that is the biggest bunch of bullshit I've ever read. So much of those theories are conditional and dependant on several variables... if you truly believe the best way to spark investment, entrepreneurism, and consumer confidence is to raise taxes, you're the one in la la land. By your rationale, we should tax the living shit out everyone and everything for a reeeeeally sound economy. It is precisely times like that (when taxes are raised) when the wealthy who invest and those to create job opportunities in the private sector hold on tighter to their money and lay people off to cut costs.

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Originally posted by The17sss that is the biggest bunch of bullshit I've ever read. So much of those theories are conditional and dependant on several variables... if you truly believe the best way to spark investment, entrepreneurism, and consumer confidence is to raise taxes, you're the one in la la land. By your rationale, we should tax the living shit out everyone and everything for a reeeeeally sound economy. It is precisely times like that (when taxes are raised) when the wealthy who invest and those to create job opportunities in the private sector hold on tighter to their money and lay people off to cut costs.

Whoa there, that's not what it said. It said if one is to truly believe that economic growth is contingent on tax policy alone, that is the only valid conclusion. Therefore the relationship between growth and tax policy is probably not as strong as we thought. That's all it said - it didn't advocate raising taxes; it merely pointed out that logically, if you really believed tax policy was the sole cause of economic growth or decline, that raising taxes would be the more valid conclusion.

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Lower taxes are only good when money isn't BORROWED to lower them.

That's what I got out of the article..and it is absolutely true. If you reduce taxes while increasing the deficit, the burden is only shifted around to other areas. The national debt will increase and the currency will be devalued, so people end up being hurt just as much (if not more) than they would have been with a higher tax rate and balanced federal budget (+ stronger currency).

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Originally posted by Lebezniatnikov Whoa there, that's not what it said. It said if one is to truly believe that economic growth is contingent on tax policy alone, that is the only valid conclusion. Therefore the relationship between growth and tax policy is probably not as strong as we thought. That's all it said - it didn't advocate raising taxes; it merely pointed out that logically, if you really believed tax policy was the sole cause of economic growth or decline, that raising taxes would be the more valid conclusion.

whoops... sorry man I took what you initially said the wrong way.

Krugman has been writing a lot about how the current Obama plan probably isn't enough:

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Romer and Bernstein on stimulus OK, Christina Romer and Jared Bernstein have put out the official (?) Obama estimates of what the American Recovery and Reinvestment Plan would accomplish. The figure above summarizes the key result. Kudos, by the way, to the administration-in-waiting for providing this — it will be a joy to argue policy with an administration that provides comprehensible, honest reports, not case studies in how to lie with statistics. That said, the report is written in such a way as to make it hard to figure out exactly what’s in the plan. This also makes it hard to evaluate the reasonableness of the assumed multipliers. But here’s the thing: the estimates appear to be very close to what I’ve been getting. The key thing if you want to do comparisons is to note that I made estimates of the average effect over 2009-2010, while they do estimates of effect in the fourth quarter of 2010, which is roughly when the plan is estimated to have its maximum effect. So they say the plan would lower unemployment by about 2 percentage points, I said 1.7, but their estimate may actually be a bit more pessimistic than mine. They have the plan raising GDP by 3.7 percent, but that’s at peak; I thought 2.5 percent or so average over 2 years, again not much difference. So this looks like an estimate from the Obama team itself saying — as best as I can figure it out — that the plan would close only around a third of the output gap over the next two years. One more point: the estimate of what would happen to the economy in the absence of a stimulus plan seems kind of optimistic. The chart above has unemployment ex-stimulus peaking at 9 percent in the first quarter of 2010 and coming down through the year; the CBO estimates an average unemployment rate of 9 percent for 2010, so the Obama people are more optimistic than the CBO, and a lot more optimistic than I am. Bottom line: even if I use the Romer-Bernstein estimates instead of my own — there really isn’t much difference — this plan looks too weak.

http://krugman.blogs.nytimes.com/20...in-on-stimulus/

Josh Marshall also has a pretty good take on the political aspects of the Obama plan:

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What to Worry About There's a lot of empirical evidence and a lot of very knowledgeable people who believe the Obama Stimulus Plan (the general outlines of which are coming into focus) is simply not big enough -- not only in overall dollar size but also in the kinds of spending included in it. Paul Krugman has been posting on the issue at his blog, particularly in this post. And this article in the Times covers it more broadly. http://www.nytimes.com/2009/01/10/w...&pagewanted=all The debate about spending priorities essentially comes down to how much bang for your buck you get in economic stimulus terms for tax cuts or rebates (even for middle or low income people most inclined to spend it) versus government spending, especially in the context of a dramatic economic downturn. And from what I can tell there's a lot of empirical evidence that the latter wins out by a substantial margin. And yet the desire to get a substantial number of Republicans to vote for the bill appears to be having a big impact on the proposal's size and shape. Quite likely, leaving it too small and too tilted toward tax cuts to get the job done. Late Update: Nate Silver has an interesting and at least partly persuasive political interpretation (thanks to TPM Reader EW for flagging it for me) of what's going on here: namely, that Obama is trying to start low and let the bidding run higher, leaving it mainly to the Senate Dems to do the heavy lifting of bidding the thing up. Remember, Obama himself did seem to hint at such a strategy earlier last week. http://www.talkingpointsmemo.com/ar...l_and_build.php If we assume for the sake of the conversation that this or something like it is Obama's strategy, my reaction is two-fold. First, the legislative process is always messy. But this is a case where you want it to be as little messy as possible. We're spending a staggering amount of money here -- and for both political and policy reasons, you want it to be focused, efficient (in terms of delivering stimulus) and focused on spending projects that will not only employee people in the medium term but spur efficiencies, economic growth and other good things for the long term. If you get deep into a lot of bidding and horse-trading you get more parochial interests in the mix which cuts against those goals. I don't say that makes it a bad idea necessarily. But it's a real concern. Second, when I write stuff critical of Obama, either on the policy or political fronts, there's always a rush of emails saying, 'Give him a chance!' 'Leave Obama alone!' 'He's probably got a plan you don't know about!' and so on. He may. I hope he does. But all of these debates are dynamic. You never assume anything. If Nate's right about what Obama's plan is, having people pushing for something better from the outside is part of it. So under either scenario, holding your tongue makes no sense, in addition to being unethical. Final Saturday Night Update: Here's a piece from the Post about concerns about the make-up of the bill. --Josh Marshall

http://www.talkingpointsmemo.com/ar...worry_about.php

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Here's a post by Digby pertaining to a show on CNN called "I.O.U.S.A." to which I think his reply to the show is relevant to the discussion (emphasis mine below):

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Americans have been mentally trained over the past few decades to believe drivel like that--- the free market is always the preferred method to solve economic problems, that the government should be run like a business (or your household budget) and, most importantly, that government is the cause of problems, not the solution. This deficit obsession plays into all those beliefs and makes it very difficult to explain in the middle of the crisis that the government isn't a business or a household and needs to go further into debt in periods when everyone else is trying to escape it. And, needless to say, it also sounds like the tax 'n spend libruls are at it again. I'm sure it hasn't escaped anyone's notice that the deficit scolds are coming out of the woodwork now that the Republicans brought us to the brink, slashing taxes for the wealthy, larding their own contributors with earmarks, solidifying the notion that military industrial complex spending is a sacred, untouchable icon, and fetishing and deregulating the market until they finally brought the whole system to its knees. They certainly didn't say much about the debt while it was adding up these last eight years. They did the same thing during the 80s, which is why Cheney uttered "Reagan proved deficits don't matter. (What was left out was "for Republicans." Democrats are endlessly and relentlessly harassed about deficits --- as they clean up the big mess the deficit spending Republicans leave behind.) They've reanimated the yellow peril, which is only fitting. Last time, we were told that Japan was taking over the country by buying up all of our real estate. This time it's the Chinese buying up all our bonds. (In 92, Perot put a little zesty mexican salsa in the recipe.) It's always something. The foreigners are going to kill us in our beds unless we cut social security and medicare. And if we even think of enacting any new "entitlements" (a conservative buzzword designed to make you think people are getting something they don't really deserve) it's pretty clear that the Asian hordes are going to destroy our way of life (if the muslims don't get to us first.) One of the fundamental characteristics of shock doctrine economics is extreme complexity for which a simple, intuitive solution is proposed. It's hard to argue with and it's hard to resist. Here are famous people who really seem to understand what's going on and the solutions they propose just seem like common sense. Even Joe the plumber can see how right their view is. Unfortunately, they're completely wrong --- at least if you care about the country as a whole and the suffering of the millions of people who will have to endure their "solutions." It's highly unlikely that they will fully have their way on this. We are in deep shit and there are a lot of very smart people who know the deficit is the least of our problems at the moment and that "entitlement reform" is one sure way to deepen the panic and make personal spending contract further than it needs to. (There's a lot of wealth among seniors and near seniors. I can't imagine that chit-chat about how social security is going broke is particularly good news to people who've just lost a good portion of their portfolios in the real estate plunge and the stock market crash.) But these people are going to cause trouble, which comes as no surprise to me. I've been writing about this for years. It's one of the reasons why I believe in liberal rhetoric (and, yes, the dreaded "ideology.") If you don't bother to educate people counter to the myths and propaganda they hear from the right, they have nothing to hold onto except faith in the Democrats in the face of arguments that have been built layer by layer over many years. (And having faith in Democrats really take courage.) The fact that they refuse to do this doesn't automatically spell failure for democratic policies, but it makes it many times harder to succeed. They don't even seem to intend to do tank the stimulus, just restrict it. What they are doing is setting the stage for entitlement cuts and a swift, premature pullback on government spending --- thus extending the crisis. And if the Democrats are cowed by these people (they always are --- they hate being called spendthrifts) there will be enough egomaniacs in the congress to hamstring the administration and force them to adopt these "common sense" methods of running the economy --- which is precisely how we got into this problem in the first place. http://digbysblog.blogspot.com/2009...nt-believe.html

No one is crazy about having to spend a shitload of money. And I guarantee you Obama is the last person to be happy about it, especially considering all the other programs he wanted to go after that required a healthy amount of $ that are now on the backburner. We're in a fucking mess, and the options are few to get us out. And until someone demonstrates that massive taxcuts which a gigantic proportion go to the wealthy somehow trickles down and stimulates the middle and lower class to spend a buttload of money will magically stimulate our economy, I will continue to disagree with such ideas purported by Limbaugh and the GOP that this will somehow work.

In fact, I would advocate the exact opposite. It's not that I don't appreciate a little extra back on my income taxes come April, and I of course appreciate a coupla hundred dollar check from the government like we got last June. But did this compel me to spend more $ and help out our economy? Or did I use that money to pay down my massive student loan debt and/or smaller credit card debt at the time? (hint: the latter, not the former).

These gifts are all well and good, but this is not the time for that. IMO, the most important gift you can give me and the rest of the middle class that I sit with is to increase my wages to match the cost of living. The stagnant wage growth is what has killed us, especially when we compare the wages of those in the top 10% or 1% which have skyrocketed versus the middle class. And the only thing that jackasses like Bush have done is increase that difference to ridiculous proportions (and yes, Bubba did it too to a healthy extent), so that the only way to keep up with the cost of living is to borrow $ via credit cards, loans, etc. And it's only getting worse.

Will Obama address this soon? Probably not - he's got way too much on his plate as it is, and creating jobs admittedly has to likely supersede this notion in the short run in order to get the economy moving in the right direction. But hopefully the fucking Beltway bureaucrats will pull their collective heads out of their asses and come to the realization that stagnant wages to the lower and middle class must be addressed sooner rather than later.

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Whence September dusk grows crisper still,
with leaves all crimson conquered,
I yearn to shout,
and dance about,
and stick pickles in my honker...

Just read a pretty down to earth opinion column from John Stossel about Obama's economic plan... makes some good points.

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Arrogant Conceit: Obama Thinks He Can Reform The Economy Barack Obama wants to use the recession to remake the U.S. economy. "Painful crisis also provides us with an opportunity to transform our economy to improve the lives of ordinary people," Obama said. His designated chief of staff, Rahm Emanuel, is more direct: "You never want a serious crisis to go to waste" (http://tinyurl.com/5n8u58). So, they will "transform our economy." Obama's nearly trillion-dollar plan will not merely repair bridges, fill potholes and fix up schools; it will also impose a utopian vision based on the belief that an economy is a thing to be planned from above. But this is an arrogant conceit. No one can possibly know enough to redesign something as complex as "an economy," which really is people engaging in exchanges to achieve their goals. Planning it means planning them. Obama and Emanuel want us to believe that their blueprint for reform will bring recovery from the recession. Yet, we have recovered from past recessions without undertaking a radical social and economic transformation. In fact, reform would impede recovery. This is not the first time a president chose reform over recovery. Franklin Roosevelt did it with his New Deal, and the result was long years of depression and deprivation. Roosevelt's priorities were criticized not just by opponents of big government but by none other than John Maynard Keynes, the British economist whose theories rationalized big government. Before FDR had been in office a year, Keynes wrote him an open letter, which was printed in The New York Times: "You are engaged on a double task, Recovery and Reform; -- recovery from the slump and the passage of those business and social reforms which are long overdue. For the first, speed and quick results are essential. The second may be urgent, too; but haste will be injurious. ... [E]ven wise and necessary Reform may, in some respects, impede and complicate Recovery. For it will upset the confidence of the business world and weaken their existing motives to action. ... Now I am not clear, looking back over the last nine months, that the order of urgency between measures of Recovery and measures of Reform has been duly observed, or that the latter has not sometimes been mistaken for the former." Note Keynes's concern. Government interventions, such as the cartelizing of industry through the National Recovery Administration, "will upset the confidence of the business world and weaken their existing motives to action." In other words, investors will not take the risks necessary for recovery if their profits and freedom are subject to unpredictable government action. Economic historian Roberts Higgs calls this phenomenon "regime uncertainty." Keynes's letter apparently had little influence on Roosevelt, who stuck to his plan. In his second inaugural address a few years later, FDR feared that signs of recovery had jeopardized his reform plans by removing the sense of emergency: "To hold to progress today, however, is more difficult. Dulled conscience, irresponsibility and ruthless self-interest already reappear. Such symptoms of prosperity may become portents of disaster! Prosperity already tests the persistence of our progressive purpose." What a shame. Free people enjoying their lives make it harder for the administration to forcibly impose its utopian vision on them. Obama wants to act quickly. In the name of stimulating the economy, he plans to spend hundreds of billions of dollars the government does not have to convert the economy from carbon-based fuels to "green" alternatives. Even if that were a good idea -- and it's definitely not -- it would not bring recovery. Any money the government spends must be taxed, borrowed or conjured out of thin air by the Federal Reserve, and that will reduce sound private investment. Obama has no real wealth to inject into the economy. He can only move around existing money while inflation robs us of purchasing power. Meanwhile, private investors who might have produced a better engine, battery, computer, cancer treatment or other wealth-creating and life-enhancing innovations, hold back for fear that big government will undermine productive efforts. The way to a lasting recovery is to greatly lighten the burdens of government. Then free Americans will save and invest. Grand interventionist reforms go in precisely the wrong direction.

Oh Lord. You're quoting Stossel now? He's about as mainstream as Ron Paul. In fact, they're practically peas in a pod.

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