Not The Bold Leadership We've Been Waiting For

By Big Tent Democrat, Section Economy
Posted on Wed Sep 01, 2010 at 11:16:22 AM EST
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Krugman:

What Martin Wolf Said [--] Obama was too cautious in fearful times.

The bad decisions of January 2009 will cast a shadow on America for years, and quite possibly decades, to come. At this point, what more can those of us who feared this outcome, who tried desperately to get the White House to listen, say?

Indeed, we've said it all before, but it needs to be said again -- "The best hope for a short-term economic plan that can win bipartisan support is a tax cut[.]" Oy. Tax cuts won't get it done. We need to raise aggregate demand and job creation - through government spending. As Krugman also notes - "[P]olicy makers aren’t being let down by standard macro, they’re choosing to ignore it, making up new doctrines on the fly even though the world looks very much the way the textbooks say it should. And somehow, the new doctrines always give a reason not to take action."

Speaking for me only

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Not The Bold Leadership We've Been Waiting For | 54 comments (54 topical)

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Maybe some bold followership is needed instead. (5.00 / 5) (#1)
by Edger on Wed Sep 01, 2010 at 11:23:37 AM EST

Obama and the Democrats could maybe try bipartisanship with liberals, for a change, if they want to retain a congressional majority in November.

Or they could just throw in the towel and give up now.

Since if republicans are batsh*t crazy, what exactly does that make bipartisan overtures to them?

Weeeeeeeee......splash (5.00 / 2) (#4)
by Militarytracy on Wed Sep 01, 2010 at 11:41:46 AM EST

computer goes into the lake :) What do we do? Where do we go from here with this kind of leadership? How can any of us have any hopes beyond hoping to survive this one too?

Please repeat after me (5.00 / 1) (#13)
by jimakaPPJ on Wed Sep 01, 2010 at 12:31:12 PM EST

Producing a product requires a demand for a product.

Cut taxes and give the people more money and you will have that demand.

Pretty simple stuff.

That only works when (5.00 / 3) (#17)
by scribe on Wed Sep 01, 2010 at 12:36:42 PM EST

(a) people have money to buy the products,
(b) people have jobs to pay them the money to buy the products.

Since a lot of people have neither money nor jobs, cutting their taxes is meaningless.

Cutting taxes is meaningless when you have no income.


However, taxes are on past income (5.00 / 2) (#26)
by Cream City on Wed Sep 01, 2010 at 01:03:54 PM EST

so it could help to create jobs and cut taxes -- as those made jobless during 2010 will have had some income, so they could use a tax credit or something on the forms they file, the taxes they are to pay, in 2011. (I know several in this situation, and they need to know this now or at least soon to know that they can use some of their remaining funds for mortgage or rent payments and other needs now.)


I have been without work (none / 0) (#44)
by scribe on Wed Sep 01, 2010 at 04:04:51 PM EST

for the past 10 months.

I have had no - zero - income all year. (I am living off the proceeds of the sale, out from under a foreclosure, of my prior residence.)

I get absolutely no benefit from a tax cut.

Please do not try to tell me otherwise; grade school math tells us 15% * 0 = 28% * 0= 35% *0 = 0.


: If I may ask, what line of work? (none / 0) (#45)
by BTAL on Wed Sep 01, 2010 at 04:17:16 PM EST

: I am not talking about you (none / 0) (#54)
by Cream City on Thu Sep 02, 2010 at 04:07:45 PM EST

so am not trying to tell you otherwise.
I am talking about many laid-off workers I know here who would benefit from a break on last year's taxes. Why would you not want them to do so?

Cutting the taxes of the 90% who have (5.00 / 1) (#27)
by jimakaPPJ on Wed Sep 01, 2010 at 01:07:11 PM EST

jobs is the fastest and most effective way of getting money to them for them to spend.

All these "projects" do is let the government keep 20%, the thieves 30% and the local political boss 40% to spend on his bud's useless pocket lining plans.

That leaves 10% to actually do something months and months later.

Like I said. This is really simple stuff.


Who is this 90% who are overtaxed (5.00 / 1) (#29)
by Militarytracy on Wed Sep 01, 2010 at 01:13:35 PM EST

that you speak of? My federal income taxes aren't going up, they have ammendments on the table for that. Just the wealthy who aren't going to spend one dime of that money in the economy anyhow because they are all busy saving due to the deflation. My real problem though Jim is my property tax. My state is completely broke and broken...how did it get that way? Now they have to raise the hell out of my property taxes when I can least afford it?


Are you sure the increase isn't the local (none / 0) (#34)
by BTAL on Wed Sep 01, 2010 at 01:26:56 PM EST

additional advalorem above the state 6.5mil?


In the past year and a half (5.00 / 2) (#36)
by Militarytracy on Wed Sep 01, 2010 at 01:41:39 PM EST

I have received a new property assessment that my house was worth more three different times. It's magic or something :) Anyhow, the first two I let slide...didn't challenge. I understand that they are broke. This last one though, that's enough...our property taxes have increased 2500 a year and this all started when the economy went into the toilet. That's a little backwards that suddenly my house is worth so much. And once again, how did this solid red Republican state get this damned broke? They are busted literally in two.


: Definitely challenge the assessment as you (none / 0) (#38)
by BTAL on Wed Sep 01, 2010 at 01:53:10 PM EST

will probably win. Also sounds like it is the local added advalorem well above the state basic. $2,500!!! Wow, I'm only at ~$1,000 for an acre with a 3,000 sq ft home.
As for the state, it may be red but it is a hard core blue majority legislature in Montgomery.

: California's Proposition 13 is probably (none / 0) (#43)
by oculus on Wed Sep 01, 2010 at 02:02:16 PM EST

looking good to you!

To be honest (5.00 / 3) (#31)
by hookfan on Wed Sep 01, 2010 at 01:25:12 PM EST

cut my taxes, and since I now have little debt, I'm going to stash it and save it. Who know what will happen with social security short or long term? I need a more secure future, and current government approaches ain't providing it. And there's no one providing for me if I lose my income. I doubt I'm alone. And the savings won't stimulate any economy. . .


Oh, you mean you'll (5.00 / 2) (#37)
by Militarytracy on Wed Sep 01, 2010 at 01:44:23 PM EST

buy a CD or something and then a small nobody can get a loan in order to pay you interest? I'll bank on you because if you save it and it isn't on Wall Street, someone can borrow it. If nothing else I have a better shot of getting you to spend it in this economy than some millionaire who has every basic need covered a 100 times over.


There's the Wall Street (5.00 / 1) (#39)
by hookfan on Wed Sep 01, 2010 at 01:55:27 PM EST

Economy, and the "other" economy for the rest of us. Credit Union is more viable to get "festivus for the rest of us". And wall street can bite itself. . .


Facts be facts (none / 0) (#50)
by Harry Saxon on Wed Sep 01, 2010 at 11:32:02 PM EST

Chuck Marr and Gillian Brunet of the Center on Budget and Policy Priorities have calculated that a family of four at the exact middle of the income spectrum will pay only 4.6 percent of its income in taxes. Remember, almost half of the country pays no income taxes at all. The top 2 percent of Americans contribute almost 50 percent of federal income taxes.

Click Me


: "Facts" are wrong (none / 0) (#52)
by Yman on Thu Sep 02, 2010 at 08:02:06 AM EST

The quote is correct, but the author is wrong. A family of four at the exact middle of the income spectrum will (depending on their individual circumstances) pay 4.6% of its income in federal income tax, not "taxes". That same family will pay a far higher percentage of its income in SS/Medicare/payroll taxes than that top 2% will pay.
Big difference.

: interestingly (none / 0) (#53)
by Capt Howdy on Thu Sep 02, 2010 at 09:11:32 AM EST

the same people who like to quote that number are usually the same ones who like to go on about how illegal immigrants pay no income tax.

"Simple" ... (5.00 / 1) (#23)
by Yman on Wed Sep 01, 2010 at 12:55:49 PM EST

... indeed.


Sheesh (none / 0) (#14)
by Big Tent Democrat on Wed Sep 01, 2010 at 12:32:58 PM EST

The votes just aren't there for any new major (5.00 / 1) (#47)
by steviez314 on Wed Sep 01, 2010 at 05:22:13 PM EST

stimulus, and holding out for one is useless.

Sure, we can have some political theater with votes, but that won't get any actual spending done.

Leonhardt in todays NYT must have been reading my blog posts:

The question, then, is what kind of cut can put people back to work quickly.
The last 30 years offer some pretty good answers. For one thing, a permanent reduction in tax rates focused on the affluent -- along the lines of those 2001 Bush tax cuts -- does little to lift growth in the short term. An across-the-board, one-time cut -- like the one that Mr. Bush signed in 2008 or that Mr. Obama signed last year -- does more.
But the most effective tax cut for putting people back to work quickly is one that businesses and households get only if they spend money. Last year's cash-for-clunkers program was an example. So was a recent bipartisan tax credit for businesses that hired workers who had been unemployed for months. Perhaps the broadest example is a temporary cut in the payroll tax for businesses, which reduces the cost of employing people.

So extend the Bush tax cuts for the middle class, and use the reinstated taxes on the rich for a payroll tax cut on new hires.

I think it's win-win for the economy and politically, and might even make Republicans uncomfortable voting against it.

I think that's where the effort needs to be made now, and quickly.

: You ask for much more (5.00 / 1) (#48)
by Big Tent Democrat on Wed Sep 01, 2010 at 05:30:13 PM EST

and then you take what you can get.
This is basic stuff.

: The time might be right for the payroll break. (none / 0) (#49)
by EL seattle on Wed Sep 01, 2010 at 05:41:49 PM EST

Workers at a lot of companies where things had to be cut to the bone (and then some) in order to survive are probably suffering from fatigue. They've had to do the tasks of those who were laid off in addition to their regular job, and after too many months that can really cause a workflow strain.
I wonder if Re-Hires would be eligible for a payroll tax break? I'd think that after enough time, they should qualify as "new" hires.

too cautious (none / 0) (#2)
by Capt Howdy on Wed Sep 01, 2010 at 11:29:59 AM EST

period

Well, if he is right, a republican congress (none / 0) (#3)
by Buckeye on Wed Sep 01, 2010 at 11:37:26 AM EST

is only going to make things worse then.

not so sure (none / 0) (#5)
by Capt Howdy on Wed Sep 01, 2010 at 11:42:21 AM EST

particularly if it is just the house.

it might be just what he needs to find some spine.


How will finding a spine help (5.00 / 1) (#12)
by Buckeye on Wed Sep 01, 2010 at 12:29:14 PM EST

if he cannot get enough votes to pass anything? The spine argument mattered when the Dems owned government (which is now). If the repubs take control of the house and possibly the senate (or get in the high 40s) with Tea Party anarchists driving them, Obama can show all the spine in the world but will not be able pass the things he needs to.


How Will Spine Help? (5.00 / 1) (#21)
by squeaky on Wed Sep 01, 2010 at 12:44:24 PM EST

It will make us feel a whole lot better... and that is not small potatoes.


Spine (5.00 / 1) (#22)
by hookfan on Wed Sep 01, 2010 at 12:55:13 PM EST

Maybe will let the Perfesser learn how to negotiate, but I doubt it.
Or to find somewhere some principle in that empty suit to not bargain away, but I doubt it.
Or more simply just say no to what the republicans mostly want, but I doubt it.


Saying no to bad policies from the right (none / 0) (#40)
by Buckeye on Wed Sep 01, 2010 at 01:58:34 PM EST

is not bad, but it does not pass anything we need (it just keeps things from getting crappier).


: Yeah (5.00 / 1) (#42)
by hookfan on Wed Sep 01, 2010 at 02:01:15 PM EST

I wish he would begin to do that rather than praising himself for using republican ideas. . .

It is either one or the other though (none / 0) (#6)
by Militarytracy on Wed Sep 01, 2010 at 11:44:10 AM EST

Either he will find a spine or he will break ours.


Has anyone actually put together a plan, list of (none / 0) (#7)
by BTAL on Wed Sep 01, 2010 at 11:50:33 AM EST

actual projects and the costs for this magical stimulus II idea? Specifics, not "infrastructure and clean energy". Has Krugman? Anyone?

Without such a plan it is all talk and has zero chance.

Yes (5.00 / 1) (#8)
by Big Tent Democrat on Wed Sep 01, 2010 at 11:54:54 AM EST

Because compiling such a list would be oh so difficult. Sheesh.

Now the chances are indeed zero - given the incompetents we have in Washington - both Republican and Democrat.

We are in the midst of a Lost Decade.

Yes, meaning there is such a plan and list? n/t (none / 0) (#9)
by BTAL on Wed Sep 01, 2010 at 12:06:54 PM EST

: That's about it. (none / 0) (#11)
by jimakaPPJ on Wed Sep 01, 2010 at 12:28:46 PM EST

Of course millions of dollars have been spent on signs declaring this and that are "projects."

If muncipalities have been smart (5.00 / 1) (#16)
by scribe on Wed Sep 01, 2010 at 12:34:28 PM EST

they have been accumulating those plans and ideas and prioritizing them for years.

When I was defending a county against a suit that a particular road was unsafe and it was the county's fault, I came across a little-known corner of the statute books which makes that sort of planning and prioritizing really beneficial to their balance sheets.

Basically, the statute says that if the governmental entity is out there collecting data and maybe making plans for how to use federal funds to improve their roads and bridges and such, the facts they found - like how unsafe the road is and how to fix it - are immunized against discovery and the governmental entity is immunized against liability for the problems they find and the improvements they planned on doing. There's a similar statute relative to rail crossings.

So, even if they never build the improvements or fix the problem, the mere fact of thinking on paper about how to do it is enough to eliminate both lawsuit risk and lawyers fees.

But, most municipalities are too penny-wise and pound foolish to do that preliminary work.


I think that this is a good point. (none / 0) (#18)
by EL seattle on Wed Sep 01, 2010 at 12:37:52 PM EST

I'm pretty sure that some parts of the first stimulus worked better than other, and if we'd just spent twice as much money or more on each element the first time, the result might not have been very miraculous either.

Didn't it take a long time for some of the money that was allocated to actually reach the stage where it was stimulating anything but budget balances? I don't think that it's just the scale of the stimulus or the sheer amount of money that gets spent that matters, it's how effectively and efficiently the money gets spent that makes all the difference.


Well, it is true it (none / 0) (#20)
by scribe on Wed Sep 01, 2010 at 12:43:50 PM EST

doesn't do much good to be repaving highways in Minnesota in February, by way of example. But beyond that, there's little value in generalizing further.


: Very true. (5.00 / 1) (#32)
by EL seattle on Wed Sep 01, 2010 at 01:25:50 PM EST

Unfortunately this recent story indicates that there are a lot of places where the highways weren't repaved once springtime rolled along, either.
That's why, 18 months after the president signed the stimulus bill into law, the U.S. Department of Energy has pledged $30.2 billion worth of stimulus grants and contracts - but only paid out $6.2 billion.
(sigh)

Repeal the Bush tax rate increases (none / 0) (#10)
by Abdul Abulbul Amir on Wed Sep 01, 2010 at 12:23:49 PM EST

Repeal the Bush tax rate increases scheduled to hit the economy like a torpedo on 2011. Bush should b e given the blame for that Hooveresque economic policy and Obama can take the credit for abandoning Bush's folly.

The Bush tax cuts (5.00 / 1) (#15)
by Big Tent Democrat on Wed Sep 01, 2010 at 12:33:41 PM EST

already hit the economy like a torpedo.

I thought you people cared about deficits?


That was Hoover (none / 0) (#24)
by Abdul Abulbul Amir on Wed Sep 01, 2010 at 12:57:21 PM EST

The deficit is the result of a shrinking economy and out of control spending.

In case you didn't notice, the economy tanked due to the housing bubble bursting. That had zip to do with tax rates and everything to do with the government's policy change in favor of highly risky mortgages.


The current deficit began (5.00 / 1) (#25)
by Big Tent Democrat on Wed Sep 01, 2010 at 01:00:32 PM EST

when Bush became President, when he squandered a 250 billion dollar yearly surplus on tax cuts for the rich and for corporations.

It was a failure in terms of job creation and spurring economic growth, as all tax cuts largely are.


Gee and here I thought (none / 0) (#28)
by jimakaPPJ on Wed Sep 01, 2010 at 01:10:18 PM EST

it was to bail us out of the recession of 2000.. which exploded when 9/11 hit.

Did you forget that the NASDAQ ran off 50% between March 2000 and March 2001?

People were speaking of 1929............


: if you would really like to know (5.00 / 3) (#30)
by Capt Howdy on Wed Sep 01, 2010 at 01:22:27 PM EST

what happened to the economy and why you should read this.
The Mission

By 1998 he had managed to create an economic system that filled the Federal treasury with unprecedented amounts of available money, and he had also managed to pass a variety of progressive social programs that benefited vast numbers of middle-class Americans. When Clinton stood up in 1998, with a massive budget surplus waiting in the wings, and cried, "Save Social Security first!" he was roaring a battle cry across the trenches that had been there since 1932. Such a surplus would fund social programs all across the country. Such a surplus would, at long last, settle the argument: An activist Federal government can be a force for good within the American populace, and once more, can be paid for with extra left over. The New Deal/Great Society wars seemed to be coming to an end.
This was why he had to be destroyed.
The rest is coda. The impeachment, funded by right-wing activists and business interests, stormed along by a mainstream media whose Reagan-era deregulated status led to a complete breakdown in journalistic ethics, and all buttressed by years of unsubstantiated scandals pushed along by congressional zealots with subpoena power, left the American population exhausted enough to vote against their own best interests in 2000.

: Uh what? (none / 0) (#33)
by Big Tent Democrat on Wed Sep 01, 2010 at 01:26:25 PM EST

Tax revenues from the rich increased (none / 0) (#41)
by Abdul Abulbul Amir on Wed Sep 01, 2010 at 01:59:40 PM EST

Tax revenues from the rich increased substantially from 2003 to 2008.

Please explain how that tax revenue increase caused the deficit.


Um, because it was not as much of an increase (none / 0) (#46)
by ruffian on Wed Sep 01, 2010 at 04:28:48 PM EST

in revenue as it would have been been without the cuts.


: That is speculation (none / 0) (#51)
by Abdul Abulbul Amir on Thu Sep 02, 2010 at 07:42:38 AM EST

A 44% increase in revenue is not responsible for a growing deficit no matter how you slice it.

Like the man says (none / 0) (#19)
by scribe on Wed Sep 01, 2010 at 12:41:59 PM EST

And somehow, the new doctrines always give a reason not to take action.

There's a pair of reasons for that: the elites he serves like the status quo just fine and even if they didn't we have the Jamarcus Russell of Presidents, complete with lethargy addiction.

: Front page articles in both the LAT (none / 0) (#35)
by oculus on Wed Sep 01, 2010 at 01:36:50 PM EST

and NYT today about sign. decrease in immigration to U.S. in 2009. Maybe keeping the economy depressed is a form of "immigration reform"?