(05-12-2010 04:39 PM)Boston Owl Wrote:  It is quite fashionable on this board to diss Obama. (After all, he's incredibly unpopular, right? Everybody hates him! Wait -- What did you say? More people approve than disapprove of the job he's doing? Liar!...)

My conservative friends ignore the long-term effects of the 2008 election at their peril, however. As the Pew Report shows, Millennials voted overwhelmingly Democratic at historically high levels. The gap between the votes of younger and older voters was the largest in four decades. While cohorts certainly tend to become more conservative over time, as many here have observed, political views formed when coming of age tend to persist. Witness Gen X-ers who matured around 1994, or our friends who grew up idolizing Ronald Reagan.

Obama advocated for pragmatic liberalism and the good that government can do in a way America hasn't heard in some time. His slogan, after all, was "Yes, we can." Sounds like a message endorsing trust in government and institutions to me.

Cranky conservatives can roll their eyes at the gullibility of the young'uns and holler "Get off my lawn!" all they want, but the Pew study you reference, emmie, documents in great detail important developments that could shape politics and society for decades to come. It is an exciting time. The times, they certainly are a-changin'.

I remember after the 2008 election thinking about the eerie reverse parallels between the 2008 election and the 1968 election. I took Dr. Matusow's "History of the US Since 1945" class (NOTE to current students . . . Best. Class. Ever.) while at Rice, and I send him this email regarding the parallels.

My Email to Dr. Matusow Wrote:I remember discussing with you and some others after class one day about the historical possibilities of this election, and as it's gotten closer and now (finally) finished, the reverse parallels to 1968 (and the 1960s in general) seem striking. The past eight years were governed by an ascendant party that had returned to power in a close election after 8 years of moderate minority party leadership (1960 - JFK; 2000 - Bush). The first term saw slow, tentative steps towards a new "vision" of America, which were accelerated by a tragic event in American History (the Kennedy Assassination; the WTC attacks). The ascendant party's program strode ahead full force by end of the first four years, and the minority party seemingly offered only token resistance at the re-election campaign (Goldwater; Kerry). However, economic problems and an increasingly unpopular war overseas would take their toll on the majority party, cause rifts, and expose flaws in the political ideology.

In the culminating years of both cycles, the winner would promise not so much a full-scale platform and program, but rather a constant, simple refrain harkening to perceived American values ("Law and Order"; "Yes we can" and "Change"). The loser would be trying to distance himself from failed promises by the incumbent president and have increaingly large and bitter factions to deal with in the party. Yet somehow, the loser manages to keep the campaign close (though not really in suspense) until the end. And when Election night finally came, it seemed that the old coalition was showing cracks, and a new one forming. In 1968, it was a conservative, evangelical South allied with fiscally conservative Midwesterners and Westerners. This year, the Midwest (and some of the west, as New Mexico, Colorado, and Nevada demonstrate) are joining with the Northeast and West to create a progressive majority. If it holds (and I'm not sure how likely that is, considering how much a factor Obama's personality and charisma were in this race), this coalition of the young, minorities, and intellectual elites (shades of Kennedy again) will manage to create a fairly lasting change, even if, as in 1976, the old ascendancy returns for one last hurrah (not suggesting here that Obama would go down in a Nixonian blaze of "glory", but again, considering the influence of his personality this year, it might be inevitable in 8 years).

Anyways, just some musings the morning after an historic night.

(05-12-2010 05:58 PM)Rick Gerlach Wrote:  And the graph, no doubt, is produced by the same people who came out this week saying that the cost savings they projected to health care reform, in their updated projections, have disappeared.

Actually Rick, the baseline projection AND the Obama projection aren't from the CBO. They're from a "non-partisan advocacy group" that is using CBO data. That data has since been updated... but one would think that if they were simply using cbo projections, they would say so. Instead, they say it is their "interpretation" of the cbo data.

The picture matches the message, but is dishonest in what the data is really telling us in two ways. First, it conveniently stops the projects at 10 years. On one level, that's okay, because it's tough to have decent estimates that far out. But it's clear that deficits are not arrested in any way and grow at a rather alarming rate at the tail end (averaging 9% growth per year on those last 6 years). But by using 10 years, the title matches what is shown.

It's further dishonest by choosing to show actual deficits starting with 2009, because that ignores the fact that deficits prior to 2009 wouldn't be higher than any deficit figure shown by the graph above. Yes, the President didn't have a budget propsal in prior years, but those prior deficits are well-known figures. Nothing like redefining the playing field by ignoring historical comparisons.

There is also the dishonesty in actually using the President's proposal versus what actually comes out of the meat grinder at the other end. Rarely do spending figures ever get reined in as much as a President's proposal (whether Republican or Democrat) shows. Sometimes, revenues surprise on the upside, resulting in lower deficits, but I'm not sure Congress ever spends less than what was proposed (at least, not in my memory).

I have nothing against deficit spending in a recession. It's a necessary evil. Unfortunately, the last couple of generations of politicians have taken the results of deficit spending and twisted it into a necessary way of business. Now, we're looking at deficits as far as the eye can see where the deficits as a percentage of GDP are greater than 5%. Considering GDP for a mature economy like what the US has cannot grow at that rate (without monetary inflation), it's a dead end. You cannot grow your debt faster than your income, because you're just going to swamp that growth and need to use it (and then some) just to pay off the debt/interest. It's not sustainable long-term. Families across the US know this, with many having experienced this thing. Now it's a country like Greece. Perhaps soon, California. Don't think the US could be immune (though the damage to the world economy would be immense - talk about too big to fail).

(05-12-2010 06:26 PM)jwn Wrote:  

(05-12-2010 04:39 PM)Boston Owl Wrote:  It is quite fashionable on this board to diss Obama. (After all, he's incredibly unpopular, right? Everybody hates him! Wait -- What did you say? More people approve than disapprove of the job he's doing? Liar!...)

My conservative friends ignore the long-term effects of the 2008 election at their peril, however. As the Pew Report shows, Millennials voted overwhelmingly Democratic at historically high levels. The gap between the votes of younger and older voters was the largest in four decades. While cohorts certainly tend to become more conservative over time, as many here have observed, political views formed when coming of age tend to persist. Witness Gen X-ers who matured around 1994, or our friends who grew up idolizing Ronald Reagan.

Obama advocated for pragmatic liberalism and the good that government can do in a way America hasn't heard in some time. His slogan, after all, was "Yes, we can." Sounds like a message endorsing trust in government and institutions to me.

Cranky conservatives can roll their eyes at the gullibility of the young'uns and holler "Get off my lawn!" all they want, but the Pew study you reference, emmie, documents in great detail important developments that could shape politics and society for decades to come. It is an exciting time. The times, they certainly are a-changin'.

I remember after the 2008 election thinking about the eerie reverse parallels between the 2008 election and the 1968 election. I took Dr. Matusow's "History of the US Since 1945" class (NOTE to current students . . . Best. Class. Ever.) while at Rice, and I send him this email regarding the parallels.

My Email to Dr. Matusow Wrote:I remember discussing with you and some others after class one day about the historical possibilities of this election, and as it's gotten closer and now (finally) finished, the reverse parallels to 1968 (and the 1960s in general) seem striking. The past eight years were governed by an ascendant party that had returned to power in a close election after 8 years of moderate minority party leadership (1960 - JFK; 2000 - Bush). The first term saw slow, tentative steps towards a new "vision" of America, which were accelerated by a tragic event in American History (the Kennedy Assassination; the WTC attacks). The ascendant party's program strode ahead full force by end of the first four years, and the minority party seemingly offered only token resistance at the re-election campaign (Goldwater; Kerry). However, economic problems and an increasingly unpopular war overseas would take their toll on the majority party, cause rifts, and expose flaws in the political ideology.

In the culminating years of both cycles, the winner would promise not so much a full-scale platform and program, but rather a constant, simple refrain harkening to perceived American values ("Law and Order"; "Yes we can" and "Change"). The loser would be trying to distance himself from failed promises by the incumbent president and have increaingly large and bitter factions to deal with in the party. Yet somehow, the loser manages to keep the campaign close (though not really in suspense) until the end. And when Election night finally came, it seemed that the old coalition was showing cracks, and a new one forming. In 1968, it was a conservative, evangelical South allied with fiscally conservative Midwesterners and Westerners. This year, the Midwest (and some of the west, as New Mexico, Colorado, and Nevada demonstrate) are joining with the Northeast and West to create a progressive majority. If it holds (and I'm not sure how likely that is, considering how much a factor Obama's personality and charisma were in this race), this coalition of the young, minorities, and intellectual elites (shades of Kennedy again) will manage to create a fairly lasting change, even if, as in 1976, the old ascendancy returns for one last hurrah (not suggesting here that Obama would go down in a Nixonian blaze of "glory", but again, considering the influence of his personality this year, it might be inevitable in 8 years).

Anyways, just some musings the morning after an historic night.

So, are we going backwards historically? Are the 1950s next? I found an interesting read saying that perhaps the 2010 midterms are not as much like 1994 as more likely 1966. It makes for an interesting read, though it certainly doesn't go into extensive detail.

http://www.centerforpolitics.org/crystal...010042901/

The problem that the 2010 version has with this playbook is that ideological litmus tests seem to be more the norm with how some of the current Republican races are turning out than a true open tent (for local variations) but well organized. We have yet to see the true message and organization of the general election for 2010, but the results of the primaries make me nervous for the Republicans in their ability to appeal across the board. I guess that lesson of the McDonnell/Christie/Brown elections hasn't quite been learned yet.

(05-12-2010 05:13 PM)Boston Owl Wrote:  

(05-12-2010 05:03 PM)Owl 69/70/75 Wrote:  Help me out here.
On my computer screen, I see a line that shows a rising trend, on a scale where rising seems to indicate bigger deficits.
So how is Obama reducing the deficits?

Heh. I think you know the answer and maybe are pulling my leg. But anyway, it's the gap between the blue (baseline/status quo) and red (Obama) lines. The red line is lower than the blue line. Thus, compared to what would have happened, Obama reduces the deficit.
It would be fair to say that Obama and the Democrats should do more to reduce the deficit. It would even be fair to say that Obama and the Democrats (and the Republicans) should do what is necessary to turn the red line downward. But that must come with the acknowledgment that the issue is a pre-existing deficit that Democrats have already begun to reduce, not one that Barry somehow magically created. That's all.

What I find disturbing is that you actually find something GOOD in this graph. I can see no good there. Then again, I see nothing good about Obama. Except that I do like shooting drones at terrorists.

(05-12-2010 05:03 PM)Owl 69/70/75 Wrote:  If your point is that the red line is lower than the blue line, I'd say that the extent of that difference is only sufficient to make a year, maybe two at most, difference in our ETA Greece.

I don't disagree with you all, that the trend is really not so comforting... it needs to go down, and stay down.

Perhaps this warrants a new thread, but with regard to all the talk about Greece and a possible parallel with the US, I'd like to point out the HUGE differences in our countries. (Note, most of my understanding of the situation comes from talking to a friend from Greece). The main problem there is that a huge portion of the rich pay little or no taxes, usually by bribing the tax police/IRS equivalent, while the poor and middle class pay in since they can't afford the bribes (though many would probably evade if they could). My friend feels philosophically this was a reaction to the dictatorship and authoritarian government foisted on them by (ahem) US interests in the 60s and 70s. So (ironically for this discussion) the tax-evasion is a product of no one trusting or valuing the government. However, the state still needs employees, roads, schools, etc, so they were borrowing HUGE amounts of money, like significant percentages of the GDP of Greece, to pay for it all. Of course in this discussion I asked why they didn't have an army of people going to all the villas to report tax-evaders, and the answer is they do - they're just bribed like everyone else. So it's a pretty ugly situation, but not exactly what we're dealing with in the US.

(05-12-2010 08:19 PM)gsloth Wrote:  So, are we going backwards historically? Are the 1950s next? I found an interesting read saying that perhaps the 2010 midterms are not as much like 1994 as more likely 1966. It makes for an interesting read, though it certainly doesn't go into extensive detail.

http://www.centerforpolitics.org/crystal...010042901/

The problem that the 2010 version has with this playbook is that ideological litmus tests seem to be more the norm with how some of the current Republican races are turning out than a true open tent (for local variations) but well organized. We have yet to see the true message and organization of the general election for 2010, but the results of the primaries make me nervous for the Republicans in their ability to appeal across the board. I guess that lesson of the McDonnell/Christie/Brown elections hasn't quite been learned yet.

Not going backwards historically. Just an indication that 2008, like 1968, was perhaps an election portending a big shift in American politics, only this time in reverse.

(05-13-2010 09:26 AM)emmiesix Wrote:  

(05-12-2010 05:03 PM)Owl 69/70/75 Wrote:  If your point is that the red line is lower than the blue line, I'd say that the extent of that difference is only sufficient to make a year, maybe two at most, difference in our ETA Greece.

I don't disagree with you all, that the trend is really not so comforting... it needs to go down, and stay down.

Perhaps this warrants a new thread, but with regard to all the talk about Greece and a possible parallel with the US, I'd like to point out the HUGE differences in our countries. (Note, most of my understanding of the situation comes from talking to a friend from Greece). The main problem there is that a huge portion of the rich pay little or no taxes, usually by bribing the tax police/IRS equivalent, while the poor and middle class pay in since they can't afford the bribes (though many would probably evade if they could). My friend feels philosophically this was a reaction to the dictatorship and authoritarian government foisted on them by (ahem) US interests in the 60s and 70s. So (ironically for this discussion) the tax-evasion is a product of no one trusting or valuing the government. However, the state still needs employees, roads, schools, etc, so they were borrowing HUGE amounts of money, like significant percentages of the GDP of Greece, to pay for it all. Of course in this discussion I asked why they didn't have an army of people going to all the villas to report tax-evaders, and the answer is they do - they're just bribed like everyone else. So it's a pretty ugly situation, but not exactly what we're dealing with in the US.

is it? I remember when Perot ran for President, his tax percentage was less than his secretaries because of the write-offs and "business expenses". Oprah and just about every actor we know writes off their chef, trainer, stylist, clothes, plastic surgeon and driver/entourage as a business expense. I'd sure like to hire a chef and be able to deduct their salary. Lobbying is merely legalized bribing. Coporations are leaving the us, so while we may still have a high tax rate on them, most of their income isn't taxed by us.

Yes, it's absolutely different... I'm just not sure it's different enough. We're certainly a long way down the same road.

Another huge difference between us and Greece is that they can't print money, right?


Interesting thread. Now that this thread has shifted toward focus toward deficit issues, here's an interview from yesterday with a UT economist about that subject..

Quote:Galbraith: The danger posed by the deficit ‘is zero’

James Galbraith is an economist and the Lloyd M. Bentsen Jr. chair in government and business relations at the University of Texas at Austin. He's also a skeptic of the prevailing concern over America's long-term deficit. With many people now comparing America's fiscal condition to Greece, I spoke with Galbraith to get the other side of the argument. An edited transcript of our conversation follows.

EK: You think the danger posed by the long-term deficit is overstated by most economists and economic commentators.

JG: No, I think the danger is zero. It's not overstated. It's completely misstated.

EK: Why?

JG: What is the nature of the danger? The only possible answer is that this larger deficit would cause a rise in the interest rate. Well, if the markets thought that was a serious risk, the rate on 20-year treasury bonds wouldn't be 4 percent and change now. If the markets thought that the interest rate would be forced up by funding difficulties 10 year from now, it would show up in the 20-year rate. That rate has actually been coming down in the wake of the European crisis.

So there are two possibilities here. One is the theory is wrong. The other is that the market isn't rational. And if the market isn't rational, there's no point in designing policy to accommodate the markets because you can't accommodate an irrational entity.

EK: Then why are the bulk of your colleagues so worried about this?

JG: Let's push a bit deeper on the CBO forecasts. They publish a baseline set of projections. One of those projections holds the economy will return to a normal high-employment level with low inflation over the next 10 years. If true, that would be wonderful news. Go down a few lines and they also have the short-term interest rate going up to 5 percent. It's that short-term interest rate combined with that low inflation rate that allows them to generate, quite mechanically, these enormous future deficit forecasts. And those forecasts are driven partially by the assumption that health-care costs will rise forever at a faster rate than everything else and by interest payments on the debt will hit 20 or 25 percent of GDP.

At this point, the whole thing is completely incoherent. You cannot write checks to 20 percent to anybody without that money entering the economy and increasing employment and inflation. And if it does that, then debt-to-GDP has to be lower, because inflation figures into how much debt we have. These numbers need to come together in a coherent story, and the CBO's forecast does not give us a coherent story. So everything that is said that is based on the CBO's baseline is, strictly speaking, nonsense.

EK: But couldn't there be a space between the CBO being totally correct and the debt not being a problem? It seems certain, for instance, that health-care costs will continue to rise faster than other sectors of the economy.

JG: No, it's not reasonable. Share of health-care cost would rise as part of total GDP and the inflation would rise to be nearer to what the rate of health-care inflation is. And if health care does get that expensive, and we're paying 30 percent of GDP while everyone else is paying 12 percent, we could buy Paris and all the doctors and just move our elderly there.

EK: But putting inflation aside, the gap between spending and revenues won't have other ill effects?

JG: Is there any terrible consequence because we haven't prefunded the defense budget? No. There's only one budget and one borrowing authority and all that matters is what that authority pays. Say I'm the federal government and I wish to pay you, Ezra Klein, a billion dollars to build an aircraft carrier. I put money in your bank account for that. Did the Federal Reserve look into that? Did the IRS sign off on it? Government does not need money to spend just as a bowling alley does not run out of points.

What people worry about is that the federal government won't be able to sell bonds. But there can never be a problem for the federal government selling bonds. It goes the other way. The government's spending creates the bank's demand for bonds, because they want a higher return on the money that the government is putting into the economy. My father said this process is so simple that the mind recoils from it.

EK: What are the policy implications of this view?

JG: It says that we should be focusing on real problems and not fake ones. We have serious problems. Unemployment is at 10 percent. if we got busy and worked out things for the unemployed to do, we'd be much better off. And we can certainly afford it. We have an impending energy crisis and a climate crisis. We could spend a generation fixing those problems in a way that would rebuild our country, too. On the tax side, what you want to do is reverse the burden on working people. Since the beginning of the crisis, I've supported a payroll tax holiday so everyone gets an increase in their after-tax earnings so they can pay down their mortgages, which would be a good thing. You also want to encourage rich people to recycle their money, which is why I support the estate tax, which has accounted for an enormous number of our great universities and nonprofits and philanthropic organizations. That's one difference between us and Europe.

EK: That does it for my questions, I think.

JG: I have one more answer, though! Since the 1790s, how often has the federal government not run a deficit? Six short periods, all leading to recession. Why? Because the government needs to run a deficit, it's the only way to inject financial resources into the economy. If you're not running a deficit, it's draining the pockets of the private sector. I was at a meeting in Cambridge last month where the managing director of the IMF said he was against deficits but in favor of saving, but they're exactly the same thing! A government deficit means more money in private pockets.

The way people suggest they can cut spending without cutting activity is completely fallacious. This is appalling in Europe right now. The Greeks are being asked to cut 10 percent from spending in a few years. And the assumption is that this won't affect GDP. But of course it will! It will cut at least 10 percent! And so they won't have the tax collections to fund the new lower level of spending. Spain was forced to make the same announcement yesterday. So the Eurozone is going down the tubes.

On the other hand, look at Japan. They've had enormous deficits ever since the crash in 1988. What's been the interest rate on government bonds ever since? It's zero! They've had no problem funding themselves. The best asset to own in Japan is cash, because the price level is falling. It gets you 4 percent return. The idea that funding difficulties are driven by deficits is an argument backed by a very powerful metaphor, but not much in the way of fact, theory or current experience.

http://voices.washingtonpost.com/ezra-kl...ed_by.html

Oh my goodness. Did this economist just say that running a zero deficit resulted in a recession? Every time? Really, that's what caused it? And not a normal business cycle? At which case they might have chosen to start deficit spending to arrest the recession? I'm sorry for Lloyd Bentsen's legacy that a man holding his honorary chair really believes that.

Then again, the transcript was edited, so maybe we really don't know what he means, or whether he could speak a coherent sentence. (Yeah, he probably can, but still...) The oversimplifications here are just astounding, but probably consistent with his world view.

I must say, I once ran a program that reached the same conclusion... but when the deficit got so big that it fed on itself, it became unsustainable. We are not there yet, but we're getting close. Deficit spending in a recession isn't the problem... HUGE deficit spending without regard to whether or not it pays for itself (or using such optimistic assumptions as to be silly... and yes, Bush and/or the Republican Congress did this as well) is a problem. If you spend $10 and get back $10 (adjusted for inflation)... no problem.

(05-13-2010 09:26 AM)emmiesix Wrote:  

(05-12-2010 05:03 PM)Owl 69/70/75 Wrote:  If your point is that the red line is lower than the blue line, I'd say that the extent of that difference is only sufficient to make a year, maybe two at most, difference in our ETA Greece.

I don't disagree with you all, that the trend is really not so comforting... it needs to go down, and stay down.
Perhaps this warrants a new thread, but with regard to all the talk about Greece and a possible parallel with the US, I'd like to point out the HUGE differences in our countries. (Note, most of my understanding of the situation comes from talking to a friend from Greece). The main problem there is that a huge portion of the rich pay little or no taxes, usually by bribing the tax police/IRS equivalent, while the poor and middle class pay in since they can't afford the bribes (though many would probably evade if they could). My friend feels philosophically this was a reaction to the dictatorship and authoritarian government foisted on them by (ahem) US interests in the 60s and 70s. So (ironically for this discussion) the tax-evasion is a product of no one trusting or valuing the government. However, the state still needs employees, roads, schools, etc, so they were borrowing HUGE amounts of money, like significant percentages of the GDP of Greece, to pay for it all. Of course in this discussion I asked why they didn't have an army of people going to all the villas to report tax-evaders, and the answer is they do - they're just bribed like everyone else. So it's a pretty ugly situation, but not exactly what we're dealing with in the US.

Your friend obviously has first-hand knowledge, but what he or she appears to lack is objectivity. There are certainly elements of truth in that analysis, but it's pretty one-sided. There's more to it than that.

But the differences are pretty immaterial. Whether you get to crippling deficits unintentionally through tax non-compliance or intentionally through budgetary indiscipline, once you are there you are dead.

We can print money and Greece cannot, but all that gets us is to where Weimar Germany was in 1932--you take your money to the grocery store in a wheelbarrow, and bring home groceries that fit in your wallet.

Unless the red line or the blue line or whatever line turns down and hits zero, it's time to stick a fork in us. Shrub is certainly to blame for part of it, but Obama has made it worse not better. Anybody who views this graph as indicating that Obama has done anything right has simply sipped too much kool-aid and become delusional.

We have received relatively little bang for the buck from either TARP or "stimulus." We have tried to solve every crisis for 80 years by stimulating demand, leaving the supply-demand relationship so far out of whack that we are the largest debtor nation and the largest importer nation in the world. When I took Eco 200 (as it was known in those days) the Keynesians were telling us that stimulating consumption could produce economic multipliers of 5 to 7 to 1. Statistical analysis of recent programs suggests multipliers in the 1.25 range. To have pumped that much into the economy with so little to show for it really indicates how sick we are.