TPS

You don't need forgiveness from those here, rather you better hope the WSJ copyright police don't hunt you down. Thanks for posting though. I think the article captures what most rust belt cities have done for years, going after the magic bullet, big box development, as opposed to focusing on cultivating small businesses and improving schools. Local entreprenuer Mark Goldman has been harping on this idea for years--quit throwing big sums of money at big projects hoping they will be the catalyst for urban development. In fact, he has been instrumental in getting a more demand-based development stategy for the waterfront.

The point of the Yahoo article was that the high top marginal rates coincided with higher growth in real gdp. And the other side of the coin, with the Bush2 tax cuts we experienced the lowest 8-year real gdp average in the post-war2 era. The Yahoo article also mentions a point I've made here before--low top marginal rates coincide with increases in inequality and asset bubbles/speculation. Just seems longer... This is just pure bunk, and is also a rehash. If you compare any Bush2 year with any historical post-war year with the same level of unemployment, revenues as a % of gdp are lower. The "full-employment budget deficit" is higher with those lower marginal tax rates. Yes, of course the deficit is an outcome of spending and tax decisions. The outcome of supply-side tax cuts has been larger deficits which is standard keynesian expansionary fiscal policy. Many left-leaning economists argue the main driver of future deficits is Medicare/Medicaid/and public pension benefits. Dean Baker talks about this all the time. Fix the health insurance issue, and the majority of future liabilities will be resolved.

In the next go round regarding expiration of the Bush tax cuts, I'd let the top rate expire and retain the rest. If I were czar, I'd suggest something completely different which would probably surprise you. Both factors were important. 6-7 million people were/are no longer paying taxes, sales were down, and asset prices fell. How many times did I tell you that tax cuts stimulate the economy by creating deficits? Laffer argued the main impact of lower taxes would be to increase savings, investment and work effort, thus increasing revenues, so there would be no deficit. Have we been arguing about this for 15 years now? God, I hope we don't end up in the same nursing home...

Yahoo

uhhh...because unemployment more than doubled. That was easy. And I hope that you would know by now that the government uses payroll tax revenues just like income tax revenues, so the old 10% pays 70% of taxes is BS. In fact, income tax revenues and payroll tax revenues are almost equal now as a % of gdp. As for the Kennedy tax cuts, they were made based on standard Keynesian theory that lowering taxes increases disposable income and consumption. Personal and corporate taxes were also cut to offset the fact that tax brackets weren't adjusted for the cpi back the--the so-called "bracket creep" problem creating "fiscal drag."

Condolences to you and your family Scott.

That's why I used borrowing with the example, to stay away from the first point--even though it appears you realize government has a slightly bigger impact by using the word "roughly." Your argument would carry a little more weight if you focused on what government buys. Government Investment in infrastructure improves overall economic performance, as does support for education and research. Transfer payments on the other hand,....

Gee, I wish I was a smart as you.

There is a difference between "the value of a dollar" (purchasing power of one dollar) vs "the value of the dollar (forex rate)." Under the gold standard they were explicitly connected; under the fiat system, they are not.

I wonder if any of those bailed outs workers post on ppp during their lunch break or worse yet during work?!?

Dude, This was an example, in response to the argument that "government demand is artificial," which is why I said "if the government" did this.... If you get worked up over me making up an example, you need to take a vacation or have a few beers. That said, there are govt programs that fund these types of activities.

This is really me. GG hacked my account.... It can't be him!

How is government demand artificial? If the government borrows money then pays unemployed urban youth to clean parks, make trails, etc, and those kids spend their money on whatever they choose, how is that artificial demand? I don't disagree that government is too large and wastes a lot of resources, but that libertarian argument that government can't create wealth just doesn't fly. The reason the private sector is accumulating assets (household savings rate is up and businesses are accumulating profits) is becuase of government deficits--this follows from national income accounting. It wasn't a coincidence that the private sector was running deficits when government ran surpluses from 1999-2001. I agree with the short-sightedness, especially the supply-side policies that racked up huge deficits after the Clinton surpluses....

That's also one of the reasons they raised the payroll tax, as it was a backdoor way of alleviating their deficit fears. Those were the days when Republicans cared about deficits. Oh, wait, they care again now...

Only a handful. I wouldn't trust their responses to make the general case though, as we tend to have similar views. That's why I'd rather trust a national survey that showed lack of demand was the number one reason--that was probably close to a year ago though. That doesn't mean that other factors weren't or aren't causing uncertainty, it's just that "regulations" (including o-care) didn't top the list).

Is the sarcasm button supposed to be on with #1? As for 2, since the government has essentially been accumulating debt for the past 100 years or so, when exactly will it pay the money back? Or, are you saying that IF the government actually paid the money back 100 years from now, that the decrease in demand next century offsets the increase in demand this year? Finally, since the FED has purchased about $1 trillion in treasuries over the past year or so, who pays that back?

I sort of agree with most of what you say. #1 is kind of vague though. We have good economic relations with the BRICKs don't we? What else should be done? I completely agree about Schumpeter, as I use him all the time in my classes. However, I don't know that tax cuts lead to innovations. I'd rather move toward stronger partnerships with Higher Ed and Corps and research. Not that I am against a tax cut for corps, rather I'm sceptical that a tax cut will significantly increase innovations? Is there a magic bullet to fix k-12 education when the social system is completely f'd up? The last one is difficult: what's the optimal size of government? Those on the right seem to think that the private sector will miraculously fill a void if government shrinks. That is true to a certain extent. However, government's role since WW2 has been to generate additional consumption. Government spends a trillion or two dollars every year to maintain demand in the economy. This is my general macroeconomic view. My libertarian view is that the beast must be starved because the congressional whores funnel money to those who pay them most...

Sounds like a very scientific study... When corporations are operating at less than 80% capacity, and unemployment is over 9% (the official rate for my friends), there is no reason to spend it. That IS the defintion of economic uncertainty.

Sorry, since I don't pay much attention to what politicians promise, I really don't remember their promises. I really had no idea who the hell "we" were. Ok, I'll play. If you can find another post where I stated "my perspective" AFTER obama's objectives weren't met, I'll buy you a bottle of wine. The historical data series is consistent.

I guess I have to repeat myself so you get it. I agreed that the release of oil from SPR won't impact long term. my point, as was stated in the article I linked, is that it was used as a message to speculative investment flows--which it appears you agree with. Second, I've argued two points about the money flows: first, they create more volatility--in the short term; second, there is an upward bias on prices from ETF type investments that are longer term. Did you read the second article? That one focused on the impact from long positions. As for that move I applauded, it did have an immediate effect. However, I argued that it was a signal to short term speculators--be ware of taking big positions. Finally, as I've said several times, I think prices are now closer to fundamental values since the big shakeout in early May.

Which is why I usually just say minsky...it is.

The CFTC just published data on daily trading in some 20+ futures markets. 95% of trades are made by "day traders" who do not hold open positions at the end of the day. As I've stated all along, commodity markets have been "financialized" and are now subject to the whims of investors. Day traders INvestors pulling out

Who is "we" and who was it that told this to "we"? My perspective is that government deficits and stimulus helped stabilize and prevent this recession from becoming a depression. As I stated here in September 2008, we would find out if monetary and fiscal policies could prevent the US and global economies from melting down, and they did. Without those interventions, this would have been worse than the 1930s. Prior to the collapse in 1930, only the business sector was signficantly over-leveraged. In this crisis, households, businesses, and financial firms were all significantly over-leveraged. The FED bailed out the banking sector, and large federal deficits have helped create surpluses in the business sector. It's the household sector that continues to be a drag on the economy as it is still deleveraging. Also, much of the federal stimulus has been offset by state and local government contractions. My expectation about the level of unemployment (and I made a presentation about this) was that it would not reach the peak of the 1981-2 Reagan/volcker recession, which was 10.8%. My argument was that the 1981-2 recession was engineered by the FED through high interest rates in order to wring inflation out of the economy--monetary policy was tight and fiscal policy was loose. In this case, they (monetary and fiscal policies) used everything including the kitchen sink to prevent the global meltdown. Unemployment peaked at 10.1% in this one.

Gee, no one here questions that it's an editorial from the TWS? If the writer wasn't biased, he would've given a range for the cost of jobs, since the report said it created/saved from 2.4 tp 3.6 million jobs--he chose to report the minimum. The most biased part of the piece is his comparison of the unemployment rate, saying it was 7.3% when the stimulus was being debated (Dec 2008), as oppposed to using the rate when it kicked in, 8.6%. The report also stated that since the stimulus was one-time spending, as the spending recedes, so is the employment impact. This guy makes some idiotic conclusion that job growth would be faster than without the stimulus. From my perspective the fiscal stimulus did what it was supposed to do--it prevented a much deeper recession, and helped in turning GDP growth from negative to positive. Of course, I would've suggested a different mix of spending and tax cuts...

I don't have a barron's subscription, so couldn't access full article.