Healthcare? Healthcare for who? She'll be fine. A Tree Grows in Brooklyn

Would Some Actual Data Help?

For those who believe it was the magic of Clintonion tax increases that balanced the budget I offered some data. Actual facts, in fact. From January 1993 through December 2000, (for the historically challenged, that is Clinton's term in office) he enjoyed a mean value of 3.85% for US inflation adjusted GDP. From January 2001 through December 2008 (Bush's term) the mean growth rate was 2.03. Sometimes it is better to be lucky than good. I'm not sure Bush was either, but Clinton certainly was lucky, in my opinion.

You can go to this website and play with the dates and look at the data yourself from 1947 onward.

http://www.tradingeconomics.com/economics/gdp-growth.aspx?Symbol=USD

The notion that our best days are behind us is a thought embraced by those who either lack imagination and/or don't understand how successful people think and act. Incentives work. More is created. More can be shared. Disincentives work, too. Less is created. There is less to share.

In the words of Margaret Thatcher, "The problem with Socialism is that sooner or later you run out of other people's money to spend."

Cheers!

Hags

Now I don't want to get cross wise with Hags

Not realy cross wise, more as an starting point with our liberal brethern.

So, you guys want to tax the high earners to "make" $130B, and keep passing on our specific suggestions of spending cuts because...and boy have we heard this a lot...those cuts won't make a dent in the deficit.

OK.. but it is a start.

So, yes, Mr. Hags we can "grow" the economy but let's cut some spending.  You know, the department of energy, earmarks, PBS  all that crap

and Rich, if, and granted it is a big if speculating if your party would ever put country before politics, they cut some and we were still short, heck, even we rational conservatives might give a listen to taxes.

Cutting Government Spending Is Good But Insufficient. Growing the Pie is Essential

I found this article insightful (see link) regarding Obama's understanding of our economy. The key to future prosperity for all is growth, and capitalism's risk/reward incentive system only works if those who take the risks get to keep enough of the rewards to provide incentive. Obama seems to have an instinct that tells him what enough is, and when enough is enough Obama will have the State confiscate the rest. Really. Check out the article. It is a quick and interesting read.

http://pajamasmedia.com/victordavishanson/stay-worried/

Massive redistribution leads to reduced risk taking which leads to reduce growth. We should reduce excessive spending, but we cannot cut our way to prosperity. We need to constrain spending AND grow the pie.

Cheers!

Hags

Look at the budget and tell me what you want to cut and how much.

So says our friend Eric.



I wwould to freeze discretionary spending at 2008 levels.  I want to privatize the post office, Amtrak, and PBS.


I would eliminate earmarks and corporate tax breaks.

I would reduce the Federal government work force, in real terms, 5%.

I would significantly down size the department of energy and education.

I would raise the retirement age to 69 and while being revenue neutral, have medicare recipients pay 5% of their first $10,000 in charges.

I would limit, by shortening and eligibility, Federal Unemployment insurance.

You have other good ideas? I'm listening.

During a recent post election political discussion at my Tony club, a semi liberal made a statement which seems to be the fall back position for the blistered Democrats. "Well what about the mess your fella left?"



Let's blog about that for a moment.


In fact, let's look at the facts:


After the dot com bust and 9-11 as well as 2 wars (their necessity a topic for another time-wars they were), the 2007 deficit was a manageable portion of GDP and the unemployment rate was hovering around 5%. Not bad, granted earmarks exploded and discretionary spending rose too quickly but things were heading in the right direction.


Then...Too many folks bought homes they could not afford, this went on for a long time, aided and abetted by our government and corrupted by our banks, but EVERYONE should have known better and the S--t hit the fan.


THAT was the mess that was left, and a mess it was. However, it was not a mess involving the health care industry, it was a mess of lending and their response...more borrowing! Everyone not stupid like Paul K. knows that does not make sense.


So here we are in a new era (the last era lasting 2 years) and I have 2 things to say:


To my club friend who probably will never read this blog, but will hear reports from the pro, as well as Baxter...you keep implying that..".hey the Republicans got their turn at over spending, we get ours!" Is that your argument? Cause if it is, it is dumb.


More importantly, and I don't get this, what do you have against the TEA party?


The TEA party candidates seemed to run on principal and discussed difficult issues. I heard Rand Paul talk about entitlements, I heard Joe Miller talk about limiting unemployment insurance. You complain that the TEA party folks talk about limited spending and limited government but don't pony up THEIR entitlements.


That is just not true. We all know unless we deal with entitlements, we are on a quick road to bankruptcy. The TEA party is offering honest solutions and being treated like wacko's in the process. I liken the initial wave and their defeat to a sacrificial group offering peace in time of war.


What is a matter with you Liberals? Are you daft?

Taxpayer dollars -- WSJ

Peggy Pegs O and Mama Griz

Excellent post-election commentary from Peggy Noonan. Ms. Palin should tread lightly when referring to Reagan. Some, like Noonan, have both lived history and even remember it.

Noonan is no light weight and she gives O and Palin a modest spanking. Give it a read.

http://online.wsj.com/article/SB10001424052748703805704575594772776292394.html?mod=WSJ_article_RecentColumns_Declarations

They seem confused

Reuters) - Demoralized Democrats face an uncertain future after their bruising U.S. election losses, and the soul-searching and finger-pointing already have begun. A debate raged about whether the party, which suffered its biggest losses in Congress since 1938, needed a dramatic shift in course ahead of President Barack Obama's 2012 re-election campaign.

Liberal Democrats demanded more confrontation and less compromise with Republicans, that worked so well, while party pragmatists called for bipartisanship and a move to the center after the election rout on Tuesday in which Republicans took control of the House of Representatives and picked up seats in the Senate.
Two years after Obama entered the White House with a promise to change Washington, voters did it for him in a result Obama termed "a shellacking."

Support for Democrats collapsed across the upper Midwest, a crucial building block in Obama's winning 2008 coalition, as blue-collar whites abandoned the party. It also weakened among independents, suburban voters and moderates, while turnout dropped among young and black voters.


"What is perhaps most remarkable to me was the inability of the Democrats to mount any kind of coherent argument in the closing months of the campaign," said Simon Rosenberg, head of the Democratic advocacy group.

It is not possible to be coherent when you are attacking the job creators when there are no jobs, spending vast sums of money when you have none.  It is very certain where the party stands...it stand for spending a whole lot of money, most of it wasted.

"Democrats are saddened and demoralized by this policy of appeasement," U.S. Representative Alan Grayson of Florida, who lost his re-election bid, said on MSNBC. "The center cannot hold. There is no center left. Either you deliver for the people on your side or you're gone. It's that simple," he said.

Each side has its idiots, he was theirs.  Good riddance!
But Democratic congressional leaders said the lesson of the election was that both parties needed to work together to find solutions on issues like high unemployment and economic stagnation. "If at the end of the day we play to a draw, achieve little or nothing, and try to celebrate with press releases, the American people will see right through it," Dick Durbin, the No. 2 Senate Democrat, said of the new Congress. "They want us to roll up our sleeves and find common ground."

Really?  So these guys want compromise?  They just want half the health care bill, because it will never grow.  Or another stimulus because the first was so effective.  They just want to be half as hostile to business and the suscessful.

Creeping Socialism

I like Jim's last post too.

I don't think the US is in danger of becoming Scandinavia. The United States is not well suited by tradition, culture, or political design to become an egalitarian society. James Madison's slow moving constitutional framework is behaving just as he intended. We are insulated from a 'tyranny of the majority.'

I am disappointed that the politics of the day is much ado about nothing.

I am coming to the conclusion that the daily news is offered as a form of therapeutic catharsis for repressed, idle, middle aged males.

And it is conspicuously lacking in salacious content. At least they have plenty of nudity in Scandinavia.

What happened?

Well Obama and the Democrats got their asses kicked for starters; but that was not the only thing.
The TEA party brought together the previously silent majority who have previously thought and now say "enough"!

Limited government! Reduce spending! We really mean it and we want it now!

Baxter's gobbledygook is standard pabulum, "we just needed to spend more"!, "infrastructure will be our savior"! and the best..."it is really not infringing on your rights to make you buy health insurance"

All the crap about how we just need to tax more to enable our entitlement state to grow and provide for everyone so we can be like...France. Well the Franc's are rioting over early retirement. LET ME AND MY FELLOW CONSERVATIVES BE CLEAR, WE DO NOT WANT OUR COUNTRY TO BECOME A EUROPEAN SOCIALIST STATE. WE DO NOT WANT TO EMULATE THEM, WE DO NOT WANT TO HAVE A GDP TO TAX RATE LIKE THEM. AND THAT MY LIBERAL FRIENDS IS WHAT YESTERDAY WAS ALL ABOUT.  We want to cut taxes but cut spending more and yes that will require entitlement reform and standing up to seniors and yes the Liberals, putting party before country, will say we are being mean by letting people keep more of what they earn and that we want to starve grandma because we don't want to allow our country and our children's, children to become insolvent.  Yes we can!

Moving forward the Conservative hold much promise, especially with a foil like Obama but we also need results and a sorting our of our previous confusion.

The old Conservative collation was somewhat patched together and with the familiar refrain...I'm a fiscal conservative but socially liberal is hopefully sorting itself out. The TEA party is manifestly FISCAL!

But I am hopeful they, the Conservatives, will do a better job this time. But...we are going to keep our eyes wide open. I can still remember reading (and almost vomiting) about the proliferation of earmarks when the Republican's held congress.

If they cannot get that simple one straight right off the bat....well let's just say they better.

Are Republicans Blue Today?

I thought I was going to feel bad today and I don't. Perhaps it is because the "wave" had been well advertised in advance and it crested below the expectations of many on the right. Tuesday night was a good one for the GOP. However, many of my Republican friends are subdued today. I get the feeling they are more upset having failed to capture the Senate than they are happy for taking the House. It may also be that their party will need to put forth genuine proposals for spending cuts that they have heretofore avoided.

Are Republicans blue today or is something else going on?

It May Be Time for the Fed to Go Negative

By N. GREGORY MANKIW
N. Gregory Mankiw is a professor of economics at Harvard. He was an adviser to President George W. Bush.

Published: April 18, 2009

WITH unemployment rising and the financial system in shambles, it’s hard not to feel negative about the economy right now. The answer to our problems, however, could well be more negativity. But I’m not talking about attitude. I‘m talking about numbers.

Let’s start with the basics: What is the best way for an economy to escape a recession?

Until recently, most economists relied on monetary policy. Recessions result from an insufficient demand for goods and services — and so, the thinking goes, our central bank can remedy this deficiency by cutting interest rates. Lower interest rates encourage households and businesses to borrow and spend. More spending means more demand for goods and services, which leads to greater employment for workers to meet that demand.

The problem today, it seems, is that the Federal Reserve has done just about as much interest rate cutting as it can. Its target for the federal funds rate is about zero, so it has turned to other tools, such as buying longer-term debt securities, to get the economy going again. But the efficacy of those tools is uncertain, and there are risks associated with them.

In many ways today, the Fed is in uncharted waters.

So why shouldn’t the Fed just keep cutting interest rates? Why not lower the target interest rate to, say, negative 3 percent?

At that interest rate, you could borrow and spend $100 and repay $97 next year. This opportunity would surely generate more borrowing and aggregate demand.

The problem with negative interest rates, however, is quickly apparent: nobody would lend on those terms. Rather than giving your money to a borrower who promises a negative return, it would be better to stick the cash in your mattress. Because holding money promises a return of exactly zero, lenders cannot offer less.

Unless, that is, we figure out a way to make holding money less attractive.

At one of my recent Harvard seminars, a graduate student proposed a clever scheme to do exactly that. (I will let the student remain anonymous. In case he ever wants to pursue a career as a central banker, having his name associated with this idea probably won’t help.)

Imagine that the Fed were to announce that, a year from today, it would pick a digit from zero to 9 out of a hat. All currency with a serial number ending in that digit would no longer be legal tender. Suddenly, the expected return to holding currency would become negative 10 percent.

That move would free the Fed to cut interest rates below zero. People would be delighted to lend money at negative 3 percent, since losing 3 percent is better than losing 10.

Of course, some people might decide that at those rates, they would rather spend the money — for example, by buying a new car. But because expanding aggregate demand is precisely the goal of the interest rate cut, such an incentive isn’t a flaw — it’s a benefit.

The idea of making money earn a negative return is not entirely new. In the late 19th century, the German economist Silvio Gesell argued for a tax on holding money. He was concerned that during times of financial stress, people hoard money rather than lend it. John Maynard Keynes approvingly cited the idea of a carrying tax on money. With banks now holding substantial excess reserves, Gesell’s concern about cash hoarding suddenly seems very modern.

If all of this seems too outlandish, there is a more prosaic way of obtaining negative interest rates: through inflation. Suppose that, looking ahead, the Fed commits itself to producing significant inflation. In this case, while nominal interest rates could remain at zero, real interest rates — interest rates measured in purchasing power — could become negative. If people were confident that they could repay their zero-interest loans in devalued dollars, they would have significant incentive to borrow and spend.

Having the central bank embrace inflation would shock economists and Fed watchers who view price stability as the foremost goal of monetary policy. But there are worse things than inflation. And guess what? We have them today. A little more inflation might be preferable to rising unemployment or a series of fiscal measures that pile on debt bequeathed to future generations.

Ben S. Bernanke, the Fed chairman, is the perfect person to make this commitment to higher inflation. Mr. Bernanke has long been an advocate of inflation targeting. In the past, advocates of inflation targeting have stressed the need to keep inflation from getting out of hand. But in the current environment, the goal could be to produce enough inflation to ensure that the real interest rate is sufficiently negative.

The idea of negative interest rates may strike some people as absurd, the concoction of some impractical theorist. Perhaps it is. But remember this: Early mathematicians thought that the idea of negative numbers was absurd. Today, these numbers are commonplace. Even children can be taught that some problems (such as 2x + 6 = 0) have no solution unless you are ready to invoke negative numbers.

Maybe some economic problems require the same trick.

Poor "O" the Repubican didn't win a majority in the Senate.

After the world class ass kicking of this evening, old Obama will be able to crow..."but we held the Senate"!

The only problem...he will not have anyone to triangulate against.

He still "owns" the economy and with his limited political skills (you hear it here first) will not compromise.

Had the Senate gone Republican, he would have a ready made villian, but not now.

Us good conservatves can hardly wait until tomorrows speech.  Watch him crow and eat crow at the same time.

Composition of the Electorate is Everything

Yesterday, the Washington Post released a poll showing that likely voters supported the GOP by 6 points (49-43) in a generic congressional ballot. This spread would lead to a gain of 50 - 60 seats. Registered voters actually prefer the Democrats by 4 points (47-43), which would lead to retention of Democratic control if they all voted. http://voices.washingtonpost.com/behind-the-numbers/2010/10/poll_republicans_lead_49-43_on.html

Further - in other polls - the "enthusiasm gap" is gauged to be 10+ points higher on the GOP side. Anecdotally, I have seen this to be the case and I do not believe that Democratic attempts to rally the base have borne much fruit. Tomorrow will be a good day for the GOP.

My bother-in-law suggested yesterday that the stock market will do very well going forward should the Republicans decisively win. So, I thought I would check out the record:

S&P 500 - Close Price at Inauguration - % Change - % per Annum

Obama: 805.22/1,183.26/+46.9%/+26.4%
GW Bush: 1,342.54/805.22/-40.0%/-5.0%
Clinton: 433.37/1,342.54/+309.8%/+38.72%
Reagan: 131.65/286.63/+217.7%/+27.2%

What is most impressive about this is that both Democrats inherited massive deficits and reduced them. Both Republicans created massive deficits. If I were to create a job growth chart, it would show similar results. Over 20mm jobs were created under Clinton, net zero under GW Bush. Facts are stubborn things, no?