Now that I have the Syrian stuff out of my system I will return to righting the wrongs put forth by the lunatics on the Right…..and now I bet you think this will be some rambling about the IRS or the DOJ and AP…..SURPRISE! I will those for lesser minds!
Later this year the circus will return to the budget and the deficit and there is something you need to know………
This is an economic post….I give warning because when it is talked about too many people glaze over and move on…..why? They get all their info from BS sources……but to pretend that one knows all about politics without a knowledge of economics is just plain stupid…..and there are those that will not let facts change their position.
If you are smart enough to turn on your TV then you know all about the budget deficit and the debate around the issue…….if you are paying attention then you have heard all the flap about the debt as percent of GDP….how this is killing jobs and bankrupting the country……right? But there is a problem with this rhetoric……with all this choking debt the nation’s GDP is still rising, slowly but rising, 2.5% for the 1st quarter of 2013….now if the toilet math of the GOP were correct would not the GDP be dropping?
Well the GOP talking point that debt is 90% of GDP and economic growth will cease and may even start to decline…….they got this information from a report by two economists, Reinhart and Rogoff……..a good piece was written and cited on any given day but Repubs time after time…….the problem is…..it is WRONG!
Yes I said WRONG! Not mistaken but outright WRONG!
I will bet you think since you believe me a liberal that I will go about quoting economists like Krugman…..am I right?
Well, just like the Reinhart/Rogoff paper, you and your friends in the conserv movement…..would be WRONG! Yes, I emphasized the word WRONG!
………….the most recent period of 2000-2009, which in almost all cases will be the most relevant set of experiences with respect to current policy debates, average GDP growth when public debt is above 90 percent of GDP is higher than when the public debt/GDP ratio is between 60 and 90 percent. The findings in our paper are clearly not consistent with the notion that we consistently observe a sharp fall-off in economic growth when the public debt/GDP ratio exceeds 90 percent. As for the misconceptions concerning causality, I encourage people to read the contribution by my professor Arin Dube. His treatment of the topic is highly readable and offers strong evidence that causality runs from slow growth to high debt.
There is not one word in our paper which suggests that a high level of government indebtedness is never a problem. It would be absurd to think that governments never have to worry about their level of indebtedness. The aim of our paper was much more narrowly focused. We show that, contrary to R&R, there is no definitive threshold for the public debt/GDP ratio, beyond which countries will invariably suffer a major decline in GDP growth. The implication for policy is that, under particular circumstances, public debt can play a key role in overcoming a recession. The current historical moment, with historically high rates of mass unemployment in both the U.S. and Europe and with interest rates on U.S. Treasury bonds at historic lows, is precisely the set of circumstances under which we would expect public borrowing to have large positive effects, with comparably fewer costs. Moreover, it is precisely the set of circumstances under which we expect austerity to have substantial negative effects.
But do not take my word for this……..the PhD candidate’s findings are linked above……read it and decide……..I will also post this article in full in a latter post today….read it……
I realize that the mindless regurgitation on the right will not read this or embrace it….and most likely will not understand anything that is not boiled down to a slogan….I would like to believe that Conservs are not idiots just misinformed…..I said I would like to believe it….but I have seen nothing about them that would lead me to think better of them…..
We hear this daily……small businesses do not know what to do, the deficit will drown us, spending is out of control….I am sure you have heard all this before, possibly just yesterday and you will hear it all over and over and over….to the point that fear and paranoia will take hold and mistakes will be made….
Let’s look at a few things that so many people are missing in all this chest thumping and demands…..from an article by Paul Rosenberg…..
(1) The deficit is already shrinking rapidly. Writing for the uber-socialist rag, investors.com (“powered by Investors Business Daily”), in November, Jed Graham noted:
Believe it or not, the federal deficit has fallen faster over the past three years than it has in any such stretch since demobilisation from World War II.
In fact, outside of that post-WWII era, the only time the deficit has fallen faster was when the economy relapsed in 1937, turning the Great Depression into a decade-long affair.
(Of course, the history on this is quite clear: The 1937/38 recession was caused by FDR’s misguided policy shift to prematurely cutting back on government spending. FDR learned, reversed course, and recovery accelerated again.)
(2) Rather than being “out of control”, government spending growth is already historically slow. Under President Obama, government spending has grown less than 1.5 percent per year, compared to more than 2 percent under Nixon/Ford, Reagan and Bush II – all three two-year GOP presidential terms in the last 50 years.
(3) The US short-term deficit is overwhelmingly due to the Great Recession. The structural deficit – that part not due to the recession – is low enough that we can grow our way out of it: Once we’ve recovered from the recession, which is still our top priority from an economic perspective This was all explained recently at yet another “bastion of socialism”, Bloomberg View’s The Ticker blog. Long-term health care costs are a different matter – but they’re not due to Medicare per se, they’re due to the wildly inefficient nature of the US health care system, which spends far more per capita than other countries with better health outcomes. Obamacare has improved the efficiency, extending the life of Medicare, but much more remains to be done.
(4) Because interest rates are so low, government can now borrow at negative rates (adjusted for inflation), meaning that it’s actually very sensible to borrow more now to increase the speed that we get back to a full employment economy. It’s utterly misleading to compare a money-printing national economy to a household, but if we must, it’s like taking out a zero-percent loan to buy a home, and stop paying rent. In the right circumstances, more of the right kind of debt is exactly what you need to get out of debt. The 30-year rates are somewhat higher, but economist Brad DeLong has explained how government borrowing at those rates still amounts to that rarest of things for an economist – a free lunch.
The economy could be a lot better but it also is not in the crapper as too many people would have you believe……..the key is to look at ALL economic data not just the stuff that feeds your belief….I know that will be difficult but at least give it a try…..
All the negotiations are finished and no one is really happy with the deal made by our asshat politicians……but what do you really know about the deal that ended the hoopla? Not the talking points that your favorite politician or media outlet has told you……what is the end deal?
Time to learn………
There is good, bad and ugly in the deal……Michael Synder has summed it up very well…….
-One of the best things about the fiscal cliff deal is that income tax rates did not rise on the poor and the middle class. This is great news for millions of families that are struggling to make ends meet each month. A significant rise in income tax rates would have been crippling.
-The Alternative Minimum Tax will now be permanently adjusted for inflation. This is something that I had screamed about in previous articles. If an AMT fix had not been passed, approximately 28 million households would have been hammered with the Alternative Minimum Tax on their 2012 earnings.
-Millions of unemployed workers will continue to receive extended federal unemployment benefits. We probably cannot really afford to keep doing this, but at least now there won’t be millions of unemployed workers that suddenly have their only source of income shut off. The next trick will be to find jobs for all of those workers. Unfortunately, millions of our jobs continue to be shipped to the other side of the world.
-Payroll taxes are going up for every American worker. The fiscal cliff deal allows the 2 percent payroll tax cut to expire, and so now the average U.S. household bringing in about $50,000 a year will pay approximately $1,000 more per year in payroll taxes. As a result, it is being projected that U.S. consumers will have $115 billionless in disposable income to spend in 2013. Happy New Year American workers!
-The fiscal cliff deal did nothing about the new Obamacare taxes that went into effect on January 1st. Many of these taxes will hurt the middle class. To see an example of a receipt where a consumer was charged the new “medical excise tax” in Obamacare, just check out this article.
-The carried-interest deduction loophole remains intact, so incredibly wealthy hedge fund managers will continue to get away with paying very little in taxes. If the rest of us are being taxed into oblivion, then they should share in the pain with the rest of us. Of course I personally believe that the income tax should be abolished entirely, but none of our politicians seem interested in that idea at all.
-Income tax rates will increase for high earners. This will hurt a lot of small businesses. Many small businesses that earn more than $400,000 a year will now be faced with making some really tough choices. Some may have to lay off workers. The top rate will now be 39.6 percent, but when other federal and state taxes are factored in, many small businesses will now be paying a top marginal rate of well over 50 percent. That is absolutely obscene.
-A compromise was reached on the estate tax. The exemption was scheduled to fall to just $1 million and the rate was scheduled to go up to 55 percent, and fortunately Congress decided to do something about that. As I have written about previously, that would have been a disaster for many small businesses and family farms. As a result of the fiscal cliff deal, the estate tax will only rise from 35 percent to 40 percent. The exemption for individuals will be about 5 million dollars and for couples it will be about 10 million dollars, and those figures will now be indexed for inflation. A tax increase is never a good thing, but if Congress had done nothing things would have been far worse.
-The fiscal cliff deal contains a lot of pork. In particular, it contains provisions that extend specific tax breaks related to Puerto Rican rum, electric motorcycles, biodiesel and renewable diesel fuel, the film and television business, and motorsports entertainment complexes.
According to the Congressional Budget Office, as a result of this deal the U.S. national debt will be about $4 trillion higher a decade from now than it would have been if Congress had done nothing.
The deficit for fiscal year 2013 alone will be about $330 billion higher than it would have been if Congress had done nothing.
So this deal has made our debt problems even worse.
Right now, the U.S. has a debt to GDP ratio of about 103 percent. We are already well into the “danger zone”, yet most Americans still don’t seem very concerned about all of this debt.
The fiscal cliff deal contained hardly any spending cuts at all. In fact, there was a 41 to 1 ratio of tax increases to spending cuts in the deal. The Democrats definitely won this round. But of course they had most of the leverage. If Congress had done nothing, the middle class would have been absolutely devastated by all of the tax increases, and the Republicans were desperate to prevent that.
Now there is your deal……..and now we will be bombarded with the crap on the debt fight to come…….
Let’s make one thing clear at this point……..the debt debate is about money already spent….not money to be spent…..let them play you like a cheap drum…Hell, they have been playing you for years and you just smile and let them get away with it…….
Americans hear a lot about the taxpayers money and where it goes….Dems want it to go to infrastructure to try and create some jobs….Repubs want it to………thinking……thinking…..I am not sure where they want our money to go…..but according to them it is being wasted and at an alarming rate……but do you know, I mean really know where your money goes and for what?
The Center For Budget and Policy Priorities was broken it down for us mere mortals…..us unknowing peasants…….
- Defense and international security assistance: In 2011, 20 percent of the budget, or $718 billion, paid for defense and security-related international activities. The bulk of the spending in this category reflects the underlying costs of the Department of Defense and other security-related activities. The total also includes the cost of supporting operations in Iraq and Afghanistan, funding for which totaled $159 billion in 2011.
- Social Security: Another 20 percent of the budget, or $731 billion, paid for Social Security, which provided retirement benefits averaging $1,229 per month to 35.6 million retired workers in December 2011. Social Security also provided benefits to 2.9 million spouses and children of retired workers, 6.3 million surviving children and spouses of deceased workers, and 10.6 million disabled workers and their eligible dependents in December 2011.
Medicare, Medicaid, and CHIP: Three health insurance programs – Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) – together accounted for 21 percent of the budget in 2011, or $769 billion. Nearly two-thirds of this amount, or $486 billion, went to Medicare, which provides health coverage to around 48 million people who are over the age of 65 or have disabilities. The remainder of this category funds Medicaid and CHIP, which in a typical month in 2011 provided health care or long-term care to about 60 million low-income children, parents, elderly people, and people with disabilities. Both Medicaid and CHIP require matching payments from the states.
- Safety net programs: About 13 percent of the federal budget in 2011, or $466 billion, went to support programs that provide aid (other than health insurance or Social Security benefits) to individuals and families facing hardship. Spending on safety programs declined in both nominal and real terms between 2010 and 2011 as the economy continued to improve and initiatives funded by the 2009 Recovery Act began to expire.These programs include: the refundable portion of the earned-income and child tax credits, which assist low- and moderate-income working families through the tax code; programs that provide cash payments to eligible individuals or households, including Supplemental Security Income for the elderly or disabled poor and unemployment insurance; various forms of in-kind assistance for low-income families and individuals, including food stamps, school meals, low-income housing assistance, child-care assistance, and assistance in meeting home energy bills; and various other programs such as those that aid abused and neglected children.Such programs keep millions of people out of poverty each year. A Center analysis shows that government safety net programs kept some 25 million people out of poverty in 2010. Without any government income assistance, either from safety net programs or other income supports like Social Security, the poverty rate would have been nearly double in 2010 (28.6 rather than 15.5 percent).
- Interest on the national debt: The federal government must make regular interest payments on the money it has borrowed to finance past deficits – that is, on the national debt held by the public, which reached $10 trillion by the end of fiscal 2011. In 2011, these interest payments claimed $230 billion, or about 6 percent of the budget.
There you have an overview of where your money goes….now use this to help you decide where to place your vote….if the you need help, that is……
We all have that special place…the place we lived as a child or that place of the first kiss or our first sexual encounter or…..well a place that holds a special place in our hearts…..Mine is Spain…..I lived there twice in my life…once as a young teenager and then as an adult…..a place of great food, wine and beauty….and yes my first adventure in love and sexuality……..her name was Charlotte a French girl from Paris and a red head….in retrospect….that could explain my obsession with red heads…..whatcha think? I also worked as a researcher for a Spanish newspaper….so I guess Spain is a place that I watch fondly…….
Sorry I digress into my past……but Spain is a source of concern in the existing economic upheaval around the world, but especially in the ailing European Union.
You may remember all the hub-bub over the situation in Greece….well Spain is reaching that point, as we speak……observations of Gonzalo Lira…….
Spain’s jobs-scarce economy plunged back into recession in the first quarter of 2012 as employment slumped even further, the Bank of Spain said Monday.
Barely two years after emerging from the last downturn, Spain slid into recession again with two consecutive quarters of economic contraction, the central bank said in a report.
Gross domestic product fell by an estimated 0.4-percent in the first quarter of 2012 after a 0.3-percent decline in the last three months of 2011, the bank said.
Spain, whose unemployment rate at the end of 2011 was already the highest in the industrialised world at 22.85 percent overall and nearly 50 percent for the young, suffered a further sharp jobs decline.
The government forecasts the jobless rate will rise to 24.3 percent this year as the sagging economy struggles to absorb millions of jobs destroyed in the collapse of a property boom in 2008.
The European Central Bank had helped to ease market tensions, Spain’s bank said, alluding to the ECB’s decision to extend more than one trillion euros in low-interest, three-year loans to the region’s banks.
Spain’s economic woes are just the beginning…..and with their propensity for protests and not always the calmest of situations….. I look for rising violence and the new government, elected last year, to fall and chaos will reign…..kind of like Greece……
If this happens and I think it will what will happen to the country?
An opinion is that they will exit the Euro on a dead run……..
With a 24% unemployment rate that is rising, and over half of the young people unemployed, no politician in his right mind—especially a nationalist—will decide that even more austerity is the cure for the disease. One thing is cutting off the fat—it’s quite another to be cutting to the bone.
For Rajoy and de Guindos, it will be simpler to exit the eurozone, go back to the peseta, and devalue by 20% to 30% right off.
It is always easier for a politician to cut expenditures via devaluation than via nominal spending cuts. Since the Eurocrats won’t allow a 20-30% devaluation of the euro, and since Spain cannot really cut any more or find any more money in the bond markets, then the only thing left for it to do is devalue a currency that it controls.
On a personal note…..I would not cry over Spain leaving the EU….I remember it from my youth and would like to see a Spain that can be enjoyed and not feel like I was held at gunpoint by the EU.
Daily we are told all about the restructing that the PIGS of the EU are having to do….well Greece is not going well and could bottom out tomorrow and yet they, the EU keeps forcing governments to do what they want….Iceland’s population said NO and now Spain is flipping off the EU…..
As many readers will already have seen, Premier Mariano Rajoy has refused point blank to comply with the austerity demands of the European Commission and the European Council (hijacked by Merkozy).
Taking what he called a “sovereign decision”, he simply announced that he intends to ignore the EU deficit target of 4.4pc of GDP for this year, setting his own target of 5.8pc instead (down from 8.5pc in 2011).
He is surely right to seize the initiative. Spain’s economy will contract by 1.7pc this year under his modified plans and unemployment will reach 24pc (or 29pc under the 1990s method of counting). To compound this with manic fiscal tightening – and no offsetting devaluation – is intellectually indefensible.
There comes a point when a democracy can no longer sacrifice its citizens to please reactionary ideologues determined to impose 1930s scorched-earth policies. Ya basta.
“Spain and other nations in the EU are sick and tired of Chancellor Merkel’s meddling and Germany’s usurpation – with the help of Sarkozy’s France and their pretended “executive presidency” that does not in fact exist in EU treaties.”
“Rajoy must not retreat one inch. The stakes are high and the country is in no mood to suffer humiliations from a Chancellor who is amassing all the savings of Europe and won’t listen to anybody, as if she were the absolute ruler of the Union. Merkel and the Commission should think hard before putting their hand into the sovereignty of this country – or any other – because it will be burned.”
Before everyone starts blaming those damn socialists….Spain voted out the socialist government a couple of months ago and this government is more conservative…..
The EU is slowly disintegration ………who cares, you may ask? Just wait! When the world markets start a downward spiral yet again and you demand an explanation…….please do not forget….you had one!
….this whole nomination thingy is just mind numbing…..I have seldom heard such out lies and misinformation in a long time….but that is all a moot point….today I want to talk about protests……
Okay truth is I am an aging hippie and had spent many hours in protests over the years and I watched closely the protest by the Occupy movement…..the marches, the tent cities, the live mic check (brilliant idea), and so on….and I have thought how it could be made more forceful….a way to make one’s point without violence or other such distasteful tactics……
And then out of the dark came a great answer! As reported om the WaPo……
Three topless Ukrainian protesters were detained Saturday while trying to break into an invitation-only gathering of international CEOs and political leaders to call attention to the needs of the world’s poor. Separately, demonstrators from the Occupy movement marched to the edge of the gathering and engaged in a brief standoff with police.
The activists are from the Ukrainian group Femen, which has staged small, half-naked protests to highlight a range of issues including oppression of political opposition.
What’s the old say? “A picture is worth a thousand words”!
Okay, I would lying to say that the idea of topless women protesting would not be enjoyable….but besides the obvious, a perfect way to draw attention to the cause….you can bet your butts that photographers were falling all over themselves to get the shots…….and with that the message gets out….and all without violence or breaking windows or spray painting graffiti everywhere….
I will bet that all red blooded men will remember what their cause was and we know why they will remember…..okay I am a pig!
From time to time I like to let others know the extreme conditions that exist in nthe South, especially in my state of Mississippi……
We hear all the hype about the business opportunities in the New South…..corporations are heading South and the commercials say it is all about the quality if the workers, the work ethic, yada yada…….but it is the business friendly state governments, the low wages, right to work and the tax incentives more than anything….my state has been selling the concept of business friendly to the voters for 30 years and what is really happened in the South?
The official US poverty rate in 2010 was 15.1 percent, an increase of 0.8 percent from 2009 and the third consecutive increase since 2007 when the figure was 12.5 percent. Approximately 46.2 million Americans lived in poverty in 2010, while 49 million were without health insurance. Forty-six of the 50 US states saw an increase in the poverty rate from 2009 to 2010, and median household income fell in all regions.
The South witnessed an increase in both poverty rates and the total number of people in poverty, with a poverty rate of 16.9 percent and 19.1 million people in poverty in 2010, up from 15.7 percent and 17.6 million in 2009. Median household income in the region fell 1.9 percent, from $46,368 to $45,492 annually.
The latest data show that of the 10 states with the highest unemployment rates, 6 are in the South. The manufacturing and construction sectors—hard hit by the economic crisis—have led the drop in employment in the region.
Certain states in the South show particularly disturbing statistics. Mississippi had the highest official poverty rate, at 22.7 percent, followed by Louisiana, the District of Columbia, Georgia, and then two southwestern states, New Mexico and Arizona.
In North Carolina, the state poverty rate rose to 17.5 percent in 2010, a 22 percent increase since 2007, when the recession began. The median household income fell by 12.3 percent during the same time period. The number of Alabamians living in poverty rose from 16.6 percent in 2009 to 17.3 percent in 2010.
The United Way of Central Alabama has seen a 22 percent increase in the number of calls for assistance, its call center having received 27,570 calls since the beginning of the year, an increase of more than 5,000 compared to the same period last year. The most common needs were food, rent, and medical assistance.
In a recent campaign ad the woman, a conservative, states that she will cut taxes, find jobs and protect education with the tax funds…..but where will those education dollars come from while she cuts taxes? The stupidity of the voters just amazes daily……
After all the years of business friendly policies and what does the South have? Bad education, massive poverty, low wages, no benefits, poor health……..and yet the people still fall for the crap every election…and that is the truly sad part….the people screw themselves! People voting against themselves…the height of stupidity!
And GOP policies will make the rest of the country as poor, uneducated and unhealthy as the South…..if that is what you want for this country then by all means vote your butts off….but if it happens….do not whine!
The Fed has been doing little things to try and keep the economy from bottoming out….like keeping interests rate near zero…thus making money more available to the innovators….but so far few have taken the bait…..but once a month there is all kinds of stories about what the Fed chair, Bernanke, is going to do to help the economy….
But there has been a turn of events…..it seems that some in Congress have taken it upon themselves to write a letter to Bernanke……
“[W]e submit that the board should resist further extraordinary intervention in the U.S. economy, particularly without a clear articulation of the goals of such a policy, direction for success, ample data proving a case for economic action and quantifiable benefits to the American people,” the Republicans write.Sens. Mitch McConnell (R-KY) and Jon Kyl (R-AZ), and House Speaker John Boehner (R-OH) and Majority Leader Eric Cantor (R-VA), ostentatiously cautioned Bernanke against providing the economy any further monetary stimulus.
Can Repubs be any more transparent?
Cool letter….but……According to the Board of Governors, the Federal Reserve is independent within government in that “its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government.”
However the Fed is subject to congressional oversight but not interference.
But the letter seems to warn the Fed from doing anything that may help the economy…now is it a desire to try and use it as a political tool? Or are they truly worried about something? Personally. I think it is a pathetic attempt to keep the economy in the toilet for as long as possible.
We have had our day of gays and Palestinians….and the media will move on to something else….but NOT in the direction of this post…..
We are entering the doldrums of fall when the political landscape in Washington gets more boring and silly by the minute….for that reason……and now for something completely different (thanx Monty Python)…..
We all know that Europe is up to its ass in problems….Greece, Spain, Italy, et al……and the Euro, the currency of the EU is having its share of troubles also…..to the point that some have predicted that the Euro could be finished….and if that actually occurs can the EU be far behind? And if it does fail, what could be the consequences?
A collapse of Europe’s monetary union would likely lead to a breakup of the European Union as a whole, posing significant risks to the region and even raising the possibility of war in the long term, Poland’s Finance Minister told CNBC. “Therefore the danger in a longer-time horizon, in 10-20 years, in the absence of one of the key elements of our security system and one of the key elements of our political system, which ensures we deal with problems in this peaceful, democratic way we’ve developed, the risk of all sorts of authoritarian political movements, and therefore even war, in the long horizon, rises,” he said.
Is it possible? Dunno….but he makes a compelling case. Thoughts?