The GOP and the Politics of Economic Pain

[mendeleev 68]

Well, that's an opinion, I guess. I'd think that the more important question would be "can we afford to do it?"

It is my opinion that its useful to use facts in considering the "can we afford to do it" question(s). Relevant facts are available from the bond market. 10-year US Treasury Bonds, last I checked, were commanding a interest rate of (only!!) 2.97%. The bond market has no worries at all about whether the US government can afford the debt we are presently taking on. There are no bond vigilantes bring the US to heel like they did Greece. While it is true that the US deficit is large, much to large on a sustainable basis, a lot of that deficit is created by the current economic emergency. The bond markets aren't worried about debt and rational people should not be too worried at this time either.

Time will come when the US needs to address our long-term fiscal problems, and they should be addressed with a combination of spending cuts and tax increases but only when the economy is operating close to productive limits. That time is not now.

We can afford to provide the long-term unemployed with extended benefits and it makes a lot of economic sense to do so.

[Obama 2012 1,714]

Oh, Charles! -- you shouldn't need a basic civics lesson, but here goes: in the United States Senate, a obdurate minority can prevent any progress if they can marshall 40 votes. You might have heard that there are 41 members of the GOP in the Senate -- or maybe you learned it just now. One things you have to admire these guys for -- they are a disciplined party that is saying "NO" to just about everything. In a republic such as ours, laws cannot get passed if that PARTY OF NO is unified. And they are.

The majority in the House is one thing, but to get things done in the Senate, apparently a larger supermajority is needed. The PARTY OF NO, despite their minority status, can prevent anything from happening. They cannot get what they want, but they can stop all progress. And they have apparently made the cynical calculation that anything they can do to obstruct economic recovery is in their partisan interest.

when congress starts offering up something that would help with economic recovery (which they haven't yet, nor can they at this point really) then you let me know.

Until then, the "party of no" can keep blocking the "party of economic stupidity."

[alienlovechild 75]

But this string is about "The GOP and the Politics of Economic Pain" and my thesis that the GOP has made a cold, calculated decision to do everything they can to obstruct economic recovery stands unchallenged -- and indeed supported by many responding to this string. The economic principles I've addressed here are really pretty simple to understand provided one has a modicum of basic economic knowledge.

Unchallenged? I already dismantled your arguments since you couldn't cite me any example of major legislation that the GOP has blocked- zip, nada and nothing. You also completely ignored that the GOP wanted to pay for the unemployment compensation with funds unspent from the previous stimulus package. Simple demand side economics means the money has to get into someone's hands in order to increase demand and economic activity.

You support for up 99 weeks of eligibility for unemployment compensation is rooted somewhat in maintaining a "floor" of consumer spending which a good thing up to a point. The problem is although it nows takes an average of 34 weeks for the unemploymed to accept a job we are providing a disincentive for people to take a job. Productivity drops and it will become more acceptable to have people not take jobs simply because the work is beneath them yet we we'd heard how we need more illegals immigrants here to take the crappy jobs (though the poor economy is hurting them too).

While it is true that the US deficit is large, much to large on a sustainable basis, a lot of that deficit is created by the current economic emergency. The bond markets aren't worried about debt and rational people should not be too worried at this time either.

You should read all the liberals wailing about Bush boosting the deficit with unchecked spending now it's become a virtue under Obama. It's not longer an economic emergency but a new normal for Obama and crew. When the stock market went up, it was seen as the stamp of approval for Obama but when the market went bearish, the talk is now that the bond market shows there's no demand from the private sector for capital and interest rates are low so why not borrow though bonds?

Even "cheap" borrowing is still by the government and at all government spending or tax cuts are equally effective in stimulating the economy. Obama's spending has more to do long term goodes for his political ideology than trying to get the ecnomy moving immediately. He doesn't have a coherent plan as spending is all over the board and no one could tell what actually worked when a recovery takes place. You can throw a lot on a wall and some will stick but that's not a plan for success.

Another reason bonds are low is because the private is uncertain to invest in anything with the Federal government playing a constant shell game with health care, cap n trade, housing incentives, tax policy, financial regulation. . . In any case debt servicing will continue to take up more of the Federal spending pie which is a bad thing.

[DEDixon 39]

recent CA governor had to issue directive prohibiting CALWORKS checks from being cashed at casinos. WOW! stupid people, stupid gov't.

http://gov.ca.gov/press-release/15419

[evli1966 88]

I am a founder of a church-based soup kitchen that provides tens of thousands of meals a year. I don't give money to individually unemployed persons -- and I do give to charities that target the unemployed. I suspect, evli1996, that my individual actions to support people at the bottom compare just fine to anyone else on this board.

But this string is about "The GOP and the Politics of Economic Pain" and my thesis that the GOP has made a cold, calculated decision to do everything they can to obstruct economic recovery stands unchallenged -- and indeed supported by many responding to this string. The economic principles I've addressed here are really pretty simple to understand provided one has a modicum of basic economic knowledge. But, as Upton Sinclair observed long ago, "It is difficult to get a man to understand something, when his salary depends upon his not understanding it." Its fair to observe that the same goes these days for a political party doing anything they can to regain power.

I commend you for your actions.

I myself help people who are down by giving them and their immediate families a place to live until they can afford to pay their way such as in the past peopel who could not afford their rent or utilities due to unfortunate events I have payed the utilities and waived the rent. I have not given to them cash nor will I but those same people are the ones who typically go the extra mile to get back on their feet. With that said I have been burned in the past as well where the dead beat was earning a general assistnace check and unemployment and foodstamps ll the while not paying rent. So to provide more of what is already there is not the answer.

Again you say you do not give the unemployed money yet you advocate that we extend the benefits paying them even more out of your pocket and mine.

BTW in case you do not realize the money comes from us.

[Texanadian 10]

Time will come when the US needs to address our long-term fiscal problems, and they should be addressed with a combination of spending cuts and tax increases but only when the economy is operating close to productive limits. That time is not now.

We can afford to provide the long-term unemployed with extended benefits and it makes a lot of economic sense to do so.

And just when will that time be? When will the economy be roaring along at the very same time we're in dire straights in terms of deficit and debt? It's too easy to kick the can farther down the road and let some future government and population deal with it. It's been almost 30 years since we went over the trillion mark in debt. Prior to that, I doubt anybody outside a mathematician had ever even heard of the word trillion before.

As far as unemployment goes, I'm not completely against it. But it should be limited. At least it's something that's earned by prior work. But 2 years worth of unemployment payments? Where is the motivation in that? People get content to stay at home and collect their check.

[mendeleev 68]

And just when will that time be? When will the economy be roaring along at the very same time we're in dire straights in terms of deficit and debt? It's too easy to kick the can farther down the road and let some future government and population deal with it. It's been almost 30 years since we went over the trillion mark in debt. Prior to that, I doubt anybody outside a mathematician had ever even heard of the word trillion before.

As far as unemployment goes, I'm not completely against it. But it should be limited. At least it's something that's earned by prior work. But 2 years worth of unemployment payments? Where is the motivation in that? People get content to stay at home and collect their check.

Taking your two points one at a time:

When will it be time to cut spending and increase taxes (primarily on the rich in order that the tax increase have the least possible contractionary effect)? It is a very good, impt question. If proper stimulus is in place, probably 1-2 years. Will Congress actually do it? Skepticism is warranted -- but which party was the last one to run a balanced budget? (Hint: Clinton was president then, and he put the budget on track toward surplus with his first budget in 1993.) Each GOP president we've had since Eisenhower (maybe Ford, but not really) has presided over an explosion in the deficit. Carter did a decent job holding the line -- a statement hard for many to swallow but go back and examine the facts. My grandfather was a hardcore republican for over 50 years -- until he got so disgusted with Reagan's blowing the budget deficit to unprecedented levels. Gotta hand it to him: he was a budget hawk with integrity, so he left the GOP and ended his life an independent who, at the end of his life, surprised both him and me with praise for Clinton's budget discipline.

Next, we still have a situation where, on average, there are 5 job seekers for each opening. The odds aren't good for job seekers and employers will tend to discriminate in favor of those whose unemployment is shorter rather than longer. (I would -- in fact in a previous recession, I did.) Studies by economics show that unemployment can encourage the unemployed to be pickier during good economic times, but your argument that the unemployed are discouraged from accepting new work is supported by the data, empirically, during severe recessions. Yours is a bias with a certain appeal -- but it simply isn't supported by the data. I have a strong bias (maybe my scientific/technical training kicks in) to act on fact when facts are available.

[mendeleev 68]

As far as unemployment goes, I'm not completely against it. But it should be limited. At least it's something that's earned by prior work. But 2 years worth of unemployment payments? Where is the motivation in that? People get content to stay at home and collect their check.

Alan Greenspan, former chairman of the Federal Reserve, not particularly known for being an out-of-touch liberal, said the following in recent testimony to the Joint Economic Committee of Congress, “nemployment benefit insurance here is essentially restrictive

because it’s been our perception that we don’t want to create incentives for people not to take

jobs. But when you’re in period of job weakness where it is not a choice on the part of people

whether or not they’re employed or unemployed, then, obviously, you want to be temporarily

generous. And that’s what we’ve done in the past, and I think it’s worked well.”

Greenspan was famous, while chairman, for making Delphic statements no one could understand. But this statement is pretty clear, and it recommends an extention of benefits.

[Obama 2012 1,714]

Alan Greenspan, former chairman of the Federal Reserve, not particularly known for being an out-of-touch liberal, said the following in recent testimony to the Joint Economic Committee of Congress, “nemployment benefit insurance here is essentially restrictive

because it’s been our perception that we don’t want to create incentives for people not to take

jobs. But when you’re in period of job weakness where it is not a choice on the part of people

whether or not they’re employed or unemployed, then, obviously, you want to be temporarily

generous. And that’s what we’ve done in the past, and I think it’s worked well.”

Greenspan was famous, while chairman, for making Delphic statements no one could understand. But this statement is pretty clear, and it recommends an extention of benefits.

Alan Greenspan is an idiot.

Not many people will say that out loud, but he's a very large reason why we're in the economic mess that we are in today. Just ask Brooksley Born on that one.

Maybe idiot is extreme, as he knows what he's doing and that's what makes it even more scary. He could have predicted all of this from a mile away, but of course he didn't let that be known out loud mind you as those who he worked for in his position got exactly what they wanted.

[evli1966 88]

Taking your two points one at a time:

When will it be time to cut spending and increase taxes (primarily on the rich in order that the tax increase have the least possible contractionary effect)? It is a very good, impt question. If proper stimulus is in place, probably 1-2 years. Will Congress actually do it? Skepticism is warranted -- but which party was the last one to run a balanced budget? (Hint: Clinton was president then, and he put the budget on track toward surplus with his first budget in 1993.) Each GOP president we've had since Eisenhower (maybe Ford, but not really) has presided over an explosion in the deficit. Carter did a decent job holding the line -- a statement hard for many to swallow but go back and examine the facts. My grandfather was a hardcore republican for over 50 years -- until he got so disgusted with Reagan's blowing the budget deficit to unprecedented levels. Gotta hand it to him: he was a budget hawk with integrity, so he left the GOP and ended his life an independent who, at the end of his life, surprised both him and me with praise for Clinton's budget discipline.

Next, we still have a situation where, on average, there are 5 job seekers for each opening. The odds aren't good for job seekers and employers will tend to discriminate in favor of those whose unemployment is shorter rather than longer. (I would -- in fact in a previous recession, I did.) Studies by economics show that unemployment can encourage the unemployed to be pickier during good economic times, but your argument that the unemployed are discouraged from accepting new work is supported by the data, empirically, during severe recessions. Yours is a bias with a certain appeal -- but it simply isn't supported by the data. I have a strong bias (maybe my scientific/technical training kicks in) to act on fact when facts are available.

I agree with you on the GOP spending us into debt and that Clinton did budget to have a surplus. The problem is the current administration is not doing this. They are the ones that are increasing government spending by the trillions.

Obama will not stop until he is countered in congress or ousted from the White House.

I do not believe in the whole 5 people for every job opening get down here in the trenches and see the people that are currently working 2 jobs (I am not saying it is the best living) to make ends meet.

Yes there are a lot of applicants but there are jobs out there if they would only accept them.

Now there may be job shortages in areas but people need to relocate to support their family not count on government support until one opens where they currently live. I understand moving is a cost in itself but relocating temporarily is an option as well. They also need to look for jobs that may not pay well and possibly work 2 part time jobs.

[mendeleev 68]

Alan Greenspan is an idiot.

Not many people will say that out loud, but he's a very large reason why we're in the economic mess that we are in today. Just ask Brooksley Born on that one.

Thanks, P&V, for another datum consistent with the hypothesis that the current GOP is so extreme that Ronald Reagan, were he a politician today, would be too liberal to get their support.

Is it Greenspan that's the cause of today's mess -- or is it the legacy of the *HUGE* Reagan deficits that started (and both Bush's escalated) long before Reagan appointed Greenspan? Just asking.

[Obama 2012 1,714]

Thanks, P&V, for another datum consistent with the hypothesis that the current GOP is so extreme that Ronald Reagan, were he a politician today, would be too liberal to get their support.

Is it Greenspan that's the cause of today's mess -- or is it the legacy of the *HUGE* Reagan deficits that started (and both Bush's escalated) long before Reagan appointed Greenspan? Just asking.

When you stop being a partisan hack, I will answer you gladly.

[Heracles 417]

So the author is hilarious and understands NOTHING about real economics and growth.

First off - The government cannot create growth and cannot stump growth with PUBLIC sector jobs. Which is what is being described as lost/created in this article.

Losing of 200,000 public sector jobs is actually a GOOD thing. That's millions to billions of dollars saved on salaries, health care, pensions, etc. which overall helps the bottom line for the government.

What needs to happen, is congress needs to go in, extend certain tax cuts that expire at the end of the year. Ones that will directly effect small businesses for one. Congress also needs to go into "too bad, so sad" mode for those who have been unemployed for 99 weeks or more. Tell them to get up off their butts, go to Wal-Mart and get a damn job. Move into a smaller apartment. Move somewhere they can afford and LIVE WITHIN THEIR CURRENT MEANS.

Sometimes basic common sense has to sink in here. I know we're talking about Washington. I know we're talking politics, but at the end of the day, we cannot afford to spend a few billion here and a few billion there. We can't afford to keep holding people up as it does nothing to fix the overall problems facing us today.

The PRIVATE sector is what creates growth, makes the government money, allows government employees to even exist, etc.

You can't do a damn thing promoting spending on public grants, public employees, etc. It's a horrible idea and the government actually loses more money than they make. It's a continued spiral of negative growth, especially if you raise taxes and try and take more money from the hurting private sector in the process.

Ugh. ####### opinion article like that in the OP really irk me in their ignorance. It's all 'touchy feely" and has no intellect behind it whatsoever.

Well the private sector has done a piss-poor job at creating jobs in this country. In fact, they [in particular] have fired a good portion of Americans.

So what's your suggestion? That the government eliminate all spending and reduces taxes to zero. Let the infrastructure crumble further, disband the military and so forth. Then what? You tell me how and what this reduction in spending and taxes to zero will accomplish, well other than send the country to third world status.

How about you go work at Walmart and then come tell me how good you have it? What sort of geniuses actually want everyone in their country to just lower their living standard? While every other country is trying to improve their citizens Q.O.L, you and many others here actually advocate the exact opposite. While corporations like walmart earn $400 billion annually, exporting jobs to China, Americans should just downsize more and live in third world countries. That attitude that so many have here is just pathetic. Never in my life have a I heard anyone suggest others basically go live in a box if need be, well not outside the US.

Edited July 7, 2010 by Booyah!

[Obama 2012 1,714]

Well the private sector has done a piss-poor job at creating jobs in this country. In fact, they [in particular] have fired a good portion of Americans.

So what's your suggestion? That the government eliminate all spending and reduces taxes to zero. Let the infrastructure crumble further, disband the military and so forth. Then what? You tell me how and what this reduction in spending and taxes to zero will accomplish, well other than send the country to third world status.

How about you go work at Walmart and then come tell me how good you have it? What sort of geniuses actually want everyone in their country to just lower their living standard? While every other country is trying to improve their citizens Q.O.L, you and many others here actually advocate the exact opposite. While corporations like walmart earn $400 billion annually, exporting jobs to China, Americans should just downsize more and live in third world countries. That attitude that so many have here is just pathetic. Never in my life have a I heard anyone suggest others basically go live in a box if need be, well not outside the US.

The private-sector I am referring to has had a loss of the tools necessary to spark/create jobs to be quite honest. All thanks to the Federal government, over-regulation, taxes out the ####, etc. It's not easy to be a small business in some cities/states.

I'm not talking about corporate America such as Wal-Mart. I'm talking Mr. John Deere tractor company owner, I'm talking about Mr. small chain of private restaurants that barely make a profit or are just lucky to break even. Hell the health care bill alone is a death tax on small businesses that might be lucky enough to have over 50 people working for them. While some might not call that too small, at the same time when as I said you aren't running big profits and are lucky to break even, having to spend extra tens if not hundreds of thousands of dollars is a near impossibility.

Hell, small businesses in some areas actually have to incorporate to SAVE money. How sad is that? Do get a tax break, they have to become a corporation... lol. It's pathetic really. Our tax system is so jacked up and so built against small America.

I'm not cheering for a loss of QOL, but I'm saying you've got to do what you've got to do to survive. Going deeper in debt is not the answer. Fighting for what's right though is the answer ultimately. No one is willing to do that however. Everyone wants to talk about more 'benefits' for them or how much it sucks that might lose their $400,000 home they couldn't really afford in the first place. Oh well I say to that. Look at who's to blame for the problems. It's ultimately the corporate banks and their hooligans.

It's not a republican or democrat issue either. Though many will make it out to be. The "party of no" worked for them for quite awhile and now the party of socialism is working for them now. Hell, guess what. They are already making money again! On our backs mind you! Of course Noooo we don't talk much about that. We don't talk about the lengths of what happened and why it happened and why they should have never been bailed out to begin with.

Ignorance is all around. I'm not saying we don't need infrastructure. Sure we do. Great, let's work on it. Let's sell back some Federally owned land to people, small businesses owners, young entrepreneurs, etc. and give them incentives to develop on it and do something for the public good. Hell, the state with the best infrastructure in the country has 93% privately owned land... How did that happen? Funny really... Where there's a will, there's a way. -- Want a new freeway built? Easy: Let a private company pay for it and charge tolls on it for the next 50 years. Make half of it freeway, the other half tollway. It's not difficult really. 3 lanes free, 3 lanes toll on both sides... Split the cost, whatever. There's always options.

Regardless though, we cannot continue down the same dangerous path we have been headed down for awhile now. It's spinning further and further out of control and honestly at this point the only way to get out of it is to hold a blade to someone like China's throat and demand they forgive our debt (and i know quite a few intelligence officers who say it's an option..) we owe them to help out...

A hole was dug and those who caused it or not paying for it. Honestly, I would love to see Alan Greenspan in prison. He had a lovely hand in creating this mess. Of course too many don't pay attention to the power he had and the hammer of an arms he was to setup this mess... whatever though, ignorance is bliss.

[Heracles 417]

You and I clearly see two totally different realities. Other countries don't treat their government workers like #######, pay them poorly and then complain. Not only is this a moronic attitude, but the end result speaks for itself.

Small businesses get a hell of a lot of tax breaks and able to make use a large number of deductions. Whereas, as a salaried worker, I don't get pretty-much any tax breaks. Speaking of small business, I also wouldn't work for some small business for the life of me. Too demanding, expect a lot and don't pay anywhere near as well.

Paul, the reality is that I've never heard of someone having to work two or three jobs to make ends meet prior to coming here. You talk as if the 60,000,000 Americans living in poverty [entire UK Population eqv] are living it up, which is simply not reality. Realistically what more can these people cut?

What gets me about every single Libertarian on here is your ability to go on and on about something based on opinion, yet flat-out ignore reality and often refuse to accept what is or is not working abroad. The Chinese Communist government will beat the US, yet you guys will still be going on about less taxes, less government etc etc etc.

Edited July 7, 2010 by Booyah!