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Argument to Authority.
Keynesian economics has failed, both in the 1930s, and now. Obama spent a trillion dollars in keynesian spending - did it pull us out of the recession? Uhhhh nooooooooooo........
and now we appear headed back into a double dip.
Leftwingers continue to piss on peoples legs, and tell them it's raining.
Argument to Authority.
Keynesian economics has failed, both in the 1930s,
No it worked.
It worked splendidly when it was finally done in the early 40s.
and now.
This STUMULUS (much like FDR's early try in hte late 30s) is another excellent example of the failure of half measures.
Rep. Tim Huelskamp (R-KS), a Tea Party-backed freshman who voted against the final debt limit bill, recently asked to hear from the Congressional Budget Office about the impact of government spending on economic growth. It's an article of faith on the right that vastly shrinking government will unleash the forces of private enterprise, and faced with CBO's opposing view, Huelskamp wanted to know the answer to two questions:
1). What current federal departments, agencies, programs, or portions thereof do not contribute to economic growth?
2). In the programs that CBO believes do contribute to economic growth, what level of spending cuts would amount to a level you believe would be significant enough to "probably slow the economic recovery"?
But if the newly elected member of the Budget Committee was hoping the non-partisan CBO would buy into his premise, he'll be sorely disappointed.
In a response letter Thursday, CBO-chief Doug Elmendorf gives Huelskamp a layman's lesson in Keynesian economics: Under current economic circumstances, new federal spending would help economic growth, and current and future cuts could stymie it, particularly if they hit key government investment.
"When demand for goods and services falls short of the economy's ability to produce them, as is the case currently, increasing government spending can increase aggregate demand and thereby narrow the gap between the economy's actual and potential levels of output," Elmendorf writes.
The precise details matter. The more robust the economy, the lower the impact. But, according to Elmendorf, "when the Federal Reserve's ability to lower short-run interest rates is constrained because those rates are already near zero, as they are currently, the short-run effects of changes in government spending on output tend to be larger than usual."
To illustrate the point, Elmendorf notes that deficit reduction measures that cut spending by $100 billion next fiscal year, and hundreds of billions more over the coming decade "would decrease real (inflation-adjusted) gross national product (GNP) in 2012, 2013, and 2014 by amounts ranging from roughly 0.1 percent to 0.6 percent depending on the year and the assumptions used." In other words, the GOP's current governing theory is damaging the economy and, by implication, costing jobs. And for those Republicans who want to cut more, " a reduction in primary deficits that followed the same gradual time path but was twice as large would produce macroeconomic effects that were roughly twice as large."
There are important growth-related reasons to reduce deficits if and when the economy improves -- it reduces the extent to which government spending "crowds out" private investment, by undertaking functions the private sector can do more efficiently. But we're not there yet and, according to CBO, won't be until the end of the decade. Spending cuts like the ones describe above, "[a]t the turn of the decade, from 2019 through 2021...would increase [GNP] by roughly 0.5 percent to 1.4 percent."
But again the specifics matter, and if the GOP wants to slash across the board, they'll do damage anyhow.
"Some types of spending, such as funding for improvements to roads and highways, may add to the economy's potential output in much the same way that private capital investment does," Elmendorf writes. "Other policies, such as funding for grants to increase access to college education may raise long-term productivity by enhancing people's skills. The positive longer-term impact of deficit reduction on GNP would be smaller if the policies that reduced deficits included cuts in productive government investments."
Huelskamp's original letter is here. Read Elmendorf's response here.
MORE: Cut And Grow Fail: CBO Schools Tea Party Freshman In Basic Economics | TPMDC
So you can't accept the reality that Tea Party economics would fail? Partisan hackery=mental illness.
No it worked.
It worked splendidly when it was finally done in the early 40s. and now.
This STUMULUS (much like FDR's early try in hte late 30s) is another excellent example of the failure of half measures.
"Some types of spending, such as funding for improvements to roads and highways, may add to the economy's potential output in much the same way that private capital investment does," Elmendorf writes. "Other policies, such as funding for grants to increase access to college education may raise long-term productivity by enhancing people's skills. The positive longer-term impact of deficit reduction on GNP would be smaller if the policies that reduced deficits included cuts in productive government investments."
People talk about economics as though economics was a PHYSICAL SCIENCE with laws that are as irrefuteable as gravity.
Our modern capitalistic Economic systems are manmade and subject to changes in policy which change the way the economy works.
Never forget that.
this whole lie of the government doesnt create jobs is just insane.
How can anything be more blatently wrong?
Rep. Tim Huelskamp (R-KS), a Tea Party-backed freshman who voted against the final debt limit bill, recently asked to hear from the Congressional Budget Office about the impact of government spending on economic growth. It's an article of faith on the right that vastly shrinking government will unleash the forces of private enterprise, and faced with CBO's opposing view, Huelskamp wanted to know the answer to two questions:
1). What current federal departments, agencies, programs, or portions thereof do not contribute to economic growth?
2). In the programs that CBO believes do contribute to economic growth, what level of spending cuts would amount to a level you believe would be significant enough to "probably slow the economic recovery"?
But if the newly elected member of the Budget Committee was hoping the non-partisan CBO would buy into his premise, he'll be sorely disappointed.
In a response letter Thursday, CBO-chief Doug Elmendorf gives Huelskamp a layman's lesson in Keynesian economics: Under current economic circumstances, new federal spending would help economic growth, and current and future cuts could stymie it, particularly if they hit key government investment.
"When demand for goods and services falls short of the economy's ability to produce them, as is the case currently, increasing government spending can increase aggregate demand and thereby narrow the gap between the economy's actual and potential levels of output," Elmendorf writes.
The precise details matter. The more robust the economy, the lower the impact. But, according to Elmendorf, "when the Federal Reserve's ability to lower short-run interest rates is constrained because those rates are already near zero, as they are currently, the short-run effects of changes in government spending on output tend to be larger than usual."
To illustrate the point, Elmendorf notes that deficit reduction measures that cut spending by $100 billion next fiscal year, and hundreds of billions more over the coming decade "would decrease real (inflation-adjusted) gross national product (GNP) in 2012, 2013, and 2014 by amounts ranging from roughly 0.1 percent to 0.6 percent depending on the year and the assumptions used." In other words, the GOP's current governing theory is damaging the economy and, by implication, costing jobs. And for those Republicans who want to cut more, " a reduction in primary deficits that followed the same gradual time path but was twice as large would produce macroeconomic effects that were roughly twice as large."
There are important growth-related reasons to reduce deficits if and when the economy improves -- it reduces the extent to which government spending "crowds out" private investment, by undertaking functions the private sector can do more efficiently. But we're not there yet and, according to CBO, won't be until the end of the decade. Spending cuts like the ones describe above, "[a]t the turn of the decade, from 2019 through 2021...would increase [GNP] by roughly 0.5 percent to 1.4 percent."
But again the specifics matter, and if the GOP wants to slash across the board, they'll do damage anyhow.
"Some types of spending, such as funding for improvements to roads and highways, may add to the economy's potential output in much the same way that private capital investment does," Elmendorf writes. "Other policies, such as funding for grants to increase access to college education may raise long-term productivity by enhancing people's skills. The positive longer-term impact of deficit reduction on GNP would be smaller if the policies that reduced deficits included cuts in productive government investments."
Huelskamp's original letter is here. Read Elmendorf's response here.
MORE: Cut And Grow Fail: CBO Schools Tea Party Freshman In Basic Economics | TPMDC
Someone needs to school the CBO in the fact that Keynesian economics is pure crap. It's been proven to be Voo-Doo over and over again. Empirical evidence has dashed all it's fundamental premises to pieces.
Just more proof that teabaggers are stupid.