Posted by: James Atticus Bowden | November 8, 2010

Holding Republicans Accountable

 

For as many elections as needed

My congressman, Rob Wittman,  1 CD Virginia, released this statement about the upcoming session.

“In the last weeks of this session of the 111th Congress and into the 112th Congress, I intend to serve as I have in the past three years: to uphold the Constitution and to support responsible governing. In order to build a firm foundation for the future, I believe we first need to slow the rate of spending and pass measures to bolster our economy. I opposed bloated, ineffective spending measures such as the stimulus package and the bailout packages, and believe we need to bring our federal budget back into balance.”

How is that for bold ideas?  Slow the rate of spending.  Not cut.  Not eliminate.  Not return programs to the states – to follow the Constitution.   But, wow, slow the rate of spending.

And, pass something that bolsters our economy.  No specifics – or even the key nouns, like taxes and regulations.  No mention of tax cuts.

Opposing bloated, ineffective spending measures SHOULD mean no more support for Americorps, Teacher Corps etc.   And, it should mean no more earmarks.   One hopes so.

How bold is that kind of Establishment Republican vision?  So, whaddya think?

 

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Responses

  1. It’s pretty clear that he says basically nothing. It’s so easy for politicians to say feel good things like “pass something that bolsters our economy”. The stimulus package was something that bolstered the economy. Most economists agree that it probably prevented our economy from going into total free fall. You think 10% unemployment is high? Things could have been worse. The fact is, the only way the government can “bolster the economy” is by spending money and or cutting taxes, which from an economics point of view is basically the same thing. They both pump more money into the economy. So basically, the republicans ran on the following platform: cut spending, cut taxes and create more jobs, therefore growing the economy and reducing the deficit. Sounds just like what Ronald Reagan preached in the ’80’s; “trickle down” economics. The results from that were clearly sub optimal. The national debt spiked to the highest level since WW-II and the deficits persisted. It took the election of Bill Clinton to balance the budget, something no Republican president has ever done in the last 50 years. Jimmy Carter did it in his last year, but Reagan did away with it.

    • Thanks for commenting. I agree about the political drivel.

      Disagree on economics. The stimulus killed more jobs than it created. The great periods of growth post-WW II were spurred by tax cuts. It is all about capital. See my other blog posts about capital.

  2. It is all about capital. Capital is all about the money supply. I’m not sure how you come to the conclusion that over 700 billion dollars in federal spending killed more jobs than it created. The CBO came to the opposite conclusion in that it increased the number of jobs by 1.4 to 3.3 million. I would submit that the stimulus wasn’t big enough. That’s not an original opinion of mine. James Galbraith, a Ph.D economist from Yale, writes that the stimulus was probably half as large as it should have been. The point is that the government should be doing all it can to stimulate the economy, but we don’t have the political will.

    If you really believe that the lack of capital is the problem, the how is it that a direct infusion of 700 billion dollars in capital was a bad thing, and why are you not advocating more of it?

    • Where did the capital come from? It came from taxes or from the Feds borrowing money.

      If it came from taxes then if one job = 25 cents, then one dollar = 4 jobs. One dollar in taxes kills 4 jobs to create one.

      If it came from borrowing money then it crowded out capital that the private sector could have used for job creation.

      The pass through on capital is less than 28 cents on the dollar. It takes the government one dollar to produce 28 cents in goods and services.

      That is why the stimulus sucks – and increased unemployment.

  3. So, using your math, if the government cuts taxes by a dollar, then 4 jobs are created? I fail to see the difference between cutting taxes by a dollar and the government purchasing a dollar’s worth of goods or services from the private sector. Just going out on a limb here, but you don’t have a degree in economics do you?

    If fiscal stimulus increases unemployment, then what does fed intervention to increase the money supply do?

  4. Jeffontheleft: I took Advanced Economics at West Point as an undergrad. I took micro, macro, public finance, and business and government in a mixed economy in grad school at Harvard. I passed the comps for statistics as my second ‘language’ for a PhD in grad school at Columbia. Since then, I’ve read a number of great books on economics.

    The rules of thumb – $150 m in taxes = 5k job loss and .28 cents on the dollar return in public sector multiplier – were learned at grad school at Harvard. They apply today because the $5t loss in capital = roughly the 10m jobs lost. The difference is $50k @ job (weighted labor rate) as opposed to $30k.

    Recommend you begin with Milton Friedman’s Monetary History of the US to understand the role of capital. Then, Niall Ferguson’s Ascent of Money to put the economics in a broader context.

  5. If we had listened to Milton Friedman, GM and Chrysler would be gone along with most of the banking sector, costing more jobs. With interest rates near zero, I think the monetary policy toolkit is pretty much empty.

    The economy is growing and unemployment is falling. These are good signs, but it would be happening much faster if the stimulus had been bigger. Let’s not forget that this is George Bush’s recession. The collapse began at the tail end of his presidency.

    • Friedman is dead, so it would be remembering MF. Too bad we didn’t remember more.

      The failure of GM and Chrysler would have been less costly to the economy than the bailouts and stimulus. It would have been tough in Michigan until the new owners of whatever was worth buying in those corporations got up and running. Likewise in NYC for the banks.

      But, the economy as a whole would not have collapsed.

      The Fed interest rate is not the sum of the monetary tools. Cutting taxes is the single greatest way to create capital – and let that capital create more capital and jobs.

      If it makes Liberals feel good to call the Housing Bubble – Bush’s – I could care less. His response was bad. Obama’s was worse.


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