A flood of red ink

November 6, 2003 10:49 PM

A flood of red ink This time the turnaround will be much tougher. There will be no “peace dividend” from the end of the cold war (indeed, the pressure on military spending may continue to increase). America is unlikely to see another stockmarket bubble, with its surge in tax revenues. As baby-boomers retire, the pressure from entitlement spending will be more acute. Set against this background, the path back to a sustainable fiscal policy will be extremely painful, even without any dramatic fiscal crisis. Long after Dubya is back on his ranch, Americans will be trying to recover from the mess he created.
posted by y2karl (35 comments total)

The thing I've never understood about the "we left money in the hands of the american people" thing --- when money's in the hands of the government, it gets spent too, and how. It pays for govt employees, and projects for which government hires contractors... and that money goes back and circulates.

I realize that's not the whole story: you have to consider where new value is created in the economy (not to mention how money in a growing economoy is actually "created" officially along with the value, which, near as I can tell, is created somewhere in the lending/investment process by some accounting not too distantly related to the funny stuff we worry about with Enrons), and that's probably more done in the private sector than public. Still... money is spent and put into the hands of the public even when it flows through government coffers.
posted by namespan at 11:08 PM on November 6, 2003

Bah. More drivel from publication that's well-known to be a bastian to wooly-headed liberal thinking.

(Well, they're European....)

(OK, British, led by that Tony Blair leftist...)

(Hmm...)
posted by weston at 11:12 PM on November 6, 2003

And to think I let my subscription to the Economist lapse because of their wilfully blinkered, uncritical reporting of the Bush candidacy and later, presidency. Still, not exactly quick to see the obvious, are they?
posted by George_Spiggott at 12:20 AM on November 7, 2003

More liberal ranting.
posted by moonbiter at 12:27 AM on November 7, 2003

Heh, nice post there moonbiter.
posted by Boydrop at 12:38 AM on November 7, 2003

> Grim as it is, the medium term appears rosy compared with
> America's long-term fiscal outlook.

Not enough, is it? (To unelect GWB, I mean.) Better get on your knees and pray to Jebus that the economy hits the wall bigtime during the next year. Hint, apologize first for long term lack of r-e-s-p-e-c-t before you get to the "I want" part. Then you can make some born-again penitent promises, like "If You will only send us a massive deflationary collapse or credit crunch or whatever, anything to get rid of W, I promise to personally see my own job outsourced to Lower Bolognia first before anyone else's, Amen."

Chances are still against you, though. People have been predicting dire economic events for America (and consequently all the West) for as long as I've been alive. I have no doubt they're right in the long run--no game goes on forever. But neither The Economist nor P. Krugman nor anyone else really has any clue how long "the long run" may be.

I personally look forward to a major crash with great anticipation, since virtually everything I object to about modern life arises from people not being hungry and scared enough to take virtue seriously. Folks here on this board (and pretty much universally out there also) seem to think a nation can stand any amount of corruption as long as the wages of sin are plowed back into the economy. I think wealth corrupts, and unlimited wealth corrupts without limit.

So who's going to bend the knee with jfuller and pray for universal immiseration? Y2? Others? Remember, the economy stays OK, you get another four years of W and Cheney and Ashcroft and all the rest of the folks you love to loathe. The only hit you take to get rid of 'em is a little all-American poverty (well, maybe a lot) for a little while (well, maybe permanently.) On the count of three, Dear Jebus, I guess I haven't talked to you in a long time, but...
posted by jfuller at 4:20 AM on November 7, 2003

I personally look forward to a major crash with great anticipation

That captures in a nutshell why Bush will almost certainly be reeelected. Until the ranters stop licking their lips and welcoming doom, and instead start proposing an alternative vision for how we can solve our problems, the Democrats have no chance.

Lots of posters here sound much more concerned with being right than with what happens to people, and as a result political threads on MeFi sound like they were designed by Karl Rove to support his strategy to typecast the left as impotent pessimist scaremongers. Shouting "Depression! Quagmire!", whether with glee or disgust, is not an electoral strategy.
posted by fuzz at 5:09 AM on November 7, 2003

jfuller said: "...everything I object to about modern life arises from people not being hungry and scared enough to take virtue seriously."

Spare me the sanctimonious routine, please. If Bush can't hiss it out and make me believe it, neither can you. :)

fuzz: Well said.
posted by denbot at 5:28 AM on November 7, 2003

More:what matters to me is not whether it's true or not but that I believe it to be true, or rather, not that I believe it, but that I believe it. I trust I make myself obscure.

Norfolk:Perfectly.
posted by jfuller at 5:51 AM on November 7, 2003

All economists are a bunch of unpatriotic, America-hating, treasonous, stupid Bush-hater know-nothings!

Just thought I would say it first. OK, your turn now Sully and Instacracker and Little Green Snotballs and Captain Clueless.

That Krugman is so shrill, isn't he? Oops, there I go again!
posted by nofundy at 6:07 AM on November 7, 2003

> That Krugman is so shrill, isn't he? Oops, there I go again!

Krugman recommends red ink. So what's your problem with it? You know so much better than the brilliant economist?
posted by jfuller at 6:44 AM on November 7, 2003

Just thought I would say it first. OK, your turn now Sully and Instacracker and Little Green Snotballs and Captain Clueless.

I know you just go on assumptions, nofundy, but if you actually read Sullivan and Instapundit, you'd realize that both (particularly Reynolds) have been fairly critical of Bush's fiscal policy. (I don't read the others, so I don't know).

And the main criticism of Krugman isn't really his economics -- it's actually the opposite: that he feels entitled to opine on topics that have nothing to do with economics (as long as the opinion is anti-administration).

That captures in a nutshell why Bush will almost certainly be reeelected. Until the ranters stop licking their lips and welcoming doom, and instead start proposing an alternative vision for how we can solve our problems, the Democrats have no chance.

Absolutely.
posted by pardonyou? at 6:50 AM on November 7, 2003

it's actually the opposite: that he feels entitled to opine on topics that have nothing to do with economics

But he writes opinion columns! And, you know, the whole idea that people aren't "entitled to opine" on matters outside their area of professional specialization is deeply anti-democratic, don't you think?
posted by furiousthought at 7:02 AM on November 7, 2003

I personally look forward to a major crash with great anticipation, since virtually everything I object to about modern life arises from people not being hungry and scared enough to take virtue seriously....I think wealth corrupts, and unlimited wealth corrupts without limit.

I've been had less than a hundred dollars in the world many a time, jfuller, and I didn't take virtue any more seriously than I do now. If anything, I feel my life is a better one now, morally, because instead of having to depend on others I can be self-sufficient and help others.

It may be true that wealth corrupts, and that unlimited wealth corrupts without limit, but it isn't the wealthy who will be hurt the most by a crash. It's the middle class and the poor. A crash does not equal moral revolution. Dubya isn't going to lose his immense personal wealth - it may be decreased somewhat, but I doubt anyone ever reformed because his net worth declined from $100 million to $25 million. He may be disgraced, but he's not likely to go to jail and so can hide out on his ranch for the remainder of his days. Sure, a crash may result in his being turfed out and succeeded by more responsible government, but at some point we'd be bound to have another reckless government and another trip around the same old mountain.

Crashes mean people get hurt, and it's almost never the "corrupt" who suffer - it's the people who are just trying to get by, who worked hard for what they have and then lose it all. Nothing good comes from people being hungry and losing their homes and savings, and for you to look forward to that in pleasant anticipation is appalling. So don't gloat, okay?
posted by orange swan at 7:05 AM on November 7, 2003

This analysis looks briefly at the level of expenditures and the role of recent spending increases, and reaches two main conclusions. First, while spending has grown over the last three years, it remains at relative low levels by historical standards. Second, revenue losses are roughly twice as significant as spending increases in turning the budget from surplus to deficit over the last three years...


The magnitude of the projected deficits can be seen in the fact that even with a full economic recovery and a decade of economic growth, balancing the budget by 2013 would entail such radical steps as:

raising individual and corporate income taxes by 27 percent; or
eliminating Medicare entirely; or
cutting Social Security benefits by 60 percent; or
shutting down three-fourths of the Defense Department; or
cutting all expenditures other than Social Security, Medicare, defense, homeland security, and interest payments on the debt by 40 percent...


The share that corporate tax revenues comprise of total federal tax revenues also has collapsed, falling from an average of 28 percent of federal revenues in the 1950s and 21 percent in the 1960s to an average of about 10 percent since the 1980s.
posted by y2karl at 7:15 AM on November 7, 2003

I know you just go on assumptions, nofundy, but if you actually read Sullivan and Instapundit, you'd realize that both (particularly Reynolds) have been fairly critical of Bush's fiscal policy. (I don't read the others, so I don't know).

Wow, way to go on assumptions about what nofundy reads or doesn't read, pardonyou.

'Course, to some who doth protest way too much about how they're really, really not just right wing ideologues, "fairly critical of Bush's fiscal policy" means something like "Our Brave Hero ought to think about kinda-maybe-pretty-please-with-sugar on top considering (if he's not too busy leading Our Brave Troops into Battle and landing on Aircraft Carriers and all) cutting back maybe a hundred dollars or so on the billions of dollars in debt he's leaving to our children, who'll probably turn out to be worthless America Haters anyway....so maybe Our Brave Hero's right about that too...sorry"

Right, pardonyou?

Until the ranters stop licking their lips and welcoming doom, and instead start proposing an alternative vision for how we can solve our problems, the Democrats have no chance.

Nonsense. Those most critical of Bush, including everyone running against him for office, have laid out economic plans a little more well-thought out than the Republican "gut the country now so the mean ol' terrorists don't get us, and pass the costs of my three SUVs on to someone else's children" charge account. There's your real "licking their lips and welcoming/inviting doom" scenario.
posted by fold_and_mutilate at 7:26 AM on November 7, 2003

Right, pardonyou?

Right, foldy!
posted by pardonyou? at 7:45 AM on November 7, 2003

The Economist rocks so very hard. I subscribe to only two newsmagazines -- The Economist and The Nation. If I had to choose one to get rid of, it would be an easy choice. The picture captions alone are worth the price of admission.
posted by Slothrup at 8:47 AM on November 7, 2003

> I've been had less than a hundred dollars in the world many
> a time, jfuller, and I didn't take virtue any more seriously
> than I do now.

I was thinking mainly of economic virtue. When you had less than a hundred bucks I presume you weren't driving a big SUV or buying fake testicle implants for your neutered pet or a satellite dish for your camper or any of those other things that make the developed world consume so much more than its share of the world's wealth. The large number of people who are now doing such things will be better people when they suddenly are too broke to continue.

But I'm a well-known fascist reactionary and ordinarily quite lonely around here as I hope and pray for End Time conditions to straighten the Sybarites out. My point is that I'm now enjoying the comfort of a sudden, unexpected access of company from mobs of lefties also hoping for End Time conditions of one form or another, no matter who it hurts, just to get rid of W. Welcome, newbies, take a hair shirt and a place in line.
posted by jfuller at 8:52 AM on November 7, 2003

So you think we need a Depression once in awhile to bring people down to reality again? Well, it's an interesting thought. You could make the argument that people who survived the depression in the 30s never did indulge in the kind of excess we see now, even when they were better off later on and could afford it. But the lesson does wear off eventually. Maybe the problem is that humanity doesn't inherit the lessons learned more than a few generations back, and so we need to keep going through the same cycles again and again - war, peace; fiscal irresponsibilty, retrenching.
posted by orange swan at 9:06 AM on November 7, 2003

> So you think we need a Depression once in awhile to bring
> people down to reality again?

What is reality?, said jesting fuller, and would not stay for an answer. But I do think it would be useful if there were less distance and disconnect between people in rich countries and people whose children scavenge for food on trash heaps outside Manilla or Jakarta or Cuidad de Mexico. And I expect that the way the U.S. is presently burning through its fiscal and cultural capital is possibly a very good way to reduce this disconnect, massively and all of a sudden. Therefore, though for my neighbor I possibly ought to protest, for myself I say let the various factions' burn rates burn on and que sera.
posted by jfuller at 9:57 AM on November 7, 2003

So who's going to bend the knee with jfuller and pray for universal immiseration? Y2? Others? Remember, the economy stays OK, you get another four years of W and Cheney and Ashcroft and all the rest of the folks you love to loathe

for those of us uninterested in exploring psycho doomsday scenarios there's, I think, a more interesting question -- in the final analysis shouldn't the Democrats be MUCH more concerned about getting the Senate back in 2004, instead of the White House? After all, why should Dean (or Kerry) be the one to sort out -- starting in January 2005 -- the Bush/Cheney mess (ie the occupation of Iraq, the huge deficit, etc)? With a Republican Congress throwing all kinds of shit at him, by the way?
Let Bush stay in the White House another 4 years and be the one to raise taxes in order to try to stop the financial bleeding, like his daddy did. A Democratic Senate could keep the administration in check, quietly Borking Clarence Thomas-style nominees to SCOTUS. Emasculating Bush's craziest plans (Patriot Act IV, anyone?). Preparing the way for an electable Presidential nominee in 2008 (ie not Dean, not Hillary) to be elected and stay there for 8 years, after the Republican Bush fiasco is self-evident.

Imagine President "Chamberlain" Dean (talk radio nickname, not mine) fighting against a rabid, strongly Republican Congress to raise taxes or find a way out of Iraq's hellhole. Not a pretty sight.

Of course, one assumes that a Democratic Senate would have some kind of fake testicle implants done, to accomplish the task

But I think that between the Senate and the White House, Democrats should choose the former (not that they have a good chance of winning back either, but still)
posted by matteo at 9:57 AM on November 7, 2003

Ah jfuller, spoken like a neo-Puritan who has never been hungry. What, people magically become better without money? No, it just becomes more difficult for them to make ends meet. Talk all you want about lessening the gap between the rich and the poor, but your gleeful anticipation of suffering is bankrupt. A lessening of excess and fiscal responsibility are good things, but crashes cause much chaos, people get hurt and people die, and the fact that you want all that simply so you won't have someone you don't like in office doesn't speak to your compassion or responsibility.
posted by Snyder at 10:07 AM on November 7, 2003

Let Bush stay in the White House another 4 years and be the one to raise taxes in order to try to stop the financial bleeding, like his daddy did.

You know, I was discussing with a friend the other day and he mentioned this option. "I'm thinking about voting for Bush just so that his administration has to deal with the problems it's created." There is something appealing about that to me on some level.

On the other hand, most of the really hard stuff probably will not happen until after 2008 anyway, and giving the current folks four more years to create mischief will probably make things even more difficult when we have to face the music.

But I do think it would be useful if there were less distance and disconnect between people in rich countries and people whose children scavenge for food on trash heaps

This is true, but the method of creating this equity does not necessarily require collapse and chaos. Instead of just blowing things up, we could theoretically reduce this gap in a more managed fashion so that the changes are not quite so painful. The only people that benefit from the type of events you seem to advocate are profiteers, thieves and thugs (see example: the former Soviet states). All those people who thought they were just playing by the rules are the ones who get screwed when the game fall apart.

[Paul Krugman] feels entitled to opine on topics that have nothing to do with economics

As does everyone else. But beyond that, Krugman is hard on the administration because he believes that the mendacity and smoke and mirrors games it plays with the economy are indicative of a more general tendency to lie about things in order to get what it wants. So in a large way his opinions on general policy are just an extension of his opinions on economics.
posted by moonbiter at 10:48 AM on November 7, 2003

Please pardon me for not including the sarcasm flag to my last post jfuller and pardonme. Instacracker and the other bloggers mentioned suck. Period. The sarcasm was intended to mimic them.

Krugman and the many webloggers who have spoken so succiently against the aWol economic policies happen to really know what they are saying. As for jfuller's remarks about PK endorsing deficits, he does, but only under certain conditions and aWol fails the test.
posted by nofundy at 11:17 AM on November 7, 2003

Wish I could remember the spell check!!
posted by nofundy at 11:18 AM on November 7, 2003

America is unlikely to see another stockmarket bubble...

Hah! The NASDAQ is up 60% over the past 12 months. Whadya call that?

when money's in the hands of the government, it gets spent too, and how. It pays for govt employees, and projects for which government hires contractors... and that money goes back and circulates.

Ah yes, the Keynsian "government multiplier." Tell me: shouldn't there be a "private sector multiplier," too? Would it be bigger or smaller than the government multiplier?
posted by ZenMasterThis at 5:06 PM on November 7, 2003

red ink
posted by clavdivs at 5:27 PM on November 7, 2003

Isn't it painfully obvious that the baby boomers are finally going to get their richly deserved screwing for wanting to be cradle-to-grave supported by everyone else?

Social Security will only continue to exist as a retirement system if it is restricted to *only* minimum-wage earners, like it was originally inteded to be; otherwise it will remain a tax-greedy joke.

Medicine will be slightly rationed: no more egregiously expensive treatments that don't work. Too bad if it's a cute little girl with big soulful eyes. She still is not going to get a taxpayer or insurance-paid heart-lung-liver-kidneys transplant with a 0% survival rate, EVEN IF THE PUBLIC WANTS HER TO BECAUSE SHE'S SO GOSH-DARNED CUTE and they made a mini-series about her on the Lifetime channel full of people crying. Oh, yes, and somebody will eventually kick the pharmaceutical industry in their collective testicles to make them stop it with the 200% profit margins.

Food we got plenty of. Anybody who proposes cutting back on food stamps or other food aid is a lying bastard who should be horsewhipped.

No retirement for baby boomers until they die. Or age 95, whichever comes first.
posted by kablam at 7:06 PM on November 7, 2003

These aging boomers are one of the things I worry about. They are a big voting block, and I can see all manner of mischief caused by politicians pandering to this demographic, trying to give them their retirement benefits while bankrupting the country.
posted by moonbiter at 7:38 PM on November 7, 2003

virtually everything I object to about modern life arises from people not being hungry and scared enough to take virtue seriously.

Although I would love to agree, and my first reaction was to post 'I love you' (seriously), on further thought : I live somewhere (Korea) where the recent and sometimes current memory of poverty and despair in the minds of the population has resulted in a nation so avaricious, so unconcerned with un-lucrative concepts like 'virtue' and 'honor,' so utterly corrupt and vicious in their every financial dealing, that it makes me literally ill to think about, sometimes.

Nice folks, in some ways, but deeply, historically damaged by their decades of being hungry and scared.

People are evil everywhere, and neither wealth nor poverty is going to make them differently virtuous en masse, I'm afraid.
posted by stavrosthewonderchicken at 7:39 PM on November 7, 2003

(It's more complicated than that, as it always is, of course. I'm just sayin'.)
posted by stavrosthewonderchicken at 7:45 PM on November 7, 2003

virtually everything I object to about modern life arises from people not being hungry and scared enough to take virtue seriously

This is absolute balderdash. Throughout most of human history the vast majority of humans have been hungry and scared. You can read about the results in any history book. People can "take virtue seriously" only when they have enough to eat and enough security to worry about something other than living until next week. Fortunately, I think jfuller is not entirely serious.
posted by languagehat at 7:46 AM on November 8, 2003

furiousthought: But he writes opinion columns! And, you know, the whole idea that people aren't "entitled to opine" on matters outside their area of professional specialization is deeply anti-democratic, don't you think?

Paul Krugman: "I remember once (during the air phase of
the Gulf War) seeing John Kenneth Galbraith making
pronouncements on TV about the military situation, and
telling friends that if I ever start pontificating in public about a
technical subject I don't understand, they should gag me."
posted by trharlan at 9:47 PM on November 8, 2003

jfuller: When you had less than a hundred bucks I presume you weren't driving a big SUV or buying fake testicle implants for your neutered pet or a satellite dish for your camper

If you're going to mock that stuff, you ought to remember that the design, manufacture, distribution, sales, and service of pseudo-nuts and redneck satellite sets provide an honest living for many people.

And I would bet that those who would cite these indulgences as an example that government ought to decide how to spend money (rather than the consumer) don't feel quite the same way when the decision is between fake junk for Fido or another dozen cluster bombs.
posted by trharlan at 9:53 PM on November 8, 2003