Grow Now, Cut Deficits Later

[Direckshun]

The Wall Street Journal talking some sense.

http://online.wsj.com/article/SB1000...googlenews_wsj

The Long and Short of Fiscal Policy
The economy is too shaky to go cold turkey. We need more stimulus now and deficit reduction later..

by Alan Binder
May 21, 2012, 7:03 p.m. ET

Can we talk about the federal budget deficit? Better yet, can we think about it? For there has been a lot more talking than thinking. One persistent point of confusion arises from the radically different macroeconomic effects of larger budget deficits in the short and long runs.

In the short run—let's say within a year or so—a larger deficit, whether achieved by spending more or taxing less, boosts economic growth by increasing aggregate demand. It's pretty simple. If the government spends more money without raising anyone's taxes to pay the bills, that adds to total demand directly.

But don’t we need to reduce the deficit—and by large amounts? Yes, we do, but that’s in the long run, where the effects of larger deficits are mostly harmful to economic growth. In the jargon, more government borrowing tends to ‘crowd out’ private borrowers by pushing interest rates up… There is an important exception, however, which is highly germane to today’s situation… Right now, the U.S. government can borrow for 10 years at under 2% per annum. At these super-low interest rates, you don’t have to be a genius to find many public infrastructure projects with strongly positive net present values. Borrowing to make such investments will enhance long-run growth, not retard it.

Looking ahead, the lion’s share of projected future deficits comes from rising health-care expenditures. Some of this cost escalation stems from heavier usage—consuming more health services per capita. But most of it comes from ever-rising relative prices; health care just keeps getting more expensive relative to almost everything else… So here, in brief, is my three-step rehab program for our nation’s fiscal policy. First, enact a modest stimulus, sharply targeted on job creation—and avoid falling off the fiscal cliff. Second, once the economy is ready, start on something that resembles the 10-year Simpson-Bowles deficit-reduction plan—which would pay for the stimulus 15-20 times over. Third, figure out how to bend the health-care cost curve downward.

[KurtCobain]

This is just the nonsense I can't get down with. You get money then you buy things.

[J Diddy]

Originally Posted by KurtCobain

This is just the nonsense I can't get down with. You get money then you buy things.

I get rid of dollar and replace with cattle. Once that done we go on a feeding spree. This will fix all economy problem, food, and global warming.

Boom, Sarah Palin 2016.

[KurtCobain]

Originally Posted by J Diddy

I get rid of dollar and replace with cattle. Once that done we go on a feeding spree. This will fix all economy problem, food, and global warming.

Boom, Sarah Palin 2016.

I buy it.

[Buzz_TinBalls]

Originally Posted by Direckshun

The Wall Street Journal talking some sense.

http://online.wsj.com/article/SB1000...googlenews_wsj

The Long and Short of Fiscal Policy
The economy is too shaky to go cold turkey. We need more stimulus now and deficit reduction later..

by Alan Binder
May 21, 2012, 7:03 p.m. ET

interesting, but naive. for every $1 the gov't earmarks for "infrastructure" another $10 is needed to manage, police & refinance the over budget boon -- rinse & repeat.

the one thing this article nailed & most ppl don't understand, is that our gov't is siphoning private industry investment resources at an enormous rate. getting a SBL is damn near impossible unless it is in specific industry.

meanwhile, the walmart corp sells chine goods almost exclusively because american goods cannot compete with the market. imo walmart is for all intents & purposes, a chine company.

there's a direct fix, but it would require america own up to the fact the USD is worth far less than current value and import tariffs would need to be greatly adjusted, nafta nulified.

[Amnorix]

Originally Posted by petegz28

Why is #1 crackers? A stronger $ seems to always coincide with a stronger economy. Intentionaly keeping the $ weak is hurting us on several fronts.

We've had this discussion before, though it was a year or so ago.

Basically, you've got your cause/effect backwards, suggesting that a stronger dollar leads to a stronger economy. They do tend to COINCIDE (your perfectly correct word), but it's because the stronger economy is LIFTING the purchasing power of the dollar.

[Amnorix]

Originally Posted by DementedLogic

When we think about solving problems, our thought process needs to be "How can we fix this problem with less government?". #2 is more government intrusion in business. We can't fix the problem of too much government by growing government.

You are fundamentally mistaken in the most basic way possible. Government is already DECIDING what is, and what isn't, an exempt job and therefore a job that is subject to being categorized as salaried (i.e. no overtime), versus non-exempt and therefore subject to the overtime provisions etc. of the Wage and Hour Act.

You're basically arguing that referees shouldn't get involved in what is and what isn't offsides in football. The very concept makes no sense. The government is ALREADY making those determinations.

What we're saying is adjust the rules a little bit in a way that will encourage employers to hire more employees rather than squeeze the shit out of its workforce. It's not a fundamental change, it's an adjustment to existing regulations.

[FD]

Romney is on board

Halperin: You have a plan, as you said, over a number of years, to reduce spending dramatically. Why not in the first year, if you’re elected — why not in 2013, go all the way and propose the kind of budget with spending restraints, that you’d like to see after four years in office? Why not do it more quickly?

Romney: Well because, if you take a trillion dollars for instance, out of the first year of the federal budget, that would shrink GDP over 5%. That is by definition throwing us into recession or depression. So I’m not going to do that, of course.

http://www.washingtonpost.com/blogs/...6LqU_blog.html