Quote: Original post by BeanDog
Buy fewer guns.

So I agree with the sentiment, but that chart is intentionally misleading - The entire chart represents a fraction of the overall budget.

Quote: Original post by Alpha_ProgDes
As of now, I'm looking at the Tea Party for solutions to our problems....

LOL. I'm thinking you're kidding. But if you're not...

The tea party is a lot of impotent rage from people who think they're getting screwed over economically (and they're probably right), but don't know what to do about it, so they're railing at whatever is easiest to rail at. It's not patriotism, it's incoherent nationalism. I wouldn't look to them for answers.

I don't know how to save the economy, or if it even needs to be saved. What I do know is that fixing an economy (or any complex system) is never as simple as just raising or lowering taxes, and that people who try to tell you otherwise are selling you a constructed narrative, and you shouldn't believe them. (I'm looking at you, fox news)

That chart represents the discretionary budget, the portion of spending based on income taxes. The missing portion are the entitlement budget - Social Security and Medicare - which is pretty much "automatic" spending.



Back to the subject of waste, has anyone here read the Scarlett Letter? Most accounts of the novel omit the framing story but it's relevant here because it describes something of the "spoilage system" of the 19th century. This is to say that wasteful government spending has been a long standing problem.

Quote: Original post by CDProp
Leave taxes where they are, increase spending on stimulus.

Right now we're experiencing a paradox of thrift

There is no paradox. When people "save" money, they don't bury it in the back yard. It goes into savings or investment accounts, where it can fund growth.

">Keynes was wrong

It doesn't always work the way you'd expect:

http://krugman.blogs.nytimes.com/2009/07/07/the-paradox-of-thrift-for-real/

Quote: Original post by CDProp
It doesn't always work the way you'd expect:

http://krugman.blogs.nytimes.com/2009/07/07/the-paradox-of-thrift-for-real/

Ok, so Krugman is expecting us look at the 2007-2009 data and buy that consumers are intentionally saving, not that their credit has been massively contracted? And the decrease in government saving is the result of this individual consumer saving, not the obvious reduction is tax revenue and increased government spending over this period?

Even Krugman says:

Quote: One caveat: some of the decline in investment, and hence in saving,is due to disruption in the credit markets. Still, my sense is that the big reason for declining business investment, at least, is simply the fact that consumer demand has fallen — which is paradox of thrift in action.

So "some" of the results are due to the credit implosion, but "his sense" is that the the real cause is the thrift paradox? Well my sense is that he's full of it :)

Here's the paradox of thrift in a nutshell. The conventional idea is that the economy performs better whenever the actors in it pursue their individual interests. In hard times it's in the interest of individuals to reduce spending and/or save money. When large numbers of actors in an economy apply that strategy, they spend less money, there is less money in circulation and the economy shrinks. The economy performs worse instead of performing better as expected. What is virtuous in the individual, is, paradoxically, poisonous to the economy.



Here's a paper on Keynesianism that Krugman recently referenced in his blog

The effectiveness of fiscal and monetary stimulus in depressions There is one important source of information on the effectiveness of monetary and fiscal stimulus in an environment of near-zero interest rates, dysfunctional banking systems and heightened risk aversion that has not been fully exploited: the 1930s. This column gathers data on growth, budgets and central bank policy rates for 27 countries covering the period 1925-39 and shows that where fiscal policy was tried, it was effective.

Quote: Original post by CDProp
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?

That's a pretty large stretch. It would save money in some areas, but other areas would increase spending and probably lower quality of care quite drastically.

The problem with today's government is that it continually supports protecting the minority, and nobody is protecting the majority from it. The government is not a charity. It should only take major actions that will help everyone. The government is continually stomping all over the checks and balances that were set up by the founding fathers to support a trillion dollar popularity contest.

I'd be most worried about the fact that very rarely are politicians held accountable until they're president, and the president is very often held accountable for the wrongs of other politicians.

Also, as someone else said, we need to cut government waste. I am really shocked at how much the government spends doing literally nothing.

I was talking to one of my roommates a while ago about this, and we thought a decent way to do a stimulus would be to offer it to college students/mid-20s area. They're usually in debt and not as fiscally responsible as older adults, so they are far more likely to actually spend it.

I thought Lieberman flipped on the health care bill because Weiner supported it. That is, Lieberman went on record six months ago supporting the expansion of Medicare to cover people 55 and over (from 65 were it stands now). Then, when Weiner announced that he could get behind that as an alternative to the public option, Lieberman flipped and came out against it [1]. When it comes to Lieberman it's worth noting that he represents Connecticut, home to a large number of health insurance companies, and his wife works as a lobbyist for big pharma [2].

Medicare For All would save even more money but this round of health care reform hasn't been about saving money, it's been about saving the health insurance industry and the $800 billion it siphons from the nation every year [3]. Viva Capitalismo!

Quote: Original post by LessBread
When large numbers of actors in an economy apply that strategy, they spend less money, there is less money in circulation and the economy shrinks. The economy performs worse instead of performing better as expected. What is virtuous in the individual, is, paradoxically, poisonous to the economy.

Yeah, I guess I have a grasp on the theory from a high level at least, I just essentially agree with the Austrian critique.

When people save money, it goes into e.g. bank accounts/IRAs/whatever where it funds investments, not in a money hole in their back yard. What we are experiencing currently probably isn't all that much savings anyway, at least not intentionally - spending is likely reduced because the economy is shrinking (correcting) from the credit bubble.

In any case, even if people were hoarding their wealth in big buckets, that still drives up aggregate demand, since that money is going to get spent on something.

There is just no way to borrow and spend your way to prosperity and wealth, it can't work on a micro or macro level.