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Meanwhile, Back At The Economy . . .

By Big Tent Democrat, Section Economy
Posted on Fri Feb 25, 2011 at 08:50:46 AM EST
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GDP for the 4th quarter of 2010 revised sharply downward:

Budget cuts by state and local governments hurt the economy more than originally thought, according to a government release Friday. Gross domestic product, the broadest measure of economic activity, was revised lower to an annual growth rate of 2.8% in the three months ending in December. The initial reading had been for a 3.2% growth rate in the period. That's a surprising dip, given that economists were expecting the rate to be revised upward to 3.3%.

Surprise will be the reaction this year as the economy struggles along with little job growth and federal government spending cuts. Our Lost Decade proceeds apace.

Speaking for me only

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    Meanwhile, Back At The Economy . . . | 41 comments (41 topical)

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    Yup, No One Could Have Foreseen (5.00 / 2) (#1)
    by The Maven on Fri Feb 25, 2011 at 09:06:23 AM EST
    that something like this would happen.  Oh, wait, that's right -- everyone with half a brain expected that this would occur.

    So of course we have Democrats in Congress and the White House seeking to impose cuts not quite as steep as Republicans would prefer.  And they're doing this so that they can preen about how "seriously" they take the deficit and be admired for their "toughness" by the Beltway media establishment.

    In the combined rush to slash spending, with competing versions of cuts that could force a government shutdown, will anyone point to the damage to the economy as a whole that a shutdown could bring about, per the Goldman Sachs research report, or, for that matter, simple common sense?

    (There's also the issue of whether our slavish devotion to looking at GDP as if it were the only true measure of our nation's economic progress, despite its many obvious flaws in measuring and assessing "output".  But that's an argument for another day.)

    And all the predicted numbers (none / 0) (#2)
    by Militarytracy on Fri Feb 25, 2011 at 09:12:24 AM EST
    they put out are crap, the amount that they constantly have to be downgraded is B.S.

    Parent
    Depends on how long a shutdown goes (none / 0) (#7)
    by jbindc on Fri Feb 25, 2011 at 10:34:40 AM EST
    Here's what would happen during a shutdown.

    The government actually has frequently had shutdowns, and it has happened something like 15-20 times since Jimmy Carter was president.

    Parent

    You mean laying off hundreds of thousands (5.00 / 2) (#3)
    by Raskolnikov on Fri Feb 25, 2011 at 09:14:53 AM EST
    of people, budget furloughs and forced pay cuts has a negative affect on the economy?  Who knew?

    Indeed (none / 0) (#4)
    by Zorba on Fri Feb 25, 2011 at 09:48:42 AM EST
    Sounds a lot like "Nobody could have predicted....."  Well, economists like Paul Krugman and Dean Baker have been saying for a long time that now is not the time to slash spending. And just wait until we see the negative effects that slashing the federal budgets is going to have.  As BTD said, "Surprise will be the reaction...." Except for those who can honestly say, "I told you so."

    Parent
    States can't (none / 0) (#11)
    by CST on Fri Feb 25, 2011 at 11:39:52 AM EST
    print money.  They can use their "rainy-day funds" if they have them, but a lot of states have already dug pretty deep into those funds.

    The budget process for a state is very different from the Feds.  States usually have no other choice but to balance the budget to some degree.

    The difference would be on approach.  Whether you do it by raising taxes or by cutting services, or both.

    Parent

    Austan Goolsbee (5.00 / 0) (#6)
    by KeysDan on Fri Feb 25, 2011 at 09:57:50 AM EST
    engaged  Jon Stewart on the Daily Show using his old experiences as a member of  Yale's improv comedy troupe and his new  work as Chair of the President's Council of Economic Advisors.   It was often difficult to know where one set of skills ended and the other left off.

    Dr. Goolsbee assured Jon Stewart that we are "going to grow our way out of this thing." Moreover, we are going to Win the Future and, conversely, re-assured us that we will not lose the future. The plan is to "educate, innovate and out-build"

    Jon Stewart, to his credit, pressed him on the point that if the stimulus helped get us out of this mess, why the draconian cuts such as reducing heating oil subsidies for the poor (answer: only cutting from a previous high to a more proportional level, and by the way, while some wanted to cut a "bunch" of Pell grants, their plan will only cut summer programs, so it is not draconian),  And, he denied that the president is fighting on the Republican terms of using the budget to change the way the government operates.

    After all, Goolsbee repeated on several occasions, we must live within our means and stabilize the debt.  This was Goolsbee at his funniest since he sent Rahm a dead fish as a present on his departure from the White House.

    good grief! (none / 0) (#41)
    by Madeline on Sat Feb 26, 2011 at 01:44:23 AM EST
    First time I saw the man and my first thought after hearing him for five minutes was:  Is he really trying to be funny about this? I couldn't decide if that was the case or if he was trying to make comedy out of Obama's State of the Union. The "educate, innovate and out-build" rah rah was funny though. I'm not sure if he meant it to be.

    Parent
    Yes, came across (none / 0) (#44)
    by KeysDan on Sat Feb 26, 2011 at 09:35:35 AM EST
    as an economist on crack.

    Parent
    Our "Gains" Have (5.00 / 1) (#39)
    by cal1942 on Fri Feb 25, 2011 at 02:02:40 PM EST
    come in underemployment

    Our expectations are steadily becoming lower.

    Budget Cuts Are the Anti-Stimulus (5.00 / 0) (#43)
    by john horse on Sat Feb 26, 2011 at 06:42:06 AM EST
    During times of deep recession, state governments provide an anti-stimulus to the economy.  Since they are obligated to balance their budgets, during hard times they cut spending due to less revenue. This just makes a bad economy even worse by decreasing demand.  This was one of the reasons that Krugman thought that Obama's stimulus should have been bigger than it was, to overcome the anti-stimulus of state governments.

    But balancing the budget does not explain what this current crop of Republican governors and state legislatures are doing.  In the case of Florida, the reason that programs and state employees paychecks are being significantly cut is because Governor Scott wants to give corporations a big tax break.  Lowering their taxes means that the burden for providing governmental services will be placed more on the middle class.

    So I look at what is happening as a transfer of wealth and a power grab.  AND it is also bad for the economy.  This will affect even those people who are not losing their jobs or having their pay cut. Worry about the economy will cause them to spend less.  They will not buy that new car that they were thinking of getting, or they will cut back on eating out.  And the businesses that are on the edge will go over the edge because there isn't enough consumer demand.  And so it goes.

    I think... (none / 0) (#5)
    by kdog on Fri Feb 25, 2011 at 09:54:10 AM EST
    we just slashed the wrong spending and laid off the wrong workers.

    If the DEA was abolished as the spend cut, the mercs laid off, and at least marijuana legalized and taxed...we'd be well on our way to some GDP growth.  Throw in legalized internet gaming and taxes we could be booming baby.

    A program for repair and maintenance (5.00 / 1) (#8)
    by Harry Saxon on Fri Feb 25, 2011 at 10:49:56 AM EST
    of roads, bridges, etc. in many parts of the country, would not only create jobs, it would be an unallloyed public good to boot.

    Which is why the Republicans don't bring it up.

    The Democrats would, as they're afraid that being caught giving a rats' a** about the  will somehow be twisted and used as ammunition against them because it's 'creeping socialism' or some other sort of nonsense.

    Parent

    Seems like that's what Florida wanted (none / 0) (#29)
    by Rojas on Fri Feb 25, 2011 at 12:12:11 PM EST
    to spend the Federal High Speed Rail Funds on instead of the train to Disney park.

    Parent
    They have the Monorail (none / 0) (#30)
    by jbindc on Fri Feb 25, 2011 at 12:12:59 PM EST
    what more do you want??

    <snark>

    Parent

    I would go further... (5.00 / 1) (#12)
    by NMvoiceofreason on Fri Feb 25, 2011 at 11:40:56 AM EST
    Have President Obama issue an unconditional pardon for all Marijuana cases. If they have other charges, such as firearms, etc, they would still have to serve those. Then issue a conditional pardon for all non-violent drug offenders, based on completing one year of treatment in an out patient community treatment program. Order the troops stationed overseas home - all of them. Leave only co-ordination forces in the UK, Germany, Japan, Diego Garcia, Bahrain, Iraq, etc. so that if we had to go there to fight a war, we could do so.

    If you take the drug war funding out of the police state, you shrink it to Grover Norquist size. If you take the defense of america back to defending America, budget deficits disappear.

    Then we can consider legalization.

    Parent

    He can't do that (5.00 / 2) (#13)
    by jbindc on Fri Feb 25, 2011 at 11:43:51 AM EST
    Unless they are in federal prison.  He only has the power to pardon criminals who committed federal offenses.  He has no power to pardon those in jail on state offenses.

    Parent
    Actually, he does (none / 0) (#15)
    by NMvoiceofreason on Fri Feb 25, 2011 at 11:51:58 AM EST
    Just as with draft evasion, he can pardon them. The limits on the Presidential Pardon power are almost none. "the President ... shall have Power to Grant Reprieves and Pardons for Offenses against the United States, except in Cases of Impeachment."

    Parent
    No, he can't (5.00 / 1) (#18)
    by jbindc on Fri Feb 25, 2011 at 11:56:32 AM EST
    He has absolutely no power to pardon state criminal offenses.

    Parent
    "Pardons and Offenses (none / 0) (#19)
    by jbindc on Fri Feb 25, 2011 at 11:57:11 AM EST
    against the United States" are federal crimes - not state ones.

    Parent
    really? (none / 0) (#20)
    by CST on Fri Feb 25, 2011 at 11:57:47 AM EST
    I would assume this part "Offenses against the United States" means it has to be a federal crime.

    FWIW, Wiki agrees...

    "The pardon power of the President extends only to offenses cognizable under federal law. However, the governors of most of the 50 states have the power to grant pardons or reprieves for offenses under state criminal law."

    Parent

    see also (none / 0) (#21)
    by NMvoiceofreason on Fri Feb 25, 2011 at 11:58:37 AM EST
    the Whiskey Rebellion
    The Whiskey Rebellion

    Wikipedia

    Parent

    Makes no sens (none / 0) (#22)
    by jbindc on Fri Feb 25, 2011 at 12:01:21 PM EST
    The Whiskey Rebellion was based on a federal tax -thus proving my point.  It was a federal offense.

    Parent
    jinx (none / 0) (#24)
    by CST on Fri Feb 25, 2011 at 12:03:00 PM EST


    Parent
    Do I have to buy you a Coke? :) (none / 0) (#25)
    by jbindc on Fri Feb 25, 2011 at 12:03:55 PM EST


    Parent
    heh (none / 0) (#27)
    by CST on Fri Feb 25, 2011 at 12:09:08 PM EST
    If you're buying I prefer beer :)

    This is getting kind of funny.  We are not usually on the same page this much.

    Parent

    Stopped clock and all that (none / 0) (#28)
    by jbindc on Fri Feb 25, 2011 at 12:10:02 PM EST
    It's Friday.

    And the beer is on me.

    Parent

    But the individual crimes pardoned by Washington, (none / 0) (#31)
    by NMvoiceofreason on Fri Feb 25, 2011 at 12:13:10 PM EST
    Adams, and General Lee were in fact STATE crimes. No objection to that either, at the time.

    And yes, Draft dodging was a Federal offense.

    Parent

    It was failure to pay a federal tax (none / 0) (#33)
    by jbindc on Fri Feb 25, 2011 at 12:16:53 PM EST
    it was NOT a state crime.  It was an excise tax imposed by the federal government. The Pennsylvania farmers attacked the tax agents.  In other words, if you want it put in modern terms - they refused to pay their federal taxes and attacked IRS agents (federal agents) who came to collect.

    Parent
    You don't know your history (none / 0) (#35)
    by NMvoiceofreason on Fri Feb 25, 2011 at 12:23:00 PM EST
    The Whiskey rebellion was much more than just attacking tax collectors. It was virtual anarchy. People attacked each other and the tax collectors. That was why General Lee pardoned all but 33 people - to stop the violence he could no longer control with the army he had at his disposal.

    Quit talking from a 20th Century view of the law and go read the history. Then we will resume - after you actually know something about it.

    Parent

    Apparently (none / 0) (#36)
    by jbindc on Fri Feb 25, 2011 at 12:27:34 PM EST
    You don't understand how presidential pardons work, so I am very suspect at your view of history either.

    Parent
    it was an anarchy (none / 0) (#37)
    by CST on Fri Feb 25, 2011 at 12:32:34 PM EST
    against the federal government though.  The people arrested were arrested by the federal militia.

    The whole thing was a test of federal power over the states.

    Parent

    Ding! (none / 0) (#38)
    by jbindc on Fri Feb 25, 2011 at 12:33:54 PM EST
    Because they failed to pay a federal tax - which makes it a violation of federal law!

    Parent
    what? (none / 0) (#23)
    by CST on Fri Feb 25, 2011 at 12:02:33 PM EST
    That was clearly a federal issue.

    Parent
    So do it (none / 0) (#32)
    by NMvoiceofreason on Fri Feb 25, 2011 at 12:15:13 PM EST
    for those he can and apply the bully pulpit to the rest.


    Parent
    And I guess we all know now (none / 0) (#10)
    by Militarytracy on Fri Feb 25, 2011 at 11:30:52 AM EST
    why recently the banks were told they had to stress test for 11% unemployment.

    But remember (5.00 / 2) (#26)
    by lilburro on Fri Feb 25, 2011 at 12:04:00 PM EST
    FDR was "irresponsible" for the way he let the economy slide.

    Parent
    I think it's worse than that (none / 0) (#14)
    by NMvoiceofreason on Fri Feb 25, 2011 at 11:45:47 AM EST
    I would say 15%, then 20% by end of summer. States are cutting workers left and right. There will be no infrastructure spending - no home construction - no jobs in the industries that actually produce something.

    We can continue to give to the rich and take from the poor - but pretty soon we are all of us (well, 98% anyway) poor.

    Parent

    I think it will be worse too (none / 0) (#17)
    by Militarytracy on Fri Feb 25, 2011 at 11:53:41 AM EST
    But we are all just pawns at this point.  The administration pumps out all that rosey economic propaganda every chance they get knowing all along that the next thing they do and the next thing coming down the road is going to be worse for average Americans.

    Our destiny is no longer in our own hands though.  If you were in the right place and knew the right people at the start of all this, you can be okay.  If not understand, your life is on the stormy seas now.  The unlucky are left to hope they don't get battered to death.

    Parent

    as if the only (none / 0) (#40)
    by sj on Fri Feb 25, 2011 at 02:29:25 PM EST
    thing that could possibly be built is housing.

    How much time do you spend preparing your comments?

    Parent

    Housing/sales (none / 0) (#42)
    by Madeline on Sat Feb 26, 2011 at 01:52:38 AM EST
    in Palm Beach County are up 22%. Housing prices are down to the 2002 numbers. But there is a bounce of new construction.

    Also, in Boca Raton, face lifts and all cosmetic surgery never felt the recession/depression. As necessary as groceries.

    There are some bright spots in the country.:)

    Parent

    Meanwhile, Back At The Economy . . . | 41 comments (41 topical)

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