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Someone posted this on another forum.  Good stuff.

 

http://www.alternet.org/story/151873/welcome_to_the_tea_party's_austerity_recession?akid=7350.80642.esS6TE&rd=1&t=3

 

On Monday, the House finally passed a deal to raise the debt limit after weeks of wrangling with a cadre of reactionary, Tea Party-endorsed lawmakers. The measure, which will force some serious cuts to public spending, is expected to easily pass in the Senate. When it does, a painful second "dip" into recession becomes far more likely -- all the conditions are there....

 

 We got into this recession when the American people lost not only jobs, but also $14 trillion in wealth during the crash, and pulled back on spending as a result. But we're stuck treading water, two years after the “recovery” officially began, in large part because of the age of austerity – due to cuts forced on us by this misguided and shortsighted view that large deficits are a cause, rather than an effect, of the downturn.

 

Last year, with the private sector economy continuing to slump, an analysis by Moody's Analytics found that almost one in five dollars in American consumers' wallets came from one government program or another. The public sector has already seen deep cuts, and that trend will only worsen with Washington's relentless focus on deficit reduction. Without those dollars, there will be fewer consumers demanding American companies' goods and services, and the private sector will continue to have little incentive to hire. That's our core economic problem at this time.

 

The American economy is heading into dark waters, but the coming "austerity recession" won't only be a result of the tireless efforts of a small band of conservative ideologues bent on dismantling the social safety net that emerged during the last century. It will also be a consequence of a crippling intellectual crisis among our elites.

 

Propaganda Trumps Research

For almost a century, the prevailing economic paradigm has held that when the private sector is in recession, and people aren't spending money, the public sector needs to step in and act as a “buyer of last resort,” running deficits to keep people working until the economy gets going again. While the fine details of “Keynesian” theory have been the subject of debate, in broad strokes, it remains the thinking shared by most economists across the political spectrum. But even as it remains the dominant economic paradigm, a network of deep-pocketed conservative donors has, to a large degree, successfully discredited that idea in the political realm, replacing it with the simplistic and ahistorical narrative that deficits "destroy jobs.”

 

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Ah, yes!  Alternet, the leftwingers' sock puppet!

 

Always, the left insists upon theory and rhetoric over hard learned experience.  They are the modern day equivalent of the Spanish Inquisitors, insisting that no matter what science revealed, if it contradicted either the Bible or Aristotle, it was wrong, wrong, evil wrong!

 

Keynes' theories as to government stimulating the economy have never worked --NEVER!

 

FDR's stimulus caused a major recession to become a major depression. Sound familiar! His own Secretary of Finance Henry Morgenthau agreed.

"We have tried spending money. We are spending more money than we have ever spent before and it does not work. And I have just none interest, and if I am wrong . . . somebody else can have my job. I want to see this country prosperous. I want to see people get a job, I want to see people get enough to eat. We have never made good on our promises. . . . I say after eight years of this administration we have just as much unemployment as when we started . . . . And an enormous debt to boot!"

 

During the  1990s, Japan tried stimulus spending on everything including the infrastructure to the tune of 240 percent of their GDP and it didn't help.

 

Until recently, the EU tried stimulus, with obviously disastrous results.  Still, the left insists trying it again.

 

And, one thing Keyes and conservatives agreed on, don't raise taxes in a recession.

 

The economy is OBAMA's!  His and his cohorts in grime including Tiny Tim.  Jeez!  A Secretary of the Treasury who can't do his own taxes, even with Turbo Tax.  How incompetent can you get.  Oh, yeah!  S&P just dropped the credit rating.  I guess that is how incompetent. 

Jobs, not deficit reduction, is what Congress should have been focusing ALL their energy and time on.  Deficit reduction can wait a bit longer, but jobs can't.  Thanks to the Teatards and Republicans, precious legislative time was lost.

 

Go ask someone who's been unemployed for over a year, who's sent out thousands of resumes, who's been turned down even for fast food gigs ('cause they aren't hiring either) what his biggest priority for this country is:  creating jobs or deficit reduction.  I, for one, am pretty sure I can predict the answer.

 

And the S&P is a joke, considering they turned a blind eye to Wall Street regulations and the mortgage meltdown. (Where were they then?)  They're trying to save face and seem credible again.  Too late.

Government doesn't create jobs capable of generating a recovery,  Anything the House prposed would have been defeated.  

 

What would work! 

 

Eighty-eight years ago,  Calvin Coolidge took office.  Faced  with a major recession from 1919-1921, the Coolidge-Dawes administrations cut taxes, balanced the budget and slashed government spending, reducing federal debt by over a third in a decade.  The economy grew, averaging just over 7% from 1924 to 1929, the years of his presidency.

 

This works, stimulus doesn't.

http://robertreich.org/post/8542550924

 

Why S&P Has No Business Downgrading the U.S.


Standard & Poor’s downgrade of America’s debt couldn’t come at a worse time. The result is likely to be higher borrowing costs for the government at all levels, and higher interest on your variable-rate mortgage, your auto loan, your credit card loans, and every other penny you borrow. 

Why did S&P do it?

Not because America failed to pay its creditors on time. As you may have noticed, we avoided a default.

And not because we might fail to pay our bills at the end of 2012 if tea-party Republicans again hold the nation hostage when their votes will next be needed to raise the debt ceiling. This is a legitimate worry and might have been grounds for a downgrade, but it’s not S&P’s rationale. 

S&P has downgraded the U.S. because it doesn’t think we’re on track to reduce the nation’s debt enough to satisfy S&P — and we’re not doing it in a way S&P prefers.

Here’s what S&P said: “The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.” S&P also blames what it considers to be weakened “effectiveness, stability, and predictability” of U.S. policy making and political institutions.

Pardon me for asking, but who gave Standard & Poor’s the authority to tell America how much debt it has to shed, and how?

If we pay our bills, we’re a good credit risk. If we don’t, or aren’t likely to, we’re a bad credit risk. When, how, and by how much we bring down the long term debt — or, more accurately, the ratio of debt to GDP — is none of S&P’s business. 

S&P’s intrusion into American politics is also ironic because, as I pointed out recently, much of our current debt is directly or indirectly due to S&P’s failures (along with the failures of the two other major credit-rating agencies — Fitch and Moody’s) to do their jobs before the financial meltdown. Until the eve of the collapse S&P gave triple-A ratings to some of the Street’s riskiest packages of mortgage-backed securities and collateralized debt obligations.

Had S&P done its job and warned investors how much risk Wall Street was taking on, the housing and debt bubbles wouldn’t have become so large – and their bursts wouldn’t have brought down much of the economy. You and I and other taxpayers wouldn’t have had to bail out Wall Street; millions of Americans would now be working now instead of collecting unemployment insurance; the government wouldn’t have had to inject the economy with a massive stimulus to save millions of other jobs; and far more tax revenue would now be pouring into the Treasury from individuals and businesses doing better than they are now.

In other words, had Standard & Poor’s done its job over the last decade, today’s budget deficit would be far smaller and the nation’s future debt wouldn’t look so menacing. 


We’d all be better off had S&P done the job it was supposed to do, then. We’ve paid a hefty price for its nonfeasance.

A pity S&P is not even doing its job now. We’ll be paying another hefty price for its malfeasance today.

Originally Posted by Buttercup:

http://robertreich.org/post/8542550924

 

Why S&P Has No Business Downgrading the U.S.


Standard & Poor’s downgrade of America’s debt couldn’t come at a worse time. The result is likely to be higher borrowing costs for the government at all levels, and higher interest on your variable-rate mortgage, your auto loan, your credit card loans, and every other penny you borrow. 

Why did S&P do it?

Not because America failed to pay its creditors on time. As you may have noticed, we avoided a default.

And not because we might fail to pay our bills at the end of 2012 if tea-party Republicans again hold the nation hostage when their votes will next be needed to raise the debt ceiling. This is a legitimate worry and might have been grounds for a downgrade, but it’s not S&P’s rationale. 

S&P has downgraded the U.S. because it doesn’t think we’re on track to reduce the nation’s debt enough to satisfy S&P — and we’re not doing it in a way S&P prefers.

Here’s what S&P said: “The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.” S&P also blames what it considers to be weakened “effectiveness, stability, and predictability” of U.S. policy making and political institutions.

Pardon me for asking, but who gave Standard & Poor’s the authority to tell America how much debt it has to shed, and how?

If we pay our bills, we’re a good credit risk. If we don’t, or aren’t likely to, we’re a bad credit risk. When, how, and by how much we bring down the long term debt — or, more accurately, the ratio of debt to GDP — is none of S&P’s business. 

S&P’s intrusion into American politics is also ironic because, as I pointed out recently, much of our current debt is directly or indirectly due to S&P’s failures (along with the failures of the two other major credit-rating agencies — Fitch and Moody’s) to do their jobs before the financial meltdown. Until the eve of the collapse S&P gave triple-A ratings to some of the Street’s riskiest packages of mortgage-backed securities and collateralized debt obligations.

Had S&P done its job and warned investors how much risk Wall Street was taking on, the housing and debt bubbles wouldn’t have become so large – and their bursts wouldn’t have brought down much of the economy. You and I and other taxpayers wouldn’t have had to bail out Wall Street; millions of Americans would now be working now instead of collecting unemployment insurance; the government wouldn’t have had to inject the economy with a massive stimulus to save millions of other jobs; and far more tax revenue would now be pouring into the Treasury from individuals and businesses doing better than they are now.

In other words, had Standard & Poor’s done its job over the last decade, today’s budget deficit would be far smaller and the nation’s future debt wouldn’t look so menacing. 


We’d all be better off had S&P done the job it was supposed to do, then. We’ve paid a hefty price for its nonfeasance.

A pity S&P is not even doing its job now. We’ll be paying another hefty price for its malfeasance today.

This is an example of deflection  -- attacking the messenger. Usually used when the author has nothing of consequence to argue with.

 

And from Tiny Tim's clone Bob Reich, no less.  Another left wing flack.

Originally Posted by interventor1212:

Government doesn't create jobs capable of generating a recovery,  Anything the House prposed would have been defeated.  

 

What would work! 

 

Eighty-eight years ago,  Calvin Coolidge took office.  Faced  with a major recession from 1919-1921, the Coolidge-Dawes administrations cut taxes, balanced the budget and slashed government spending, reducing federal debt by over a third in a decade.  The economy grew, averaging just over 7% from 1924 to 1929, the years of his presidency.

 

This works, stimulus doesn't.

You are just plain nuts !  You obviously have NO IDEA what happened in 1929, and youve told so many lies about the New Deal you probably believe them by now.

I just can't reason with someone who makes up their own facts and then claims them like they are gospel. 

Originally Posted by b50m:

Just shows all of Obama's smiling and whining did not stop the inevitable.

 

For a few people called an AstroTurf fad to be blamed for the entire downfall of the economy is so stupid.

 

Unless the dems agree to cutting entitlements and the reps agree to tax raises, we will go even lower.

SS is completely solvent until 2039 when payouts will exceed income. Easy fix, just like last time, lift the cap on payroll taxes sometime in the next 20 years.

Medicare is less so, but the Health Care act (what the idiots call "Obamacare") has provisions to save billions of dollars in that program to help it get back to solvency.  Right now, the R's want to repeal it , so Medicare may get in more trouble -- time wil tell.

Those are two entitlements that do not need to be cut . Period.  , but I can agree with you that taxes should go back up , IMO to where they were in the Clinton Admin. If Obama has grown a pair, that will happen in about a year, hopefully.

Seeweed,

 

From you, "You are just plain nuts !  You obviously have NO IDEA what happened in 1929, and youve told so many lies about the New Deal you probably believe them by now.

I just can't reason with someone who makes up their own facts and then claims them like they are gospel."

 

Seeweed, But, of course, I have every idea of what happened in 1929 and subsequently.  Unlike ancient Egypt, who left behind only hierogpyphics, and even ancient Roman, who left voluminous records including spreadsheets of government expenses and revenue, we have mounds of information anout the Great Depression. The federal government has statistics, reports, recordings and more from that era.  Historians and economists had reviewed the era, analyzed it and dammed near dissected it to death.

 

In case you missed it I shall post once again,  FDR's stimulus caused a major recession to become a major depression. Sound familiar! His own Secretary of Finance Henry Morgenthau agreed.

 

"We have tried spending money. We are spending more money than we have ever spent before and it does not work. And I have just none interest, and if I am wrong . . . somebody else can have my job. I want to see this country prosperous. I want to see people get a job, I want to see people get enough to eat. We have never made good on our promises. . . . I say after eight years of this administration we have just as much unemployment as when we started . . . . And an enormous debt to boot!"

 

During the 1990s, Japan tried stimulus spending on everything including the infrastructure to the tune of 240 percent of their GDP and it didn't help.

 

Until recently, the EU tried stimulus, with obviously disastrous results. Still, the left insists trying it again.

 

And, one thing Keyes and conservatives agreed on, don't raise taxes in a recession.

 

No lies, simply the truth about an economic theory that has NEVER WORKED IN REAL LIFE!.  You state you can't reason with me. No, it is you who have lost the capacity for reason, logic and analyzation.  I blame it upon the present liberal education system which, despite more revenue that any nation, except Switzerland, has failed miserably. 

Sorry, but entitlements, including medicare and social security are immediate concern. Not only S&P, but Moody's and Fitch stated that.

 

As to social security, true that is one of the easier fixes.  However, it must be attended to NOW! From a recent SS trustees's report.

 

"Specifically, the trustees' report predicts that the trust fund from which Social Security payments are made will be unable to pay retirees full benefits by 2037, four years earlier than forecast a year ago. In particular, the trustees single out the financial weakness of the part of the program that subsidizes disabled Americans, saying that fund will run out of money in 2020."

http://www.washingtonpost.com/...AR2009051200252.html

 

The past year, social security has run a month to month deficit and required replenishment from the general fund.

 

As to medicare:

"As a result, the administration said, the Medicare fund that pays hospital bills for older Americans is expected to run out of money in 2017, two years sooner than projected last year."

http://www.nytimes.com/2009/05...litics/13health.html

 

Don't expect Obamascare to helpt the situation. 

 

"In his analysis accompanying the recently released Annual Report of the Medicare Board of Trustees, Richard Foster, Medicare's chief actuary, noted that Medicare payment rates for doctors and hospitals serving seniors will be cut by 30% over the next three years. Under the policies of the Patient Protection and Affordable Care Act, by 2019 Medicare payment rates will be lower than under Medicaid. Mr. Foster notes that by the end of the 75-year projection period in the Annual Medicare Trustees Report, Medicare payment rates will be one-third of what will be paid by private insurance, and only half of what is paid by Medicaid.

 

Altogether, ObamaCare cuts $818 billion from Medicare Part A (hospital insurance) from 2014-2023, the first 10 years of its full implementation, and $3.2 trillion over the first 20 years, 2014-2033. Adding in ObamaCare cuts for Medicare Part B (physicians fees and other services) brings the total cut to $1.05 trillion over the first 10 years and $4.95 trillion over the first 20 years. "

http://online.wsj.com/article/...437311393854940.html

 

A more complete 10 year scoring by the CBO shows that at least another $60 billion wil be passed on to the states annually to cover medicaid -- another unfunded mandate.

 

Seeweed,

 

I suspect your supplier sold you some "bad stuff."    

Originally Posted by interventor1212:

 

 

Keynes' theories as to government stimulating the economy have never worked --NEVER!

 

FDR's stimulus caused a major recession to become a major depression. 

 

 

A second cyclical downturn officially began in May 1937 when FDR, always a fiscal conservative, mistakenly thought the economy had become self-sustaining and slashed public spending programs to balance the budget. These harsh and premature spending cuts caused another severe recession that ended after 13 months in June 1938.

 

Even in this severe downturn, annual GDP did not fall back below its 1929 peak. And although many suffered and most economic measures did fall back below their 1929 levels, not one fell anywhere close to its March 1933 low. For example, although industrial production fell sharply in the 1937-38 recession, at its low point, in April 1938, it remained 49 percent above its level of March 1933.

When the economy again contracted sharply in late 1937 and early 1938, FDR quickly reversed course and rapid growth immediately began again. GDP soared by 10.9 percent in 1939 and industrial production soared by 23 percent.

 

 

http://www.ourfuture.org/blog-...0603/fdr-failed-myth

 

In 1937, after five years of sustained economic growth and a steadily declining unemployment rate, the Roosevelt Administration began to worry more about possible inflation and the size of the federal deficit than the ability of the economy to sustain the recovery. As a consequence, in the fall of 1937, FDR supported those in his administration who advocated a reduction in federal expenditures (i.e. stimulus spending) and a balanced budget. The results — which included a massive reduction in the number of people employed by such programs as the WPA — were catastrophic. From the fall of 1937 to the summer of 1938, industrial production declined by 33 percent; wages by 35 percent; national income by 13 percent; and not surprisingly, the unemployment rate rose by roughly 5 percentage points, with an estimated 4 million workers losing their jobs.

The economic downturn caused by the decline in federal spending was commonly referred to as the “Roosevelt recession,” and to counter it, FDR asked Congress in April of 1938 to support a substantial increase in federal spending and lending. Unlike the current situation, Congress backed FDR’s request, and as a result, the recovery was soon underway again.

Equally important, the lessons drawn from the 1937-38 recession convinced FDR that deficit spending and monetary expansion were critical to economic recovery. In essence, the Roosevelt Administration, through hard experience, finally endorsed Keynesian economics . . .

http://www.rooseveltinstitute....and-danger-austerity

Jobs, we are told, is the answer, or a large part of it. But is there any reason to expect corporations that have already moved millions of jobs offs**** to hire domestically?  If they want to expand production, will they not just add jobs where they are most profitable--offs****? Sure, there are some jobs that can not practicably be added offs****, but folks, the job market is now a creature of globalism.  The world really is flat and job expansion in the global corporate manufacturing and technology sectors will not be growing domestically as it has in the past.

Originally Posted by interventor1212:

Government doesn't create jobs capable of generating a recovery,  Anything the House prposed would have been defeated.  

 

What would work! 

 

Eighty-eight years ago,  Calvin Coolidge took office.  Faced  with a major recession from 1919-1921, the Coolidge-Dawes administrations cut taxes, balanced the budget and slashed government spending, reducing federal debt by over a third in a decade.  The economy grew, averaging just over 7% from 1924 to 1929, the years of his presidency.

 

This works, stimulus doesn't.

 

 

From 1924 to 1929, just like today, wages didn't budge and most even fell.

 

From 1924 to 1929, just like now, somebody besides those actually doing the work bene****ed from the growth in the economy. 

 

http://eh.net/encyclopedia/article/Smiley.1920s.final

You Say Recession, I Say Depression

Why the difference between those two words is so important to the future of our economy.


In its basic contours, the current downturn is much more similar to the depressions of the 1890s and the 1930s than to the post-World War II recessions. Until our policymakers in the White House and on Capitol Hill acknowledge this, and convey the depth of the crisis to the public, it is going to be very difficult to get out of the economic hole in which we find ourselves.

 

During recessions, a downturn in one country has been eased by prosperity in another, but in depressions, the downturns have been global. During the early 1890s, the downturn spread from Europe to the United States; in the 1930s and late 2000s, it spread from the United States to Europe and Asia.

 

Each of these features contributes to the most salient feature of depressions: their sheer length and intractability. Overcapacity in leading industries [production moving overseas] and the growth of indebtedness [workers’ wages flat for 30 years and they turn to credit to maintain standard of living] discourage consumption and investment; global instability holds back trade. The recovery of the private sector is slow and tortuous, and an increase in employment must be achieved primarily through public investment. During the Great Depression, new private investment in factories and offices did not rise to the level of the 1920s until 1946. Until then, whatever growth in employment occurred was largely the result of public investment.


To get out of a depression, a country’s consumers and businesses must pay down the debts they have accrued. Only then can demand for consumer and capital goods pick up.  Government can, however, accelerate this process through public subsidies to individuals, businesses, and banks, and through jobs programs. If government decides not to stimulate spending and demand, as occurred in the United States in 1938 or in Japan in 1998, it can cause a regression in the recovery and prolong the process over a decade.


In each of these instances, government has played a major role in creating the conditions for reviving the economy. It has reformed the financial sector, eased the burden of debt, fuelled private demand, subsidized new industries, and negotiated needed changes in the global economic system. Without a huge and active governmental role from the United States, much of the world economy could never have enjoyed the kind of prosperity it did after the Great Depression and World War II.

http://www.tnr.com/article/eco...-depression?page=0,1

Originally Posted by interventor1212:

So, that justifies similar actions like FDRs that will ensure 10 to 15 years of stagnant economic actvity and high unemployment?  Rather than changes that lift the economy out of the doldrums ina 2 or 3 years!

 

 

"Changes that lift the economy out of the doldrums in 2 or 3 years?"

 

Straight into an economic collapse!

 

Just like now . . .


Encouraging the spending, the three Republican administrations of the 1920s practiced laissez-faire economics, starting by cutting top tax rates from 77% to 25% by 1925. Non-intervention into business and banking became government policy. These policies led to overconfidence on the part of investors and a classic credit-induced speculative boom. Gambling in the markets by the wealthy increased. While the rich got richer, millions of Americans lived below the household poverty line of $2,000 per year. The days of wine and roses came to an abrupt end in October 1929, with the Great Stock Market Crash.

 

Between 1929 and 1932, the market fell 89% from its high. It took Franklin Delano Roosevelt and his New Deal Keynesian policies to save the country.

 

see:

http://www.huppi.com/kangaroo/Causes.htm#events


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