Why should we trust the president and the Democrat-controlled Senate when it comes to our current debt/debt ceiling situation? At every turn, Mr. Obama and his liberal allies in Congress place ideology ahead of everything …including reality.
In the depths of our recession, the president said we needed his spending package of nearly a trillion dollars in order to stimulate the economy and keep unemployment below 8%. The result? Today unemployment stands at 9.2% and economic growth is a weak 1.8%. Should anyone be surprised? No, since every time it has been tried, the Keynsian government spending approach doesn’t work. It failed under FDR during the Great Depression; it failed for Japan in the 1990’s and caused its “Lost Decade” and predictably it failed for President Obama.
Moreover, in 2009 Speaker of the House Nancy Pelosi, with the president’s blessing, pressed to raise the minimum wage. Once again, the liberals’ ideology of fairness caused them to ignore warnings that even a first year economics major understands – raise prices (wages are simply the price of labor) above their equilibrium price and the result is a surplus i.e. unemployment. According the US Bureau of Labor, the youth unemployment rate (the unemployment rate for 16 to 24 year olds) prior to the in July 2009 minimum wage increase was 18.5 percent. By June 2011, that had increased to 21.4%. And who suffered? The very same people the liberals wanted to help – young people and entry-level employees. Once again when ideology takes precedence over reality, the results are predictable. If they bother to report it, the liberal media usually accompanies news like this with the word “unexpected.” Is it really?
To be sure, we are in the midst of a crisis with regard to the debt ceiling but instead of working in good faith with the Republicans to reach an agreement to raise the debt ceiling, the president has used the opportunity to frighten the elderly, demonize the so-called rich and continue to attack American business. Remember “Never let a crisis go to waste?” While the House Republicans have proposed 3 plans now that not only raise the debt ceiling but also help rein in spending in order to actually help solve the underlying problem, the president and the Senate have yet to put a plan on paper. Instead, Mr. Obama advocated a “balanced” approach that called for tax hikes now, an increase in the debt ceiling now and spending cuts in the future. There isn’t a single economic school of thought that prescribes raising taxes in the middle of a recession or during an anemic recovery. In fact, in 2009 President Obama himself said that raising taxes in a recession is irresponsible and come to think of it, while he was a senator, he also called raising the debt ceiling a failure of leadership. Nor does any serious person believe that spending cuts promised for the future will ever materialize. Additionally, the Democrats resorted to the same time pressure tactic that enabled them to push the stimulus package. They established an arbitrary August 2nd date that the government would potentially have to default on its financial obligations. In order to heighten the anxiety in the country, the president implied that the government might not be able to pay social security benefits or make Medicaid and Medicare payments. Here he is either being deliberately disingenuous or unconsciously admitting that these are his lowest priorities since when forced to cut back, most Americans start at the bottom of their priority list.
Now that it appears that a compromise is unlikely by the artificial deadline, miraculously the Treasury announced tonight it has found enough money to postpone default until the 10th of August. Is it any wonder the public is losing confidence in Mr. Obama and his administration?
I agree with those who are calling for our politicians to act like adults. Where I disagree with liberals is when they contend that Obama is the adult in the room. Allowing one’s ideology to triumph over reality, trump the facts and lead one to deliberately exacerbate a serious situation are not what I consider hallmarks of grown-up behavior. On this, I guess my liberal friends and I will have to agree to disagree.
To quote Ronald Reagan, "there you go again!" It would be nice if the world were a black and white place with no ambiguities and inconsistencies. But it's not. So let's introduce a shade of grey to your arguments...
ReplyDeleteFirst, it's true there is not a shred of evidence to suggest that the USD 1Tr stimulus package has created jobs. What it did do was avert catastrophe. Alan Greenspan has consistently said that the systemic seriousness of the financial distress of 2008-09 actually EXCEEDED that of the distress that led to the Great Depression. It was the policy prescriptions in the most recent crisis that prevented economic apocalypse. None other than Hank Paulson himself called Treasury's response a "kitchen sink" strategy. It's axiomatic in politics that you never get credit for the crisis averted. The President deserves some credit.
Second as for the gratuitous "happy slap" assault on Keynes, students of history will recall that the removal of government stimulus in 1937, accompanied by raising of interest rates plunged the country back into depression. It was only Keynsian-style stimulus (spending on WWII) that brought the world out of global depression. A quick read of "Economic Consequences of the Peace" will demonstrate that Keynes was prescient on the topic of stimulus - he was a primary author as well of the Marshall Plan, generally regarded as a success amongst non-Marxists and National Socialists. Economist Martin Wolf, of the FT, himself no "Keynsian" has warned that the near term danger of asset price deflation provoking another crisis is even more acute than the sovereign debt crisis.
Third, a reference point is necessary when talking about raising or lowering taxes. Kind of like piloting an aircraft, your altitude actually kind of matters. Personal income taxes are currently at historical lows. It's therefore not rationale to take that off the table. As the German economy has shown, full (structural) employment, and economic growth can be sustained in the face of an increased tax burden. Said another way, the taxation debate is more NUANCED than supply siders and other dogmatists would lead you to believe. It's the growth factor that's absent from the debate (and your assessment of it).
Lastly the dual-winners of the "Bartleby the Scrivener" award for wilful intransigence in the face of reality and the Alfred E Neumann "What me worry award?" for wilful ignorance goes to the Tea Party. Congratulations to the winners...you're morons.
Why is it that when liberals need to use a great quote, they usually have to look to a conservative? That said, there are several Reagan quotes that would be more appropriate. Two that come to mind are: "In this present crisis, government is not the solution to our problem, government IS the problem." and "The problem is not that people are taxed too little, the problem is that government spends too much."
ReplyDeleteAs to the spending, it isn't very productive to enter into an argument about what would have happened had we not ... whatever. The bottom line in all this is that this crisis is largely the result of government meddling; well- meaning government bureaucrats trying to do what government has no business trying to do nor is it particularly well equipped to do. In an effort to guarantee affordable housing for every American, liberals brow-beat banks and mortgage companies into making loans, not based on credit worthiness, but rather on social engineering goals. Credit checks, down-payments, current employment, ability to ever repay the loans be damned, it’s all about fairness! Adding to the insanity, the quasi-governmental organizations, Fannie Mae and Freddie Mac, guaranteed all the super-risky loans. Finally, the whole house of cards came crashing down and to top off the entire fiasco, Senator Chris Dodd and Representative Barney Frank, two men completely embroiled in the affair, have the nerve to write a 2300 page bill to “solve” the problem which doesn’t even mention Fannie or Freddie! To refresh your memory, Dodd was forced to retire from the Senate over the sweet-heart deal he received from Countrywide Mortgage and Frank was the lead cheerleader for the misguided fair housing policies. Only in our Congress! With regard to who receives credit for saving us from catastrophe, liberals, of which Obama is one, can’t get credit for rescuing us from a disaster that was largely of their own making!
Now to address your points on Keynes. Please don’t tell me you are trying to make the argument that WWII is an example of Keynesian policy. God help us if economic policy brings us out of a depression at the expense of 50 million dead and a continent completely destroyed. Additionally, I may be wrong but I don’t think Keynes was actually an author of the Marshall Plan. It may have reflected Keynesian thought but I don’t think he actually “had a seat at the table.”
Next, I love when liberals talk about nuance and examining the various shades of gray. Nuance is the liberal equivalent of saying “Um.” It allows them to avoid making decisions while trying to look thoughtful. And the taxation issue is a complete red herring. If we tax the income of the richest 1% in the country at 100% - ignoring the unintended consequences that would ultimately lead to no revenue at all – it would still not make a difference in a budget environment where we base-line our budget at current year plus 8%. A decrease in the rate of projected increase is only a budget cut in liberal land and Bizzaro World from the Superman comics. Furthermore, when 50% of Americans pay no income taxes at all and the top 1% pay a higher percentage than in any other industrial nation, it’s time to stop the class-envy politics. It is down-right immoral. Taking money from one private citizen to give to another private citizen is just government sanctioned thievery.
Lastly, When it comes to government, I side with Thomas Paine – “Government is at its best a necessary evil and at its worst an intolerable one.” – and Jefferson – “That government that governs best, governs least.” Our government is to the people like the liver is to the body. You have to have a liver to survive, but if it becomes malignant and grows out of control, it kills you. America is stage 4.
If not to raise the b*shit flag on your somewhat "liberal" interpretation of some statistics, I'm going to at least selectively challenge you for a reference. Let's start with the taxation rate on the top 1% of earners please. Higher than France? Puuuuuulease. Bet a beer on it?
ReplyDeleteI'll concede the widely held view among the Tea-Party crowd that 99.5% of Democrats are Baal worshipers.
In response to your remark re: Keynes influence on the Marshal Plan, I can cite numerous references. Ignacio Ramonet Editor of Le Monde Diplomatique until 2008 said in a 2007 editorial, "The Marshall Plan itself was profoundly influenced by the interventionist theory of economics set out by John Maynard Keynes in his "General Theory of Employment, Interest and Money". Keynes had argued that governments ought not just to rely on the markets alone, but should do all in their power to secure full employment by achieving a better redistribution of income. The Marshall Plan also provided a way of gaining public acceptance in Europe for the New Deal format that the United States had successfully used before the war to end the recession triggered by the 1929 Wall Street crash"
May I point out that at Bretton Woods in 1944, Keynes DID have a seat at the table.
Oh congrats on the S&P downgrade BTW. Should get your Tea Party Luddites the election hands down now. Brilliant! You have to ask yourselves though, was "Dick & George's Excellent Adventure" in Iraq worth this ignominy? At least Medicare, Medicaid, and Social Security are by and large spent in the US on Americans.
UK and France, for all their faults are AAA in case you required reminding.
Fair enough - I should cite the reference for my statistics.
ReplyDeleteI may have to defer to your understanding of Bretton Woods as I was under the impression that BW was a precursor to the Marshall Plan and was not a planning session for it. True, Keynesian economic thought was an influence to be sure. However, the comparisons of our current economic situation to the Great Depression, WWII, and the Marshall Plan are really not appropriate. Henry Morgantheau, FDR's Treasury Secretary, himself doubted the benefit of the New Deal spending when the resulting national debt was taken into account. Had WWII not come along, we may have found ourselves in a very different situation. Further, what choices were there other than American money to stimulate the European recovery from the war? Rubble and corpses typically have limited stimulus effect.
I'll ignore the ad hominen assualts on the previous administration accept to point out that the current administration is spending double its predessesor. Curious reference to Luddites since the most recent example of Luddite thinking was President Obama's ridiculus claim that technology like ATMs is to blame for the unemployment.
Lastly, the UK and France are AAA for now but it is most liekly because they are being fiscally responsible unlike the US and the majority of the rest of Europe. They are backing away from their over the top socialist spending programs e.g. UK requiring more from students for tuition to University.
Bottom line is we have a spending not revenue problem. Every addict says, "Just one more fix and then I'll get clean." Furthermore, liberals need to understand that taxation is about revenue not social justice - period.
"Socialism only work in two places. Heaven where it isn't needed and hell where they already have it!" Ronald W. Reagan
"In recent testimony before the Senate Budget Committee, international studies were quoted showing the wealthy in America pay more of the nation's tax burden than in any other industrialized country, giving the U.S. "the most progressive income tax system" in the world.
ReplyDeleteEarlier this month, Scott Hodge, president of the non-partisan Tax Foundation, testified before the committee, showing that the top 1 percent of taxpayers in the U.S. now pays a greater share of the income tax burden than the bottom 90 percent combined.
'As of 2008, the top 1 percent of taxpayers paid 38 percent of all income taxes, while the bottom 90 percent of taxpayers paid just 30 percent of the income tax burden,' Hodge explained. 'By any measure, this is the sign of a very progressive tax system.'
Hodge was quoting studies by the Paris-based Organization for Economic Cooperation and Development, or OECD, which analyzes a wide array of economic factors around the world." (WorldNetDaily, 24Mar2011)
The link where the entire article including tables is:
http://www.wnd.com/?pageId=278389
News Flash: France's credit rating is now facing downgrade due to their debt! It isn't the messenger (i.e. the Tea Party) it is the debt. It isn't Bush and Cheney. It is the debt!
ReplyDeleteStandby U.K.
I don't reprt this gleefully.