The US Economy

According to Bill Moyers, we only need look at the McKinley Administration just a century ago to see how Bush's economy will turn out. We are history repeating itself. The corporate and elite favoritism, the privatization, the tax cuts, the whole nine yards. How did it turn out for McKineley? Well, the people got pissed off and there were baron wars and sagebrush rebellions and unionizing and yadayada ya. Moyers theorizes that the brain, Karl Rove has patterned GW's whole presidency from the beginning on McKineley's. I am going to have to read up on McKineley myself. I think he was assassinated.

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Welcome, Moot! I'd rather see him survive and be dragged through the mud he's created.

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http://www.welovetheiraqiinformationminister.com/images/07-minister.jpg

"There are no stimulative effects from Bush's policies, I tell you, none! Not a single one! We have slaughtered them all!"

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Thomas, Your post makes the most sense in terms of our macro-economy. We have trillions of dollars floating around in this world, and this president's monetary policy only worsens the future "real" growth. Too much money in circulation equals inflation. Unfortunately, most people don't understand that very simple rule.

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Thomas wrote:

Scrat wrote:

Thomas wrote:
The rest were cuts or abolishments of other taxes (capital gains, estate, inheritance ....) which benefitted the top few percent of the income distribution almost exclusively.

Only if you assume that there is no benefit to the economy,

Economists think it's a tradeoff.

(Jesus...) SOME economists may think that, others likely do not. Care to cite any rather than pretending to know what every economist thinks?

Thomas wrote:

There is a long-term benefit to the economy because long-run growth depends on the rate of capital accumulation. On the other hand, the cuts are financed with a rise in government debt, which impedes long-term growth by crowding out private investment.

That last is only true if the economy stays flat, but it isn't, it's growing, which means tax revenues are growing and reducing the projected deficits you want to tell us are the poison filling to our economic pie.

Half of any story usually sounds pretty bad.

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Scrat wrote:

Thomas wrote:
Scrat wrote:

Thomas wrote:
The rest were cuts or abolishments of other taxes (capital gains, estate, inheritance ....) which benefitted the top few percent of the income distribution almost exclusively.

Only if you assume that there is no benefit to the economy,

Economists think it's a tradeoff.

(Jesus...) SOME economists may think that, others likely do not. Care to cite any rather than pretending to know what every economist thinks?

I was referring the standard exposition given in, among other places, in

1) Gregory Mankiw, Principles of Economics
2) Gregory Mankiw, Macroeconomics
3) Paul Samuelson/ WilliamNordhaus: Economics
4) Olivier Blanchard: Macroeconomics
5) Rudi Dornbusch, Stanley Fisher: Macroeconomics
6) J. Bradford de Long: Macroeconomics. A draft of the book is available online. You can download the PDF files here. here.

For the conservative minority case, see

Robert Barro: Macroeconomics, 5th edition.
Milton Friedman: Essays in positive economics.

May I suggest that you do what you advised Wolf to do in the Global Warming thread? Read a freshman textbook on the subject you hold such passionate opinons on? What I told you in my last post ist mostly stuff that is uncontoversial among professional economists. To the extent opinions differ, I clearly stated it. There simply is no respectable economic theory under which Bush's fiscal policy is clearly a good thing, while it is clearly a bad thing according to the standard textbook version. Go figure.

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Thomas - If you could actually erase the meat of my arguments, instead of just failing to quote them or respond to them, you might have a better chance at pretending I never made them. I did make them, and I'll stand behind them (knowing that they show I need not do the remedial study work you suggest) and refrain from chasing your white rabbit down its hole, thanks.

FYI: That you can cite several economists does not mean you have shown what all economists think. (I suspect you know this, but perhaps you're too stubborn to acknowledge it.)

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Scrat's quote, "FYI: That you can cite several economists does not mean you have shown what all economists think. " This quote just goes to prove you have no idea what economics is all about. "All?" Yeah, sure.

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Scrat wrote:

Thomas - If you could actually erase the meat of my arguments, instead of just failing to quote them or respond to them, you might have a better chance at pretending I never made them.

I was trying to be nice. Because you clearly reveal you have yet to read a single economic principles textbook when you write stuff that simply isn't true, like:

Scrat wrote:

That last is only true if the economy stays flat, but it isn't, it's growing, which means tax revenues are growing and reducing the projected deficits you want to tell us are the poison filling to our economic pie

But maybe it's a relief for you that I'm giving up. Teaching textbook economics to you is about as futile as teaching wolf the basics of physics and biology. And that's a high standard of futility indeed.

Bye.

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Thomas wrote:

Scrat wrote:
Thomas - If you could actually erase the meat of my arguments, instead of just failing to quote them or respond to them, you might have a better chance at pretending I never made them.

I was trying to be nice. Because you clearly reveal you have yet to read a single economic principles textbook when you write stuff that simply isn't true, like:

Scrat wrote:
That last is only true if the economy stays flat, but it isn't, it's growing, which means tax revenues are growing and reducing the projected deficits you want to tell us are the poison filling to our economic pie

But maybe it's a relief for you that I'm giving up. Teaching textbook economics to you is about as futile as teaching wolf the basics of physics and biology. And that's a high standard of futility indeed.

Bye.

I hate to spoil your storming off in a huff, but this news report seems to suggest that I do in fact know what I am talking about (of course, if it makes you feel better about yourself to pretend I'm an idiot, be my guest):

Quote:

U.S. tax receipts improving, less deficit

WASHINGTON, Oct. 11 (UPI) -- The amount of federal taxes relative to the overall economy has dropped to their lowest level since Dwight D. Eisenhower was president in the 1950s.

The Congressional Budget Office said the deficit for fiscal 2003, at the close of Sept. 30, was $374 billion, or $27 billion less than the CBO forecast in August, but without the improving economy the deficit would have been larger.

"It's early to celebrate, but there are indeed hopeful signs," said White House Budget Director Joshua B. Bolten.

Tax receipts, including corporate taxes, came in stronger than forecast indicating improving corporate and personal incomes, while there was less spending than forecast for welfare payments, health care and unemployment benefits, the Washington Post reported. Complete Story...

But perhaps the folks at the Congressional Budget Office and the White House Budget Director have likewise "yet to read a single economic principles textbook". Rolling Eyes

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Scrat wrote:

I hate to spoil your storming off in a huff

no you don't

Scrat wrote:

but this news report seems to suggest that I do in fact know what I am talking about

No it doesn't. And your quote proves my point even stronger than I could hope for.

The CBO, as quoted by Scrat wrote:

U.S. tax receipts improving, less deficit

... meaning less deficit than the CBO originally expected, not less deficit than without the tax cuts.

The CBO, again as quoted by Scrat wrote:

Tax receipts, including corporate taxes, came in stronger than forecast indicating improving corporate and personal incomes

again, that means tax receipts came in about $30 billion stronger than the CBO expected, not stronger than without about $200 billion worth of tax cuts.

Scrat wrote:

But perhaps the folks at the Congressional Budget Office and the White House Budget Director have likewise "yet to read a single economic principles textbook".

No they don't, because they know what their comparison is when they say things like 'less deficit' and 'stronger tax receipts'. You, on the other hand, consistently quote a comparison with an earlier forecast and treat it as a comparison with an alternative scenario. Moreover, you consistently ignore that the CBO's correction is about 15 percent of the originally projected loss of government revenue. For the correction to prove your point, it would have to be more than 100 percent. The latter demonstrates that reading an economics textbook would help you. The former demonstrates that you might also find it helpful to work on your reading comprehension.

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Thomas, you offer cogent argument, which you present well. I have more than passing familiarity with the works of the scholars you cite. Still, my osition here is not the same as yours. I can pretty much see where you're coming from, but I'm perplexed that you got from there to here.

To carry on with the current theme, I do happen to believe enhanced tax revenue due to increased taxable earnings will have a significant ameliorative impact on the admittedly balooning deficit. Without spending restraint, it cannot solve the problem. That part bothers me increasingly. I think The Current Administration's economic policies, while not unflawed, are heavily contributory to the emergent recovery, which recovery I feel should blossom into broad, vigorous, sustainable expansion of the overall economy, both domestic and global. Of course, that will be a lot easier on a diet of far less pork, a problem which dwarfs fraud and waste almost to the point of insignificance. Tariffs aren't a bright idea in the current situation, either. I'm not completely comfortable with current dollar-valuation policy; on the one hand, it does encourage exports, on the other, it could greatly inconvenience other currencies, many of which are far more dollar-dependent than they wish to admit.
The Euro itself is more an accepted currency than an established one, and is helped not at all by the the fiscal policies of France and Germany or the squabbling over the EU constitution. Interesting times lie ahead.

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timberlanko wrote:

Thomas, you offer cogent argument, which you present well.

Thank you, and so do you!

timberlandko wrote:

Still, my position here is not the same as yours. I can pretty much see where you're coming from, but I'm perplexed that you got from there to here.

Fair enough -- so what are the inconsistencies between my conclusions and my economics? I'd be happy to correct them.

timberlanko wrote:

To carry on with the current theme, I do happen to believe enhanced tax revenue due to increased taxable earnings will have a significant ameliorative impact on the admittedly balooning deficit.

If you mean 'enhanced tax revenue' as in 'enhanced compared to a scenario where you have a tax cut, but where people neither spend nor invest their tax cuts at all', I agree -- and so does every card-carrying economist. If you mean 'enhanced' as in 'enhanced compared to a scenario where there isn't any tax cut in first place', I disagree. And so, as I understand it, does every card-carrying economist. What is the reference point to your comparison? And if the reference point is tax revenue that would have been collected without a tax cut, what are your sources saying the tax cuts raised it? I'd be happy to consider them.

timberlanko wrote:

Without spending restraint, it cannot solve the problem. That part bothers me increasingly.

I agree. And if you are familiar with Barro's work, you know he basically says that spending is the only thing that matters (as long as the government stays solvent). Governments spend, and they have to pay their bills, plus interest, at some point. Given that, according to Barro, tax cuts simply shift this point further into the future, while tax increases simply shift the point closer to the present.

As it happens, federal government spending is increasing under Bush.

timberlanko wrote:

I think The Current Administration's economic policies, while not unflawed, are heavily contributory to the emergent recovery

I agree, minus your 'heavily', if the alternative considered is to do nothing at all -- which nobody had proposed.

timberlanko wrote:

which recovery I feel should blossom into broad, vigorous, sustainable expansion of the overall economy, both domestic and global.

I agree. But that "vigorous sustainable expansion" is happening because of the new economy, just like it did at the end of the nineties. Neither Bush nor Clinton had anything to do with that. I pass over the rest of your post, which I agree with. Especially the last line: "Interesting times lie ahead"

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Thomas - Ah, well if that was your point, why bury it under all the huff and bristling where nobody can find it?

Of course, I happen to believe that in time we will see the deficit shrink to where we are in better shape than we would have been without the tax cuts. Now, feel free to call me names and insult my intelligence for thinking that, but it's what we here in the heartland call a matter of opinion.

Now, do us both a favor and make good on that promise to run off and leave me to my stupidity. Thanks. Cool

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Mind the sticks, kids ... poke at the issues, not each other, please.

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timberlandko wrote:

Mind the sticks, kids ... poke at the issues, not each other, please.

Okay, Daaaaaad. :wink:

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The reports on this christmas season shopping kickoff seems encouraging. Consumer spending is needed to grow our economy, and christmas is a good indicator - IMHO.

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Early reports from the Malls do seem upbeat. Too soon to tell, of course, but I would be unsurprised were initial estimates both for the day and for the entire shopping season to have been unduly cautious. Even Target and WalMart, two retailers which earlier this month had warned that 4Q earnings might falter, are now hedging that bet, both indicating analyst expectations appear now to be "in line" and "achieveable". Upscale marketers, such as Macy, Nordstrom, and Neiman Marcus are reporting strong week-over-week sales gains. This indeed is promising.

The Democrats' economic doom-ranting may be the victim of "Shop and Awe" Laughing

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Manufacturing index near 20-year high

Nation's purchasing managers say business conditions much stronger than expected in November.
December 1, 2003: 11:10 AM EST

NEW YORK (CNN/Money) - U.S. manufacturing accelerated in November, the nation's purchasing managers said Monday, in a report that was the strongest in nearly 20 years and reinforced analysts' hopes that the long-sluggish economy is finally in a classic, self-sustaining expansion.

The Institute for Supply Management (ISM) said its index of manufacturing activity jumped to 62.8 from 57 in October. Economists, on average, expected an ISM index of 57, according to Briefing.com.

The index was the highest since 69.9 in December 1983 and has been above 50, a number that indicates expansion in the sector, for five straight months.

"It appears that the recovery is gaining momentum. Indications are that the manufacturing sector is ending 2003 on a very positive note, and all of the indexes support continued strength into 2004," said Norbert Ore, director of the ISM's survey committee. "While there are still companies lagging the recovery, they should be encouraged by the current indicators in the sector."

Full story

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