I was fascinated by Rasmussen's poll data this morning. Paul Krugman will not be happy, although I am sure there are ways to dismiss this poll:
"While influential 20th Century economist John Maynard Keynes would say it’s best to increase deficit spending in tough economic times, only 11% of American adults agree and think the nation needs to increase its deficit spending at this time. A new Rasmussen Reports national telephone survey finds that 70% disagree and say it would be better to cut the deficit.As for "Boom and Bust," the one thing that resonates for both sides is the hangover.
In fact, 59% think Keynes had it backwards and that increasing the deficit at this time would hurt the economy rather than help.
To help the economy, most Americans (56%) believe that cutting the deficit is the way to go.
Eighty-three percent (83%) of Americans, in fact, say the size of the federal budget deficit is due more to the unwillingness of politicians to cut government spending than to the reluctance of taxpayers to pay more in taxes".
20 comments:
Harriet-
Thats a great video :)
it is a great video, but as far
as economics go, most people are morons.
They think tax cuts grow the economy and they think war is a great stimulus.
You don't know how many times i heard some idiot say "What we need is a war to start things going".
Pat-
The problem with macro economics is there are a lot of things that work in theory and may or may not work in action. Tons of people think tax cuts work an similar number think they don't There is so little empirical evidence mixed with too many variables to actually know for sure.
On the war thing that is just scary. I would much rather have a bad recession than have a major war where too many people will lose their lives.
Well, it seems to me that we've had two wars and tax cuts for quite some time now, and as Dr. Phil would ask, "how's that workin' for ya?"
We now return to your regularly scheduled house - related programming.
The roads are starting to get bad - hope everyone is hope and safe by now.
Ace-
The tax cuts and wars started when we where in a recession. We did a pretty good job of getting out of the recession and record low unemployment and a lot of had prosperity (although a lot of this was related to the bubble). That is the problem with these things. After a while the economy just expects them and you need additional tax cuts/wars to stimulate the economy. At some point you can't do these forever.
I actually like the Keynesian principles. I think the important part is that when you are not in a recession the government needs to cut back and save money. You can't really have a government always run large deficits and just run bigger deficits during recessions like we are trying too. On the other hand China is doing what they should. They were rolling in money during the boom years and are spending it now to get their countries economy going.
Sorry, housebuyer, I'm not a believer in the notion that tax cuts and wars are the way out of recession.
Hope you have a great weekend.
HB
It is immoral to suggest starting a war to make people a little more comfortable.
At least Obama is just doing cash for clunkers or putting money into renewable energy technology.
putting cash to balance our energy trade deficit is the way.
Ace & Pat-
I absolutely do not think wars are a good way to get out of a recession. I also think it is very immoral I am pretty sure one of my posts yesterday said as much. I was just trying to show how in macroeconomics you can't really prove anything because there are too many variables so you need to work with ideas and this is why there is so much disagreement about the best way to get out of recessions.
I did say I liked Keynesian philosophy, but all this says is that during a recession private demand for goods goes down so the government should make up for this demand in the short term. I think I would prefer that they create demand through spending on projects like making a smart energy grid, updating our highways systems... But seeing that they don't seem willing to make our country more efficient tax cuts will do in a pinch.
I hope you all have a good weekend and can have a relaxing couple of days in the house :)
I'm quite middle-aged, and I have never heard a soul say, "what we need is a war to start things going."
What interesting acquaintances you have, Pat.
harriet
I've heard that line numerous times.
Heck, some of the Neocons were tossing it around that the war in Iraq would stimulate the economy.
I'm with HB that if you want to grow the economy, pour it into R&D, Infrastructure, fixing trade deficits.
if we could stop importing oil if we could build high speed trains on the coasts.
Pat,
Now that I know you didn't hear it personally, do you have a link to someone quoted as saying the Iraq war would be good for the economy and is a "great stimulus?"? Now as you've identified this particular group of people, I would appreciate your backing it up.
I know of no persons who would support war as merely an economic prospect. And in your quote you lumped those imaginary people with those who support tax cuts as an economic stimulus.
The two are separate and distinct issues. We are talking about taxes and spending, not war.
If you think people are economic morons, send them the Keynes video. Maybe it will spark an interest. We are all learning every day.
Harriet
"Now that I know you didn't hear it personally, "
Nah, I used to hear that tossed around all the time growing up in chicago and going to college.
That was during the Reagan recession and lots of dimbulbs were arguing "What we need is a war".
as for Militar Keynesiasm
http://www.yaliberty.org/posts/would-our-government-really-start-a-war-to-try-to-stimulate-the-economy
http://www.nytimes.com/2008/12/08/opinion/08kristol.html?_r=1
Harriett
You have no idea how much these right wingers have called for war as a good thing.
Increasing the deficit now would definitely help the economy now. Of course this would mean that the government would have to start paying down some of the debt (not just reduce the deficit) when times are better. Since that never happens, should we be more concerned with a rapid improvement in today's economy or the total collapse in the future? If the debt gets so high that the government can no longer finance it's deficits, it will be inflate the value of the currency in order to pay the debt. If the inflation is too high then the dollar will become almost worthless and all businesses in the country will go bankrupt. While I believe our government will figure out a way to avoid such a calamity, it will no doubt involve a huge amount of pain for the country (though not as much as there would be with a default). So what if the country takes an extra year or two to recover? I'd rather a slower recovery than a sooner collapse of the dollar.
Krugman only pretends to care what Keynes said. He's an ideologue at best, a liar at worst. Keynes' entire theory (so far as I understand it) wasn't about sacking up ridiculous amounts of govt debt. It was about building surpluses to use when needed. Krugman is an extremist liberal who is riding on the credit earned from his Nobel Prize.
Sorry, had to get that off my chest.
Pat,
Thanks for the links. The second link was an editorial by Bill Kristol, the first was from a Ron Paul group. Kristol suggests putting money into national defense, the Paulite opposes. The second isn't really an ideological tax-cutter, but the first is.
If you're a libertarian who supports Lew Rockwell and Ron Paul, you're a tax cutter and you oppose most wars. (Isolationist).
Bill Kristol talks about national defense but does not mention the need to engage in active theater, which is what I thought of when you said 'war'. We do have a lot of CIA, NRO, NSA, and FBI workers and contractors here in Northern VA. He did say "national defense" and not war.
Defense contractors in Northern Virginia aren't usually huge supporters of cutting defense spending, I mean, it does pay their bills - Gerry Connolly, who supports defense spending, isn't exactly my idea of a right-winger.
Kevin,
This is Paul Krugman two days ago:
"The point is that running big deficits in the face of the worst economic slump since the 1930s is actually the right thing to do. If anything, deficits should be bigger than they are because the government should be doing more than it is to create jobs."
This is what Paul Krugman said in 2003:
"So what? Two years ago the administration promised to run large surpluses. A year ago it said the deficit was only temporary. Now it says deficits don't matter. But we're looking at a fiscal crisis that will drive interest rates sky-high.
. . .
That may sound alarmist: right now the deficit, while huge in absolute terms, is only 2 — make that 3, O.K., maybe 4 — percent of G.D.P. But that misses the point. "Think of the federal government as a gigantic insurance company (with a sideline business in national defense and homeland security), which does its accounting on a cash basis, only counting premiums and payouts as they go in and out the door. An insurance company with cash accounting . . . is an accident waiting to happen." So says the Treasury under secretary Peter Fisher; his point is that because of the future liabilities of Social Security and Medicare, the true budget picture is much worse than the conventional deficit numbers suggest."
Paul Krugman isn't worried in 2003 about a bubble and the need to shore up money for future stimulus spending (Keynesian?). Rather, he's worried merely about SS & Medicare, which we still have a problem with.
And he's not worried about the deficit now being 10.6% of GDP, although he freaked when it was 3.5%. And he probably should have, but I will wait for proof in future years (when HOPEFULLY this disaster is behind us) that he's consistent. But I'm not so sure at this point that he isn't an ideological opportunist. But hey, who isn't?
2/2/2010 Washington Post:
"The White House projects that the deficit for the fiscal year ending September 30 will amount to 10.6 percent of gross domestic product, the highest level since World War Two. The White House predicts deficits will fall to 3.9 percent by 2014, still above the 3 percent of GDP that economists consider sustainable".
CR thinks:
"The time to concerned about the structural deficit was in 2001 through 2006, and hopefully again starting in 2011 or 2012".
Well, that's a relief.
Harriet, a 1.3 trillion dollar deficit isn't that bad but over time it is. If we can't raise taxes and lower spending, 1.3 trillion dollars per year for 10 years is 13 trillion dollars. That would put our debt at 25 trillion dollars in 10 years.
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