Nobel Prize Winner for Economics take on Bailout

[Secretariat]

http://www.commondreams.org/view/2009/02/08-8

"Published on Sunday, February 8, 2009 by the New York Times
What the Centrists Have Wrought
by Paul Krugman

I’m still working on the numbers, but I’ve gotten a fair number of requests for comment on the Senate version of the stimulus.

The short answer: to appease the centrists, a plan that was already too small and too focused on ineffective tax cuts has been made significantly smaller, and even more focused on tax cuts.

According to the CBO’s estimates, we’re facing an output shortfall of almost 14% of GDP over the next two years, or around $2 trillion. Others, such as Goldman Sachs, are even more pessimistic. So the original $800 billion plan was too small, especially because a substantial share consisted of tax cuts that probably would have added little to demand. The plan should have been at least 50% larger."

[Tom]

Well, there's an idiot if I ever heard one.
(Not you, Sec....the economist!;))

[prospector]

Krugman always has been a left loon..

[jballscalls]

i know many of us are for tax cuts and smaller government. Me being young and not well versed in political history, is there a specific example of when tax cuts, either long term or short term, did show to be effective for the country, government, and economy.

I know its a simple idea, more money in our hands equals more money in the economy, just curious of when it actually worked?? and don't say trickle down period, we know how that ended up LOL

[JustRalph]

i know many of us are for tax cuts and smaller government. Me being young and not well versed in political history, is there a specific example of when tax cuts, either long term or short term, did show to be effective for the country, government, and economy.

I know its a simple idea, more money in our hands equals more money in the economy, just curious of when it actually worked?? and don't say trickle down period, we know how that ended up LOL

you really don't want to ask this question. You can find a thousand versions of why it works, and why it doesn't work.........depends on what side of the aisle you stand on............

[delayjf]

POSTING LIKE A TREMENDOUS MACHINE

Sec, where've you been??

[Lefty]

I'd like to ask Krugman how 4.1 billion for Acorn, and other payoffs to unions etc can help the economy?
To me it's pig simple. Cut Corp taxes from 35% to 20%. Cut capital gains tax from 15 to 10%. That's Stimulus not the phoney spending plan of obama's.

[ddog]

stimulus should be voted down.

cutting the rates you gave will do nothing.

without demand visibilty business will do nothing- hoard cash.

if the opposite were true then you would not have layoffs as you have now.

capital gains , where are those, who wants to take those now?

tax cuts may have some effect once the layoffs slow, maybe.

for now, you need to retire debt at all levels.

The gvt and econs can rant and rave all they want, that's simply the endgame.

[hcap]

......economists -- including Congressional Budget Office (CBO) director Douglas W. Elmendorf and Mark Zandi, the chief economist and co-founder of Moody's Economy.com,have stated that, in Zandi's words, "aid to financially-pressed state governments" is an "economically potent stimulus." H.R.1, the House economic recovery bill, includes provisions that provide such aid to states, including additional federal matching funds for Medicaid and the creation of an "Emergency Contingency Fund for State Temporary Assistance for Needy Families Programs." Similarly, economists have stated that, in Elmendorf's words "[t]ransfers to persons" -- such as provisions in the bill that extend food stamps and unemployment insurance payments -- "would also have a significant impact on GDP."

According to a table Zandi included with his written July 24, 2008, testimony before the House Committee on Small Business, "General Aid to State Governments" would boost real GDP by $1.36 for every dollar spent, while "Extending UI [unemployment insurance] Benefits" and providing a "Temporary Increase in Food Stamps" would increase real GDP by $1.64 and $1.73 per dollar spent, respectfully:

http://mediamatters.org/static/images/item/burnett-20090129.jpg

[Tom]

So we increase food stamps, human anchors sit home all day and eat more and more food I buy for them, and we say this is an increase in GDP and it is good??????

[hcap]

Yes.

[bigmack]

So we increase food stamps, human anchors sit home all day and eat more and more food I buy for them, and we say this is an increase in GDP and it is good??????
Don't bother hcap now T, he's busy sucking on the teat of MediaMatters.org (without even so much as a footnote)

[wes]

It's not money that is the root of all evil. It's the love of money. The Democrats pass that one on flying colors.



Wes

[Tom]

Correction.....the love our our money!

[Lefty]

Obama said most economists agreed with him. really? He didn't mention any names. I hear the Kato(Cato?)institute published a list of 200 economists who DO NOT agree with Obama.

[Lefty]

President Obama, not all economists agree with you. Here's the link.


http://www.cato.org/special/stimulus09/cato_stimulus.pdf

[Secretariat]

Not only does Nobel Prize winning economist Paul Krugman criticize Obama's plan for it not being big enough, but also Nobel prize winning economist Joseph Stiglitz also beleives it is too small, and should not include tax cuts unless linked to investment. Nobel prize winning economist Edmund Phelps is on board with Obama.

So Lefty, that's three Nobel prize winning economists who overall support Obama. The major consensus is Obama's stimulus plan is too little, and too heavy on tax cuts , yet some here on the board beleive it is too big and prefer Hoovernomics or GWnomics

http://www.dailykos.com/storyonly/2008/4/25/84227/0290/242/503167

Lefty, why do you prefer right wing approved economists and shun Nobel Prize winners?

Personally, I agree with Stiglitz.

http://www.bloomberg.com/apps/news?pid=20601073&sid=a8ewnp.DoZMk&refer=election

"President-elect Barack Obama should avoid tax cuts in his new stimulus package unless they are linked to investment, Nobel Prize laureate Joseph Stiglitz wrote in the Financial Times.

“We need to link handouts to changes in behavior,” said Stiglitz, who won a Nobel Prize in 2001 for his work on the economic value of information. “Household tax cuts, except for possibly the poorest, should have no place in the stimulus. Nor should business tax breaks, except when closely linked with additional investment.”

...

"Tax cuts have increased the U.S.’s national debt and encouraged the nation to live beyond its means, and further reductions would have the same effect, Stiglitz said. The only tax break that should be included is “temporary incremental investment” credit to encourage companies to spend, he said."

.................................................. ................................................

[Lefty]

sec, you think all 200 economists on theCato list are right wing?
Just for the sake of a good argument, let's say they are. I don't think much of the Nobel prize anymore since it's reserved only for left wing nuts these days. I gave up on it when they gave it to Gorbachof(bad spelling, i know)instead of Reagan. But i digress.
Everytime we have emplyed tax cuts as stimulus it has worked. It worked for JFK, reagan and GW Bush. Nobody has ever spent it's their way out of a recession. The Japanese quadrupled their deficit in the 90's and had a depression. obama said they didn't spend enough. He proves his ignorance when he says nonsense like that.
sec you may want this country to embrace euro socialism but I don't.

[JustRalph]

Nobel Prize? You mean the same lunatics that gave AlGore a Nobel Prize?

You lay down with Dogs................. :ThmbDown:

[Tom]

Tax cuts have increased the U.S.’s national debt and encouraged the nation to live beyond its means,

And a trillion dollar porkulus bill, a two trillion dollar bail outs won't?

[Secretariat]

Everytime we have emplyed tax cuts as stimulus it has worked. It worked for JFK, reagan and GW Bush.

GW's tax cuts for the rich are one of the main reasons we're in this mess. Supply side economics simply don't work except to increase the size of debt.

Until you realize this, you'll never understand why the Republicans lost the last election.

[Lefty]

ahh, same old liberal crap on a sandwhich. I'm not rich and I got a tax cut from GW as did everyone who PAID taxes. How can getting more money into the treasury cause this? It can't, bub and you know it. It was all the bad loans inspired by the likes of Barney Frank and Chris Dodd and others that caused this mess and you know it and if you don't then you're confused.
Tax cuts have always worked. Spending trillions of dollars won't work. It didn't work for Japan and it won't work for us.
Cut Payroll taxes, corporate taxes and capital gains taxes and the economy will boom. the dims know it, but that's not their plan.
I know why we lost the election. It was 8 years of ragging on Bush by the leftwing media. If this crisis had emerged earlier, Mcaine would not have got the nomination and Mitt Romney would be our President. That's speculation but it makes sense. So if you get a raise I guess you'll turn it down, because by your reasoning having more money in the coffer causes problems. How friggin ignorant is that?
So take your mantra of tax cuts for the rich to someone dumb enough to believe it.

[Marshall Bennett]

GW's tax cuts for the rich are one of the main reasons we're in this mess. Supply side economics simply don't work except to increase the size of debt.

Until you realize this, you'll never understand why the Republicans lost the last election.
GW's tax cuts had very little to do with the mess we're in . Excessive spending had almost everything to do with the mess we're in . Until you realize this , you'll never understand basic economics . Btw , excessive spending was shared by all and does not correspond with party lines . A free enterprise doesn't function according to a political guide-slope as much as it does by individual investment . Malfunction of the same falls under the same principle . Bush in fact had absolutely nothing to do with this crisis ... and thats a fact !!

[JustRalph]

GW's tax cuts for the rich are one of the main reasons we're in this mess. Supply side economics simply don't work except to increase the size of debt.

Until you realize this, you'll never understand why the Republicans lost the last election.

Oh yeah, the Media and a lock-step minority majority was thinking about Supply Side economics when they went to work for Obama..........

you would be funny if you weren't trying to be serious