Thinking Fool

Ah, but do you really think Obama doesn't want partisian politics? He doesn't care if it's Washington as usual, so long as he looks like he's staying above the fray.

I appreciate your point re: spending as stimulus. Dems take that approach, and anyone trying to argue with that approach right now is pretty silly. Instead people should be focused on picking out the particular spending provisions that don't make sense.

We certainly don't always agree, but I think you nailed this one.

Doesn't Federalist No. 10 stand for the proposition that partisan politics are a good thing and that the system is working by design?
On another note, why do we rely on a fat-assed rodent to tell us how long winter will last? What makes ground hogs so special in their predictive abilities? And if we're going to rely on the fat little rodents, can other rodents give us information? What bits of knowledge do Mr. Opossum and Mr. Badger have for us?

TF: You are right on the money here. I never thought I'd reach the point where proposed federal spending would make my blood boil and I would take it so personally. But this is more than slightly vexing.

PHILOSOFER: I agree with you here. Obama appears to be an image-focused guy.

WIZEAZZ: Possums are North America's only marsupials. Badgers are carnivores. Perhaps you should go back and read Federalist No. 10 with more care than is evidenced by your taxonomy.

A decent ceramic flat iron costs over $100.00.

Philo, Great minds think alike, so in this instance, clearly you have a GREAT mind. ;-)
Wiseazzz, I don't know if Federalist No. 10 encourages partisan behavior. If it does, it's moronic. This country is a centrist nation. Sure there are nuts on the left, and nuts on the right, but a majority of people fall somewhere down the middle. It would be nice if our governing agents would govern that way (or at least put the nation's interests ahead of their personal interests). As for the groundhog, I was thinking the same thing. What does that little bastard know? I think there should be "cooch" day on February 3. It would be a response to Groundhog Day. You can set up the rules.
Fermanator, Excellent comment, as usual.
Leaf, Clearly the girl in the hypo is an absolute moron.

hysterical.

I agree with your point, but think you've gone a little bit overboard here. http://beingawesome.blogspot.com/2009/02/economic-stimulus.html

Spending is a slow, unfair way to distribute money into the economy. It allows Congress to lavish money on favored industries, groups, and causes--even if that spending ends up being a pointless waste. And a lot of this money won't even get into the economy until 2011.

Cut income taxes. Add means testing to Social Security and Medicare and cut payroll taxes. Eliminate the home loan interest deduction and reduce taxes further to compensate. That will put plenty of money into people's pockets right away.

And for heaven's sake, stop letting the government fiddle with the housing market.

Ah, Thinking Fool..I love your analogies and similes!!

"Cut income taxes. Add means testing to Social Security and Medicare and cut payroll taxes. Eliminate the home loan interest deduction and reduce taxes further to compensate. That will put plenty of money into people's pockets right away."

I think most economists argue that cutting taxes have a far less stimulatory effect than direct spending (and this is intended to be a stimulatory bill). The consumer is scared and that is evidenced by the first positive saving rate last month in over 20 years. Cutting their taxes will not necessarily encourage them to spend, especially if the economic outlook is bleak.

Seriously, cutting taxes is not the answer here, and it's getting annoying listening to folks constantly espouse this an answer to all our ills. We have been doing it for the past 8 years and I don't see it as having worked very well (although it may have if it was accompanied by appropriate regulation and spending cuts). Direct stimulus really is the way to go.

Now I think a fair argument can be made that some of this bill is not direct stimulus, but I would like to see a more detailed analysis that folks jsut screaming "PORK, PORK." There will be SOME pork in any bill, but if it is a fraction of the total folks need to buck up and deal.

Well said OE, well said. There are certainly economists who argue both ways, but the fact of the matter is that economics hasn't ever really given us a diffinetive answer when it comes to normative questions, because economic models are all far too simple and make all sorts of assumptions that just don't play out in reality. So we've got to turn to something else, and direct stimulus makes an awful lot of sense.

I bought a flat iron yesterday for $125.

OE: You are right, economists don't like to make normative statements. But I'm happy to make one: letting people keep their money and pay off their debt is better than letting the government give it out to the hogs at the trough.

Philo: "Stimulus" seems to mean forcing debt-laden Americans to save less and consume more--that borders on the immoral. Government spending just makes this process involuntary by forcibly taking money from the savers and spending it for them. That cannot be justified by contradictory predictions from hypothetical economic models.

If there has been an increase in the marginal propensity to save, that is a fantastic development. Continuing the debt-fueled consumption binge of the last 50 years is insane. Stringing out Americans on debt and calling it recovery is a joke.

The economy is going to recover no matter what we do. "Most economists" can tell us nothing. 75 years later, economists can't tell us if the New Deal helped or hurt. They can't tell us if the Reagan or Bush tax cuts helped or hurt. It is impossible to disentangle the effects of these policies from the massive background noise provided by wars, bubbles, oil crises, Al Gore's invention of the Internet, and so forth.

Me -

I guess I see the stimulus as more about job creation/retention, than about encouraging consumers to spend. I agree that we're at the point that more debt spending is dangerous, but whether it's more money going out or less money coming in (tax cuts), the effect is the same - they both extend our debt.

"OE: You are right, economists don't like to make normative statements. But I'm happy to make one: letting people keep their money and pay off their debt is better than letting the government give it out to the hogs at the trough."

I'm kind of torn here, because I basically agree with the premise that the US consumer has taken on too much debt (and we have had fiscal policies encouraging them to do so). I also think this should be the policy for the government.

The problem with the "tax cuts are always good" philosphy is that we have as a society, right or wrong expect the government to provide certain services (roads, military, disaster relief, police, etc...). The tax rate should be high enough to cover these costs. If they aren't we walk right into the probelm we have now. So my response is: propose spending cuts and only cut taxes when we have a surplus.

It is interesting that you refer to the past, remember at the outset of the last Great Depression we raised interest rates and slashed spending. It is the general consensus of economists that that fiscal policy spun us FURTHER into the Depression. What we are trying now is the exact opposite: low interest rates and stimulus spending. Will it work? Who knows, but one thing is for certain, if you are going to try a stimulatory approach tax cuts are NOT the way to do that.

my flat iron cost 220 4 years ago and it's still 220. No one in their right mind would spend 85 on a decent straightener. Also, why is she spending money on wine glasses when she could have just spent it on wine instead? And let's talk about this dress. Brand, style, season. These are all pertinent questions that need to be answered. Hell, this hypothetical is confusing me. Why doesn't this situation sound real?

I've enjoyed the back and forth, guys!
what ailes you, cut me some slack; i have a penis!

Cut income taxes significantly so that people pay off their debt and then have money to spend. The money goes to the banks when debt is paid off and the economy is stimulated by spending. Raise the sales tax so the government can recoup some money.

"Cut income taxes significantly so that people pay off their debt and then have money to spend. The money goes to the banks when debt is paid off and the economy is stimulated by spending. Raise the sales tax so the government can recoup some money."

Again, this is not effective stimulus. Assuming that a tax cut even enbles folks to pay off a portion of theit debt (in most cases it won't) all this is doing is servicing the bank loans. The purpose of the stimulus is to:

A. Increase GDP growth (or slow its loss) and
B. Support employment

Tax cuts do neither of those things well, even conservative economists (like Martin Felstein, economic advisor to Reagan) recognize this.

I also have no idea why you are suggesting raising the sales tax and lowering the income tax. If you want to stimulate the economy via tax cuts you would do the reverse. (Sales tax is on of the most regressive types of tax).

Seriously folks, put down the tax-cut Kool-aid.

http://www.epi.org/economic_snapshots/entry/webfeatures_snapshots_20081022/