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The law of unintended consequences rears its ugly head again, eh?
You haven't talked to many bankers & investors, I presume.
That is one problem, not the problem.
No argument about that.
We don't have a Social Security surplus now? That is news to me. Social Security is solvent, but it needs to be fixed in the future. That is why I opposed Obama's idea of giving us a "payroll tax holiday", which exacerbates its problems. The most important fix that we need to accomplish now is to allow Medicare under Part D to negotiate down the price of prescription drugs. Republicans (with Democratic complicity) passed that hummer in 2003, and it was done in pure Republican style--let private industry dictate its terms. It only went into effect in 2006, but it is doing tremendous damage to a very good program.
I did mention raising more money in tax revenues, but, for some very stupid reason, politicians are terrified of being accused of raising taxes. Government is supposed to be free, don't you know? Secondly, if we can grow the economy, that will produce increased tax revenues. Thirdly, we need to wean ourselves off of the manufacturing of military hardware, and that must be done gradually, not precipitously (as most liberals seem to want). We need to produce more goods that are more useful to ordinary citizens.
I have no trouble with regaining higher tax rates on high levels of income and on interest income. It will help a lot just to let the Bush tax cuts for the wealthy expire. But an expanding economy will help us work down the debt. When Clinton left office, we were predicting a balanced budget by 2012. That would have caused problems, because so much of the world's economy depends on us borrowing money. Other countries like to buy our treasury bonds, for some reason. (Well, no thanks to Republicans this year, whose obstructionism gave us a huge black eye on that score.)
It makes perfect sense to the Goldman-Sachs trainees who seem to always be whispering in the ears of presidents. What can I say? We live in an imperfect world. Without some injection of cash from the government, we would have had instant economic chaos. "Too big to fail" means that you and I get screwed if it fails. Some economic reform has passed Congress in the past, but the current Congress is doing everything it can to gut it. Not funding bills it passes is one of the biggest flaws in the way Congress works. There needs to be a Constitutional amendment that forces Congress to fund (i.e. guarantee payment of) everything it passes. Oh, wait. That was the 14th Amendment. It's just that nobody seems to have the stomach to enforce it *cough*Obama*cough*.
In the short term, it does, but the market has a marvelous method for correcting Wall Street nail biters. When demand increases, their cherished ideological delusions vanish. When people buy things, that drives investment and economic expansion. After all, why does anyone ever borrow money? Not everyone invests sensibly, but you borrow money to invest in a future where you have the means to repay it and still live prosperously. The government still has the ability to borrow money at bargain rates, and it has no choice but to borrow.
This is often said, but it sounds like mere mantra, rather than the result of careful analysis.
It strikes me more as a proffered rationalization to hand money to connected businesses. As an alternative, the money
The short term becomes the long term because those factors drive the market. It reminds me of the silly old joke....In the long term, we're all dead.
That misses the point that whatever increases costs & risk, also increases interest rates & makes borrowing more difficult. It works this way in
I'm glad to see you finally quoting John Maynard Keynes approvingly. His original quote was: "The long run is a misleading guide to current affairs. In the long run we are all dead." What he meant by that was that inflation would not cure itself without short term government intervention.
Well, you are missing a couple of points here. One is that the government can borrow money so cheaply now because US treasury bonds are considered the safest place to park money. That is where people who want most to avoid risk put their money. The only thing that has threatened it lately is the intransigent behavior of Congressional Republicans, who unnecessarily brought us to the brink of default. Secondly, you are missing the real point here, which was that the conservative idea (bought into by both Republicans and moderate Democrats) was to give all that money over to the banks in order to make them feel good about lending money again. What the giveaway did was it prevented a collapse that would have had a domino effect on economies around the world, not just in the US. We still face that danger from the mess going on in Europe with Greece and Italy. But the banks are still free to gamble with it rather than put it back into productive use.
I agree, and that is also the case in private industry. In a corporation, it is considered almost criminal not to spend the entire budget you've been allocated, even though everyone (who knows how to bargain) pads their budget requests, knowing that management will slash the requests under suspicion that they have been padded. :cover: I've been on that merry-go-round to many times. Nevertheless, there is always going to be waste, fraud, and abuse. When budgets and programs are slashed with a meataxe, it is not always the most meritorious ones that survive, but the most entrenched ones. The real world of big business is messy, and that of big government no less so. There is no simple solution, except in Ayn Rand's novels.
Not quite. We all want to cut government waste, which means making government smaller. We just have different ideas on what to cut and how to cut it. Ironically, when Al Gore was Vice President, he led a successful effort to reduce the size of government. Imagine that--a Democrat actually cutting unnecessary bureaucracy.
Thanks for the compliment. I respect you, as well. The answer is no, I do not think raising taxes will solve the country's problems completely. Nor have I argued that. I have argued that it is only part of the solution. We certainly need to cut waste and abuse, which is a constant struggle. I would like to see less invested in the military budget and more invested in education and scientific research. But let's be realistic. There is no solution that fails to include tax increases of some kind. I would rather that they not fall disproportionately on those who can least afford them. That would be both inhumane and counterproductive. It would further depress the economy to shift more wealth into the hands of people who are erroneously labeled "job creators" by conservative propagandists. The real job creators are those who purchase goods and services, not those who invest only when demand rises to justify it.
Actually, I don't think that we should ever "balance the budget". That carries its own problem, as people use treasury bonds as a vehicle for ultra-safe investment. However, I am somewhat bitter that we could have balanced the budget by now if a certain Republican president had not found a way to give vast amounts away (mostly to the wealthy), drag us into two completely unfunded wars, and saddle us with a poison pill "Part D" Medicare boondoggle. I'll say one thing for Reagan. He raised taxes and expanded government, even though he still managed to run up a huge deficit. Bush's only redeeming feature is that he spent some money to combat the AIDS epidemic in Africa. He made an utter mess of everything else.
Actually, I think that it does, but the deficit is not really our biggest problem at the moment. It is putting people back to work so that they can buy the goods and services that businesses serve up. If people don't have the money to pay for things, then all the cash in the world won't save us if all it does is line the pockets of 1% of the people.
Have a source for the underlined part? (I'm skeptical.)
I don't miss your point. I just consider it irrelevant. No matter how cheap the money, massive borrowing has deleterious effects which government ignores at our peril.
Ho hum....I'm numb to partisan blame..... "If only that evil other side did as we want, everything would be all hunky dory!"
You missed the fact that I didn't miss that point. Rather, itwas my point that the massive give-away didn't make borrowing easier.
Where is the analysis to support this assertion?
There are potential problems with that. Right now, banks aren't lending. So we go to private equity firms...you know...the ones financed by rich guys.
Wikiquote to the rescue: John Maynard Keynes.
And I get your point, as well, but the more serious peril in a recession come from making money more expensive. You want to do that only when the economy is overheating. That is why the fed has set its base rate to essentially zero. Monetary policy has bottomed out. Only fiscal stimulus has a real chance of putting people back to work. The holy market, peace be upon it, is only able to react positively to a rise in demand. Dumping wealth in the pockets of the super-wealthy has already proven ineffective. Why continue that policy and expect different results?
I know, and nobody that I'm aware of sees the Democrats as blameless. However, there is a difference of approach between the two parties. As I've said in the past, you strain too hard to maintain that neutral perspective on who merits blame. Obama wants to position himself in the middle and construct some kind of grand compromise between the parties. His compromises and half-measures have kept the ship afloat, but just barely. When it comes to fiscal policy, libertarians are not really neutral. They tend to swing to the Republican side. I fear that that direction will ultimately push us over the edge of an economic cliff. Confidence in the economy will not be restored by cutting government programs. The markets will just get worse.
That giveaway did prevent a more catastrophic collapse of our economy, but it has not actually been as "massive" as was once believed. It never reached the level of $700 billion, and the final cost looks to be more in the area of $19 billion. But you are wrong that it did not make borrowing easier. It may not have worked out for small businesses and individuals, but the crisis of having all those "toxic assets" on the books of lending institutions made it almost impossible for them to lend any money out. One immediate effect was that large employers would be unable to meet their cash obligations, including payrolls. That would have had a chaotic and depressive effect on the economy by precipitously reducing the demand for goods and services. Millions could have faced layoffs in a short amount of time. Hence, we were really staring into the maw of another Great Depression. That didn't happen, so it is easy to look back and say that the panic was unjustified. It was a very real possibility. The TARP saved the day by wiping those "toxic assets" off the books of the lenders, and they did begin lending again.
And I could just as easily create a false analogy to support any conclusion I want. That's why analogies are considered logical fallacies when used to argue a point. The reality is that the real losses to taxpayers from the TARP will be far less than most people believe. The government stands to get most of the money back, and that has been happening. If you want an analysis to support the assertion that the TARP staved off an economic collapse, it is hard to know where to begin, except that any reference to economists who disagree with your opinion will likely be dismissed out of hand. For example, it appears that you believe almost nothing that economists like Krugman have to say about it, even though he has also been a big critic of the way the TARP was handled. He still says that doing nothing would have been worse. You would probably agree with most of his criticisms, but you don't take seriously the probability that we would have ended up in a depression without the TARP.
Close enuf to what he said....
I agree, but money is becoming more expensive as a result of government regulation, borrowing, taxation, policy dithering & printing
This is why I've opposed bail-outs & stimulus.
Such personal observations are about as useful as my pointing out that you're too much of an apologist for lefties, & too ready to blame Publicans.
I disagree.
I find this unsupportable & unlikely.
My experience is otherwise. Interest rates are climbing & loan qualification is becoming more difficult & more costly.
"May not have"? It's rather clearer than that for me.
There are better ways to address the problem than handing mountains of money to banks who suffer from weak borrowers. Bailing out the
It ain't over yet, so it's too early to crow about success.
Is the current status of lending your idea of success?
That seems a non sequitur.
If they have evidence based cogent arguments, feel free to present them.
His mere say so is insufficient. If he can't present a reasoned argument, I'll not take his word on blind faith.
Ain't nobody without bias.
Kathryn said:
