Quite frankly, everything is a mess. No one has a good solution or even a comprehensible one. Whatever will guarantee job growth, I'm in for. Cut taxes and businesses will hire. I'm for it. Raise taxes and businesses will hire. I'm for it. As of now, I'm looking at the Tea Party for solutions to our problems....

Combine all businesses into sector based monopolies. Streamline everything for highest levels of productivity and public health and safety. Cut the standard work week to less than 30 hours.

Costs drop, quality improves, and people have more free time for themselves.

I'm no longer a huge opponent to raising taxes (I'd rather have the current generation pay for allowing their government to squander their money than the next generation), but increasing tax revenue (which I assume is the goal) will only lead to increased spending. And based on the current climate in Washington, I guess that would be bad news to the rest of the world, as it'd probably mean more boots on their ground.

I had hopes for the Tea Party, but just heard Rand Paul tell

">Anderson Cooper on 360 that "Sarah Palin could be a great president" of the US. Sure, he gave a non-answer the first time around, but... Sarah Palin? I was already surprised when he readily accepted Palin's endorsement, but... president? I have a feeling that if Cooper has asked Paul sr. the same question, the answer would've been very different (and more entertaining).

Change Taxes.

From taxing good things like Profits, working and saving.
To Taxing state created monopolies and real pollution (not CO2).

You need an LVT.

Leave taxes where they are, increase spending on stimulus.

Right now we're experiencing a paradox of thrift and are in danger of a deflationary spiral. Normally, the Federal Reserve can combat this situation by lowering interest rates. However, interest rates are already at 0%, and therefore we are in a situation known as a liquidity trap.

Since we can no longer rely on monetary policy to solve our demand issues, we must rely on fiscal policy, i.e. stimulus spending. I think there are a lot of things which make a proper stimulus politically impossible at this point.

First is the perception that we've tried it already and it didn't work. However, that stimulus was woefully inadequate from a Keynesian point of view. The overall size was too small, and much of it was composed of tax cuts and other provisions that Keynesian economists find useless, but which were thrown in there in order to win bipartisan support (which it failed to do, in any case).

Yet, most economist seem to agree that it did have a positive effect, to the tune of about 2 million jobs. The perception that the stimulus didn't work has much to do with the White House's estimates that unemployment would cap out at 8% with the stimulus and 9% without it. Once unemployment hit 10%, the perception that was pushed by the opposing political party is that the stimulus actually made things worse, even though most economists seem to agree that unemployment would be even higher than 10% without the stimulus.

Second is fear of debt. However, I believe that most of these fears are unfounded. There is the fear, for instance, that borrowers, especially China, will lose their appetite for US government debt, but I think it's important to note that two things. One, demand for US debt remains very high. Two, the rise in government borrowing as of late has been more than offset by the huge drop in private borrowing.

Another point about the debt is that we should worry more about the debt-to-GDP ratio than the size of the debt itself. In other words, the debt itself is simply a numerator in the real overall equation. If we forgo stimulus, thus keeping our debt the same, our GDP will shrink as a result, and our debt-to-GDP ratio will increase. This is, in principle, exactly what would happen if we increased our debt, and GDP remained the same. So, each scenario has the same debt-to-GDP ratio, but in the latter case we have a larger economy.

Keep in mind that, after WWII, our debt-to-GDP ratio was 1.2, which is much higher than it is right now. By the time Kennedy took office, that ratio was cut in half. How did we do this? By paying down the debt? No, by more than doubling our GDP.

So in my opinion, it is better to concentrate on the denominator of this equation. Why settle for a contracted economy if it's going to yield us a higher debt-to-GDP ratio anyway? Why settle for a decade of slow, agonizing job growth while millions of people suffer?

Quote: Original post by Alpha_ProgDes
Quite frankly, everything is a mess. No one has a good solution or even a comprehensible one. Whatever will guarantee job growth, I'm in for. Cut taxes and businesses will hire. I'm for it. Raise taxes and businesses will hire. I'm for it. As of now, I'm looking at the Tea Party for solutions to our problems....

The Tea Party? Really? You're going to let yourself get suckered into supporting Republicans? So far the Tea Party has turned out to be the GOP in disguise. Sarah Palin, Tom Tancredo, Dick Armey, Grover Norquist...

Judging Stimulus by Job Data Reveals Success (February 16, 2010)

How to walk the fiscal tightrope that lies before us (February 16 2010)

More Taxes = More Democracy (08 December 2009)

Quote: Original post by Talroth
Combine all businesses into sector based monopolies. Streamline everything for highest levels of productivity and public health and safety. Cut the standard work week to less than 30 hours. Costs drop, quality improves, and people have more free time for themselves.

We've got the monopoly part down.

Here's a quick run down and a plug for a new book on the subject: Robert Bork, William Baxter and the Monopolization of America

Here's an interview with the author of that book: Monopoly Capitalism Is the Root of All of America's Problems

My biggest worry right now is that we're repeating the mistakes of 1937, i.e. declaring that the recession is over, and pulling the plus on stimulus money.

What I don't understand is that our current economic position, though unfortunate, has given us the opportunity to kill several birds with one stone. We need stimulus spending, and a WPA-like program in particular would be nice. We also need major investments in our infrastructure and in renewable energy. However, since we need a super-majority in the Senate to pass anything these days, the shamed Republican party still has enough clout to put an end to all this.

The health care bill, which would have reduced the debt by $100 billion over 10 years according to the CBO, was stopped dead in its tracks by Lieberman, whose stated purpose in opposing the bill was that he wouldn't vote for anything that added to the national debt. What the hell?

How many Republican congressmen voted for Bush's MMA, which covered prescription drugs but made no effort to explain where the money would come from, yet voted against the democrat's health care bill, which pays for itself, and then some?

How many Republican congressmen, who are now condemning the health care bill's Medicare cuts, participated in Gingrich's government shut down in the mid 90s in an effort to force Clinton to agree to Medicare cuts? How many of these Republicans now support Paul Ryan's Roadmap for America's Future, which not only cuts Medicare even more severely than Obama's plan, but in the long-term actually plans to eliminate it altogether?

The Tea Party is a joke. It's just a bunch of Republicans who, after 8 years of severe deficit spending, in which they doubled the National Debt, started two wars, and crippled many of our constitutional rights, are pretending to suddenly care about freedom and small government.

I'm anti-taxes, but I'd be just as happy if they stayed the same and we cut wasteful spending instead.

If anyone of us was in charge of the budget for a day we could cut billions of waste.

Just by practicing some basic business concepts we could cut our budget drastically.

The problem is that unlike a business, there is 0 accountability or incentive for financial savings in the government. People that waste money don't get voted out of office. There is no CEO demanding cost reductions or threatening job cuts.

If voters put pressure on fiscal responsibility and raises/bonuses were based on financial savings, we might have an entirely different country.

Also, I guess I should directly address the question of cutting taxes. Here is why I think cutting taxes won't work. As I said before, our main problem right now is a gap in demand that needs to be filled. Some Republicans posit that, by cutting taxes, people will have more money to spend, and that this extra spending will help fill the demand gap.

However, since we are in a paradox of thrift, people will have a tendency to save that money rather than spend it. Estimates are that only 70 cents on the dollar would actually go towards stimulating the economy.

Now consider the debt picture, because Republicans are railing against Democrats because of what stimulus spending has done to our deficits. If we cut taxes, but keep spending constant, then the result is an increase in our deficit! So, that won't do.

If we cut taxes, and match the tax cuts with spending cuts, then we exacerbate the demand gap problem. The most that we can hope for in this situation is that the people will spend their tax relief to help fill the gap created by the government spending cuts. So, in other words, the best case scenario is that the tax cuts have zero effect. However, since research has shown that people will save 30% of the money, rather than spend it, the likely case is that the demand problem gets worse.

So the only way that tax cuts have any positive effect on the demand gap is when they are not paid-for with government spending cuts. In other words, we have to go into debt, which is exactly what Keynesianism prescribes anyway. All of these tea-baggers, who at least pretend to hate deficits, would still have nothing to be satisfied about (although since we know that their hatred of deficits is just a pretense, and that they really just hate taxes, we know that in reality they would be satisfied by such a scheme).

So the way I see it, we have four options:

1. Cut taxes, keep spending the same: results in deficits, and only a 70% effectiveness rate on stimulating the economy.
2. Cut taxes, cut spending: no deficits, exacerbates the demand problem, as private spending only makes up for 70% of the cut in public spending.
3. Leave taxes the same, increase spending: results in deficits, but helps solve our demand gap problem, especially when multipliers are taken into effect.
4. Leave taxes the same, leave spending the same, i.e. do nothing.