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Micro Econ Comix
March 21, 2006 6:59 PM   Subscribe

President Bush on the state of the US Economy, including a discussion of the national debt and rising global interest rates, from today's news conference.
posted by alms (100 comments total)

 
How about an update on the "hunt" for Osama Bin Laden?
posted by sharksandwich at 7:04 PM on March 21, 2006


I listened to it today. I thought most of it consisted of the same non answers he has give for the last 5 years. It would be so much interesting if people could ask a second and third question. Like "What does what you just said have to do with my first question?"
posted by Mr_Zero at 7:11 PM on March 21, 2006


Like everything the chimp says these days, this is riddled with inaccuracy. For one, almost none of the monies set aside for Katerina have been spent. And with a Republican congress, the Prezn'it doesn't really need a line item veto. The deficit is clearly the product of his tax give aways.

My theory about the administration's UAE deal is this: Arabs own a lot of US dollars. The administration needs to keep Saudis and UAE investors from selling their holdings.

Perhaps I'm slipping on the old tin foil hat. But with record debt and deficits, my scenario is enevitable.

I really can't express how angry I am about the damage done to the U.S. Nor can I express enough outrage over U.S. war crimes.
posted by gesamtkunstwerk at 7:12 PM on March 21, 2006


The economy is, right now, as good as it has ever been. Really remarkable. How about a round of applause for the Bush tax cuts, which have been wonderful for the US.
posted by ParisParamus at 7:14 PM on March 21, 2006


And bravo for Bernanke's appointment.
posted by ParisParamus at 7:16 PM on March 21, 2006


Umm, gesamtknstwerk .
posted by alms at 7:17 PM on March 21, 2006


I only hear Paris clapping.
posted by mildred-pitt at 7:17 PM on March 21, 2006


Alms, that's what I meant. They've all got us (and PP) by the balls. Bush can try and buy us some good will with sweet heart deals, but once you become a debtor, you have less and less latitude to make decisions for yourself.
posted by gesamtkunstwerk at 7:21 PM on March 21, 2006


Dude, Bernanke? Name 2 differences, beside the name and age, between Bernanke and Greenspan. I mean he's a good guy but Bernanke isn't as big of a deal as, say, a first round draft pick in the NFL -- he doesn't make the economy.

While I agree the economy is in good shape, I would be thankful for foreign capital inflows more than the tax cuts. Our lucrative investment environment (strong laws, contracts enforced, seen as generally safe) and our loose labor policies (easier to reassign, i.e. fire employees, layoff) help keep our economy strong.

Now, no mention of the fixed Chinese currency? What?
posted by geoff. at 7:24 PM on March 21, 2006


HOW ABOUT A ROUND OF APPLAUSE FOR A NATIONAL DEBT OF $298,837,235!!!

That's a mere $27,945.98 of debt per every man, woman, and child in these great United States!

The National Debt has continued to increase an average of
$2.43 billion per day since September 30, 2005!

GOOD JOB GEORGE BUSH!

The economy is, right now, as good as it has ever been. Really remarkable. How about a round of applause for the Bush tax cuts, which have been wonderful for the US.
posted by stenseng at 7:24 PM on March 21, 2006


oops! That's the population!

HOW ABOUT A ROUND OF APPLAUSE FOR A NATIONAL DEBT OF $8,351,298,322,487.27 rather!
posted by stenseng at 7:26 PM on March 21, 2006


Not that I'm addressing Paris, but if I took on a shitload of debt I'd look pretty well-off too.
posted by GooseOnTheLoose at 7:27 PM on March 21, 2006


Our national debt is attrocious, but our unemployment rate is phenomenal. Anyone who says that things are going amazingly well or that things are in the crapper is missing the big picture.
posted by aburd at 7:28 PM on March 21, 2006


Yay for Helicopter Ben!

PP, the economy is a disaster propped up by flagrant money printing by the Fed. They speak 'tightening' words, but there are two factors to the money supply... both the cost of it, and the AMOUNT of it. They're raising the cost from 'nothing' to 'almost nothing', while printing the stuff like there's no tomorrow.

This started in the Clinton years, and was the single biggest factor of the Nasdaq bubble. Clinton also inaugurated 'truthiness' into government economic statistics. You can't trust ANY government figures about money or the economy, and especially not about inflation. (the inflation-stats changes were made on the Bush watch, but I think it was just an outgrowth of the Clinton policies, to be honest.)

The only reason we didn't have a once-in-a-lifetime recession/depression after Y2K was simply that the Fed opened the spigots to a completely unprecedented degree. It's worth pointing out that their rate in recent months has increased to nearly the post-crash levels; the last I read, they were on target to expand the money supply by 12% this year _alone_. And the ONLY thing allowing us to do that is the fact that the Chinese and Japanese central banks have been printing lots of their own currency to buy ours. This is causing their own economies to heat up (in the case of China's, probably massive overheating), and will eventually result in inflation for them as well.

This is called 'papering over the problem'. Historically, these kind of monetary games have resulted in massive damage to the economies so insulted.

It feels good now, in exactly the same way that a heroin high does. But eventually, the body just won't take it any more.
posted by Malor at 7:31 PM on March 21, 2006


The economy is, right now, as good as it has ever been.

God. You're not even worth it anymore, Paris.
posted by XQUZYPHYR at 7:32 PM on March 21, 2006


National debt as a % of GDP? (or is it GNP? What ever happened to GNP?!) Gee, I remember that our debt was going to destroy us in 1985, 1990, 1995, and 2000. Doesn't seem to have harmed us at all. Probably because much of out debt winds up being productive. Would no debt be better? Probably not.
posted by ParisParamus at 7:35 PM on March 21, 2006


What an idiot.
posted by homunculus at 7:37 PM on March 21, 2006


that's just straight up trolling.

/ignore.
posted by shmegegge at 7:37 PM on March 21, 2006


ParisParamus writes "The economy is, right now, as good as it has ever been. Really remarkable. How about a round of applause for the Bush tax cuts, which have been wonderful for the US."

You're not coming here for the hunting, are you Paris?
posted by orthogonality at 7:37 PM on March 21, 2006


Malor, XQ, where's the example you can cite? I don't understand the effect of debt, but please show me some hard evidence that you do.
posted by ParisParamus at 7:38 PM on March 21, 2006


Oh Jesus, let's throw national debt numbers around without putting them in context. Our national debt is something like 8.3(trillion)USD, our GDP is 11.75. Let's say 70% of our income is debt.

Let's look at Canada with a national debt of 3.9(trillion)USD and a GDP of 1.07(trillion) USD. That's 27% of their national income to debt.

German has a 2.36(trillion)USD GDP and debt is roughly 1.65USD which is 70% -- ours.

Most Western countries run in that range and if anything, it seems debt levels coincide with a strong economy.
posted by geoff. at 7:39 PM on March 21, 2006


See previous comment.
posted by XQUZYPHYR at 7:39 PM on March 21, 2006


“You know, it's a myth in Washington, for Washington people to go around the country saying, well, we'll balance the budget, just let us raise taxes. That's not how Washington works. Washington works raising taxes and they figure out new ways to spend.”

WTF is he talking about? Washington? I’m sorry did I miss the Republicans being in power in Washington? Did that not happen?

“We are showing what we would do. If the Republicans were in charge of this House and in charge of the Senate, it would be a much different America. It would be a much different government.” - Tom DeLay, March, 1994

`Until our monstrous $3.4 trillion deficit is eliminated, interest payments will continue to eat away at the important initiatives which the government must fund. I will not stand by and watch Congress recklessly squander the future of our children and grandchildren...The American people have wanted a balanced budget amendment for a long time, because they know it's the only way to force Congress to make spending choices.' - D.Hastert c1994 (currently speaker of the house)

Contract With America? Anyone? Anyone? Balanced___ Amendment? Anyone? Bueller?

I honestly don’t know how one could refer to oneself as a “conservative” and support the current state of affairs. Unless perhaps you’re a radical social conservative and a fiscal anarchist.
If it was true then (balancing the budget, limiting spending) why isn’t it true now?
Expediancy.
Which is b.s. either you believe in principles or you’re a f’ing mercinary.

http://today.reuters.com/news/newsArticle.aspx?type=domesticNews&storyID=2006-03-20T163503Z_01_N20258421_RTRUKOC_0_US-ECONOMY-JOBS.xml&archived=False

“How about a round of applause for the Bush tax cuts,” - ParisParamus

How about you support
your arguments?

You’re not entirely wrong Paris, Bushco hasn’t completely screwed everything economically (as my link points out), but what does that have to do with raising the debt ceiling or ignoring fiscal responsibility?

I happen to agree with Malor that there were signs under Clinton - but he’s not in power right now. Hasn’t been for a bit. So who is? Washington?
posted by Smedleyman at 7:49 PM on March 21, 2006


Geoff, where are you getting your numbers? The US external debt, to match numbers, is $8.8 trillion. Canada's matching number is $600 billion. Canada's ration of external debt to GDP is significantly better than the US number.
numbers all 2005, CIA world factbook
posted by Dipsomaniac at 7:50 PM on March 21, 2006


I"m not necessarily panicked about the debt. We got ourselves out of a pretty bad debt situation under Clinton, after all, so if we have to we can do it again. By electing another Clinton, if necessary (ironic that, the only President in recent memory to actually demonstrate fiscal discipline).

I am panicked about the sheer idiocy on display. The Prez'nit shows again his typical approach of answering a complicated question by defining the terms that he's been given, instead of just answering it. The question of the sovereignty of Indian reservations, for example, is an important one because they are sovereign.

And then there's the whole "stalling for time" bit. What the fuck is that about, anyway? The way this works is, they give you a question, you answer it. Was he hoping to run out the clock? Or was this again a manifestation of the secret microphone business?
posted by dhartung at 7:56 PM on March 21, 2006


Bottom line: debt has not hurt the US in the past, and its unlikely to hurt us now, particularly since relative to the size of the economy, the debt is not that big.

But if typing big numbers preceded by a "$" feels good, go ahead, go wild!
posted by ParisParamus at 7:57 PM on March 21, 2006


Malor, XQ, where's the example you can cite? I don't understand the effect of debt, but please show me some hard evidence that you do.

The international economic system is changing rapidly. Let's use the next few years as evidence.

Personally, I am betting everyone I know that Bush won't last through 2007. I hope I'm wrong -- I am American by birth, and I hate to see the U.S. slide into decline--but I really don't think mainstream Americans understand the consequences of a falling dollar. The faster the Green backfalls, the harder it is to fianance the debt, and the more influence other countires will have.
posted by gesamtkunstwerk at 7:58 PM on March 21, 2006


PS: how much smaller would the debt be if there was no Iraq War? Most of Washington's spending goes to domestic programs; programs no one, apparently wants to cut.

So, lots of FOS to go around, on both sides of the aisle...
posted by ParisParamus at 8:00 PM on March 21, 2006


Oh yes I didn't copy and paste the right numbers for Canada.

Here's where I got the Germany numbers.

Ha it appears the CIA world factbook does the number crunching for you. So here's some quick ones:

France - 66%
England - 47%
Germany - 68.1% (I was close)
US - 64.7% (I think they're being conservative)
posted by geoff. at 8:02 PM on March 21, 2006


Most of Washington's spending goes to domestic programs

God. You're not even worth it anymore, Paris.
posted by XQUZYPHYR at 8:02 PM on March 21, 2006


Countries and their Debts as a % of GDP
posted by blue_beetle at 8:05 PM on March 21, 2006


Oh, holy cow Italy is 103% debt to GDP. Well at least in perspective with other top world economies you can't just say that national debt does not mean a bad economy. A good look at the balance of payments, unemployment and other factors are necessary to say if an economy is doing well overall.
posted by geoff. at 8:05 PM on March 21, 2006


No, Paris isn't worth it, but it would be nice if he were right.

Keep in mind, the value of a currency is in constant flux. If it loses value suddenly, say because the Saudis and Chinese want it to, the ability to service the debt becomes much harder.
posted by gesamtkunstwerk at 8:08 PM on March 21, 2006


This is a nifty visual look at where the tax dollars go.
posted by Smedleyman at 8:13 PM on March 21, 2006


"The only reason we didn't have a once-in-a-lifetime recession/depression after Y2K was simply that the Fed opened the spigots to a completely unprecedented degree."

Do some research. I guess if you feel that "You can't trust ANY government figures about money", you're free to make up your own statistics to fit your agenda. I'm not sure why we should believe YOU, though.

If we take a chance on the gov't stats instead, and use, say, the most commonly watched money supply indicator, seasonally adjusted M1, then compare the last ten years:
Feb 1996 $1,118B to Feb 2006 $1,374.8B, that's a growth rate of about 2.1%. Compare that with Feb 1976 $311.5B to Feb 1986 $730.7B for an annual growth rate of 8.9%.
posted by JParker at 8:15 PM on March 21, 2006


XQ, this link indicates that the just-proposed budget raises defense spending to $439.3 billion, which is about 15% of the proposed $2.7 trillion budget.
posted by ParisParamus at 8:22 PM on March 21, 2006


Wow, Smedly, you actually called PP on his weasling before he even weaseled. Good job.
posted by XQUZYPHYR at 8:28 PM on March 21, 2006


JParker--rational being on Mefi--the mind boggles!
posted by ParisParamus at 8:28 PM on March 21, 2006


Dude, Bernanke? Name 2 differences, beside the name and age, between Bernanke and Greenspan.

1. When he addressed Congress, Bernanke emphasized the importance of reducing the deficit but he said the choice between tax increases and spending cuts was political and for Congress to decide. Greenspan specifically endorsed spending cuts over tax increases.

2. Bernanke is not a disciple of Ayn Rand. Greenspan is.

3. Greenspan will not have to clean up the mess created by the last decade of loose monetary policy that Greenspan created. Bernanke will. As a result he will address the problem more seriously.

There, that's three. I actually like Bernanke. It was one appointment that Bush realized was too important to be given to a toady.
posted by alms at 8:56 PM on March 21, 2006


So, any progress on finding Osama bin Laden, or the anthrax-in-the-mail person?
posted by fandango_matt at 8:57 PM on March 21, 2006


XQ, you lose.
posted by ParisParamus at 8:58 PM on March 21, 2006


Bush likes the unidentified straw man argument e.g.: “Washington says” or “Some say that if you're Muslim you can't be free.”

I suspect it would get more play on Mefi if it wasn’t used personally. Such as:
---
“We shouldn’t randomly club old women to death in the streets” - Smedleyman

!Unlike Smedleyman I don’t think we should randomly club old MEN to death in the streets.
posted by antiSmedleyman (with the goatee)
---
So instead we’d have:

Some say we should club old men to death in the streets, I disagree.
posted by antiSmedleyman (with the goatee)
---

then you have them guessing. Wha? Who said that? I didn’t say that...does he mean me?
Indeterminacy is a powerful ally. Just ask the Shadow or Batman (or Mossad).

/... world socialist web site? What the hell is that? We all lose.
posted by Smedleyman at 9:00 PM on March 21, 2006


XQ, this link indicates that the just-proposed budget raises defense spending to $439.3 billion, which is about 15% of the proposed $2.7 trillion budget.

Liar and coward. You grasped to find a random site mentioning- and only mentioning- defense spending. Funny, since you could just go to the actual budget. The one with all the numbers that prove you wrong. Because you knew you would have to to play the fake budget card of mentioning the overall budget including Social Security and Medicare mandated expenditures.

You needed to do that because you know you got called on your lie. You didn't say "the budget." You said "most of Washington's spending goes to domestic programs." You're wrong, and you know you're wrong, so you weaseled away from it.

XQ, you lose.

Now that was worth it.
posted by XQUZYPHYR at 9:01 PM on March 21, 2006


JParker, M3 is a much better indicator.

M1 is pretty much just hard cash, which isn't a very good indicator in an era of electronic money.

1996, Month 02 M3 supply: 4700.60
2001, Month 02 M3 supply: 7308.5
2006, Month 02 M3 supply: 10294.3

(source: Economagic stats.)

Over the last ten years, that's about 8%. (and 1995-2000 were the big problem years that led to the Nasdaq bubble. ) Over the last 10 years, it's a bit over 7% annually. Last year was back up to about 7.5%.

By way of comparison, from 1990 to 1995 we saw about a 1% M3 growth; in other words, during the last (fairly minor) recession, money didn't grow much. Note that during this last recession, money supply increased at a breakneck pace. Also note: economists in the 1940s and 1950s were arguing because the money supply, over TWO DECADES, had expanded by only 18%, and they were worried that there wasn't enough liquidity. (there was, obviously).

These stats only cover through February, so I can't double-check that the 12% figure I read is correct. It seems quite large... perhaps it was in relation to something money-related, but not directly M3. I'll try to find that source.
posted by Malor at 9:09 PM on March 21, 2006


Its worth noting that our debt is denominated in dollars. This means that a falling dollar (inflation?) makes it easier, not harder to pay off the debt. This is in contrast to say the Indonesian crisis in '98 or Argentina where their debt was also denominated in dollars and then when their local currencies fell it became impossible to meet the exchange rate and pay off their debts.

In our situation (and in any inflation situation) the holders of the debt get screwed. Of course the market responds by raising the interest rate which has other nasty consequences.
posted by H. Roark at 9:15 PM on March 21, 2006


smedleymanThat's a kickass graphic.

Also: I don't think the abysmal personal savings rate was mentioned, but I do think it should be.
posted by rollbiz at 9:26 PM on March 21, 2006


Keep in mind, the value of a currency is in constant flux. If it loses value suddenly, say because the Saudis and Chinese want it to, the ability to service the debt becomes much harder.

Exactly the opposite. Actually, a devaluation of the dollar will make the current debt worth LESS, and consequently it will become easier to service the debt. In fact, this is one of the scenarios speculated by economists - that US will devalue its way out of debt.
posted by VeGiTo at 9:30 PM on March 21, 2006


(on an accrual basis tho... :)
[I]f you look at 2005, the official deficit was reported at around $319 billion. Using generally accepted accounting principles, the 2005 Financial Report of the U.S. Government published by the U.S. Treasury, showed a deficit of $760 billion. That’s without considering Social Security and Medicare. However, in the 2004 report’s management discussion and analysis section, the Bush II Administration basically said, “Hey, guys, you’d better be aware of how these numbers work.” Where the official federal deficit in 2004 was reported at about $412 billion, and the GAAP-based deficit was around $616 billion, they said that if you added in the net present value of the underfunding of Social Security and Medicare, the one-year deficit in 2004 was $11.1 trillion. That’s trillion, not billion. That amounted to almost 100% of GDP at the time. Now, that $11 trillion included a one-time spike of about $8 trillion, to account for what Congress and the President did in setting up the Medicare drug benefit without funding it going forward. But you can see that if you back out that one-time charge, that on a GAAP basis, accounting for Social Security and Medicare, in 2003 the deficit was around $3.7 trillion; in 2004 it was $3.4 trillion; and in 2005 it was $3.5 trillion. We’ve had three years in a row here where the GAAP deficit has been basically $3.5 trillion. So the deficit and the total obligations of the federal government are increasing by roughly the amount of GDP every three years. In fact, the fiscal 2005 statement shows that total federal obligations at the end September were $51 trillion; over four times the level of GDP. It is unprecedented for a major country to have its actual obligations so far out of whack... It’s beyond control. Keep in mind that 2005’s $3.5 trillion GAAP deficit is roughly 10 times bigger than the “official” deficit.
cheers!
posted by kliuless at 9:50 PM on March 21, 2006


PP: Bottom line: debt has not hurt the US in the past

You're kidding, right?? The US has never recovered from the Reagan deficits.

Here's the simplest example of harm that I can spell out for you: Public debt competes in the marketplace for capital - the huge federal borrowing drives up interest rates for all other borrowing. Everyone in America must pay more for their mortgages, for their car loans, because the GOP's profligacy dries up trillions of dollars in investment capital. It comes directly out of our pockets, in the form of higher interest rates.

Second-order effect: Without these huge public deficits, the cost of borrowing money would be lower, and actual productive economic activity would be cheaper to undertake, and so there would be more of it. And this lost growth would compound down the years. The US would be 10-30% richer today per capita if we weren't still paying off the Reagan deficits.

Third-order effect: an ever-increasing fraction of our taxes goes to financing the debt. We pay more taxes, and derive fewer benefits.

And the disaster of the Reagan-Bush years wasn't fully reversed by the Clinton years - and we may never dig ourselves out of the hole that the current Bush junta is digging for America.

How do deficits harm us? Look at the UAE ports deal: foreigners are tiring of simply holding our paper - soon they will want to own every productive asset in America. And soon ALL of America's capital will be siphoned directly offshore to our foreign owners. We will never get out of the hole: American wages will continue to decline to Mexican levels, AND we'll be unable to amass capital to grow our way out.

We're truly fucked, and the GOP are the ones who have sold us out.
posted by AsYouKnow Bob at 10:14 PM on March 21, 2006


The number crunching aside - the basic fiscal conservative principle is that you build an economy by encouraging business, not growing government. It’s a classic difference in governing philosophy. So, where the hell is it?

“Ever since I've been the President we have slowed the rate of growth of non-security discretionary spending and actually cut discretionary spending -- non-security discretionary spending...But in terms of the debt, mandatory spending increases is driving a lot of that debt. And that's why it's important to get the reforms done.”

WTF is manditory spending? Medicare and social security? Did I miss the part where elected officials can change the spending formula on those programs and where Republicans, are, in fact, most of the elected officials?
Didn’t Bush fire out a Medicare prescription drug bill back in 2003 that expanded the hell out of the federal government?
Didn’t a lot of other wacky things happen in 2003?

Someone should really smell what they’re shoveling.
I mean I don’t know dick about economics, and even I know better.
posted by Smedleyman at 10:21 PM on March 21, 2006


You know who felt good about typing big numbers preceded by a "$"?
Hitler.
posted by Smedleyman at 10:45 PM on March 21, 2006


Debt is only part of the story. Here's another unpretty picture: US GDP Growth with and without Mortgage extraction, for starters.

Teetering on the lip of the abyss.
posted by stavrosthewonderchicken at 10:48 PM on March 21, 2006


Er, Malor -- you said, above (and I quite agree):

> Parker, M3 is a much better indicator...... during this last
> recession, money supply increased at a breakneck pace....
> ...
> These stats only cover through February, so I can't
> double-check that the 12% figure I read is correct....

Well, er, DUH -- if the government were going to start printing dollars like mad (say for dumping them by the suitcase full into the Iraqui economy as cash payments) would they want anyone to KNOW about them? They'd show up in the M3, which includes foreign funds, as soon as they hit any foreign bank. So, well, what do you think the government would do?

Now, tin foil briefcase time: Perhaps coincidentally, this:

FRB: H.6 Release--Discontinuance of M3

On March 23, 2006, the Board of Governors of the Federal Reserve System will cease publication of the M3 monetary aggregate. The Board will also cease ...

http://www.federalreserve.gov/releases/h6/discm3.htm

Got that straight? Like the President said, we're stalling for time here.
posted by hank at 11:09 PM on March 21, 2006


More on why M3 is being disappeared (they have nothing to do with how the American economy works, those foreign-owned dollars, eh?)

http://www.dailykos.com/story/2005/11/11/16272/574
posted by hank at 11:14 PM on March 21, 2006


Debt doesn't matter. Compare the current US debt to the number of plankton in the ocean. It's miniscule! As long as the dollar is the dominant currency, everything is fine. We'll keep printing paper and other countries will keep buying it. Hopefully none of those countries will make a "run on the bank" and think that their global position would be better than ours if they were to collapse our economy.

Global economic "collapse" may be better if you have trade lines set up and alternate currency forms.
posted by ryoshu at 11:28 PM on March 21, 2006


Bottom line: debt has not hurt the US in the past, and its unlikely to hurt us now, particularly since relative to the size of the economy, the debt is not that big.
posted by ParisParamus


Erm.... I'm going to have to call bullshit on that.
posted by Talanvor at 12:02 AM on March 22, 2006


Actually, I find it fairly absurd how the "fiscal conservatives" have been blaming so called tax and spend Democrats for the deficit and telling us how horrible it's going to hurt the country, steal our grandchildren's futures, etc. As soon as they get into power, they act in an even worse fashion, spend more and tax less, inflating the debt to ridiculous levels.

Of course Democrats and their rightward march just makes the picture even more ludicrous.

Seriously, has not one person in government balanced a goddamn checkbook in their lives?!
posted by Talanvor at 12:07 AM on March 22, 2006


My roommate is German and she says you should be very careful using them as a good example. She says the economy is shit, job prospects are shit and in general the economy has gone to hell in a handbasket since the reunification when the govt took on huge debt to provide govt services for the entire former east germany. Note, she is not against reunification, simply notes the effect of the debt and govt spending on the economy years later.
posted by fshgrl at 12:10 AM on March 22, 2006


From OMBwatch:

In 2003, during the debate over yet another round of huge tax cuts, Glenn Hubbard, then chairman of the CEA, maintained that less than half of the tax cuts would be replaced by increased economic growth, even in the best case scenario.

Hubbard's successor as chairman of the CEA had still harsher criticisms of the tax cuts. Greg Mankiw, who served as the chairman of the CEA from 2003 until 2005, wrote that there is "no credible evidence" that tax cuts pay for themselves and, in an often quoted line, an economist who makes such a claim is a "snake oil salesman who is trying to sell a miracle cure" (Principles of Economics, Gregory N. Mankiw, 2003).

A recent report by the Congressional Budget Office (CBO) explored the economic and budgetary impact of a theoretical 10 percent cut in income tax rates under a wide variety of scenarios. The CBO concluded the budgetary impact could be estimated to offset between 1 and 22 percent of the lost revenue from the tax cuts in the first five years and could in fact decrease those offsets by 5 percent in the second five years.

If fact, when tax cuts are deficit-financed, they increase both the deficit and the national debt and could actually have a negative economic impact, lowering the national savings rate, increasing long-term interest rates, and dampening economic activity.
posted by insomnia_lj at 12:59 AM on March 22, 2006


Again, it's very important to point out that this is a non-partisan problem. This has been happening since Reagan. It got bad to the point of insanity under Clinton.

WE DID NOT BALANCE THE BUDGET UNDER CLINTON'S ADMINISTRATION. That was lies. Pure smoke and mirrors. They are playing games with the government's books that would make Enron blush.

Under Bush 2, sadly, we're headed full-speed over a cliff. But economics is slow. Problems this massive take many years to develop, and they take many more years to resolve. You can blame him for not reacting, but you can't really blame him for the crummy situation he was handed.

We were in DEEP trouble when he took over, but instead of dealing with reality and trying to get our hands around the problem, we opted for a path that very seriously risks the continued existence of the United States as the same governmental entity.

Fundamentally, the problem may no longer be fixable; it will require enormous sacrifice and pain to recover. We will be forced to renege on many promises. Alternately, we can 'fulfill' them all by printing worthless dollars, but destruction of a country's currency generally shortly precedes the destruction of the country itself. There will still be something CALLED the "United States of America", but whether or not it will be even vaguely related to the present government is highly questionable.

And it's nobody's fault but our own. We, the People, have let this go on too long, and ignored our Senators while we partied down at the Circus Maximus Televisionus.
posted by Malor at 1:32 AM on March 22, 2006


We're fucked.

Social Security will implode, health care costs keep rising, and global warming will -- at best -- dislocate the entire world's economy.

And not one politician has a plan that goes beyond next year.


Our only hope is to find leaders who aren't afraid to make unpopular decisions and can stick to their principles, even in the face of massive derision.

Not politicians blinded by their own fantasies about "Mission Accomplished", not slick triangulators who -- like the former first lady with a safe seat as New York's junior Senator -- still refuse articulate a position on the war but who take the great risks of condemning violent video games and flag burning

The only national figure I see who is able to do that is also the only senator to vote against the Patriot Act, the only senator to call for the censure of George W. Bush.

In the upcoming decades of unrelenting crisis, we're going to need the kind of leadership that Russ Feingold has the courage to provide.
posted by orthogonality at 2:53 AM on March 22, 2006


what's the sound of one Paris clapping?
posted by matteo at 3:24 AM EST on March 22 [!]


Plop, plop, plop...
posted by juiceCake at 3:00 AM on March 22, 2006


It's incredible to me that Republicans can continue to hold themselves up as fiscal conservatives and blame Democrats for big spending and bigger deficits.

Don't buy stuff you cannot afford.
posted by EarBucket at 3:51 AM on March 22, 2006


I’m sorry did I miss the Republicans being in power in Washington

Smedlyman - Republicans don't raise taxes then spend, they BORROW and spend.

Not a problem if you hyperinflation the money to pay off that debt, is it?

Lets say this quote is right And we have just heard that a certain State Attorney General has been researching the possibility of slapping a state sales tax of 25% on all goods on all Chinese imports. Smoot-Haley tariff time! Whee!

I gotta ask - how is this all going to end well?
posted by rough ashlar at 4:52 AM on March 22, 2006


Our only hope is to find leaders who aren't afraid to make unpopular decisions and can stick to their principles, even in the face of massive derision.
Don't we have that already?
posted by dmo at 5:16 AM on March 22, 2006


dmo writes "Don't we have that already?"

Touche.
posted by orthogonality at 5:27 AM on March 22, 2006


Public debt competes in the marketplace for capital - the huge federal borrowing drives up interest rates for all other borrowing. Everyone in America must pay more for their mortgages, for their car loans, because the GOP's profligacy dries up trillions of dollars in investment capital. It comes directly out of our pockets, in the form of higher interest rates.

That's not very Keynesian of you. And higher real rates only come out of the pockets of debtors, not creditors.

WE DID NOT BALANCE THE BUDGET UNDER CLINTON'S ADMINISTRATION. That was lies. Pure smoke and mirrors.

Not really "lies," if you call Social Security what it is-- a paygo transfer program whose surplusses and deficits are Washington's to do with as it sees fit.

Hubbard's successor as chairman of the CEA had still harsher criticisms of the tax cuts. Greg Mankiw, who served as the chairman of the CEA from 2003 until 2005, wrote that there is "no credible evidence" that tax cuts pay for themselves and, in an often quoted line, an economist who makes such a claim is a "snake oil salesman who is trying to sell a miracle cure" (Principles of Economics, Gregory N. Mankiw, 2003).

"The supply-side economists, if that is the right term for those whose research I have been discussing, have delivered the largest genuinely free lunch I have seen in 25 years in this business, and I believe we would have a better society if we followed their advice." (Nobelist Robert E. Lucas)

Isn't pingpong fun?

You said "most of Washington's spending goes to domestic programs." You're wrong, and you know you're wrong, so you weaseled away from it.


Transfer payments aren't "spending," XQ?
posted by Kwantsar at 5:39 AM on March 22, 2006


Defense gets less than 20% of the federal budget. XQ, et al are in denial.

And by the way, the horrible, evil Bush tax cuts have significantly INCREASED federal tax revenue (click on the chart).
posted by ParisParamus at 5:49 AM on March 22, 2006


But hey, most of the same people who think Iraq is going poorly also think the economy is bad--a lack of credibility knows no bounds.
posted by ParisParamus at 6:02 AM on March 22, 2006


Defense gets less than 20% of the federal budget.

And? I repeat: You said "most of Washington's spending goes to domestic programs." You're wrong, and instead of admitting it you whined in MeTa in an second failed attempt to kill the thread.

But hey, most of the same people who think Iraq is going poorly also think the economy is bad--a lack of credibility knows no bounds.

PP, you lose.
posted by XQUZYPHYR at 6:11 AM on March 22, 2006


Denial aint just another reason to go bear hunting with a bazooka.
posted by shnoz-gobblin at 6:15 AM on March 22, 2006


You're so clever you needn't argue with the facts?
posted by ParisParamus at 6:17 AM on March 22, 2006


ParisParamus writes "But hey, most of the same people who think Iraq is going poorly also think the economy is bad--a lack of credibility knows no bounds."

61 pct doubted that US policy in Iraq would be successful, up from 55 pct in January, while only 20 pct were confident, compared with 26 pct previously.

So you're saying more than 6 of every 10 Americans agree the economy is bad, and you wonder why you're the only one clapping?
posted by orthogonality at 6:22 AM on March 22, 2006


if I'm clapping, its primarily because you are boo'ing. He's not the Economy God; just the President. Remember, I didn't start the thread, and would not have started one.
posted by ParisParamus at 6:28 AM on March 22, 2006


6 out of 10 Americans may think watching American Idol, or a March Maddness basketball game is a good use of time. I don't really care about public perceptions of this kind.
posted by ParisParamus at 6:29 AM on March 22, 2006


XQUZYPHYR: Best way to kill a zombie is to hit 'em with a shovel, I sez.
posted by Baby_Balrog at 6:31 AM on March 22, 2006


IMPORTANT REMINDER: ParisParamus is just trolling. His sole goal is to get you to respond in anger. He doesn't actually care about any of this, he just likes to fight.

Be better than him (it's not hard).
posted by I Love Tacos at 6:43 AM on March 22, 2006


(please feel free to post that warning after any future ParisParamus trolls and derails)
posted by I Love Tacos at 6:44 AM on March 22, 2006


"Ever since I've been the President we have slowed the rate of growth of non-security discretionary spending and actually cut discretionary spending -- non-security discretionary spending...But in terms of the debt, mandatory spending increases is driving a lot of that debt. And that's why it's important to get the reforms done." - G.W. Bush

Notice that he says non-security discretionary spending has been reduced. How much has security related spending increased? More than non-security decreased? By first slipping and saying they cut "discretionary spending", he reveals that he doesn't consider the security spending discretionary or optional. I think it's entirely reasonable to say that security spending isn't optional. Certainly I would expect there to always be some spending here. But is anyone examining what all is being described as "security" spending, how much is being spent and whether it's all worthwhile spending? Or is anything that calls its self security spending automatically approved because IT WILL KEEP US SAFE FROM THE BAD PEOPLE WHO WANT TO EAT OUR BABIES
posted by raedyn at 7:26 AM on March 22, 2006


Bush presided over the largest government reorganization since 1947 and increased the size of government. He's financed the Iraq War with emergency supplemental requests; are they included in the budget?
posted by kirkaracha at 7:37 AM on March 22, 2006


HA Just Remembering back to ParisParamis calling the middle easterners, "poor primitive looney types" and this one he actually tried to make good comments.
posted by Elim at 7:38 AM on March 22, 2006


Remember "fuzzy math"?
posted by sonofsamiam at 7:39 AM on March 22, 2006


all spending is discretionary. Except the spending of which YOU approve.
posted by ParisParamus at 7:52 AM on March 22, 2006


Snow's tax revenue chart, taken at face value, presumes causality when a number of other factors are involved. Perhaps tax cuts have helped, but the economy in general has rebounded strongly. Many large corporations, having built up large cash reserves during the recession, began to grow more aggresively. M&A activity has surged, driven by strong credit markets and those corporate cash balances. And much of this activity has been driven more by growth strategies than cost-cutting initiatives. After a few years of retraction and conservatism on behalf of corporations, the surge in growth makes sense. This would've happened with or without the tax cuts.
posted by mullacc at 7:56 AM on March 22, 2006


mullacc, I was not arguing cause and effect so much as just pointing out that those who think the economy is in bad shape are just plain wrong. I know the consensus here on Metafilter is that Bush has wrecked; well he hasn't wrecked the economy.
posted by ParisParamus at 8:00 AM on March 22, 2006


Yet. You reap what you sow. The bill comes due and cannot be paid.
posted by exlotuseater at 8:06 AM on March 22, 2006


"...pointing out that those who think the economy is in bad shape are just plain wrong."

No, that's just not so. When an economy has a new-job production rate that can't even keep up with new graduates, much less immigration, and the majority of jobs that are produced are part-time low-pay while full-time work is being lost at a steady rate, then there is something wrong with the economy.
posted by Dipsomaniac at 8:08 AM on March 22, 2006


Not yet anyway, but I think the danger is evident if you look at the current yield-curve. It's flat and threatening to become inverse - that is, short-term rates are almost as high, and may go higher than, long-term rates. The simplistic story is that investors are hesitant to make long-term bets on the US dollar and economy. Is that Bush's fault? I don't know, but I don't think deficit spending helps (especially out-of-control spending in Iraq). And the yield curve situation is starting to make mortgage lending an unprofitable venture which threats the real estate market and consumer liquidity.
posted by mullacc at 8:10 AM on March 22, 2006


"Not yet anyway" refers to PP's last comment. And while I'm at it, s/threats/threatens.
posted by mullacc at 8:11 AM on March 22, 2006


Everybody needs to shout-out some love to the Paris/Dios factions. Metafilter wouldn't be shit without the contrarians. Without them this place would be nothing but a big old... how do you say... jerque cirque? These intersting and entertaining conversations exist in no small part because of the e-rage that forces us to go look up some factiod so that we can refute and even (best possible case scenario) pwn them.
posted by hatchetjack at 9:00 AM on March 22, 2006


You know who felt good about typing big numbers preceded by a "$"?
Hitler.


Food. All over the keyboard. Damn you, Smedleyman.

Metafilter wouldn't be shit without the contrarians.

Remember: there's a difference between "contrarian" and "troll". A contrarian looks at the same facts and says "but what if THIS is causing it instead?" or "history tells us this happens if that happens, but what if this time another thing happens instead?", and does so in order to encourage conversation. A troll throws out any unpopular comment they can in order to annoy and distract people.

So, of course you're right: contrarians are good for MeFi. Trolls, however, are not, and there's plenty of people here I disagree firmly with, yet respect the opinions of.
posted by davejay at 12:45 PM on March 22, 2006


“Metafilter wouldn't be shit without the contrarians.”

Horseshit. I have had disagreements with many people here and had frutiful discourse. By the same token I’ve had acrimonius and insipid misunderstandings, sometimes it’s me, some times it’s the other guy, sometimes both. I very much enjoy the former. The latter is just noise and ego bullshit. Most particularly the unsubstantiated unreasoning sloganeering.
I get your point hatchetjack - that passion is induced in opposition to trolling, but I think it’s way overstated. That passion is and has been shown elsewhere between reasonable individuals and has resulted in much more fruitful conversations.
We’d all be better off without contrarian gainsaying - my own bullshit included. Who cares what work you do if you’re simply shouting at a brick wall?
/but at the very least I do in fact read and abosorb other’s comments and address them. Nearly everyone here does in fact give some sign that they recognize reason. It’s the difference between interactive discourse and soliloquy. We share ideas. There’s plenty of other places to go where people monologue their own party line at you.


“I gotta ask - how is this all going to end well?” -posted by rough ashlar

You asking me? I don’t want to get in anyone’s face here. Been doing too much of that lately. You understand I’m accusing the Republicans of sacrificing what was (in name anyway) their political and fiscal philosophy, right? No sarcasm intended.
posted by Smedleyman at 1:05 PM on March 22, 2006


note: Help maintain a healthy, respectful discussion by focusing comments on the issues, topics, and facts at hand -- not at other members of the site.
posted by Smedleyman at 1:06 PM on March 22, 2006


/or what davejay said better than, and just before, me.
damn you and your vengance for food on the keyboard through clarity, man!
posted by Smedleyman at 1:09 PM on March 22, 2006


Smedleyman writes "note: Help maintain a healthy, respectful discussion by focusing comments on the issues, topics, and facts at hand -- not at other members of the site."


Smedleyman, I respect you enormously, more and more with your every comment. But what wowed me most was your offering another Mefite the chance to kill you without any legal repercussions, in order to point out the difference between those who have killed for their country and those who merely cheerlead wars from the Home Front.

You cut through a lot of bullshit with that and you made an important point, but you weren't not focusing on "other members of the site."
posted by orthogonality at 1:13 PM on March 22, 2006


orthogonality writes "But what wowed me most was your offering another Mefite the chance to kill you without any legal repercussions"

Well, I talked to my lawyer on this one and he said permission via Metafilter wouldn't stand up in court. But I'm not sure he realized how many people flagged that comment as "fantastic."
posted by mullacc at 1:42 PM on March 22, 2006


"1996, Month 02 M3 supply: 4700.60
2001, Month 02 M3 supply: 7308.5
2006, Month 02 M3 supply: 10294.3

Over the last ten years, that's about 8%.
posted by Malor
"

No it's not. It's 6.75%.

"By way of comparison, from 1990 to 1995 we saw about a 1% M3 growth
posted by Malor"

No we didn't. It was more than double that. Check the numbers yourself.

I took the M3 numbers and plotted them on a log scale in Excel. It took me about 3 minutes. There was no acceleration in the money supply recently, and although recent years have seen more rapid growth than some periods over the past 40 years, it's not as fast as it was in the 1980's. For comparison, M3 growth from 1977 to 1987 was 8.45% annually. Over the last ten years it's been 6.75%.

DO THE MATH.
posted by JParker at 9:01 PM on March 22, 2006


1990 - 1995: (4396.5/4095.6)^(1/5)-1 = 1.4% CAGR

1996 - 2006: (10294.3/4700.6)^(1/10)-1 = 8.15% CAGR

I guess you meant: DO THE MATH DIFFERENTLY
posted by mullacc at 1:25 PM on March 23, 2006


"but you weren't not focusing on "other members of the site."

Indeed. I understand the devil can also quote scripture to suit himself.

Seriously tho, I could have done without the aggravation.
PP strikes me as disingenuous. There are others here who are. Folks say dios is, but I don't get that from him.

I dislike needless argument for the sake of argument - which is what I understand 'contrarian' to mean. I'd go with davejay's "troll."
Some people just argue with you to try to piss you off. PP has stated that as his purpose here.
Some other folks it's a bit more subtle.

I do take the point, trolls, contrarians, etc, do serve as foils - but I'd rather have the smooth interaction of meaning and nuance and "oh I haven't thought of that" kinda thing even in disagreement that I get from you and a great majority of folks here than any accolades that go with having a beef with someone who is completely unreasonable.

Hell, I can chuck this nickname and get another one for $5 and no one knows "Mr. Forfle" was actually me.

Who the hell is "Smedleyman" anyway?

I very much appreciate the respect, but anonymity does serve to buffer egos somewhat I think. I'm not attached to "Smedleyman" and I only want to read and give and get feedback.

And ultimately that point was not made for PP. I would have given up far earlier if even if I thought he would get anything out of it. It was made for you guys.

I figure maybe there's some guys here thinking that pulling the trigger, violence, etc. is the way to do. I have the benefit of experiance and I thought I'd share that.

Which is more what I think this is about, sharing.

...of course, this is not to say I there aren't occasions in which I don't completely fuck that up though.
posted by Smedleyman at 3:16 PM on March 24, 2006


Smedleyman writes "I dislike needless argument for the sake of argument - which is what I understand 'contrarian' to mean."


"Contrarian" is more subtle than "argument for argument's sake".

The contrarian -- and I often play one -- tries to get the reader to see things from a different angle than the reader is usually inclined to see from, in hopes that the reader sees things are more complicated or subtle or intertwined. The contrarian is -- at his best -- trying to say, "if you squint a little, you might see more than a lop-sided hexagon."

Or: "sometimes caricature and exaggeration makes the essential features more salient."


"And ultimately that point was not made for PP. I would have given up far earlier if even if I thought he would get anything out of it. It was made for you guys. "

Well, exactly. You were being a contrarian to make a point: you didn't actually want PP to kill you, you wanted to make manifest to PP (and us) that killing -- even for the best reasons -- is never easy, never something to be taken lightly by fervent behind-the-lines jingoists, that it has real and life-altering costs to the victim and to the soldier asked to do it.

You weren't arguing for the sake of arguing, you were telling a raw and essential truth, by means of playing with deadly seriousness, the role of contrarian.
posted by orthogonality at 3:40 PM on March 24, 2006


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