Debt deal

[Embar Angylwrath]

Why didn't the Dems even address a budget when they had a good chance of passing one... or a better chance than they have now.

[Lurker]

You asked the same question over a year ago and I answered it then.

Saying they didn't have a responsible budget just because it didn't go through the formal process isn't any more accurate now than it was then.

[Fallakin Kuvari]

It was impossible to eliminate or even reduce the deficit and prevent a full-blown depression.

Thats merely speculation on your part, just like it would be speculation for me to say that it would have still prevented a full-blown depression by inspiring confidence on the debt and people would've started using some of their stashed cash which would have stimulated the economy.

[Lurker]

Your ignorance is on full display.

[Fallakin Kuvari]

As is yours.

[Lurker]

You really have no clue how ignorant you sounded, do you?

What tether to reality is there to speculate there were people not spending stashed cash because they were worried about the deficit, and that hundreds of billions in Government spending cuts during a demand recession would have stimulated the economy by boosting confidence?

None. There is no tether to reality. Your ignorance has no limits.

[Harlowe]

Apparently all he has left is "I know you are but what am I".

[Fallakin Kuvari]

You really have no clue how ignorant you sounded, do you?

What tether to reality is there to speculate there were people not spending stashed cash because they were worried about the deficit, and that hundreds of billions in Government spending cuts during a demand recession would have stimulated the economy by boosting confidence?

None. There is no tether to reality. Your ignorance has no limits.

The fact that banks are holding cash rather than lending it out. The fact that Apple has more money than the Federal Government. The fact that gold has skyrocketed to over $1600 (where people are putting their money instead of in the dollar, because of lost confidence due to the deficit issue).

The writing is on the wall Lurker, you just have to be intelligent enough to see it.

[Lurker]

Please provide one study or credible voice who thinks that attempting to reduce the deficit by cutting spending was the proper response to the recession, or who looking back in hindsight thinks that fear of deficit spending caused people to hoard cash and worsened the recession.

[Kulaf]

The only question that matters at the end of the day is:

Are we better off now with a still shaky economy and trillions more in debt than we would have been had we not spent money at the start of the cycle and saw whether it was going to actually get really bad, and then started spending the money on what went bad?

That is the only question that matters and one we will never know the answer to.

[Fallakin Kuvari]

Please provide one study or credible voice who thinks that attempting to reduce the deficit by cutting spending was the proper response to the recession, or who looking back in hindsight thinks that fear of deficit spending caused people to hoard cash and worsened the recession.

Peter Schiff.

[Ddrak]

Dammit, so much to respond to.

I dont understand how you can make the statement that doing too much too soon threatens the recovery of the economy in a recession. Did you not notice the MASSIVE bailouts? The huge increase in the length of unemployment benefits? The wholesale change of the health insurance industry under Obamacare? If you think those are little nudges, then you don't have the same definition of little that I have.

I'm sorry, I thought you were saying that Obama should have reduced the deficit but now it sounds like you're saying he saved the nation through deficit spending.

So, no, those aren't particularly related to my statement (save one). Bailouts are spot-injections and not forward policy changes. Unemployment benefits are also injections of liquidity and not macroeconomic policy shifts. Obamacare on the other hand is definitely a shift and I'll raise my hand to say it was an economically risky move to undertake during a recession. It should be noted that I'm also on record as saying that it didn't go far enough (a public insurer is necessary imo), so I think he was stuck with the lesser of two evils and decided to risk the economy to improve health care.


@Kulaf: I don't think there was really much either the Congress OR Obama could have done (the President does initiate the budget so you have to give him some credit/blame) during 2009/2010 to significantly change the balance of payments left by the outgoing administration, and as my graphs showed, it was primarily due to the recession collapsing government revenue.


@Fallakin: It's not really speculation to say they couldn't reduce the deficit at the same time as preventing a full-blown depression. Keynesian and Austrian school economists both agree on that one so there's really no dissent. The main difference is the argument over whether the extended recovery and inevitable period of stagflation following massive deficit spending is better or worse than a full-blown depression.

You're also conflating 2008-9 with 2011 when you're talking about banks holding cash rather than lending. The primary deficit spending was in response to the banks overextending on lending (among other things) that has now resulted in tightening of liquidity, which was going to happen no matter what the government did to ease the fall. Ditto gold. It would be way past 1600 had the government NOT gone even more massively into debt.

Schiff is basically saying that the government should have let the whole system crash in 2008-9 and then allow the free market to pick up the pieces. He's also right in saying the recovery would probably be shorter from that action. The downside to his statement is it would have completely destroyed the lower income earners and resulted in the good old soup queues from the 30s again. He's not saying that Lurker's wrong in what you quoted, in fact he's saying that the deficit spending helped a lot in the short term and certainly eased the recession by ensuring liquidity of the market (ie banks NOT hoarding as much cash as they might have otherwise), but that the spending and particularly QE1 and QE2 are going to haunt the economy for decades to come.

Dd

[Fallakin Kuvari]

I daresay Schiff was arguing against those sort of actions (TARP and deficit spending) because of the pain it would cause in the long-term.

[Embar Angylwrath]

Dammit, so much to respond to.

I dont understand how you can make the statement that doing too much too soon threatens the recovery of the economy in a recession. Did you not notice the MASSIVE bailouts? The huge increase in the length of unemployment benefits? The wholesale change of the health insurance industry under Obamacare? If you think those are little nudges, then you don't have the same definition of little that I have.

I'm sorry, I thought you were saying that Obama should have reduced the deficit but now it sounds like you're saying he saved the nation through deficit spending.

So, no, those aren't particularly related to my statement (save one). Bailouts are spot-injections and not forward policy changes. Unemployment benefits are also injections of liquidity and not macroeconomic policy shifts. Obamacare on the other hand is definitely a shift and I'll raise my hand to say it was an economically risky move to undertake during a recession. It should be noted that I'm also on record as saying that it didn't go far enough (a public insurer is necessary imo), so I think he was stuck with the lesser of two evils and decided to risk the economy to improve health care.


@Kulaf: I don't think there was really much either the Congress OR Obama could have done (the President does initiate the budget so you have to give him some credit/blame) during 2009/2010 to significantly change the balance of payments left by the outgoing administration, and as my graphs showed, it was primarily due to the recession collapsing government revenue.


@Fallakin: It's not really speculation to say they couldn't reduce the deficit at the same time as preventing a full-blown depression. Keynesian and Austrian school economists both agree on that one so there's really no dissent. The main difference is the argument over whether the extended recovery and inevitable period of stagflation following massive deficit spending is better or worse than a full-blown depression.

You're also conflating 2008-9 with 2011 when you're talking about banks holding cash rather than lending. The primary deficit spending was in response to the banks overextending on lending (among other things) that has now resulted in tightening of liquidity, which was going to happen no matter what the government did to ease the fall. Ditto gold. It would be way past 1600 had the government NOT gone even more massively into debt.

Schiff is basically saying that the government should have let the whole system crash in 2008-9 and then allow the free market to pick up the pieces. He's also right in saying the recovery would probably be shorter from that action. The downside to his statement is it would have completely destroyed the lower income earners and resulted in the good old soup queues from the 30s again. He's not saying that Lurker's wrong in what you quoted, in fact he's saying that the deficit spending helped a lot in the short term and certainly eased the recession by ensuring liquidity of the market (ie banks NOT hoarding as much cash as they might have otherwise), but that the spending and particularly QE1 and QE2 are going to haunt the economy for decades to come.

Dd

No, you have mis-read my post.

You stated that large scale adjustments in economic policy should never be attempted in a recession, as it would interject uncertainty into the markets and make the recession worse. Yet Obama did just that, injected a lot of uncertainty into the market. He made huge policy chages. And the effect on the recessions was... nothing.

What he did didn't work. So maybe some other large scale economic policy shift will> Or maybe it won't. But you can't make a blanket statement that injecting uncertainty in the market durng a recession always leads to a worsening of the recession.

[Lurker]

Never mind that everything you just posted about the effect of Obama's policies on the recession is factually wrong... you've completely backed away from your original point, which was that Obama should have made large scale adjustments aimed at ending the deficit when he took office. "He put more rocks on the back of John Q. Public and his children!".

[Embar Angylwrath]

Reid insists on filibustering his own bill.

http://www.washingtontimes.com/blog/ins ... debt-bill/

He's not interested in a deal. He won't even allow a vote ON HIS OWN BILL!. He's just interested in political posturing, and hamstringing negotiations.

[Lurker]

[Reid] said he would be willing to move up the vote if Republicans didn't insist on a 60-vote threshold

So, the Republicans insist on filibustering the bill but want to waive the required 2-day clock. Reid wants to have a simple majority vote. And Embar thinks Reid is insisting on filibustering his own bill.

Embar is parroting pure political spin he read on a Washington Times blog. Any clearer example of what a dishonest partisan hack Embar has turned out to be?

[Kulaf]

I am going to put on my politico hat and give my prediction:

The Republicans will want to get a settlement on the issue done, but the Democrats will not agree. Probably because they realize something that the Republicans have yet to realize, and that is this sets up President Obama to be the major hero. When the deal is not reached in time I predict you will see a national address by the President where he will get to act very Presidential. He will chastize Congress to failing to perform their duty as required in the Constitution and as mandated by the very spending they themselves have enacted through legislation. The President will state that he cannot allow the nation to not meet its legal obligations to its debtors as a matter of national security and will order the Treasury Secretary to continue to operate as normal to meet the countries obligations. He will then call both houses into session and not allow them to adjourn until they have settled the matter.

The President will come out all presidential.....and the Republicans will have made a huge error.

[Ddrak]

No, you have mis-read my post.

You stated that large scale adjustments in economic policy should never be attempted in a recession, as it would interject uncertainty into the markets and make the recession worse. Yet Obama did just that, injected a lot of uncertainty into the market. He made huge policy chages. And the effect on the recessions was... nothing.

What he did didn't work. So maybe some other large scale economic policy shift will> Or maybe it won't. But you can't make a blanket statement that injecting uncertainty in the market durng a recession always leads to a worsening of the recession.

Uh, I responded to exactly that point. The only thing you mentioned that was actually a "large scale adjustment in economic policy" or "huge policy changes" was Obamacare, and I agreed that it probably made the recession worse. The others were liquidity injections, which are NOT "large scale adjustments in economic policy" and, in fact, were designed precisely to REMOVE uncertainty from the market.

Also, the effect of all your examples on the recessions was not "nothing". The liquidity injections eased it (ie they DID work) and the large scale policy change hindered recovery.

So, while I'll agree that a blanket statement will always have corner cases, I figured you'd accept it at face value for "large scale adjustments in economic policy" will overwhelmingly result in uncertainty in the market, which will almost always make a recession worse. To date, we've seen no counter-examples from Obama (or Bush) on that.


@Kulaf: Could play out that way, but I'd expect an attempt to impeach Obama if he tried that.

Dd

[Embar Angylwrath]

@ Lurker - Thanks for admitting that the Dems aren't really wanting a deal, they want to play this for political positioning.

And my response to the Prsident would be.. why didn't you resolve this a lot earlier when you had control of the House and a filibuster proof Senate? Mr' President, we all know you're great at giving speeches, but this isn't the hope and change you promised. You knew the partisanship that existed, and you said you were going to change that. If anything Mr President, it now worse under your watch. Mr. President, with all due respect, you seem to be all hat, no cattle, when it comes to actually accomplishing things other than reading from a teleprompter, which we all agree you do very well.

@Dd.. which reminds me, I forgot to comment on your comment about a President can do what he wants with control of the House and Senate. Your response was.. what about filibustering Reps? My response to that is Obama didn't have to worry about that until 1) Kennedy had the audacity to die, 2) The Dems couldn't hold on to long-time Democratic seat, and 3) the Dems were so out of favor with their policies they got a shellacking in the midterms and lost an almost hitoric number of seats in both houses.