+ Reply to Thread
+ Post New Thread
Page 1 of 3 123 LastLast
Results 1 to 10 of 26

Thread: Obamanomics 101: Failure Explained

  1. Default Obamanomics 101: Failure Explained

    "Dan Mitchell of the Cato Institute does an excellent job explaining why Keynesian fiscal strategies do not work in this new video from the Center for Freedom and Prosperity Foundation. It’s more important than ever to combat the myths of Keynesianism with President-elect Barack Obama proposing a massive government spending plan, and even some conservatives promoting a tax version to boost economic growth.

    According to President Obama, “every economist who’s looked at it says that the Recovery Act has done its job.” The four economists gathered at the National Press Club on Tuesday were apparently not asked for their opinions on the matter.

    Tuesday’s program, “Debt and Deficits: Implications for U.S. and Global Economic Recovery,” featured a panel of academics who addressed not only the unsustainable rate of spending but also legislative solutions to rein in the $13 trillion debt. Naturally, to remedy any situation, it is essential to understand the source of the problem.

    That problem is ignoring the second half of the Keynesian model: Spending must be financed, and long-term financing results in rising debt. Veronique DeRugy, a Senior Research Fellow at George Mason University’s Mercatus Center, explains that “in Keynesian thought, a fall in economic demand causes a fall in spending.” A decrease in spending makes a nation poorer; thus when the government makes budget cuts, the result is job loss. That seems pretty uncontroversial, but Keynesians argue that government spending can take the place of private spending to revitalize demand and economic growth. So, does it work?

    DeRugy cites a study by Harvard’s Robert Barro and Charles Redlick in which they analyze the effects of government spending on the overall economy, using defense spending as a proxy. Barro and Redlick concluded that one dollar of government spending results in a growth in GDP of 40–70 cents—a strong negative relationship between government size and economic growth. In other words, not a very savvy investment.

    The ultimate test case for the Keynesian model, of course, is the American Recovery and Reinvestment Act, which promised that 3.5 million private sector jobs would be created at a price of $787 billion. The President warned that if the stimulus were not signed into law, the country could face 8.8 percent unemployment.

    One only needs the post-enactment facts in order to ascertain the success of the stimulus bill:

    • 862,000 jobs created at an average cost of $282,000 per public sector job and $647,000 per private sector job

    • Four of five jobs created are in the public sector

    • Government spending is not correlated to areas of high unemployment, and

    • The rate of unemployment has reached 9.3 percent after peaking at 10 percent.

    The facts confirm the Barro and Redlick—and countless others’—research. The Keynesian model didn’t work in the case of the current recession, and even if one accepts the stimulus as an a priori good, it is unsustainable at its current rate. According to David Primo, associate professor at the University or Rochester, “Bailing out states rewards their bad behavior.” When states receive federal funds to sustain their spending habits, they are not forced to “face the music” and engage in budget reform. Essentially, it is that budgetary reform that targets the source of the financial crisis and will ultimately fix it.

    What form should state and federal budget overhaul take? Primo suggests a Constitutional Budgetary Rule that is broad in scope, has few escape clauses, and affords minimal accounting discretion. Such a rule would create the congressional commitment and external enforcement that render current efforts to cut spending ineffective. Without strong external enforcement and minimal loopholes, reform proposals are “gimmicks at worst, band-aids at best,” says Primo.
    When states are faced with the task of cutting spending, they will have to make unpleasant and politically unpopular choices, but those choices are easier to make before Congress faces a fiscal emergency that will force its hand. A gradual cut in spending and the necessary corollary decrease in entitlements will also be easier for the public to swallow.

    That is why Miron, Primo, and DeRugy propose that serious budget reform begin now, gradually cutting spending over the course of time. Cutting entitlements will be unavoidable because “even if we slashed [all spending] except for unemployment, it would only buy us a few years until we reach credit default,” says Miron. In fact, he suggests a Social Security freeze while phasing out other programs.

    After, or in conjunction with, the initial spending reductions, Bruce Yandle, former Executive Director of the Federal Trade Commission, suggests a strict budgetary statute or the kind constitutional of amendment Primo proposes. A constitutional amendment on the federal level may be unlikely, but states could more feasibly enact such a measure, spurring economic growth.

    The stimulus bill failed to do just that: spur economic growth. Yandle explains what is at stake if the deficit continues to grow:

    The average family’s private world will contract while the public sector expands. Their expectations for future wealth and prosperity will gradually be revised. And they will not likely know that deficits and public debt led to these results.

    In the wake of a failed stimulus package, one might think that “if at first you don’t succeed” doesn’t apply to the logic of economics. Think again, because the Administration is pushing a second, larger stimulus bill. That’s Obamanomics.

    http://blog.heritage.org/2010/07/23/...ure-explained/
    Last edited by James Cessna; Sep 26 2011 at 08:58 AM.
    James Cessna

    "If you give a man a fish (socialism), you feed him for a day. It you teach a man to fish (capitalism), you feed him and the people he employs for a lifetime."

  2. Prosper.com, finance, financial, investing, lending, borrowing, banking, credit card, payday, borrowers, lenders, debt consolidation, Prosper, investment, personal loans, personal loan, investors, investment opportunities, debt consolidation

  3. Default

    Quote Originally Posted by James Cessna View Post

    "Dan Mitchell of the Cato Institute does an excellent job explaining why Keynesian fiscal strategies do not work in this new video from the Center for Freedom and Prosperity Foundation. Its more important than ever to combat the myths of Keynesianism with President-elect Barack Obama proposing a massive government spending plan, and even some conservatives promoting a tax version to boost economic growth.
    Keynesian Economics Is Wrong: Bigger Gov't Is Not Stimulus

    [ame="http://www.youtube.com/watch?v=VoxDyC7y7PM"]Keynesian Economics Is Wrong: Bigger Gov't Is Not Stimulus - YouTube[/ame]
    James Cessna

    "If you give a man a fish (socialism), you feed him for a day. It you teach a man to fish (capitalism), you feed him and the people he employs for a lifetime."

  4. Default

    Quote Originally Posted by James Cessna View Post
    Keynesian Economics Is Wrong: Bigger Gov't Is Not Stimulus

    Keynesian Economics Is Wrong: Bigger Gov't Is Not Stimulus - YouTube
    Read Murray Rothbard's Keynes the man.

    If you look up some of Keynes' quotes, you're amazed how people take him so seriously.

  5. #4
    usa
    Location: USA
    Posts: 47,176
    Blog Entries: 2
    My Latest Mood: Yeehaw

    Default

    Quote Originally Posted by MaxGeorgeDicksteinXXXI View Post
    Read Murray Rothbard's Keynes the man.

    If you look up some of Keynes' quotes, you're amazed how people take him so seriously.
    His economic philosophy simply comes closest to the emotional reasoning of the Left that the state should be the end all and be all of human existence.

  6. Default

    Quote Originally Posted by MaxGeorgeDicksteinXXXI View Post

    Read Murray Rothbard's Keynes the man.

    If you look up some of Keynes' quotes, you're amazed how people take him so seriously.
    You are correct, GeorgeDickstein.

    All these people do is take water (money) out of one end of the pool and pour it into the other end of the pool and expect the water level (the economy) to somehow rise!

    Foolish! very foolish indeed!
    James Cessna

    "If you give a man a fish (socialism), you feed him for a day. It you teach a man to fish (capitalism), you feed him and the people he employs for a lifetime."

  7. Default No right alternative.

    What James Cessna and his video friend are not saying is that in pursuit of a long-term solution to the rising deficit, the Neo-Classcists will actually inflict MORE short-term pain. Government spending cuts will cause more unemployment and will cause a contraction of the economy if they are at the levels necessary to tackle the deficit.

    It makes much more sense to wait until the economy has covered somewhat and then bring in what amounts to austerity measures for the federal government. What really has me worried is that the Republicans won't factor in the lost revenues from a reduced tax base and thus will achieve a maximum of pain for a minimum of result (towards slaying the deficit). Why bother with austerity and its negative effects if the positive effects are negligble?
    Political compass:
    Economic Left/Right: -3.25
    Social Libertarian/Authoritarian: -2.21

  8. #7

    Default

    The failure is of unAmeri-cons to completely destroy the economy. They've done everything possible to kill it and are close again, but still can't manage to complete it, where's the knockout blow boys? And don't make me laff with 'it's coming in '12', HA! The gross incompetence in every negative thing they try is stunning... Afghanistan, Iraq, our economy, elections, etc. How hard is it to complete the game for these bums? Do they ever finish anything? They have Obama on the ropes, and he's doping them into the mat face first just like Ali did to Foreman. TIMBER! The inability to do a F'n thing is incredible, and it's the only thing keeping this country afloat while they stuggle to sink it is the massive amounts of sheer stupid negative incompetence.

    Obama pulled Bush's deadly dick out of this country's ass and cons want to ram it back in hard and fast until they've finished America off.

  9. Default

    Well, the news stations sure don't want the economists on the air for some reason. Why do you think that is?
    Attached Images Attached Images
    Get paid to post - Political Jack

    Get a laptop for free at Political Buddies

  10. #9

    Default

    Quote Originally Posted by conBgone View Post
    The failure is of unAmeri-cons to completely destroy the economy. They've done everything possible to kill it and are close again, but still can't manage to complete it, where's the knockout blow boys? And don't make me laff with 'it's coming in '12', HA! The gross incompetence in every negative thing they try is stunning... Afghanistan, Iraq, our economy, elections, etc. How hard is it to complete the game for these bums? Do they ever finish anything? They have Obama on the ropes, and he's doping them into the mat face first just like Ali did to Foreman. TIMBER! The inability to do a F'n thing is incredible, and it's the only thing keeping this country afloat while they stuggle to sink it is the massive amounts of sheer stupid negative incompetence.

    Obama pulled Bush's deadly dick out of this country's ass and cons want to ram it back in hard and fast until they've finished America off.
    You have utterly and absolutely zero, zilch, notta idea what you are talking about in anyway shape or form. No offense, but you sound like you are regurgitating Racheal Maddow and Keith Olbermann talking points who are equally clueless about what is reality.

  11. Default

    The really really sad part is that the liberals, many on this forum believe all those hundreds of thousands of dollars per job was a good thing.

    can you believe these fools?
    I swear-by my life and my love of it-that I will never live for the sake of another man, nor ask another man to live for mine."-John Galt

    If Obama had a son, he would look like Treyvon. If Obama had a City, it would look like Detroit. If Obama had a Country, it would look like Cuba.-Scottie Nell Hugues

+ Reply to Thread
+ Post New Thread
Page 1 of 3 123 LastLast

Similar Threads

  1. Whining and Finger-Pointing Can't Hide Failure of Obamanomics
    By James Cessna in forum Political Opinions & Beliefs
    Replies: 22
    Last Post: Sep 07 2011, 12:31 PM

Tags for this Thread

Bookmarks

Bookmarks