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Town Square

Stimulus Versus Austerity--A False Choice

Original post made by stephen levy, University South, on Jul 4, 2010

I watched the Fareed Zakaria GPS show this morning. Paul Krugman argued that the U.S. economy needs more federal stimulus to help increase economic growth and reduce unemployment. Niall Ferguson, a Harvard history and business school professor and Hoover Institution fellow, argued that the priority today is to reduce high federal debt levels that could lead to high interest rates, inflation and lower long-term growth.

At the end of the show Fareed Zakaria suggested that we should do both by enacting additional stimulus now and, at the same time, taking steps to reduce future deficits. The stimulus would help the short-term problem of insufficient demand i.e. not enough customers to support full employment. A firm agreement to reduce future deficits would give investors around the world confidence that the U.S. was serious about the federal deficit. That agreement would include reductions in future Medicare and Social Security benefits, elimination of some federal subsidy programs such as agriculture and some additional taxes—Zakaria suggested a gas tax and small national sales tax.

[Web Link Web link]

I agree with Zakaria that stimulus versus deficit reduction (so-called austerity) is a false choice. It is a "both and" not an "either or".

Later today I read this week's Economist magazine—the British economic and financial weekly. The headline is "Both sides in the stimulus v austerity exaggerate, but the austerity lobby is the more dangerous".

The article points out that politics is preventing the sensible policy of an additional temporary stimulus while at the same time giving no inducement to tackle the sources of long-term fiscal deficits and rising debt.

[Web Link Web link]

Take the debate in Congress about an extension of unemployment benefits and additional aid to prevent layoffs of teachers and public safety workers. The idea that preventing this spending has any connection to the nation's long-term deficit challenge is silly, hypocritical and callous.

The false choice is silly because whether we spend an extra $100 billion or $200 billion in stimulus for one more year has virtually no impact on the long-term deficit arithmetic or policy challenge but it could have an impact on how fast the economy recovers, the level of public services and how people caught in long-term unemployment through no fault of their own fare during the next year, which is certain to see at best a slow recovery.

The false choice is hypocritical on the part of Republicans for several reason—1) they would support tax cuts in a heartbeat if that were the proposed stimulus program despite the lack of any evidence that tax cuts are the best anti-recession policy and 2) Republicans supported a broad round of "Bush tax cuts" (unaccompanied by spending cuts that led to rising deficits followed by supporting a large Medicare drug benefit )not paid for in any way) that will contribute far more than an extra year of stimulus spending to our long-term deficit.

The false choice is callous because it does not arise out of any theory or conviction but only out of political expediency. It is certainly possible that Democrats would act similarly on an issue were the situations reversed but that only underscores on this July 4th celebration how far we are from coming together as a people.

The economy still needs help and the long-term deficit challenge demands immediate attention and the associated pain of living more responsibly. Both challenges are serious threats to our economy and deserve better from our leaders than political jockeying.

We can and should act boldly on both the short-term and long-term challenge and do both quickly.

Comments

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Posted by Richard
a resident of Midtown
on Jul 4, 2010 at 5:54 pm

Mr. Levy,

Did you advise the Greece government over the past couple of decades?

"taking steps to reduce future deficits"...please excuse me while I pick myself off the floor (from laughing so hard!). It will never happen, because people demand things for 'free'. Just try cutting social security or agriculture price supports...you will get unemployed as a politician very quickly.

You are a tax-and-spend type. You want the money up front, then offer empty promises down the line. It is a very old (and tiresome) game.

If you want to extend unemployement benefits, then take the money from the existing stimulus funds...but that would mean that you couldn't create new government programs (and government power) with the remaining stimulus funds.

Austerity will be achieved, but only indirectly. The wolf in sheeps clothing is inflation, and it will take its toll, starting with the increased cost of credit at all levels. It is truly ironic when socialist Europe ends up lecturing the U.S. on too much public spending. They understand the wolf, because they just got bit by him in Greece. Now you want us to become Greece. I don't think so....


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Posted by JustaGuy
a resident of Stanford
on Jul 5, 2010 at 8:56 pm

Steve -

I think I probably agree with Richard, but I come at it from another angle and perhaps more directly.

The problem is that the government has repeatedly promised to pay on Tuesday for a hamburger today.

They just don't do it. They promise to do some specific thing in the future to reduce the deficit, and don't do it.

For example, isn't there a new law that says every new program expenditure must be accompanied by something to enable it without increasing the deficit? That law was made to show that we are serious about reducing the deficit. Now, you are objecting to simply following that rule. And your objection shows that rules made about future actions involving deficit reduction will bring forth people who insist that we get around those rules. They will claim, "not this time, we will do it later." No one has the political courage to reduce spending to what we can afford, or even to what we have legally required ourselves to do!

It would be easy to extend the unemployment benefits. Just cut somewhere else.

Credibility of government in the economic sphere is the most important element in the whole issue. As such it is a direct "connection to the nation's long-term deficit." And for many of us, breaking a new law in order to again borrow more now and pay later simply does not allow us credibility of our government w/r to our economy.



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Posted by Paul Losch
a resident of Palo Alto
on Jul 5, 2010 at 9:08 pm

Paul Losch is a registered user.

I think Krugman is closer to the mark than are some pundits and economists, not just in the States, but elsewhere in the world.

That said, getting past the "Emergency Room" question of fiscal stimulus or austerity at this juncture begs a larger question.

Which is how the economy and the governments that enable it need to be structured going forward. It is not just a question for the US Federal Government, it is a question for each and every state, and each and every local US government, and each and every country around the world.

Chickens hatched many years ago are coming home to roost. Be it incredibly generous pensions for government employees, lack of intelligent policy and planning to deal with a demographic worldwide that is getting older and not replenished that is leading in this country to Social Security and Medicare in jeopordy, the reality of the economic theory of comparative advantage, which has led to where production in a truly global economy has led to work permanently exiting this country.

I have a day job, although I majored in Economics in college and have an MBA from what is regarded as a top school. Still, I do not not know, and Steve, maybe you do, know what sort of thinking is being presented at the academic and policy leve about how we need a paradigm shift.

I don't view this as an ideological question. I view it as there was a "model" that worked for the last several decades, and it no longer is working. It needs re-engineering.

You can only spend so much time in the ER. It is fine to move on to the general wards and then to rehabilitation, but some practices and behaviors need to change if the "patient" is going to be well going forward.


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Posted by Good grief!
a resident of Meadow Park
on Jul 6, 2010 at 7:07 am

Paul Krugman has been dead wrong every single time.

I have come to believe that we need to do the opposite of whatever Paul Krugman "recommends". He pretty much buys into the whole "central planning/redistribution of wealth" concept; if he were advising China, r Russia, Poland etc he would bemoan the fact that both have moved away from their old ways, because, you know..those old days were so much better than now. I am sure he would advise Cuba to do more stimulus spending since it has worked so well for them also.

When FRANCE is telling us to cool it and learn from their mistakes, you know we have veered far off course ( next thing you know, Greece will be telling us to learn from them!)


This is not an ideological issue..it is an issue of what works and what doesn't work throughout history. Somehow we simply fail to remember that punishing productive work and risk and creativity and rewarding not-work for some magical reason dampens production..gosh, how behaviorally strange!

We repeat this experiment every generation or so. Does anyone have any hope at all that our kids won't repeat it yet again? Or is that wishful thinking?

But, go ahead, all of you who want to support letting some bureaucrat take your money to distribute to politically favored others ...be my guest.

In fact, let's just take everything over %75,000 that anybody in the USA makes this year..just take it...and finance some more stimulus spending with it. I am sure that will help the economy greatly and everyone will work really hard and risk all they have to make more than $75,000 next year!


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Posted by stephen levy
a resident of University South
on Jul 6, 2010 at 9:42 am

stephen levy is a registered user.

I agree with Paul Losch that the U.S. faces unsustainable federal obligations for Medicare, Medicaid and, to a lesser extent, Social Security and that a paradigm shift (new social contract) is required.

The best hope is for a breakthrough in reducing health care costs but, undoubtedly, there will be reductions in current benefits and, possibly, higher taxes as part of the new social contract re health and retirement benefits.

Solutions and the will to make tough choices have eluded Democrats, Republicans, Independents and most residents.

The point I was making is that this has nothing to do with the debate over additional temporary stimulus funding in 2010 and 2011 and, in particular, about the current holdup in Congress about extending unemployment benefits and funding for local schools and public safety.

David Walker has been a leading spokesperson for the effort to address federal deficit challenges. But he understands the difference between the short term and long term and in the quote below from yesterday's New York Times understands that the current stimulus versus austerity debate poses a false choice.

David M. Walker, the president of the Peter G. Peterson Foundation, an organization that has focused on cutting long-term deficits, said the "myth that we cannot address our current economic crisis and our long-term fiscal crisis at the same time" had become an obstacle to bipartisan agreement.

"In our view, the answer is to continue to pursue selected short-term initiatives designed to stimulate the economy and address unemployment, but to couple these actions with specific, meaningful actions designed to resolve our long-term structural deficits," Mr. Walker testified last week to the National Commission on Fiscal Responsibility and Reform, the bipartisan panel named by Mr. Obama.

I understand that the name Paul Krugman is a red flag to some bloggers so use the name David Walker instead. On this point they are saying the same thing.


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Posted by stephen levy
a resident of University South
on Jul 6, 2010 at 9:56 am

stephen levy is a registered user.

The debate over additional federal stimulus has at least three major perspectives:

1) The one I support is that additional stimulus should be in the range of $150-$200 billion and focus mainly on spending (unemployment insurance, aid to state and local governments and infrastructure proejcts of national importance) with some targeted temporary tax cuts.

2) There is a position that no additional stimulus programs should be initiated.

3) And there is a position that would take large permanent tax cuts as the appropriate policy-- a position that these advocates take whether the economy is in recession or boom.

David Brooks in today's New York Times argues his version of the second position. I disagree but he makes a calm and reasoned argument.

Web Link

But he also says

"So you have your doubts, but you are practical. You want to do something. Too much debt could lead to national catastrophe. Too much austerity could lead to stagnation.

Well, there's a few short-term things you can do. First, extend unemployment insurance; that's a foolish place to begin budget-balancing. Second, you need to mitigate the pain caused by the state governments that are slashing spending. You need a program modeled on Race to the Top. You will provide federal money now to states that pass responsible long-term budget plans that will reduce spending and pension commitments. That would save public-sector jobs and ease contractionary pressures without throwing the country into a fiscal-debt spiral."

So if the name Paul Krugman turns you off add David Brooks to David Walker as citizens concerned about the deficit who understand that stopping unemployment besefit extensions and aid to state and local governments has nothing to do with the tough long-term choices we continually avoid.


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Posted by stephen levy
a resident of University South
on Jul 6, 2010 at 10:03 am

stephen levy is a registered user.

Some posters have argued that they may be sympathetic to extending unemployment benefits but that the money should not raise total spending--something else should be cut.

But the point of stimulus spending is to ADD to total spending. In normal times it is absolutely reasonable to provide that additional spending be offset by increased taxes or spending cuts elsewhere.

But anti-recession stimulus efforts are not supposed to be offset--it defeats the purpose. The challenge is to make reductions later when the economy is growing and it HAS proven to be a bi-partisan challenge.

But the underlying economics is that anti-recession efforts are supposed to cause short-term deficits.

To add another voice to the point I am trying to make--this time from John McCain's campaign economic advisor:

Mark Zandi, the chief economist at Moody's Economy.com, told the House Budget Committee last week, "It is important — in fact I'd say it's vital — that you continue to provide some additional temporary stimulus to the economy." But he added, "Once the economy is on a sound footing, it is critically important that you do pivot as quickly as possible and address the long-term fiscal situation."




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Posted by Richard
a resident of Midtown
on Jul 6, 2010 at 1:53 pm

"make reductions later when the economy is growing"

What reductions? Name some that have been made in the past, other than the military.

The only way that Washington DC makes 'cuts' is through inflation, and those cuts are unintentional. We have seen this current movie before, and it ends up in stagflation. Once the states and cities get on the federal bailout bandwagon, they will never get off.

I have a friend who has turned down two job offers, because he thinks they are below his level. He says he will just stay on unemployment until something better comes along. I say it is time to make him choose.

We should never waste a good recession, it is a time for trimming the fat, and making the hard choices to renew our efforts, both indivdually and nationally. We are currently wasting this recession, and stretching it out... and it will only end up the way Greece ended up. One difference between Greece and the U.S. is that we don't have any vacation islands to sell.


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Posted by Anon
a resident of Another Palo Alto neighborhood
on Jul 7, 2010 at 9:06 am

I'm something of a debt hawk, but, Krugman is absolutely right about this-- this would be a stupid time to put austerity measures in place. Real debt hawks get busy when the economy is clicking along -- THAT is the time to squeeze the debt down -- as we did during the good economic years prior to 1973, and, again, during the 1990's.

Web Link

Extending unemployment insurance is also about the fastest stimulus you can have. The real concern is that you don't want people to get used to not working.

I'm also getting tired of hearing the free-market fundamentalists, who continue to ignore economic reality. Read Andy (Intel) Grove's article in Business Week this week. Free markets are great, but, they are not everything.






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Posted by stephen levy
a resident of University South
on Jul 7, 2010 at 10:47 am

stephen levy is a registered user.

Anon has it right on both points.

It is always legitimate to think about the incentive effects of policies such as extending unemployment insurance.

But right now the nation has 5 unemployed workers for every job opening so it is lack of job openings not disincentives that keep people unemployed.

And extending unemployment insurance (and funding for state and local governments) pays off double--they are highly effective as fast stimulus with high multipliers and meet social goals as well.

Richard says we are "wasting" the recession and we should "trim the fat". I don't think of unemployed workers as fat needing trimming and cutting education and public safety services both adds to unemployment and undercuts long-term competitivenss.

The failure to make "tough choices" is partly an ongoing American challenge and partly becasue there is no consensus on what tough choices to make. A recession is probably the worst time to try and reaach agreeement on long-term reforms precisely because it results in the confusion we see today about short-term stimulus versus long-term deficit control.

They are a "both and" not an "either or"


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Posted by Richard
a resident of Midtown
on Jul 7, 2010 at 11:18 am

"the nation has 5 unemployed workers for every job opening"

Really? My brother is a contractor, and he hires mostly illegals because they are willing to do the work. He used to hire legal American workers, but he says they don't want to work anymore. It is far past time that American workers be forced back to do work, and not just chase 'careers'. There are plently of jobs available for those willing to work. We should not waste this recession by making even more excuses and incentives for not working.

It is clear that the Greek disease has infected America, and Mr. Levy and a few others (e.g. Krugman) are busy spreading it. The good news is that additional stimulus money will probably not be approved by congress.


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Posted by Paul Losch
a resident of Palo Alto
on Jul 7, 2010 at 4:26 pm

Paul Losch is a registered user.

Richard,

Your latest observation is facile at best. You describe your brother's contracting business and generalize that illegal immigrants are doing work that Americans will not do.

Plenty of jobs? Come on! There are numerous highly skilled professionsals with great track records and terrific experience who have been affected by this current economy. It is not that they are losing out to illegal immigrants: their type of work is in short supply right now. That, I perceive, is what Steve Levy was describing.

Add to that age discrimination, certain work continuing to get outsourced to countries such as India and China--this is not for lack of work ethic, it is a major structural shift the global economy is going through, and our corporate and political policy makers in this country have not figured out how the US economy can thrive going forward, except for bubbles like the internet boom of the 1990's and the housing bubble of the 2000's. Both artificial and with dire consequences.

There are not plenty of jobs for millions of people in this country right now. People with skills, experience. Do you really believe it is merely a matter of being willing to work? You got it wrong, Richard, it's not that simple.


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Posted by Richard
a resident of Midtown
on Jul 7, 2010 at 8:17 pm

"their type of work is in short supply right now"

Paul,

This is where some attitude adjustment is necessary. If there are no jobs for what you used to do, whatever your previous training, then you need to adjust your sights and take a job that is available. Notice I use the word "job", not "career". A job is where you work, and you get paid for that work. There are plenty of jobs available for those who are not afraid of getting calluses on their hands. Or are you saying that some elite people should not be expected to get a job?


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Posted by Mike
a resident of Crescent Park
on Jul 8, 2010 at 10:14 am

There is some tangible effect this economy is having on making people rethink their job choices.

One of the Taco Bells I frequent has for the last two visits a Caucasian working the counter, the first I remember seeing there ever over the course of the last few years.


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Posted by Paul
a resident of Downtown North
on Jul 8, 2010 at 11:56 am

"This is where some attitude adjustment is necessary."

Face it people: the Conservatives have won. The American Dream of a better life and satisfying career is now officially dead. Little People will either know their place, or they will take their place on the streets.


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Posted by stephen levy
a resident of University South
on Jul 8, 2010 at 12:14 pm

stephen levy is a registered user.

Posters have raised two issues about job seeker attitudes and behavior.

One suggestion is that there are lots of jobs out there if only people would look harder and lower their expectations.

Most readers probably know someone who got a job in this tough market or maybe someone who turned down a job hoping for something better. This is kind of like in my world everyone has heard a story about a company that left California because taxes were too high or regulatory policy was too tough.

Anecdotes abound but these two don't stand up to the numbers.

However you cut it there are 15.3 million unemployed workers and more millions who have dropped out of the workforce or are working part time because they can't get a full time job.

And there are only 3.1 million job openings. So the person who got a job at Taco Bell ended his or her job search but that did not increase the number of jobs in the economy. It is a story about who got the job.

There are also posters who imply that job seekers could get jobs more easily if they offered to work for less. This is certainly true and it would be an interesting debate if any political party took a firm position that unemployment is so high because workers won't cut their pay. I will wait eagerly for that debate (just kidding).

While an individual worker may remain unemployed as a result of his/her choices, the 15 million remain unemployed because the nation is slowly digging of a tremendous set of shocks to housing, the financial sector and the world economy.

This is a problem with the economy. It is unfair to blame unemployed workers for the deep recession and persistent caution on the part of consumers and businesses.


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Posted by Richard
a resident of Midtown
on Jul 8, 2010 at 6:51 pm

Mr. Levy,

"There are also posters who imply that job seekers could get jobs more easily if they offered to work for less. This is certainly true and it would be an interesting debate if any political party took a firm position that unemployment is so high because workers won't cut their pay. I will wait eagerly for that debate"

So let's have that debate right here on this thread. You have already stated that it is a true proposition, so I don't know how you would argue against it. You seem to be saying that it is politically untenable. However, the Guvernator is calling for cuts in state worker pay, so it is not beyond the realm of political possibility. It is also politically untenable to increase the stimulus package, yet you continue to argue for it.


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Posted by Paul Losch
a resident of Palo Alto
on Jul 8, 2010 at 9:49 pm

Paul Losch is a registered user.

Richard,

Have you ever run a small business, as I do?

Lower wages do not affect my hiring decisions. Sales volume and profitability are the drivers. Credit also is a factor, which has been something folks in my position have been sweating like crasy since the crisis hit a couple years back.

Mine is the proverbial "small business" that supposedly is the heart of our economy and will bring us back from the brink.

There are plenty of people who would love to work at my company. Several of my company's key accounts kept us as a vendor as they let others go in the past couple of years. Despite that, orders were down due to the recession.

I am perfectly capable of an intellectual discourse around Steve's post, but I also go to work every day to a place where I have people layed off and furloughed as a consequence of our current economic times. I hire people as busines demands, not based on a wage or a willingness to take on work that differs from prior experience.

You really don't get it. You are in the ether.


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Posted by Richard
a resident of Midtown
on Jul 9, 2010 at 3:53 am

Paul,

"I hire people as busines demands, not based on a wage or a willingness to take on work that differs from prior experience"

Do you have any of your products manufactured in China? If so, are you willing to move your maunfacturing back to America? Most businesses I know of have shut down their maunfacturing in America, because the labor costs, especially wages, are lower in China. Since wages are not a factor for you, it should be a no-brainer for you to do all your production in America. Also, the next time you do hire someone, and his/her wages are not an issue, will you even discuss wages, or will you simply allow the new hire set his/her own wages?


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Posted by Paul Losch
a resident of Community Center
on Jul 9, 2010 at 6:50 am

Adios Richard,

You are not interested in a meaningful discussion.


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Posted by Disagree with Paul
a resident of Stanford
on Jul 9, 2010 at 7:22 am

As usual, if you dare to disagree with Paul on this forum you are dismissed as not being interested in having a meaningful discussion.
I am surprised he has not brought up his other favorite quote:
" I am not interested in having a p______ contest with you".


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Posted by Richard
a resident of Midtown
on Jul 9, 2010 at 8:13 am

Paul,

I will take your answer as meaning that you do manufacture in China. This means that you have two sets of employees, one that you pay a relatively high wage (America), and one that you pay lower wages (China). If you are typical of other businesses that manufacture in China, you have more low wage workers (in China) than you have high wage workers (in America).

Given the obvious advantages of manufacturing in America, your intended market, including the absence of shipping fees and much better transportation hub, it is obvious that you should be able to hire many Americans to do your manufacturing - if their wages were not so high. Since you manufacture in China, you obviously DO hire your employees based on wages. It follows that there would be many more American jobs if Americans were willing to work for less.


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Posted by Paul Losch
a resident of Community Center
on Jul 9, 2010 at 11:56 am

Richard,

Presume as you see fit.

I do source semi-finished product from China, and the reason is that it is no longer available here. The companies that used to produce in this country are not around any more in the States. Think supply chain. There are very few vertically integrated producers anywhere in the world in this day and age.

My company does the final production here in America with US made ingredients and with US employees.

It is not a matter of what my small business would like to do, it is a matter of what it can do.

I find your theoretical polemics tiresome.

Adios


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Posted by stephen levy
a resident of University South
on Jul 10, 2010 at 3:00 pm

stephen levy is a registered user.

Here are two challenges for the "people could find work if they just lowered their wage requirements.

First, make it your job and someone comes in and offers to work for 20% less than you are making. It is all well and good to talk about other people taking lower wages when you feel you won't be affected.

The economics poses a challnege as well.

A society that earns 10% or 20% less has 10% or 20% less to spend.

To the extent possible I think we all want a high wage, high productivity, high standard of living economy.

Paul Losch gets the case for more temporary stimulus. We have a shortage of customers. While some businesses are investing now (think Tesla and Google) most companies have excess capacity as they face a shortage of customers--why invest much now?

But the point I have been making is that long-term deficit reduction and the debate over the role of tax policy is incentivizing investment do not in any detract from the case for extending unemployment insurance or additional temporary aid to state and local governments or additional infrastructure spending to extend the "economic bridge" needed until the private sector recovery kicks in.

The recession lasted longer and was deeper than hoped for so a longer "bridge" is needed while consumers and businesses regain their footing.


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Posted by JustAGuy
a resident of Stanford
on Jul 10, 2010 at 8:08 pm

"But the point I have been making is that long-term deficit reduction and the debate over the role of tax policy is incentivizing investment do not in any detract from the case for extending unemployment insurance or additional temporary aid to state and local governments or additional infrastructure spending to extend the "economic bridge" needed until the private sector recovery kicks in."

Steve -

I and others have explained to you that the "detraction" is the level of financial credibility of our local, state and federal government. This point of view is supported by a variety of measures, including elections.

Why do you pretend not to receive this message?

I propose that it is because you categorically conclude that taxes should be raised, and any thoughts that might challenge that conclusion cannot be considered.


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Posted by Richard
a resident of Midtown
on Jul 10, 2010 at 10:20 pm

"A society that earns 10% or 20% less has 10% or 20% less to spend."

A society that increases productivity by by 11% or 21%, despite having 10% or 20% less to spend, is a more prosperous society.


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Posted by Good grief
a resident of Meadow Park
on Jul 26, 2010 at 4:13 pm

Web Link

Above is a link explaining how MOST small businesses will pay more taxes. I am sure that those who voted for and vocally and vociferously support increased deficit spending, taxation and "wealth distribution", believing it wasn't going to hurt THEM, are thinking twice right now.

If these folks are happy to hand over more money to government instead of running their business their own way with their own earnings..well, at least they aren't hypocrite and I gotta admire that.

But I, for one ( for millions) am sick to death of the ever growing hubris and power of this Admin/Democrat party to believe it can centrally manage MY earnings better than I can. I simply fail to understand how any of the folks who live here and support socialism don't just go live and work in a socialist nation where they can be punished as they see fit, happily paying 70% of their earnings to the government in, say..France, to manage and distribute for them, .....and stop punishing those of us who want to be left alone!I prefer to choose my own retirement fund, health insurance and charities, and NOT have some dingbats in DC decide everything for me and my charities!

For the rest of you not too excited about your taxes going up .. how is that promise of "no taxes on small businesses and anyone making less than $250,000" working out for you? This is what is wrong with socialism..eventually the ones in power will run out of your money as you lose incentive to work and risk.

When we give


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Posted by Perspective
a resident of Meadow Park
on Jul 28, 2010 at 6:53 am

Web Link

CBO just released a report that debt is rising to unsustainable levels.

Hows that Krugman advice working out for all of y'all?

Or does anyone else think that ol' Cloward-Piven model is the actual dream...collapse the economy by overwhelming it so that the masses panic and hand over all power to the "guvmint" to save 'em?

I think we need more "stimulus"..don't you?

Or..perhaps the real choices are between

1) Central planning/distribution of wealth: you know, because THIS TIME it will work because FINALLY we have folks in the Admin who are smart enough to make socialism/communism actually work ( the last 100 years have failed because nobody else was as smart all the other times they tried this model)

2) getting the "guvmint" the he>> out of our way, letting folks keep what they risk and work for to earn, and letting the hundreds of millions of consumers pick the winners and losers in an economic system. You know, all the other times we did this, it was just a coincidence that our economy boomed.

Contrary to the left's template, we went into this economic meltdown BECAUSE OF leftist policies, ( see Community Reinvestment Act- Carter leading to bad-sub primes backed by Barney, Dodd's Fannie Mae and Freddie Mac, bundled and sold by banks forced to hand out keys to high risk folks..this lit the economic wildfire, conveniently used in an election year to fan the flames with bailouts and "stimulus" talk ..and here we are, with completely unsustainable debt which is threatening to collapse us)

So why do we keep thinking that giving another glass of water to a drowning man is going to help?


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Posted by Gimme Shelter
a resident of Midtown
on Jul 28, 2010 at 7:55 am

Perspective,

How's it working out? Well, thank goodness we got the first stimulus or things would be much worse. Let's hope the Party of No fails and we get a second stimulus--it is our only prayer. As for collapsing the economy, I think that was the plan of GW Bush et al., no? Granted, he had lots of help from Goldman Sachs and friends.

I'm not sure why you oppose redistribution of wealth. That has been going on for some time now, as the great, looting fortunes have reemerged over the past 10 years. Did you oppose that?


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Posted by Perspective
a resident of Meadow Park
on Jul 30, 2010 at 8:56 pm

To Gimmee: yes, clearly we didn't do enough "stimulus", or we would be so much worse off!

Don't you think we should just go full out and simply let the government take over all the businesses and run them, and take everything everybody earns and redistribute it evenly out to everyone? Really, it simply isn't fair that some folks make more money than others, and if we only took enough from the rick then we would all be better off.

that would really end this slump once and for all!


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Posted by Gimme
a resident of Midtown
on Jul 30, 2010 at 11:05 pm

Agreed, we need more stimulus.

Yes, I'm sure you're right. The great looting fortunes have been assembled by the sweat of some genius's brow and are simply fair gains. We should probably cut taxes for them.


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Posted by Perspective
a resident of Meadow Park
on Jul 31, 2010 at 6:13 am

Here is an article by the Investor's Business Daily on how it is one huge "canard" ( polite way of saying "lie") to believe that only the "rich" small businesses will be hit by upcoming taxes

Web Link

Way to kill more jobs, Obama/Dems!

Go for it!

Keep taking from creative, hard working, risk taking producers and giving to sloths who sit at home and do nothing!

I thought this was a "canard" of the right wing nut cases years ago, that we "took from workers and gave to sloths". Until I moved into an apartment building, went to work every day, etc, and slowly realized that most of my neighbors didn't ever seem to leave. They stayed home, they drank, they screamed their way through the night, they had better cars than I had, there were my age.....and they were all on welfare!

Taught me a huge lesson.


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Posted by Perspective
a resident of Meadow Park
on Aug 12, 2010 at 7:30 am

What a shock...reward a behavior and it increases.

We extended unemployment payments to 99 weeks ( almost 2 years!!) up from the usual 26 weeks from a mere couple years ago..

and shockingly, unemployment claims went up.

Web Link

We have to re-learn the basic prinicples of human behavior. Create a "moral hazard" by paying people for poor behaviors, and the behaviors continue.

We are giving tax subsidies to people to not work..so of course folks aren't returning to the job market, aren't moving if they must to where the jobs are.

I dare anyone reading this to give a treat to their dog or their kid every time they do something you don't want them to do ..do it for just 2 days..see what happens.

Now apply this to millions and millions of adults who are just as pavlovian. Why aren't they taking jobs that exist?


Read here about having businesses having troubles finding employees. Web Link

Why should anyone work when they can get as much staying home? Why should anyone worry about their mortgage payment when Uncle Obama is taking your money to pay their mortgage for them? Web Link

Stop rewarding peoples' bad choices.

Now TAKE a treat from your kids or dog every time they do something yo like. Have your kid mow the lawn, then tell him that he has to give half of what he earned to the neighbor kid who sat watching TV all day. See how hard it is to get him to mow your lawn next week.

Stop punishing good choices, taking money from people who earn it to give to people who don't, and begin a real recovery cycle.

Maybe we can even begin to recover during this proclaimed "summer of recovery".


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Posted by Perspective
a resident of Meadow Park
on Aug 13, 2010 at 5:11 am

Oh my gosh..


Just learned yesterday that 3 years ago 1/3 of our College loans were govt backed...now 90% are, and have gone up to 800 billion dollars.

This was from the "Health Care" bill ( what the heck does student loans have to do with Health care??) which overnight destroyed the private student loan industry, and transferred the "business" to the government to run.

Couldn't figure out why the Dems wanted to do this, except that Dems will always choose to destroy a private market and take it over if they can. But it seemed anachronistic.

But, I had a brainstorm yesterday. I remember Obama promising to "forgive some" student loans.

The Dems have set it up for the future to bribe young people into voting for them in return for promising to force other people to pay off their loans. Now that the "government" is in charge of them, you and I will have to pay them off in the future. It is another "housing collapse bail out" coming up in the future.

Think about it, over 800 billion in "loans" to students with money we don't have..just keep those printing presses rolling, Uncles Obama, , Reid, Gietner, Frank, Dodd, and Aunt Pelosi!! Keep destroying the private sector for increasing government debt on our children!

We are bankrupting our country, why do we bother tinkering with the deck chairs on the Titanic as it heads for that iceberg?

This is why it ISN'T a false choice, "stimulus vs austerity"...basic finance, don't spend more than you have. Can't spend out of bankruptcy. But that is what this Admin is trying to do, all while putting a power stranglehold on our future..




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Posted by Perspective
a resident of Meadow Park
on Aug 13, 2010 at 6:24 am

Better written on why it isn't a "stimulus" but instead a "sedative", by Thomas Sowell

Web Link

Hadn't seen it before..well done.

Quote from intro

"Abraham Lincoln once asked an audience how many legs a dog has, if you called the tail a leg? When the audience said "five," Lincoln corrected them, saying that the answer was four. "The fact that you call a tail a leg does not make it a leg."
That same principle applies today. The fact that politicians call something a "stimulus" does not make it a stimulus. The fact that they call something a "jobs bill" does not mean there will be more jobs.
What have been the actual consequences of all the hundreds of billions of dollars that the government has spent?"


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Posted by Perspective
a resident of Meadow Park
on Sep 16, 2010 at 6:26 am

This is what is wrong with a government choosing winners and losers

Those in power take your money and give it to their friends.

Chavez, at least, admits it

Web Link

Thankfully, at least a few of us are finally awake and have noticed that we have voted away our ability to choose our own path personally and in business, and given that control to a completely narcissistic, self-aggrandizing Fed and State Governnment whose only interest is in keeping and expanding their own jobs..

Time to Reduce, Repeal and Restore

Reduce: the power and scope of Govt

Repeal (bad bills)

Restore the Constitution: fundamental principles underpinning what made us the greatest country in the world;

the only country to spill blood and resources to free other people around the world without payback:
the only country to fight a civil war to end slavery:
the only country to put our blood and money where our mouths are to defend individual liberty and equal opportunity to all here and abroad.

The economic engine of the world for the last 60 years, and the economic broken engine of the last 2.

Let's fix the engine.




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Posted by Barbara Todish
a resident of Stanford
on Jul 9, 2011 at 5:40 pm

[Post removed by Palo Alto Online staff.]


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Posted by Perspective
a resident of Meadow Park
on Jul 10, 2011 at 2:38 pm

The architect(s) of failing economies in order to take over governments are NOT the ones investing their own funds and time into the economy...How foolish it would be to think that any sane businessman or woman would think "Hmm,, let's lose millions of dollars on purpose in order to take over the government".

Think about who is engineering the policies that have failed here and around the world,..what is the ideological goal of these people? What do they gain?

Then you start getting a little closer to who is "never letting a crisis go to waste" in order to increase their power over the people they make dependent on them.