January 28, 2010
Economics for Progressives
I went looking for reasons why the GOP's Big Tent actually gets bigger when Progressives are kicked out of it to advance a discussion with jk and found this gem. I'm not sure yet how it relates to my premise but I have to share it, for it seems to tie in with several internecine issues around here.
The admitted Progressive author, UT-Austin professor of [not specified] argues that not only should Medicare and SoschSecurity NOT be slashed (in the name of deficit reduction or anything else) but that large, long term deficits are actually ... desirable.
So the fetish of long-term deficit reduction is politically poisonous -- and economically pointless. In reality, we need big budget deficits. We need them now. We need bigger deficits than we've got, to stabilize state and local governments and to provide jobs and payroll tax relief. And we may need them for a long time, on an increasing scale, and in the service of a sustained investment strategy aimed at solving our jobs, energy, environment and climate change problems. To pretend that expansionary policies are needed only for now, gives all this away.
But don't worry, boys and girls, nothing bad will happen.
The CAF coalition concedes that "long-term deficit reduction" is vital. But why? No reason is given. Are they worried about a threat of inflation? If so, why not look at interest rates? Last December's average 20-year Treasury bond rate was 4.40 percent -- lower than it was before the crash sent deficits soaring. Clearly, the markets aren't worried -- or the government would have to pay more to borrow. Equally obviously, the markets aren't worried about "default" or "national bankruptcy" either. Investors know those concepts don't apply to the government of the United States.
[Pause until your jaw returns to normal position.]
I mentioned tie-ins. This guy sounds like an uber-Progressive, and he's bashing CAF for doing the right thing for the wrong reasons. Sound familiar?
I said McCain should be opposed in the AZ GOP primary because he won't support the "massive structural reform" that it will take to rescue America economically. Slashing Social Security and Medicare are two such reforms.
Economics and Markets Posted by JohnGalt at January 28, 2010 3:14 PM
If your jaw drops, you've been away from Boulder for awhile. I'd consider most of those arguments mainstream. Wrong, yes, but mainstream. Paul Krugman would make most of those statements and he was awarded the Nobel Prize.
We're stuck in label hell. I have tried to use the word "progressive" as others use "liberal" in an (speaking of quixotic) attempt to rehabilitate liberal to its Mises definition.
Taking ka's cue and using progressive in the TR-Wilson mode, I think it describes the maverick-y Senator from Arizona pretty well. It ain't limited government. Conversely, McCain has been tough on spending and earmark reform. His Presidential campaign included some good free-market ideas. I fear a party that could not find room for Senator John McCain would be a small party.
Posted by: jk at January 28, 2010 4:13 PM"...We need bigger deficits ... to provide payroll tax relief..."
Wait, whoa - what? We need to go deeper into debt through more government spending, one benefit of which would be... lower taxes?
I'm just a tyro on economics, but is he smokin' what I think he's smokin'? To quote Ricky Ricardo, he's got some 'splainin to do, because I don't get it. Might one of you smarter guys be able to help out?
Posted by: Keith Arnold at January 28, 2010 4:39 PMWOW Did I lose calibration sometime in the third hour of the SOTU last night? I've read it twice now and still don't see anything in here you would not read in any issue of TNR or the NYTimes.
And, maybe I am misreading Keith, but I think he refers to the one stimulus idea that I could actually accept: a large reduction (I'd say complete holiday) from payroll taxes for employer and employee.
An extremely attractive GMU grad student was pushing this last year in a YouTube clip (if you share my love of economics, you might remember her...) For the same price as the craptastic porkulus bill, she claimed, we could give everybody a year off payroll taxes. That would create jobs.
And the pain of expiring it would advertise the underlying pain of withholding. Don't know if the numbers add up, but I have great faith in GMU's economists.
Posted by: jk at January 28, 2010 5:08 PMAmassing additional deficits AS A RESULT OF a payroll tax holiday is one thing (but the obvious answer "stop spending so damb much money, too!" prolly doesn't occur to such sophisticated, nuanced thinkers); amassing greater deficits IN ORDER TO provide tax savings is quite another. If I'd had enough sense to major in Economics instead of English, maybe I could get past what could just be a crappy grasp of syntax and not actually faulty cause-and-effect thinking.
Still, our budget problem is a spending addiction, not a shortage of income. If Uncle Sugar didn't have such a love for grabbing the check...
That's it - Uncle Sugar needs an intervention.
Posted by: Keith Arnold at January 28, 2010 7:27 PM'xactly. "IT'S THE SPENDING, STUPID!"
What I'm slack jawed about is not the list of "mainstream" ideas, but the last one specificallly: "...these concepts don't apply to the government of the United States." Do they think China's lending wealth, patience and cooperation are limitless?
It's just my opinion mind you, but I say there's plenty of room in the Tent for McCain and other Progressives, just not for their ideas and values.
Posted by: johngalt at January 28, 2010 9:36 PM | What do you think? [5]