar of net financial assets injected into the economy.

    You’re as fucking hopeless as your little pal.

    1. Every dollar of deficit is one dollar of net financial assets injected into the economy.

      Thats actually true if you simply ignore all the negative concequences of deficit spending.

  40. Wants are infinite, but they also tend to be exclusive.

    If there is a difference between Blinder and Krugman (even though they both teach at Princeton University), however, I would say that Blinder believes that any “jobs program” would provide temporary relief while Krugman seems to be a True Believer that new government jobs would promote new spending which would give the economy what he calls “traction” to move on by itself. What neither person seems to understand, however, is that unemployment is a symptom of the current economic problems, not a cause.

    Now, to a certain extent, Krugman kind of understands this, but only on a most superficial and, frankly, circular basis. In Krugman’s analysis, spending creates jobs, but then people with jobs also spend, so if the economy suffers from a lack of spending which causes people to lose their jobs, then the government should start spending so that people can get their jobs back so they can spend.

    Neither person seems to have a clue as to what an economy really is, and neither seems to understand even the most fundamental basis of production. To them, an economy is something that just happens; spend the money and an economy magically appears. And if an “economist” cannot even understand an economy or only can explain its workings in the most superficial and mechanistic fashion (Y = C + I + G), then he or she pretty much is incapable of understanding that a “job” is not an independent and random creation of the state, but rather the employment of factors of production that is purposeful in nature.

    To Keynesians such as Krugman and Blinder, factors of production really are homogeneous; as long as money is spent, it will flow evenly to all of those factors that currently are unemployed and lift them back into employment at the same time. Yet, one cannot understand the dynamics of a recovery unless one understands the simple fact that factors of production are heterogeneous.

    This goes back to the Keynesian view of the boom, which Keynesians see as a good thing. When the bust occurs, argue Keynesians, government must spend to “fill the hole” (in Krugman’s words) in order to keep boom conditions flowing. However, the booms do not go off the rails because of a lack of spending per se, but rather because the boom is based in large part upon spending and investment that is directed toward lines of production that cannot be sustained because consumer spending is trying to move in a different direction.

    The contraction, or recession, actually is a corrective action in which the malinvested resources no longer are receiving the same amounts of investment money, with entrepreneurs looking for those lines of production that are sustainable, given consumer preferences and choices. The bitter irony is that the government’s “stimulus” actions, along with its regulatory initiatives, are trying to keep resources in those unsustainable lines of production and actually are blocking a recovery.

    Furthermore, President Obama has painted himself into a corner. By continuing the Bush initiatives to deal with the original crisis and prevent the necessary liquidation of some lines of production, Obama also has guaranteed that an ensuing correction will be much worse than it would have been had the economy been able to take a corrective course four years ago, and I think that he and his advisers know it.

    Unfortunately, Obama continues to insist that he can do the impossible: direct investment into lines of production that are unsustainable in a free market (such as “green energy”) and blame Bush and the Republicans for everything. (And Bush and the Republicans bear a lot of responsibility, but Obama is in his third year of office and he only has made things worse.)

    The sad fact is that the American economy has not yet seen the very necessary economic correction that needs to happen before we can have a real recovery. The political classes have done all they can to block the correction, which means that we are going to have the worst of both worlds: economic stagnation. There is a way out, but neither the “elite” economists nor the people in political power are willing to take that route, and everyone else will pay for their foolish choices.

    1. GM being a poster child for this foolishness. Propping up the corpse of old GM, to these people, is a great success. Letting nature take it’s course would be a disaster.

      1. Do you guys fixate on GM because–among the many bailed-out companies–it was done by a Democrat? Just wondering.

        1. GM and Chrysler should have been allowed to fail.

          Studebaker, Packard, Willys, Nash, Hudson, Kaiser-Frazier, Crosley… none of them got their asses bailed out by the taxpayers. Think of the tens of thousands of jobs lost when those companies went toes-up.

          Okay… Nash and Hudson became American Motors, but they were bought by Chrysler back in the 90’s. But AMC wouldn’t have survived on its own, nor would it have gotten bailed out.

          But the theory still holds.

          1. To answer your question, personally:

            It wouldn’t have made a shit difference to me if McCain had won and bailed out GM and Chrysler.

            I can’t speak for anyone else, but I’d say some variation of that sentiment is prevalent.

            1. It was so unfair.

              Raiding the pay checks of the working poor to bail out overpaid UAW workers.

              I can throw everything else out the window on that one. The thought that people who make a fraction of what the average UAW worker makes–are still paying for the GM and Chrysler bailouts out of their paychecks? Makes me want to wretch.

              It’s so fundamentally unfair.

  41. The Keynsean Kool Aid drinkers are like someone who claims he can raise the water level in a bathtub by scooping water out of the front end of the tub and pouring it back in the back end of the tub – after he’s spilt about 1/3rd of it on the floor.

  42. “Precisely who is calling for actual budget cuts right now? The correct answer is zero.”

    Mostel? I thought he was dead.

  43. Another Fantastic Tony construct: Austerity is the same as raising taxes.

    Tony stop pretending you know or follow Keynes. You will never support government spending cuts, no matter how good the economy is. Nor do you care about employment rates, your favourite socialist countries such as France have had high unemployment rates for decades, that is simply the price of socialism.

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