Third Party & Independents Archives

December 19, 2007

Republicans Raising Taxes: Again

The Republicans in the White House, the Senate, and the House of Representatives have already raised taxes on Americans by 3.4 Trillion dollars since 2001. That is the amount that has been added to the national debt under their rule, to be paid by future American taxpayers like your and my children and grandchildren. But, it gets very much worse.

The interest on that 3.4 trillion dollars will amount to at least half that amount again, as it is paid year after year for decades on the principle borrowed from Saudi Arabians, the Chinese government, and India and American treasury lenders. The fact is Republicans have raised taxes by 5.1 Trillion dollars. The raise conveniently was passed on to future taxpayers who are not old enough to vote or have a say in the matter, yet.

Rep. Roy Blunt (R-Mo) said today on the House floor that Republicans refuse to raise taxes to pay for this Alternative Minimum Tax relief bill today costing 50 billion dollars. But, he is lying through his teeth, as Republicans have since 2001. The fact is, this Congress IS raising taxes on our children: by not only the 50 billion dollars they won't tax current payers for, but, an additional 30 billion dollars in interest on that 50 billion by the time it is paid off, if it is ever paid off.

So, the reality is, not only are Republicans passing the cost of the Alternative Minimum Tax bailout for wealthy and middle class on to future taxpayers, they are electing to raise that cost by 30 billion in interest over what it would cost if they raised taxes or cut spending for it today. Rep Steny Hoyer (D) said this is a very sad day for his grandchildren.

And it is a very sad day for America's children. In fact, it has been a very sad seven years for our children and grandchildren whom we have denied the quality of life we enjoy by passing the cost of our enjoyment on to them in their work lives and careers through their taxes which will have to shoulder this national debt and interest payments.

This country was founded on a revolution against taxation without representation. Yet, the nearly 9.2 trillion dollars in national borrowing is precisely a tax levied on future generations who have no representation or voice in the matter. Pretty damned clever of these politicians to come up with a way to play the thief on the one hand, while professing to be tax defenders to their voting constituents on the other. And today's voters are just as guilty as they continue to vote more than 90% of these thieving politicians back into office election year after election year.

If American voters would only ask themselves if they, at the age of 5, would have wanted their parents to raise their taxes for the entire rest of their lives, just so a thousand companies could enjoy Cayman Island tax breaks, or so hedge fund managers making 1+ billion dollars a year could buy a 4 foot longer yacht, they would surely vote these thieving politicians out of office.

Posted by David R. Remer at December 19, 2007 03:33 PM
Comments
Comment #241060

right on David
Been my point for along time
The Right wing is all against “taxes” (for the upper class, us middle and lower class get to pay for their share of the bill) and they SAY they are FOR personal responsiblity — but when it comes time to pay to play, they prefer to play now, and let someone else pay later and then
point proudly to the fact that they didn’t raise taxes (which to me means they are freeloading and skipping out on their bills!! — not really the role model of Personal responsiblity)

Posted by: Russ at December 19, 2007 04:49 PM
Comment #241065

Just another thing we can thank progressives for, before FDR and his failures at handling the depression until WWII came along, the thought of deficit spending was an abomination. Now it is an every day occurance because so many now think that they are owed something by the government and if we can’t afford it now, just charge it!

In 1929, federal expenditures constituted only 3% of the GDP. Between 1933 and 1939, they tripled, funded primarily by a growth in the national debt. The debt as proportion of GNP rose under Hoover from 20% to 40%. Roosevelt kept it at 40% until the war began, when it soared to 128%.
Posted by: Rhinehold at December 19, 2007 05:14 PM
Comment #241067

Will all the spending and spending with no end in sight, why would Congress (Dems and Reps) continue to pack the Omnibus with pork?

Admittedly, CNS and The Heritage Foundation are right wing sites, but they do have a good idea.

Take a vacation. Yep, take a vacation to all the places YOU have already paid for…with PORK in the budget.

Some of the places you can visit because YOU paid for it with Congressional PORK.

Posted by: Jim T at December 19, 2007 05:22 PM
Comment #241072

Jim T-
You know, if you weren’t so busy bashing us, you might find that many liberals dislike pork, waste, and deficit spending, too.

If Democrats and Republicans both got together and made their wishes clear, we could get somewhere.

What it would take is more compromise on the notion of what constitutes proper spending, a definition of pork that is effective.

That is one problem in defining the problem, since some Republicans are so extreme in their definition of government waste.

This is one of many problems Republicans could take care of better if they were more willing to compromise with others.

Unfortunately, Bipartisanship and compromise are four-letter words for the current crop of Republicans.

Posted by: Stephen Daugherty at December 19, 2007 06:16 PM
Comment #241073

David:

Your article completely misses the point. And it is one you have made many many times.

Our current federal debt situation ($9 Trillion) is not a huge problem. Show me an economy for instance that has a debt to GDP ratio like ours that is near collapse. They simply do not exist.

In addition you mention interest expense. Interest expense is actually on a historical basis not that bad because interest rates have fallen. So when you measure the effect of interest on the economy it’s not that bad at all. Certainly nothing to worry about.

This amazes me, to bring up your issue. The issue is the future. It is promise made that cannot be paid for. That is the issue.

America can run at debt levels of 60% of GDP for ever without a problem. That means our debt can grow at the same rate of Nominal GDP forever, get that, forever without a problem.

THEE problem, which again is your issue that you didn’t touch is entitlement spending in the future.

The last five years have not been that big of a deal. We have a war and had a recession and debt to gdp went up a few percentages and has been stable for the last several years and may now be declining.

Proof that we are currently ok is the bond market. There is no way on God’s green earth you can have a country in fiscal difficulty with 4-5% interest rates on it’s notes. Can’t be.

We do have a problem. It’s entitlements, entitlements entitlements. Actually to me more specific it’s medical medical medical. Our medical system is not working and needs to be fixed. Fix our medical system and our future fiscal problems decline dramatically.

Craig

Posted by: Craig Holmes at December 19, 2007 06:46 PM
Comment #241082

Rhinehold:

Exactly how did WWII rescue the economy, if it wasn’t through deficit spending? Was it a reaction to bullets penetrating the ozone? What is the magical link exactly that you think expanded the money supply?

Deficit spending isn’t any more evil than a gun.

You love to curse FDR. Is it Hitler or Tojo we need to thank?

Libertarians really need to study economics.

Things have changed since 1913 and 1929 in many fields. The Fed may be evil, but it is also based in fact, rather than fantasy.

Posted by: googlumpus at December 20, 2007 12:42 AM
Comment #241083

Craig, you said the sub-prime mortgage bubble wasn’t going to be a problem too. I can no longer accept your incredible optimism that there is no debt too great until an economic collapse occurs. That manner of thinking utterly fails any kind of conservative principle prophylaxis to prevent negative outcomes BEFORE they occur.

Posted by: David R. Remer at December 20, 2007 01:18 AM
Comment #241085

Craig,

Actually, its violating trust funds and irresponsible spending, and expansion of entitlements irresponsibly that is the problem.

Irresponsible spending is a problem, not entitlements, per se. It’s the redistribution of wealth to thieves that’s a problem.

David,

It isn’t the size, it’s what you do with it.:)

Seriously, it’s relative size (although, in a fiat system that’s not real important) and RESPONSIBLE deficit spending that resolves a contraction.

Prosecuting fraud, limiting profiteering and promoting trust are important in stabilizing an economy.

Posted by: googlumpus at December 20, 2007 01:32 AM
Comment #241091

googlumpus,

I’ve responded in the other thread, albeit a bit more rationally and without breaking the Rules For Participation…

Posted by: Rhinehold at December 20, 2007 02:56 AM
Comment #241092

BTW, the deficit spending did not put an END the depression, it helped curb it until a real solution could be found, which was after WWII.

Along with the Holocaust of WWII came a revival of trade with America’s Allies. The war’s destruction of people and resources did not help the US economy but this renewed trade did.

Not until both Roosevelt and the war were gone did investors feel confident enough to set in motion the postwar investment boom that powered the economy’s return to sustained prosperity.

Posted by: Rhinehold at December 20, 2007 03:22 AM
Comment #241104

googlumpus said the size of the debt isn’t the problem.

Tell that to the USSR in the 1980’s, or Brazil in the 1970’s and 1980’s. The size is important when it exceeds any reasonable expectations of repayment.

The sub-prime mortgage industry bubble is a prime example of how size of debt comes crashing down when repayment is no longer possible.

C’mon, man, this is economics 101. You don’t borrow more than you can repay in a relatively short time. Otherwise the interest denies you savings by eating all your increases in revenue in perpetuity, thus keeping you indebted, poor, and limited as to options and choices.

Which accurately depicts America’s future from this point forward, indebted, poorer, and increasingly limited in its affordable options. There are a minimum of 44 Trillion dollars in borrowing staring America square in the face with Soc. Sec. and Medicare. That’s a total of 53 Trillion dollars of national debt.

There isn’t a single rational economist in America who will tell you we can float that kind of debt and enjoy the wealth of choice, lifestyle, health we experience today. The size does matter to the next generations shouldering it.

Posted by: David R. Remer at December 20, 2007 09:18 AM
Comment #241111

Stephan,

You said…

“You know, if you weren’t so busy bashing us, you might find that many liberals dislike pork, waste, and deficit spending, too.”

Well, then why don’t the Dems in Congress SHOW it?

I know beyond a shadow of a doubt that Reps never met a pork program that they didn’t like.

So, why don’t the Dems LEAD in cutting pork instead of saying, “Me too!”? I mean, the Dems have the majority. Why doesn’t Nancy Pelosi or Harry Reid stand up and say, “No pork in this budget from the Dems! If there is pork in the Omnibus, it is Rep pork!”?

Why? Why not take the high moral ground on this instead of packing the Omnibus with pork and just keeping their mouths shut?

One of the parties needs to take the lead…to take the moral high ground on this and castigate the other party until it drops its pork packing as well.

I have no doubt that many Libs hate pork and waste as well.

Just have the cajones to SHOW it…and MEAN it!

Posted by: Jim T at December 20, 2007 11:55 AM
Comment #241113

Jim T, and excellent retort. And of course the answer to you inquiry is, political parties get their office holders reelected on that pork.

Until voters vote out 30% or more of incumbents in a single election on both sides of the aisle, pork will be politician’s first priority when it comes spending.

Posted by: David R. Remer at December 20, 2007 12:31 PM
Comment #241114

david

the amt needs to be fixed. i’de say we pay for it by cutting spending in other places. i also find it interesting that this tax which took affect in i believe 1969 was not set up to be ajusted for inflation each year. i’m sure that was no mistake. the dems who championed this, knew it would be a big money maker over time, probably the same reason the estate tax was never indexed for inflation either. i don’t believe we should keep running up the national debt, but we also cannot allow congress to keep spending money they don’t have, and then putting out thier hands and demanding more. i would say a possible fix would be to freeze federal spending at it’s current level for the next few years. not everything needs to be increased every year. we could then evaluate the situation. we hear the whinning every year about those mean old republicans wanting to cut funding for social programs, when in reality thier not cutting funding only the size of the increase in funding.

Posted by: dbs at December 20, 2007 12:40 PM
Comment #241125

dbs said: “the amt needs to be fixed. i’de say we pay for it by cutting spending in other places.”

Well, Democrats have been trying since Jan. to cut spending in Iraq. Republicans won’t hear of it. Republicans have been trying to get an across the board cut without any prioritization (simple solution for simple minds), but the Democrats won’t hear of it.

If spending cuts are off the table by both parties, that only leaves raising taxes on some or all next year to pay for the AMT lost revenue resulting from the band aid approach, or passing the 50 billion onto the national debt, which is the play the Republicans forced, since they rejected raising taxes for current tax payers.

Posted by: David R. Remer at December 20, 2007 03:51 PM
Comment #241131


David:

Craig, you said the sub-prime mortgage bubble wasn’t going to be a problem too.

Here are some of your comments on the Housing slump:

As for your predictions this year, get back to me next week after the Fed responds at its FOMC meeting. And we will see how your prediction a year ago held up. And again early in 2009, as the spill over from the housing slump and sub-prime problems take a more substantial hold on economic data.

You seem to be implying an economic downturn, or recession.

Here are some comments of mine.

In a year from now the subprime issue will be gone and you and I will be debating another issue taking the same stance. I will be saying that the new economic issue is normal and you will be taking the position that it is yet another sign of doom.

I stand by my comments. You would need to provide me quotes of where I ever thought the housing issue wasn’t a problem. David, we always have, and always will have problems. Of course the housing issue is a problem. It looks like it will slow the economy for a while only to pick up speed again later in the year.

I can no longer accept your incredible optimism that there is no debt too great until an economic collapse occurs.

My incedible optimism is that America will continue to grow at or near it’s mean average. Meaning we will muck through. This is of course shared by Alan Greenspan and Bernanke whose economic forcasts are about the same.

That manner of thinking utterly fails any kind of conservative principle prophylaxis to prevent negative outcomes BEFORE they occur.

You fail to show examples of economies in distress with 60% debt to gdp rations. If you find some let me know.

Posted by: Craig Holmes at December 20, 2007 06:52 PM
Comment #241134

googlumpus

Irresponsible spending is a problem, not entitlements, per se. It’s the redistribution of wealth to thieves that’s a problem.

Actually if you really drill into the problem it’s medical expenses on the rise that is the long term threat.

Greenspan says that at some point they will begin to rise at levels that are consistent with gdp nominal growth.

I agree with your comments on responsible deficit spending. We need a valid government securities market in a modern economy to manage our trade etc. In general we are doing a reasonable job.

I am concerned about what is coming over the horizon with out reform. I firmly believe however that reform will come.

Craig

Posted by: Craig Holmes at December 20, 2007 07:14 PM
Comment #241136
Craig Holmes wrote: David: Your article completely misses the point. And it is one you have made many many times. Our current federal debt situation ($9 Trillion) is not a huge problem.
No?

On which planet?; in which galaxy?; in which dimension?

Maybe in the land of Zanadu?

Let’s see:

  • $9.2 Trillion National Debt

  • Interest alone on the National Debt is over $1 Billion per day!

  • $12.8 Trillion borrowed and spent from Social Security; great timing too with a 77 Million Baby-Boomer bubble.

  • $450 Billion PBGC Pension Debt

  • The U.S. Dollar falling like a rock.

  • Two wars with no end in sight in Iraq and Afghanistan, costing many tens of billion per month.

  • Hundreds of Billion$ of unfunded liabilities for Medicare.

  • A tax system that is regressive (among other regressive/oppressive systems).

By the way, Article V is being violated.
That is not the only Constitutional violation.
Let one violation pass, and you can expect more to follow.

QUESTION: When will voters finally understand that rewarding Congress with 95% to 99% re-election rates ain’t workin’ ?
ANSWER: When failing to understand that becomes to painful.

Other than that, yeah boy! Everything is rosy!
Keep those rose-colored glasses on and see where it gets us.

Posted by: d.a.n at December 20, 2007 07:47 PM
Comment #241137

We don’t need to raise taxes.
We need to fix it so that it isn’t REGRESSIVE, among these other many REGRESSIVE/OPPRESSIVE systems that did not all come about by mere accident.

Hmmmmm … do ya think repeatedly rewarding incumbent politicians with 95% to 99% re-election rates may be a tiny bit of the problem?

Anyone who doesn’t thing massive debt, regressive taxation, and these many regressive/oppressive systems are not a problem, then please send me a pair of those rose-colored glasses you are wearing. I very much want to visit La-La land where you can believe anything you like.

Don’t pay anymind to the massive and growign problems behind that curtain.

Posted by: d.a.n at December 20, 2007 07:58 PM
Comment #241138

Dan:

Simply show me an economy with debt to gdp ratios in the 60’s in a fiscal crisis because of debt. THERE ARE NONE.

Also, please point to a country that you admire their fiscal policies so I can review them.

CH

Posted by: Craig Holmes at December 20, 2007 08:02 PM
Comment #241143

Craig,

I agree it is healthcare that is causing problems. It has outstripped inflation since the 50’s. Some are making a killing, even though the aging population and technology partly play into this. The Insurance industry has handled this irresponsibly, in my opinion, and turned from common sense into a cost plus boondogle.

This is why I am for National Healthcare. I too, believe a solution will arrive.

Rhinehold,
Actually you haven’t responded with a rational answer, IMO, you mostly falsely accused me of a Rules Violation. Playing victim to dismiss my question’s doesn’t answer my questions.

I agree trade with Europe and Japan helped our economy. I agree destroying Europe did not help our economy, except in the full employment of our workforce. Do you really believe it was the Death of Roosevelt that cured the Depression? Do you think the Mercantilism (or Trade, if you prefer)of the post War, the phenomemal deficit spending of the War, or the stability of the Marshall Plan had nothing to do with it? You treat Roosevelt as if he were Hitler. That’s bizarre, IMO. This is why I find many Libertarians strange in Economics.


David,
I was joking about size, and said relative size in the serious portion of my answer. I agree with Craig on this. I only finished Econ 101 thru 103, but I did get an A.

Posted by: googlumpugus at December 20, 2007 10:11 PM
Comment #241150

googlumpugus:

I agree it is healthcare that is causing problems. It has outstripped inflation since the 50’s. Some are making a killing, even though the aging population and technology partly play into this. The Insurance industry has handled this irresponsibly, in my opinion, and turned from common sense into a cost plus boondogle.

This is why I am for National Healthcare. I too, believe a solution will arrive.

Posted by: Craig Holmes at December 20, 2007 11:40 PM
Comment #241153

googlumpugus:

Oooops. Sorry about previous post.

I think that the solution will appear when medical expenses start to show up in increases in the federal budget as a whole. Since the 1950’s other expenses have roughly declined by about the same percentage. (Defense spending comes to mind).
When that is over and medicare costs mean tax increases I think change will come.

Posted by: Craig Holmes at December 20, 2007 11:59 PM
Comment #241156
Actually you haven’t responded with a rational answer, IMO, you mostly falsely accused me of a Rules Violation. Playing victim to dismiss my question’s doesn’t answer my questions.

Falsly accused? Do you want me to go over it again here too? The *BEST* you could say is that you were accusing the ASE of being Nazis (with a smiley face) and that I was spewing their propaganda as a libertarian would. You can play it off all you want to but you don’t seem to understand that I find this very offensive and that you can’t even for a second acknowledge that and instead use my indignance as another attack against me is telling.

As for a rational answer, please tell me in what way is my answer not ‘rational’? You have yet, once, to even address anything that I’ve actually said, just repeating that it was the monopolists and free marketers that caused the depression and the holy FDR that saved us all when the FACTS do not at all back this up. Why was there a depression in 1937? Why did we not have an actual recovery until after the war? For a decade FDR could not spend us into recovery, his finance secretary during that time admitted that they failed miserably and the people in 1939 were two to one blaming FDR for the continued state of affairs because of how he was treating business.

So now that I’ve stated just a FEW of the things to back up my point, what say you? What caused the recession of 1937 as a start?

I agree trade with Europe and Japan helped our economy.

Good

Do you really believe it was the Death of Roosevelt that cured the Depression?

I think I made it pretty clear what cured the depression, it was the removing the clenched fists from around the throat of business that created an atmosphere for investment that spurred on the recovery. This occured partially during (business was needed to move forward with the war effort) and mostly after the war. Which is when the recovery actually occured, not during the 1930s. (And seriously, attempting to tax 100% of all income over 25,000 with a signing statement? 90% income tax and taxing the middle class for the first time, you think those were GOOD policies?)

Do you think the Mercantilism (or Trade, if you prefer)of the post War, the phenomemal deficit spending of the War, or the stability of the Marshall Plan had nothing to do with it?

Nothing to do with it? No, they were indeed helpful in creating that atmosphere of investment I talk about. But so was lessoning the stranglehold on business. This all occured during and after the war, not the 1930s when the New Deal was helping PROLONG the effects of the Depression.

You treat Roosevelt as if he were Hitler. That’s bizarre, IMO. This is why I find many Libertarians strange in Economics.

Of course it is bizarre because I do no such thing. FDR was FDR, not Hitler, not anyone else. He did some good things to get assistance to people and put in (what should have been temporary) programs to get people working again. He then went overboard and started fighting with business, the people who actually create the jobs and keep the economy going with re-investment business growth, causing them to scale back and put their money away in safe areas until it was clear what was going to happen to the economy. More than not, it was the constant up and down, changing field of play that business had to operate in during that time that caused them to be overly cautious against investing and spurring the economy that was needed at the time.

Perhaps it is because you don’t listen to libertarians and instead see us as nothing but Nazi propogandists that causes your issues with them?

Posted by: Rhinehold at December 21, 2007 12:21 AM
Comment #241157
I too, believe a solution will arrive.

Actually, the solution is already here in the form of Healthcare Savings Accounts.

The real problem, the dirty secret that no one wants to talk about, is why healthcare costs are increasing so much. To put it bluntly, there is nothing in the current system (put in place with the assistance of government, I might add) that insents people to watch what they spend on healthcare. People pay their 20 copay and just keep going, never paying any attention at all to the cost of what they are paying for, never challenging, never saying that they will start going to a different doctor because the rates are better. To them there is no difference.

The doctors then, having to maintain such a huge and unwieldy billing system, have to hire a whole industry just to maintain the paperwork shuffle. HMOs now fight with the doctors on the back end about costs, neither one actually be a) rational or b) the purchaser of the services.

HSAs put that power back into the hands of the individual who can either decide if he/she wants to pay 150 for an aspirin during a hospital stay or whether they will fight that billing until it become reasonable.

Only when an actual free market is in place, or a completely facsist healthcare system that the democrats want to implement is in place, will the costs get better. The ‘middle of the road nonsense’ that we have instituted now just doesn’t work, it is, to borrow a phrase from the Depression era, a boondoggle.

I think that the HSAs is the answer and helps retain our liberty. The progressives offer a different opinion, but what is a few loss of liberties between friends, eh?

Posted by: Rhinehold at December 21, 2007 12:28 AM
Comment #241163

Rhinhold said: “I think I made it pretty clear what cured the depression, it was the removing the clenched fists from around the throat of business that created an atmosphere for investment that spurred on the recovery.”

Your view of history is so contrived as to be laughable. Government, BIG Government CONTRACTS with private companies for the War Machine and the vast expansion of the work that ensued is what strengthened the economy during the war years and long after as the production plants were converted to produce cars, refrigerators, radios, and air conditioners, as the men and women who had been earning wages during the war in the plants saved their money and unleashed those savings in the newly developed consumer product market after the war.

BIG Government saved the economy, by taxing present and future Americans and spending those taxes on the war and private production companies geared to the war. Those are the facts. Spin them however you wish, but, that was the cause and effect. In direct contradiction to Libertarian philosophy about small and unobtrusive government.

Posted by: David R. Remer at December 21, 2007 02:23 AM
Comment #241164

Craig said: “This is of course shared by Alan Greenspan and Bernanke whose economic forcasts are about the same.”

Why do you continue to perpetuate this falsehood to defend your position when time and again I have proven your statement false with Bernanke’s statement that the time to address entitlements was 10 years ago, and Greenspan’s comment that the debt and entitlement crisis threaten democratic capitalism itself?

Your comments no longer contain any accuracy and therefore have lost their credibility for me, at least.

Posted by: David R. Remer at December 21, 2007 02:29 AM
Comment #241165

Rinehold
Spending accounts are not the answer when you don’t have enough to put into spending accounts
and spending accounts are not good when any surplus at the end of the year just disappears
(no one has explained to me how that is right)

The problem is not people using their insurance
The problem is NOT people going to the doctor — in fact, the problem would be lessened if people went to their doctors more often, and sooner.
The problem is people that cannot afford to go to the doctor at all — and no system that allows them to visit a doctor early, when the disease might be easily and cheaply cured or treated.
The uninsured utilize ER’s (the most expensive health care there is) as their clinics — our system FORCES them to. There is no other place where the law REQUIRES the hospitals to treat the patient. — so they wait until they are too sick to do anything else, and then they go to the hospital. My wife treats these people all the time, and they are VERY sick, and their treatment is VERY expensive — and you and I get to pay for it!!
It is a dirty little secret that you right-wingers or libertarians or whatever you are want to dismiss. We have socialized medicine — poor people DO get treated all the time, but because of YOUR paranoia about “socialized medicine” and what a hobgoblin it might be, we are forced to pay for an inefficient, expensive, ineffective form of socialized medicine.
Sooo, where do you think the money comes from to treat all the indigents that end up being treated at ER’s throughout the country??? Hmmmmm every wonder why it is sooooo damned expensive for a hospital stay, doctor visit, whatever??
two things actually
make up for the indigents (as above)
and make up for the piss poor reimbursements by the insurance companies.
We could start controlling health care costs if we had a system that encouraged everyone to go to the doctor MORE often — get an annual physical (why do you think the insurance companies FINALLY wised up and agreed to PAY for annual checkups??? — IT IS CHEAPER IN THE LONG RUN)
Let people get treated before they are so sick they
end up staying in 3,000 dollar a day hospital bed
end up losing their job — hurting their employer by being out of work
losing their home (and the bank losing their mortgage)
Hurting the economy by being out of work
Socialized medicine of some form — one that we acknowledge, instead of our current underground form, would go along way toward controlling health care costs.

Posted by: Russ at December 21, 2007 02:30 AM
Comment #241170
Spending accounts are not the answer when you don’t have enough to put into spending accounts and spending accounts are not good when any surplus at the end of the year just disappears

Russ,

In the HSAs that I talk about that have just been ok’d, the money does NOT disappear at the end of the year. It in fact ends up being a ‘401k for healthcare’ that you can pump full of money (there is a yearly limit at the present time) that rolls over, earns interest, and can be used after you retire.

And it comes with catastrophic insurance (at least the one my employer offers does) that kicks in after a certain threshold of money has been spent in a single year.

It is a dirty little secret that you right-wingers or libertarians or whatever you are want to dismiss. We have socialized medicine — poor people DO get treated all the time, but because of YOUR paranoia about “socialized medicine” and what a hobgoblin it might be, we are forced to pay for an inefficient, expensive, ineffective form of socialized medicine.

‘whatever I am?’ It doesn’t take much investigation to find I am a libertarian and your post in the other column tells me that you really don’t know what that is.

But besides the point, I clearly stated that our current plan drives up prices because no one is ‘minding the store’ so to speak. Either a full fledged fascist system needs to be in place or the purchaser of the service has to be responsible/incented to keep the costs down. The middle of the road is not working.

I’m all for people being healthy, etc.

But catastrohpic healthcare is available to all it is not that expensive. Let the entire cost of that be reduced from every individual’s taxes if they purchase it. I think you’d find more people buying it then. There is no need to bring in governmental administration of the program if we just make it cost effective to have. Currently we do not do that, but the notion that a fascist healthcare system is the only solution is nonsense.

Posted by: Rhinehold at December 21, 2007 03:41 AM
Comment #241171
Government, BIG Government CONTRACTS with private companies for the War Machine and the vast expansion of the work that ensued is what strengthened the economy during the war years and long after as the production plants were converted to produce cars, refrigerators, radios, and air conditioners, as the men and women who had been earning wages during the war in the plants saved their money and unleashed those savings in the newly developed consumer product market after the war.

That goes against what googlumpus says ended the Depression, David, not me.

If the pre-war attitude towards business had still existed after the war, the recovery that the deficit spending during the war created would not have continued. In fact, Keynes was wrong about this as well when he predicted that just that would happen:

To Keynesians, the war economy showed just how large the fiscal stimulus required to end the downturn of the Depression was, and it led, at the time, to fears that as soon as America demobilized, it would return to Depression conditions and industrial output would fall to its pre-war levels

In fact, it most likely would have had the business environment been as brutal as it was before. But it wasn’t. People wanted to buy and businesses were able, because of this new environment, to invest in new businesses to sell those things that they wanted to buy, keeping the employment up and recovery going.

As I said, the war helped get to that point, I’ve never denied that, googlumpus did in the other column. But also wasn’t the end of the story, business can and will be chocked off when no profit is to be made…

My point, though, was that it was not DEFICIT SPENDING that ended the Depression and in fact, FDR’s war against big business (that really started in earnest in 1936 (re-election time)) that keep the recovery from coming sooner and caused the recession of 1937.

Please read the other thread to see my full point… In fact, this was my first comment:

it was the agressive actions taken against ‘big business’ that was the culprit, and when the noose around their necks was lessoned as they were needed for the lend/lease program and other military buildups, only then did the economy rebound.
Posted by: Rhinehold at December 21, 2007 04:07 AM
Comment #241177
Craig Holmes wrote: d.a.n: Simply show me an economy with debt to gdp ratios in the 60’s in a fiscal crisis because of debt. THERE ARE NONE.
False.
  • You are conveniently excluding a huge portion of the total $22 Trillion federal DEBT, which is 160% of GDP. Only a few other nations have a DEBT to GDP ratio that huge.
  • To make matters worse, $12.8 Trillion has been borrowed and spent from Social Security, and the timing couldn’t be much worse with the approaching 77 million baby-boomer bubble (around 13,175 new Social Security recipients per day!).
  • And the PBGC pension system is about $450 Billion in the hole.
  • And Medicare is already in big trouble with hundreds of billions of unfunded liabilities.
  • And the two wars in Iraq and Afghanistan also represent hundreds of billions of unfunded liabilities for many years in the future.
  • And there is NO other nation (NONE) that has as much federal debt as the United States.
  • In fact, the U.S. federal debt probably exceeds the debt of hundreds of nations, combined.
Craig Homes wrote: Also, please point to a country that you admire their fiscal policies so I can review them.
There are a few nations that are more fiscally responsible than the U.S. So? Does that mean we should follow in their footsteps? Haven’t you seen the U.S. Dollar lately? It’s falling against the British Pound, Australian Dollar, Canadian Dollar, Chinese Yuan, Japanese Yen, and even the Argentine Peso (which we used to joke about for excessive inflation). A 1950 U.S. Dollar is now worth about 11 cents (or less).

The massive debt is being heaped onto tax payers now, and those of future generations. You think that’s fair? Nothing to worry about? Just because a few other nations are more fiscally irresponsible than the U.S. does not mean we should emulate them.

The warfare on the middle-income groups is real, as evidenced by these many regressive/oppressive systems, which did not all come about by mere coincidence. And please don’t tell me about GDP growth and assets, when:

  • 1% of the U.S. population owns 40% of all wealth (up from 20% in year 1980) while household incomes have been stagnant for many decades (or falling if you consider that there are more workers per household)

  • the tax system it unfair and REGRESSIVE

  • too many taxes; especially too many REGRESSIVE taxes (i.e. sales taxes)

  • inflation and the falling U.S. Dollar from an abused and diehonest money system

  • a severely bloated, FOR-SALE, wasteful government that is essentially a plutocracy, as evidence by 83% of all federal campaign donations from only 0.15% of all 200 million eligible voters

  • illegal immigration; our politicians are despicably pitting American citizens and illegal aliens against each other

  • lies, blunders, and Constiutional violations

  • Greedy banks, ridiculously high and usurious interest rates, predatory lending practices, and the Federal Reserve creates 89% of every new loan out of thin air and then collects the interest on it. What’s up with that? Hell of a deal, eh?

  • $20 Trillion personal nation-wide debt
But, other than that, everything is rosy!

Posted by: d.a.n at December 21, 2007 08:27 AM
Comment #241181

Rhinehold said: “My point, though, was that it was not DEFICIT SPENDING that ended the Depression”

And your point is point blank WRONG! During WWII America created the highest deficit spending and national debt to GDP ratio on record. Since, you make the point that the war did help end the depression, it certainly was not dying soldiers that caused it. It was the DEFICIT SPENDING on the war, much of which went to private contractors for munitions and equipment and energy development and replenishment. In addition, in the post war era, all those Savings Bonds sold to the AMERICAN public to fund the war, returned dividends to help fuel the new unleased pent up consumer demand.

Your whole attempt to paint FDR as anti-business when in fact, his entire war effort was dependent upon business, and they were profitable indeed under FDR during the War, is a prejudice and bias that simply isn’t born out by the facts. FDR’s criticism of business was primarily focused at Wall Street investors and speculators who were key to the 1929 Stock Market crash which precipitated the 1930 run on the banks and devastated so many small family savings accounts and earnings.

Which in turn fueled an enormous distrust of banks, speculators, and the industrial barons, whose laissez faire lobbying in Congress paid back the American people with a depression (actually not all that severe in unemployment terms, but compounded by the great dust bowl era to follow on its heels, which devastated so many family owned farms with foreclosures.) FDR is the founder of the comparatively safe and reliable REGULATED markets which investors enjoy and rely upon today.

Note that the sub-prime mortgage industry was entirely unregulated as are hedge funds, causing so very much financial, credit, liquidity, and economic problems in today’s business headlines.

Posted by: David R. Remer at December 21, 2007 09:28 AM
Comment #241184

Rhinehold,

That goes against what googlumpus says ended the Depression, David, not me.

Actually it doesn’t, and apparently is a logical leap you make.

Deficit spending in a contraction expands the money supply and stabilizes aggregate demand and supply without restricting output. continued deficit spending in absence of a contraction causes inflation and overheating of an economy in macroecoomics as Keynes predicts and most rational economists accepted long ago.

Your conclusion that it was restrictive government policy towards business that was “released” during and post WWII isn’t supported by anything other than your contention that it was.

While I agree overly aggressive action toward business is detrimental, we apparently disagree on this definition.

Your blindness to a lack of oversite that led to some overreactive legislation such as Smoot Halley leads you to conclude erroneously that a return to this Laissez Faire (although you vigorously deny you support this) types of policy. You fail to define what is adequate oversite. You aver for gutting Government which will then be unable to provide oversite. This leads many to see Libertarians as Corporatists who use Liberty and as a disguise for promoting unrestricted business interests.

FDR did not do everything right. It was Keynes who understood the macroeconomic effects at play in the depression. This is pro government intervention. Government policy must be responsible and can have large economic effect. Now we arrive into today’s economy. Libertarian economics as I’ve read them will return us into the problems of the 19th century by ignoring the lessons or misrepresenting the history of the Depression. That is a problem for the Libertarian party.


Posted by: googlumpus at December 21, 2007 09:56 AM
Comment #241188

googlumpus said to Rhinehold: “Your conclusion that it was restrictive government policy towards business that was “released” during and post WWII isn’t supported by anything other than your contention that it was.”

Quite correct. Since, it was the government that underwrote the vast increases in productivity that were adopted by whole industries borrowing from the Henry Ford model of specialized station production and time and motion studies, and to no small extent, the Henry Ford economic model as well, making products with wages that make one’s employee’s consumers of one’s products. It was dynamic and not the least bit restrictive in these regards.

The very concept of the government hiring civilian workers for public works projects, which in turn stimulated vast amounts of economic activity in the private sector after those public works were finished had an incredible long term economic effect, as in the Tennessee Valley Authority.

Posted by: David R. Remer at December 21, 2007 10:14 AM
Comment #241189
Actually, the solution is already here in the form of Healthcare Savings Accounts.

LMAO…

Posted by: Rachel at December 21, 2007 10:49 AM
Comment #241194

David,

Greenspan is not God, but has clarified that as a solvable problem that becomes more difficult with time. He was not predicting the end of the US economy.

The only difference between your and Craig’s position, as I see it, is pessimism vs. optimism.

I, too, am an optimist about America.

Rhinehold,

I agree that unfettered and unmonitored spending is the problem and the half way solution is not a solution.

I think a National Healtcare system rather than HSA is more pratical, depending on how it is implemented. The system is now so corrupt a few players need to simply be removed. Insurance is one of them, frivilous lawsuits, and the AMA lack of oversite is another. Drug companies need to be reintroduced to a free market and deprived of advertising.

Healthcare should become a basic service of a wealthy industrialized nation. This is the moral choice. We don’t leave police, fire, or justice to the market place.

I’m not sure what liberties you insist this would deprive one of, but when your sick, I suspect liberty is rather moot.

Posted by: googlumpus at December 21, 2007 12:25 PM
Comment #241199

Dan:

Ok, so here is what I conclude from your comments.

1. You know of no country with debt to gdp ratios in the 60% range that are in fiscal crisis before debt.

You state my numbers are incorrect but you use the same ones on your website.

2. You know of no other country that you care to name that you can point to who do a better job.

That means that insite of all your criticism we are still among the best in the world at managing our money IN YOUR OPINION.

Craig

Posted by: Craig Holmes at December 21, 2007 12:48 PM
Comment #241200

David:

Why do you continue to perpetuate this falsehood to defend your position when time and again I have proven your statement false with Bernanke’s statement that the time to address entitlements was 10 years ago, and Greenspan’s comment that the debt and entitlement crisis threaten democratic capitalism itself?

Because you take tiny quotes from them and build you case out of context.

Bernanke’s position on the economy and entitlements is that if we do nothing our children could see, I said could see as much as a 14% drop in standard of living over what it would have been assuming that we address the issue now. That means that their standard of living will still be higher than ours as productivity increases a 2% a year.

Second Greenspan is his recent book says that between now and 2030 GDP growth will be fine.

My simple answer to your question is that you are not well read in Bernanke and Greenspan and simply take a few quotes and run with them.

Posted by: Craig Holmes at December 21, 2007 12:52 PM
Comment #241201

Craig, it is you who are not well read. If you read the context of their rosier predictions you will find a number of contingencies that must be met for those scenarios to play out. IF you read their negative scenarios, you will see they are contingent on the status quo.

NOW, look at the prescriptions for the rosier scenarios and compare them to government action from 1990 to the present. They aren’t taking place. The status quo is remaining - and that is all that needs to happen for their far more dire predictions to occur.

Posted by: David R. Remer at December 21, 2007 01:08 PM
Comment #241202

David:

I will say I don’t admit to being an “expert” on these men. I have however read Greenspans recent book, and read nearly every speech Bernanke gives listed on the Federal Reserve website.

Both are good writers who speak plain english wish is more that Greenspan did when he provided testimony.

Neither is anywhere near your view point of a serious crash of our economy in the works. Both see Entitlements as an important issue that needs to be addressed. Basically they are far less extreme than you are. They don’t deny the issues you bring up. Actually they discus them frequently.

Just to give you a dividing line to measure, both believe standard of living will continue to rise in our country going forward. Their concern is that entitlements will slow that growth.

Unless I have missed something big time, you are of the opinion that unless drasitic action is taken up to and including voting out incumbants from office a serious downturn is in our future.

When they talk about a problem that doesn’t mean that they believe the economy is going to tank. That is the difference between what I read from your writings and what I read from theres.

I hope that clarifies things.

Do you still believe that a serious downturn will start in January because of the subprime issue?

Posted by: Craig Holmes at December 21, 2007 01:15 PM
Comment #241204

googlumpus said: “Greenspan is not God, but has clarified that as a solvable problem that becomes more difficult with time. He was not predicting the end of the US economy.”

Another comment which speaks out of context. OF course Greenspan is not god, he is a Republican and he is partially responsible for the current sub-prime mortgage debacle. But, that’s another topic.

By solvable problem, if you are referring to national debt and unfunded entitlement mandates, he was indeed predicting the end of not only the U.S. economy as we know it, but, also the end of the democratic capitalist model for emerging nations, since its shining example will have been reduced to ashes by its own inherent flaws and weaknesses: public ignorance, corporate influence, and political gridlock in the face of prolonged and growing problems requiring sustained and consistent action years and even decades in advance of the problems becoming a political, economic nightmare.

His prediction was simply that if government cannot or will not get its fiscal house in order immediately, points of no return along the way to ruin will be passed by at increasing speeds and frequency.

Simply ending the entitlement programs does not solve the problem. All that does is push 100 million or more Americans into poverty in the coming decades and dramatically increase the risk of civil insurrection and revolution: collapse of the democratic capitalist model.

In using the words Democratic and Capitalism together he is depicting the double edged problem. A capitalist solution alone would cause a revolution against the government. A political solution alone, (increasing national debt to keep reelection bid successful) results in economic collapse as inflation hits with a vengeance as money is printed in ever larger amounts in a losing battle to pay the interest on the mountainous national debt of 25, 40, and 50 trillion dollars.

The solution must be both political and economic, and painful. There are no painless solutions to our future entitlement crisis. But, doing nothing will be catastrophic and doing nothing is precisely what politicians have been about for the last 15 years that this has been a growing emergency.

Like Bernanke said early this year, ‘The time to deal with the entitlement problem is 10 years ago’. Anything we do now will be painful. Anything we do later, will be even more so. Doing nothing will be catastrophic. The political landscape between Dem’s and Rep’s is such that neither side is going to propose painful solutions and risk losing political advantage. Ergo, the path forward is to do nothing.

So, yes, Greenspan was referring to the inevitable collapse of the economy and the political system as well, if we do not act responsibly today politically and fiscally. And therein lies the great threat to Democratic Capitalism, and not just here, but, around the world. If our system fails, other nations will move away from our failed model. That too should be plainly obvious.

Posted by: David R. Remer at December 21, 2007 01:28 PM
Comment #241205
Craig Holmes wrote: d.a.n: Ok, so here is what I conclude from your comments. 1. You know of no country with debt to gdp ratios in the 60% range that are in fiscal crisis before debt.
False.

You just stated 60% above. However, our total $22+ Trillion federal debt is 160% of the $14 Trillion GDP.

Craig Holmes wrote: You state my numbers are incorrect but you use the same ones on your website.
False.

I use the following numbers over and over and over, which also mentions ALL federal debt:

  • $9.2 Trillion National Debt, with over $1 Billion of interest on it per day!

  • $12.8 Trillion borrowed and spent from Social Security; now it is pay-as-you-go, with a 77 million baby boomer bubble approaching

  • $450 Billion PBGC Pension debt

  • hundreds of billions of unfunded Medicare liabilities for the next year

  • hundreds of billions of unfunded liabilities for the wars in Iraq and Afghanistan
To make matters worse, there are these regressive/oppressive systems. Surely you are not alleging the do not exist?

Craig Holmes wrote: 2. You know of no other country that you care to name that you can point to who do a better job.
There are lots of countries that are doing better in a number of ways with regard to debt. That’s why their currencies aren’t falling like a rock like the U.S. Dollar has in the last five years:
  • $1 U.S. Dollar fell from 0.98 EURO to 0.6825 EURO between Jan-2003 and Oct-2007
  • $1 U.S. Dollar fell from 1.80 British Pound (GBP) to 1.07 GBP between Jan-2003 and Oct-2007
  • $1 U.S. Dollar fell from 1.57 Canadian (CAD) to 0.926 CAD between Jan-2003 and Oct-2007
  • $1 U.S. Dollar fell from 1.78 Austrailian (AUD) to 1.077 AUD between Jan-2003 and Oct-2007
  • $1 U.S. Dollar fell from 1.46 Swiss Franc (CHF) to 1.13 CHF between Jan-2003 and Nov-2007
  • $1 U.S. Dollar fell from 3.51 Argentine Peso (ARS) to 3.13 ARS between Jan-2003 and Nov-2007
  • $1 U.S. Dollar fell from 31.8 Russian Roubles (RUB) to 24.59 RUB between Jan-2003 and Nov-2007
Craig Holmes wrote: That means that insite of all your criticism we are still among the best in the world at managing our money IN YOUR OPINION.
That’s some of the most circular logic I’ve ever seen to date.

Where did I ever even imply that “we” (i.e. the U.S.) are among the best in the world at managing our money?
Especially when I’ve stressed over and over our:

  • $22 Trillion of total federal debt

  • $20 Trillion of nation-wide personal debt

  • Trillions in trade deficits

  • millions of foreclosures each of the last few years; the current housing slump is the worst since the Great Depression

  • 1% of the U.S. population owns 40% of all wealth; up from 20% in year 1980; never worse since the Great Depression

  • stagnant (or falling) household incomes (especially considering there are more workers per household)

  • the money system is dishonest and mismanaged; incessant inflation is why a 1950 U.S. Dollar is now worth 11 cents.
Therefore, how anyone could conclude that my opinion is “we are still among the best in the world at managing our money” is fascinating. It reveals yet another desparate attempt to see everything with rose colored glasses, becasue nothing I’ve written has ever drawn such a conclusion as alleged.

Other than that, everything is rosy!
That is, if you are the 1 in 5 people that own 83% of all wealth in the nation.

I don’t give a damn how any other nation is doing.
This nation can be doing MUCH better.
Elimination of unfair and the 10 regressive systems mentioned above would be a good start.
The path we are on now, if we stay on it, will lead to more economic instability.
Another Great Depression is not far fetched.
And trying to constantly paint a rosy picture, rationalize mediocrity (or worse), is not helping get on a better path.

Posted by: d.a.n at December 21, 2007 01:45 PM
Comment #241206

Craig said: “Just to give you a dividing line to measure, both believe standard of living will continue to rise in our country going forward. Their concern is that entitlements will slow that growth.”

You are grossly misunderstanding what they are saying. If entitlements go forward, our national debt goes up to 54 Trillion dollars by 2075. There isn’t Econ 101 student, let alone a single Federal Reserve Board governor who would say our economy can shoulder that kind of debt and survive. Entitlements will NOT slow our growth, they will destroy our economy by exacting taxes for service on that debt which almost entirely will be paid to foreign interests. Our economy would collapse with that kind of net export of American wealth to foreign nations and investors.

On the other hand, simply voting to end the entitlement programs and send workers out in the cold without their lifetime payments into the system and no benefits in return either, would create a political unrest whose potential could be nothing short of revolutionary. It is not a political reality. Politicians KNOW they would not be reelected if they cancelled these programs.

So, what is the solution? You see, this is where you have to read between Bernanke’s and Greenspan’s lines, real close. Because you won’t find an answer in the lines or between them. Both are excellent at outlining the problem, but neither will venture to lay out the details of the solution, because they don’t have one. The problem is that enormous, and so, Greenspan and Bernanke on the one hand make these statements about dire consequences of the entitlement crisis and just as quickly say it is a political and fiscal problem, not a Fed Reserve or monetary problem.

Then, they turn right around and use the assumption that government will somehow find a solution to the fiscal/political problem of entitlements, as a basis for saying: going forward, the economy will do just fine from their monetary perspective.

Posted by: David R. Remer at December 21, 2007 01:45 PM
Comment #241209

So Dan which countries do you look to as doing a better job than we are?

Which are your shining examples?

Posted by: Craig Holmes at December 21, 2007 02:11 PM
Comment #241210

David:

So, what is the solution? You see, this is where you have to read between Bernanke’s and Greenspan’s lines, real close. Because you won’t find an answer in the lines or between them. Both are excellent at outlining the problem, but neither will venture to lay out the details of the solution, because they don’t have one.

Have you read Greenspan’s book?.

Posted by: Craig Holmes at December 21, 2007 02:15 PM
Comment #241211

Craig, no, I haven’t read his book. But, then his book is not about the future, it is about his past. He calls it “psychoanalysis of himself”. I prefer to let the data and community of historians speak about Greenspan’s experience and tenure as economist and Fed Governor, rather than his autobiographical explanation, which some have called his ‘apologetic vindication’.

Posted by: David R. Remer at December 21, 2007 02:56 PM
Comment #241215
It was the DEFICIT SPENDING on the war, much of which went to private contractors for munitions and equipment and energy development and replenishment.

Again, this helped bring the country to the point where it could being a recovery, but had the environment been as it was between 1933 and 1939 the Keynsians would have been right in their suggestion of a return to a depression. Deficit spending alone could not end the depression because at some point that debt has to be paid back, which plays into it. Had decifit spending been enough we would have been out of the depression in 1937 instead of entering another recession because of these new attacks on business.

Your whole attempt to paint FDR as anti-business when in fact, his entire war effort was dependent upon business, and they were profitable indeed under FDR during the War, is a prejudice and bias that simply isn’t born out by the facts.

Bull. I’ve posted several facts that support my point, none of them have been challenged or refuted. Just ignored. 100% tax on all income over 25,000 via a signing order? Taxing the middle class for the first time? Changing the price of gold by 21 cents because 3 and 7 are lucky numbers? Implementing the NLRB that enforced saying no to a union demand illegal? But the real problem was the seemingly bipolar policies that FDR was putting into place, changing from month to month, causing businesses to not even begin to guess what the long term future was going to bring and backed off on most if not all investments and expansions.

What is invalid about this statement:

Roosevelt was pulled toward greater spending by Hopkins and Ickes, and as the 1936 election approached he decided to gain votes by attacking big business. Roosevelt rejected the advice of Morgenthau to cut spending and decided big business was trying to ruin the New Deal by causing another depression that voters would react against by voting Republican. It was a “capital strike” said Roosevelt, and he ordered the FBI to look for a criminal conspiracy (they found none). Roosevelt moved left and unleashed a rhetorical campaign against monopoly power, which was cast as the cause of the new crisis. Ickes attacked automaker Henry Ford, steelmaker Tom Girdler, and the superrich “Sixty Families” who supposedly comprised “the living center of the modern industrial oligarchy which dominates the United States.” Left unchecked, Ickes warned, they would create “big-business Fascist America—an enslaved America.” The President appointed Robert Jackson as the aggressive new director of the antitrust division of the Justice Department, but this effort lost its effectiveness once World War II began and big business was urgently needed to produce war supplies.

These were the actions of a pro-business administration? FDR was as anti-business as they come right up until the war started.

And then he became a great war president. Much like Bush didn’t… Had Bush taken the 9/11 situation as FDR did WWII and brought the country together as a leader, he would have huge numbers right now. But he failed miserably. Thankfully, FDR didn’t and backed off of his attack on businesses in order to fight the war and those relaxations of his 1936-1939 attacks on business helped ensure the economic environment was ripe when presented with the opportunities that the post war era provided.

Historian Jim Powell, in FDR’s Folly, points out that the median joblessness rate throughout the New Deal was 17.2 percent and never went below 14 percent. He says the Depression was worsened and prolonged “by doubling taxes, making it more expensive for employers to hire people, making it harder for entrepreneurs to raise capital, demonizing employers, destroying food…breaking up the strongest banks, forcing up the cost of living, channeling welfare away from the poorest people and enacting labor laws that hit poor African Americans especially hard.” However as Alvin Hansen pointed out at the time, few businesses were attempting to expand. The poor voted at the 80-90% level for Roosevelt according to public opinion polls. A study by Harold L. Cole and Lee E. Ohanian concludes that the “New Deal labor and industrial policies did not lift the economy out of the Depression as President Roosevelt and his economic planners had hoped,” but that the “New Deal policies are an important contributing factor to the persistence of the Great Depression.” They say that the “abandonment of these policies coincided with the strong economic recovery of the 1940s.”

Even his finance secretary admitted that they failed to do what they set out to do.

We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and now if I am wrong somebody else can have my job. I want to see this country prosper. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this administration, we have just as much unemployment as when we started. And enormous debt to boot.
Posted by: Rhinehold at December 21, 2007 03:38 PM
Comment #241216
I’m not sure what liberties you insist this would deprive one of, but when your sick, I suspect liberty is rather moot.

Have you heard of the phrase ‘Give me liberty or give me dealth’? Why do you think it no longer applies…

YOU may not care about your liberties that much but there are millions of people who do. Are their liberties just to be ignored because the majority says so? What about other liberties then, like privacy, life, property, etc? Subjects of the whim of the majority are they?

If there are two ways to do something, and one of them takes away personal liberty, shouldn’t we be trying to enact the other instead of taking the easy way out? Maybe put a little more thought behind it and come up with BETTER plans that don’t have to stomp on our personal liberties even further than they are now?

Posted by: Rhinehold at December 21, 2007 03:46 PM
Comment #241219

David:

He addresses many of your concerns in his book. Greenspan’s book has several chapters about the future. He has chapters on the future of energy, the future of entitlements and the future of the economy in general along with globalization, China, Russia etc. Public education. It’s actually quite comprehensive.

Here are some of his solutions:

On Income inequality. Greenspans view is that this issue has two causes, immigration and pubic education. He believes the only way to raise the bottom is through reforming public education. The ONLY way to improve the lower classes in his view is through increasing their skills.

In terms of lowering the top, Greenspan believes we should open our borders to well skilled immigrants to increase the labor supply of well skilled laborers.

On Entitlements here is a quote:

In the end, I expect Medicare funding imbalance to be resolved by rescinding the benefits of the more affluent. The frenzy of politics and the so-far intractable continued increase in income inequality, in my judgement, leave no other credible political alternative. Restored balance could occur through the development of private accounts (which I support) or through legislation requiring Medicare to be means-tested (as is Medicaid)

He has many thoughts on the future of our country and it’s problems. And actually is quite optimistic. He expects for instance GDP growth to average about 2.5% which is a bit under the mean but still good!!

Greenspan has ideas and solutions for every problem you mention, and looks to an optimist future.

Posted by: Craig Holmes at December 21, 2007 03:56 PM
Comment #241220

Craig if this is all he has to say: “In the end, I expect Medicare funding imbalance to be resolved by rescinding the benefits of the more affluent.”

He does not Address the issue at all. First, simply removing the wealthy from the benefit rolls in NO WAY compensates for the 40 Trillion unfunded Medicare mandate.

Second, he does NOT offer ANYTHING to base his expectation on. Certainly NOT the past, since the past is full of increasing the unfunded mandate not decreasing it, as in the Rx drug legislation.

Thanks for showing that his book offers nothing of relevance regarding the future, though.

Posted by: David R. Remer at December 21, 2007 04:14 PM
Comment #241221

Rhinehold asked: “What is invalid about this statement:”

First of all the fact that it lacks a source and context. That will do for starters.

Posted by: David R. Remer at December 21, 2007 04:19 PM
Comment #241223

David:

Every comment you make shows me you need to reed Greenspan. You should read him more.

Posted by: Craig Holmes at December 21, 2007 04:28 PM
Comment #241224
Craig Holmes wrote: So d.a.n which countries do you look to as doing a better job than we are? Which are your shining examples?

Take your pick. The United States places 4th in the nations with highest total federal debt as a ratio of GDP of 121 nations:

  • 001 Lebanon 209.00% (2006 est.)

  • 002 Japan 176.20% (2006 est.)

  • 003 Seychelles 166.10% (2006 est.)

  • 004 United States 160.00% (2006 est.)

  • 005 Jamaica 133.30% (2006 est.)

  • 006 Zimbabwe 108.40% (2006 est.)

  • 007 Italy 107.80% (2006 est.)

  • 008 Greece 104.60% (2006 est.)

  • 009 Egypt 102.90% (2006 est.)

  • 010 Singapore 100.60% (2006 est.)

  • 011 Belgium 90.30% (2006 est.)

  • 012 Sri Lanka 89.60% (2006 est.)

  • 013 Israel 89.00% (2006 est.)

  • 014 Moldova 84.50% (2006 est.)

  • 015 Nicaragua 82.70% (2006 est.)

  • 016 Bhutan 81.40% (2004 est.)

  • 017 Ethiopia 80.30% (2006 est.)

  • 018 Jordan 72.20% (2006 est.)

  • 019 Morocco 70.90% (2006 est.)

  • 020 Uruguay 70.60% (2006 est.)

  • 021 Cote d’Ivoire 69.40% (2006 est.)

  • 022 Hungary 68.60% (2006 est.)

  • 023 Malawi 68.40% (2006 est.)

  • 024 Portugal 67.40% (2006 est.)

  • 025 Honduras 67.10% (2006 est.)

  • 026 Germany 66.80% (2006 est.)

  • 027 Zambia 65.70% (2006 est.)

  • 028 Canada 65.40% (2006 est.)

  • 029 Cyprus 64.80% (2006 est.)

  • 030 France 64.70% (2006 est.)

  • 032 Turkey 64.70% (2006 est.)

  • 033 Austria 63.00% (2006 est.)

  • 034 Philippines 61.60% (2006 est.)

  • 035 Panama 61.30% (2006 est.)

  • 036 Argentina 61.00% (2006 est.)

  • 037 Sudan 59.60% (2006 est.)

  • 038 Mauritius 57.90% (2006 est.)

  • 039 Tunisia 57.30% (2006 est.)

  • 040 Croatia 56.20% (2006 est.)

  • 041 Pakistan 55.00% (2006 est.)

  • 042 Papua New Guinea 53.70% (2006 est.)

  • 043 Costa Rica 53.40% (2006 est.)

  • 044 Serbia 53.10% (2005 est.)

  • 045 India 52.80% (2006 est.)

  • 046 Switzerland 51.00% (2006 est.)

  • 047 Netherlands 50.80% (2006 est.)

  • 048 Kenya 50.50% (2006 est.)

  • 049 Brazil 50.00% (2006 est.)

  • 050 Poland 49.00% (2006 est.)

  • 051 Vietnam 47.50% (2006 est.)

  • 052 Bangladesh 46.70% (2006 est.)

  • 053 Malaysia 46.70% (2006 est.)

  • 054 Sweden 46.40% (2006 est.)

  • 055 Aruba 46.30% (2005)

  • 056 Dominican Republic 45.60% (2006 est.)

  • 057 Colombia 45.30% (2006 est.)

  • 058 Norway 44.80% (2006 est.)

  • 059 Indonesia 43.80% (2006 est.)

  • 060 Thailand 43.50% (2006 est.)

  • 061 El Salvador 42.60% (2006 est.)

  • 062 United Kingdom 42.20% (2006 est.)

  • 063 Macedonia 41.50% (2006 est.)

  • 064 Spain 39.90% (2006 est.)

  • 065 Ghana 38.60% (2006 est.)

  • 066 Syria 37.90% (2006 est.)

  • 067 Finland 37.70% (2006 est.)

  • 068 Trinidad and Tobago 36.60% (2006 est.)

  • 069 Slovakia 36.10% (2006 est.)

  • 070 Ecuador 36.00% (2006 est.)

  • 071 Republic of China(Taiwan) 34.60% (2006 est.)

  • 072 Bahrain 34.20% (2006 est.)

  • 073 Peru 33.80% (2006 est.)

  • 074 South Africa 32.90% (2006 est.)

  • 075 Angola 32.70% (2006 est.)

  • 076 Saudi Arabia 32.50% (2006 est.)

  • 077 Korea, South 31.90% (2006 est.)

  • 078 Namibia 31.60% (2006 est.)

  • 079 Paraguay 31.30% (2006 est.)

  • 080 Tanzania 30.50% (2006 est.)

  • 081 Yemen 30.00% (2006 est.)

  • 082 Uzbekistan 29.70% (2006 est.)

  • 083 Uganda 29.30% (2006 est.)

  • 084 Czech Republic 29.10% (2006 est.)

  • 085 Slovenia 29.00% (2006 est.)

  • 086 Gabon 28.60% (2006 est.)

  • 087 Cameroon 28.40% (2006 est.)

  • 088 Venezuela 28.40% (2006 est.)

  • 089 Denmark 28.10% (2006 est.)

  • 090 Bulgaria 25.60% (2006 est.)

  • 091 Iran 25.30% (2006 est.)

  • 092 Bosnia and Herzegovina 24.50% (2006 est.)

  • 093 Qatar 23.60% (2006 est.)

  • 094 Iceland 23.50% (2006 est.)

  • 095 Mozambique 23.20% (2006 est.)

  • 096 Ireland 22.80% (2006 est.)

  • 097 People’s Republic of China 22.10% (2006 est.)

  • 098 Romania 21.40% (2006 est.)

  • 099 Mexico 20.70% (2006 est.)

  • 100 New Zealand 19.90% (2006 est.)

  • 101 Algeria 18.60% (2006 est.)

  • 102 Guatemala 18.60% (2006 est.)

  • 103 Lithuania 18.00% (2006 est.)

  • 104 Senegal 17.80% (2006 est.)

  • 105 Australia 14.10% (2006 est.)

  • 106 Ukraine 12.70% (2006 est.)

  • 107 Kazakhstan 11.00% (2006 est.)

  • 108 Latvia 11.00% (2006 est.)

  • 109 Azerbaijan 10.40% (2006 est.)

  • 110 Nigeria 10.40% (2006 est.)

  • 111 United Arab Emirates 9.00% (2006 est.)

  • 112 Kuwait 8.10% (2006 est.)

  • 113 Russia 8.00% (2006 est.)

  • 114 Botswana 7.10% (2006 est.)

  • 115 Libya 5.60% (2006 est.)

  • 116 Wallis and Futuna 5.60% (2004 est.)

  • 117 Equatorial Guinea 4.70% (2006 est.)

  • 118 Oman 4.50% (2006 est.)

  • 119 Chile 3.90% (2006 est.)

  • 120 Estonia 3.60% (2006 est.)

  • 121 Hong Kong 1.00% (2006 est.)

Total U.S. Federal Debt is from:
  • $9.2 Trillion National Debt, costing over $1 Billion per day in interest per day!

  • $12.8 Trillion borrowed and spent from Social Security; it’s not pay-as-you-go, with an approaching massive 77 million baby boomer bubble; the fictitious surpluses are nothing but government paper; where’s the money going to come from?

  • $450 Billion PBGC Pension debt

  • Hundreds of Billions of unfunded Medicare liabilities for the next 12 months

  • Hundreds of Billions of unfunded liabilities for the two wars in Afghanistan and Iraq

  • tens-to-hundreds of Billions of annual pork-barrel, graft, corporate welfare, subsidies, etc.

  • inflation will exacerbate all of that above; a 1950 Dollar is now only worth 11 cents; the Canadian Dollar is worth more than the U.S. Dollar for the first time in history.
Even if ONLY we resort to ENRON style book-keeping, ignore the total federal debt, and consider ONLY the $9.2 Trillion National Debt, the Unites States still places a dismal 26th of the 121 nations above (with a Debt to GDP ratio = 65.7% == $9.2 Trillion / $14 Trillion).

But, other than that, every thing is rosy!
That is, if you are the 1 in 5 people that own 83% of all wealth in the nation.
That is, unless you are the in the majority of Americans that are being hammered by these regressve/oppressive systems, which did not all come about by mere coincidence.

Craig, What is interesting about all of your excuses and rationalizations is the message: It is worse somewhere else; So we are doing great!
… as evidenced by your comment a few weeks ago:

    America as a whole has never been this rich, and it’s getting richer all the time. It’s a great time to be an American

If we keep ignoring the warning signs (like Do-Nothing Congress), another Great Depression is not far fetched. There are already some signs. Some things now have never been worse since the Great Depression:

    total federal debt of $22 Trillion
  • foreclosures in the millions for the past few years, and millions predicted for next year

  • 1% of the wealthiest now own 40% of all wealth (up from 20% in 1980), which has never been worse since the Great Depression

  • stagnant-to-falling household incomes for over 30 years

  • many regressive/oppressive systems for the past 30 years

Posted by: d.a.n at December 21, 2007 04:39 PM
Comment #241225
Every comment you make shows me you need to reed Greenspan. You should read him more.
Funny!

What’s obvious about the Federal Reserve Chairman of the Board is their rosy outlooks. If they say something serious, it’s probably more serious than they are making out.

Posted by: d.a.n at December 21, 2007 04:45 PM
Comment #241229

Dan:

So which one is your economy that in your opinion we should emulate?

Posted by: Craig Holmes at December 21, 2007 05:34 PM
Comment #241230

Dan:

What is the sourse of your figures?

CH

Posted by: Craig Holmes at December 21, 2007 05:35 PM
Comment #241231

Dan:

What’s obvious about the Federal Reserve Chairman of the Board is their rosy outlooks.

Remember your definition of Rosy is that the economy will grow under it’s long term mean average. That is Greenspan’s prediction. 2.5% real growth between now and 2030.

So if you say growing less than average is rosy, then your prediction must be,,,,,,,, draconian?

Both you and David are on the far far pessimistic side. Actually way off the charts on the pessimistic side.

Posted by: Craig Holmes at December 21, 2007 05:43 PM
Comment #241232
First of all the fact that it lacks a source and context. That will do for starters.

Ok, let’s say that passage was from Freedom from Fear: The American People in Depression and War, 1929-1945 By David M. Kennedy.

Now, let’s address what was actually stated, is it valid or not?

Posted by: Rhinehold at December 21, 2007 06:15 PM
Comment #241235

Rhinehold,

Again what liberties would National Healthcare deprive one of? Patrick Henry is a great quote, but not an answer.

I wanted to add to all here d.a.n., David, Rhinehold, Craig…and any I’ve missed…this is a delicious thread. You guys are amazing at your abilties to source and edify, I’ve been reading this with joy. Thanks to all and continue please.

Posted by: googlumpugus at December 21, 2007 08:45 PM
Comment #241239

Dan:

I get a list nearly identical to the one you show above for debt of countries. My sourse is here:

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html

The difference of course is that the United States is ranked 4th on your scale and 26th on the CIA handbook scale.

To what do you account for the difference? In fact if you look at your list it there is a mark at number 26 where the United States should fit in.

It looks like you doctored the chart. In addition if you look on your website one simple idea, you list federal debt at about the same percentage of gdp as would be on the CIA list.

Anyway which country do you want to compare us with?

How about Estonia? They have low debt.

Posted by: Craig Holmes at December 21, 2007 10:52 PM
Comment #241242

Craig, there you go again, saying d.a.n and I are the ones way too pessimistic when it was your own quoted sources Bernanke and Greenspan issuing the pessimistic warnings. Bernanke said of entitlement mandates: “The longer we wait, the more severe, the more draconian, the more difficult the objectives are going to be. I think the right time to start was about 10 years ago.” And Greenspan said: “The income gap between the rich and the rest of the U.S. population has become so wide, and is growing so fast, that it might eventually threaten the stability of democratic capitalism itself.” which is precisely what the entitlement crisis bodes for the income gap.

These are the words of the very sources you cite for a more optimistic view of wishful thinking that Congress and the White House are going to make nice and responsible and solve the entitlement crisis, global climate change, wealth disparity, and energy dependence in the next couple of years. Oh, yes, Craig, your optimism is stoic, but, unfounded in any actions currently demonstrated by those with the power to act toward an optimistic future outcome on these issues.

Bernanke and Greenspan CLEARLY set the conditions for a pessimistic outcome and those conditions currently exist. You have no evidence of any kind currently extant to support your optimism.

Posted by: David R. Remer at December 22, 2007 12:43 AM
Comment #241246

David,

My grandfather, when I was about 10, was sitting on his front porch with me, on his Tobacco farm. The farm in eastern Ky, consisted of small allotments of Tobacco patches equaling a few acres in a valley. The surrounding hills were covered in trees. He looked up at the trees and told me that that hill used to be planted in corn, he had plowed it with mule teams during the 20’s and 30’s. He said he didn’t think people would work that hard again meaning they’d starve rather than struggle. I don’t agree. With pain comes struggle and work to remove it, and people while perhaps softer, can become tougher.

The thing about the 30’s was the Depression wasn’t understood by many of influence, except Keyne’s. No one believed or understood the massive deficit spending required to correct the contraction. Some have agenda or lack experience to grasp these concepts today.

Today that IS understood by many, however. While I don’t disagree with you that irresponsible spending will lower living standards due to inefficiencies and other instabilities, I do not think anyone could get away with the stupidity of repeating the mistakes of the 30’s. As generations grow away from that pain they are likely to tempt fate, but ultimately there is enough written history to understand how to set monetary and fiscal policy. There may not be the same wisdom about Nuclear War, overpopulation, or environmental contamination, or political extremism.

Ultimately fiscal deficits are monies Americans owe themselves. Monies are an artifice to facilitate exchange of labor and goods. As long as goods and labor do not disappear, contractions and expansions are perceptions, mostly and psychological in nature. I didn’t understand that when our professor discussed that in Econ 101 or 102 (I had the same professor throughout), but feel I have a grasp of that now. I realize I am oversimplifying things grossly.

The point I’m making and ultimately that I believe Greenspan was making is that America suffered through the depression, and he can see similar perturbations, but he has not and does not believe we are doomed to them.

We risked democracy in the 30’s, there are always risks. There may be pain, but I doubt we’ll see the thirties repeated without major catastrophes of a real nature, rather than a fiscal nature. Global economics could even bleed our economy, but I am positive we understand much better about stability and recovery. We have 80 years of unprecedented growth. That isn’t unfounded positive optimism.


Posted by: googlumpus at December 22, 2007 10:03 AM
Comment #241249

googlumpus, one major flaw in your analysis, when you say : “Ultimately fiscal deficits are monies Americans owe themselves.”

More than 45% of our current national debt is owed foreign investors. That percentage will rise dramatically going forward with entitlement borrowing. The consequences of this are geo-political in monumental ways, some of which constitute direct threats upon our sovereignty, security, and economic longevity.

You said: “The point I’m making and ultimately that I believe Greenspan was making is that America suffered through the depression, and he can see similar perturbations, but he has not and does not believe we are doomed to them.”

While you are certainly free to believe what you like about Greenspan’s words while disregarding them in the same instance, his words could not have be phrased more deliberately or dramatically. Their meaning is quite clear: “the end of democratic capitalism”. If you choose to believe it was his poor language skills, or senility, or despite the context, an attempt at levity, go ahead. But, taken in context, his words have but one serious and sincere meaning. If Congress and the President continue to dodge this bullet, we will pass a point of no return on route to economic and political demise. So, far the evidence is 100% on the side Congress and the President will continue to dodge this responsibility as they have for the last 15 years; Which fulfills Greenspan’s pessimistic warning.

Your preference to dismiss his warning as not serious, is very akin to the disbelief of the investors and bankers in 1929 before the crash, as they considered a crash absolute fantasy in light of the long and recent gains. All declines are preceded by refusal to believe they can happen. This is a priori true, because if people believed a decline was coming, they would act to prevent it. So a kind of cognitive dissonance takes place, a rationalization that prevents one from taking COSTLY preventive measures. And of course, decline follows with far greater costs to be incurred.

Posted by: David R. Remer at December 22, 2007 12:07 PM
Comment #241252
Craig Holmes wrote: d.a.n: So which one is your economy that in your opinion we should emulate?
  • 028 Canada 65.40% (2006 est.)
  • 030 France 64.70% (2006 est.)
  • 033 Austria 63.00% (2006 est.)
  • 046 Switzerland 51.00% (2006 est.)
  • 047 Netherlands 50.80% (2006 est.)
  • 054 Sweden 46.40% (2006 est.)
  • 058 Norway 44.80% (2006 est.)
  • 062 United Kingdom 42.20% (2006 est.)
  • 064 Spain 39.90% (2006 est.)
  • 067 Finland 37.70% (2006 est.)
  • 089 Denmark 28.10% (2006 est.)
  • 094 Iceland 23.50% (2006 est.)
  • 096 Ireland 22.80% (2006 est.)
  • 100 New Zealand 19.90% (2006 est.)
  • 105 Australia 14.10% (2006 est.)
Also, which is no coincidence, all of those nations score higher than the U.S.A. on the Transparency International Corruption Index. BTW, the Canadian Dollar is now, for the first time in history, worth more than the falling U.S. Dollar.
Craig Holmes wrote: d.a.n: What is the sourse of your figures?
Wikipedia. However, when all of the $22 Trillion of U.S. federal debt, the U.S. is 4th on the list.
  • 004 United States 160.00% (2006 est.) $22T/$14T
If only the $9.2 Trillion National Debt is used, the U.S. is 26th on the list, which is still pathetic.
  • 026 United States 65.71% (2006 est.) $9.2T/$14T
Craig Holmes wrote: d.a.n: Remember your definition of Rosy is that the economy will grow under it’s long term mean average. That is Greenspan’s prediction. 2.5% real growth between now and 2030.
That’s not my definition.

Besides Whhoooooppppdeeeedoooo !
1 in 5 persons owns 83% of all wealth. While GDP is and has been rising, median household incomes have stagnated or fallen since 1976 (especially considering that there are more workers per household).

  • 80% of Americans own ONLY 17% of all wealth in the U.S.

  • 1% of Americans own 40% of all wealth.

  • 5% of Americans own 60% of all wealth.

  • 10% of Americans own 70% of all wealth.

  • 20% of Americans own 83% of all wealth.

Craig Holmes wrote: So if you say growing less than average is rosy, then your prediction must be,,,,,,,, draconian?
Nonsense.

That some more circular logic.
Just because GDP grows doesn’t prove everything is OK.
Expecially when these 10 REGRESSIVE/OPPRESSIVE SYSTEMS are hammering the middle-income group.
I don’t give a damn if GDP grew when the wealth is only going to the very wealthy as a result of those regressive/oppressive systems.

Craig Holmes wrote: Both you and David are on the far far pessimistic side. Actually way off the charts on the pessimistic side.
Nonsense.

It only appears that way in the land of Zanadu where everyone wears rose-colored glasses and thinks only rose-colored (or circular) thoughts.

Craig Holmes wrote: d.a.n: I get a list nearly identical to the one you show above for debt of countries. My sourse is here: www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html The difference of course is that the United States is ranked 4th on your scale and 26th on the CIA handbook scale. To what do you account for the difference? In fact if you look at your list it there is a mark at number 26 where the United States should fit in.
I already explained that above.

Again, Your list is the same as mine (from Wikipedia), with one exception, in which I showed two ratios:

  • the U.S. as 4th on the list if you included all $22 Trillion of federal debt (157% = $22T_DEBT / $14T_GDP)

  • and I also showed the U.S. as 26th on the list if you used ENRON-style book-keeping and ONLY considered the $9.2 Trillion National Debt (about 65.7% = $9.2T_DEBT / $14T_GDP)

Craig Holmes wrote: It looks like you doctored the chart.
False.

I included BOTH viewpoints.
It is misleading to look at ONLY the $9.2Trillion National Debt only when
The total U.S. Federal Debt is really around $22 Trillion, based on:

  • $9.2 Trillion National Debt, costing over $1 Billion in interest alone per day!

  • $12.8 Trillion borrowed and spent from Social Security; it’s not pay-as-you-go, with an approaching massive 77 million baby boomer bubble; and the fictitious surpluses are nothing but government paper; Where’s the money going to come from? Get ready for more inflation.

  • $450 Billion PBGC Pension debt

  • Hundreds of Billions of unfunded Medicare liabilities for the next 12 months

  • Hundreds of Billions of unfunded liabilities for the two wars in Afghanistan and Iraq

  • tens-to-hundreds of Billions of annual pork-barrel, graft, corporate welfare, subsidies, etc.

  • massive trade deficits; Trillions of dollars leaving the nation; China holds a Trillion (or more) of it, which is an obvious vulnerability (not to mention the numerous other nations foolishly investing in the massive U.S. Federal Debt).

  • all of the debt (above) represents many tens of Trillions of interert on the debt, will take literally centuries to pay-down, and massive unfunded liabilities will make it difficult to cut spending and stop excessive money printing and borrowing.

  • inflation will exacerbate all of that above; a 1950 Dollar is now only worth 11 cents; the Canadian Dollar is worth more than the U.S. Dollar for the first time in history.
Even if we resort to ENRON style book-keeping, ignore the total federal debt, and consider ONLY the $9.2 Trillion National Debt, the Unites States still places a dismal 26th of the 121 nations above (with a Debt to GDP ratio = 65.7% = $9.2 Trillion / $14 Trillion).

Craig Holmes wrote: In addition if you look on your website one simple idea, you list federal debt at about the same percentage of gdp as would be on the CIA list.
The $9.2 Trillion / $14 Trillion GDP = 65.7% is based ONLY on the $9.2 Trillion National Debt; NOT all $22 Trillion of Federal Debt.
Craig Holmes wrote: Anyway which country do you want to compare us with? How about Estonia? They have low debt.
See list above. So, what is wrong with Estonia?

Still, despite Estonia having only a 3.60% Debt/GDP ratio, is not on my list, because it scores even lower than the U.S.A. for corruption.
Corruption and lawlessness are important factors too.
A good example of it in the U.S.A. is the refusal of government to enforce existing immigration laws. The majority of our politicians choose to despicably pit American citizens and illegal aliens against each other for profits and votes. Also, the Constitution is being flagrantly violated (e.g. especially Article 5).

Craig, the $9.2 Trillion National Debt is only ONE of many pressing problems.
It is wise (not mere pessimism) to look at all of these disturbing factors, and see how it could lead to more economic instability.
Another Great Depression is not far fetched; especially if we stay on the path we’ve been on for 30+ years (see 10 REGRESSIVE/OPPRESSIVE SYSTEMS above).
You’ve already conceded that same thing MANY times (i.e. if we stay on the same course).
Well, I am not as convinced as you that we will suddenly change course.
Many of these problems are a result of deep-rooted corruption, and that does not simply disappear on its own (not without some pain); especially with such prevalent levels of apathy and complacency, and Congress’s 95% to 99% re-election rates since year 1980.

The longer we allow corruption to grow, the longer and more painful it will be later, and the less likely we will change course in time to avoid the painful consequences.
Review history (and its repetitiveness; 2.00 steps foward, 1.99 steps backward) and then factor in human nature and psychology.
Change (including progress) does not come without painful consequences.
Progress is often lost and often has to be regained.
There will most likely be painful consequences for the past 30+ years of so many regressive/oppressive systems.

googlumpugus wrote: I wanted to add to all here d.a.n., David, Rhinehold, Craig…and any I’ve missed…this is a delicious thread. You guys are amazing at your abilties to source and edify, I’ve been reading this with joy. Thanks to all and continue please.
Thanks! Posted by: d.a.n at December 22, 2007 01:15 PM
Comment #241255

Dan:


Ok so you want us to emulate socialist countries:

028 Canada 65.40% (2006 est.) 030 France 64.70% (2006 est.) 033 Austria 63.00% (2006 est.) 046 Switzerland 51.00% (2006 est.) 047 Netherlands 50.80% (2006 est.) 054 Sweden 46.40% (2006 est.) 058 Norway 44.80% (2006 est.) 062 United Kingdom 42.20% (2006 est.) 064 Spain 39.90% (2006 est.) 067 Finland 37.70% (2006 est.) 089 Denmark 28.10% (2006 est.) 094 Iceland 23.50% (2006 est.) 096 Ireland 22.80% (2006 est.) 100 New Zealand 19.90% (2006 est.) 105 Australia 14.10% (2006 est.)

Why would we emulate you list when according to this list

http://www.heritage.org/research/features/index/countries.cfm

Only one ranks higher than the United States in terms of economic freedom?

Posted by: Craig Holmes at December 22, 2007 02:32 PM
Comment #241256

Dan:

Let’s take that list apart. Do you want us to emulate a country like france that has government expenditures that are about 50% higher than in the United States? What about countries with over 50$ of GDP going to federal programs? Finland has 50% going to government programs, as does Austria. Norway is at I think 45%.

Did you intend to choose the largest spending governments on earth for us to emulate? Is that really our position?

Or do you want to refine your list?

Posted by: Craig Holmes at December 22, 2007 02:37 PM
Comment #241257

David:

Craig, there you go again, saying d.a.n and I are the ones way too pessimistic when it was your own quoted sources Bernanke and Greenspan issuing the pessimistic warnings. Bernanke said of entitlement mandates: “The longer we wait, the more severe, the more draconian, the more difficult the objectives are going to be. I think the right time to start was about 10 years ago.” And Greenspan said: “The income gap between the rich and the rest of the U.S. population has become so wide, and is growing so fast, that it might eventually threaten the stability of democratic capitalism itself.” which is precisely what the entitlement crisis bodes for the income gap.

With all do respect David you are simply taking tiny quotes out of their thoughts that fit your view of the world.

You need to read them more to get a better feel for what their views are on these important subjects.

YOu need to build a context around their comments.

With all

Posted by: Craig Holmes at December 22, 2007 02:42 PM
Comment #241260

David:

Let me try again. Your thesis is basically that America has peaked and without serious action there is going to be an huge finanical crisis like we have never seen since the great depression and maybe even greater.

Not so Bernnake. Bernnake’s thesis is about economic justice between generations. If you read him completely you will see time and time again that he will say that if we do not act now, then our children will not have the same opportunites that we do. He even WITH MANY DISCLAIMERS says that the federal reserve has estimated that without action their standard of living will be about 14% less than it would have been without prompt action. Now he also estmatates productivty to increase by about 2% a year. So he is basically saying that our inaction will set the country back by about 7 years.

Above Dan gave his suggestion of modeling socialism. Bernanke says that is an option. However he says that a country that spends 50% of GDP on government behaves far different that one that spends 20% or so like we do. What he sees is that we could become like Europe.

Dan has a solution. We can emulate the countries he is listing I would cross link your earlier article about how high spending could go on Entitlements and then look at Norway, Austria etc and see what they are spending in government solutions.

Dan’s solution works. Bernanke’s point is that if we choose Dan’s approach, we need to be aware that it has it’s opporutnity costs as well.

You see the future in terms of “If we don’t take drastic action america is really in trouble”. Bernanke take the position that we can help our children to have a better future with prompt action. You see finacial ruin as the end if we don’t take action. Bernanke sees that our children will not be quite as well of if we don’t take prompt action.

Again you are far more alarmist about entitlements and America’s future than either Bernanke or Greenspan.

You can of course pick out statements that agree with your conclusion. It is just the Bernanke and Greenspan say those things to draw a different conclution th

Posted by: Craig Holmes at December 22, 2007 03:05 PM
Comment #241261

David:

Sorry I am having trouble with my internet explorer.

To finish:

It is just that Bernanke and Greenspan say those things to draw a different conclusion than you do.

Posted by: Craig Holmes at December 22, 2007 03:07 PM
Comment #241262

Craig said: “It is just that Bernanke and Greenspan say those things to draw a different conclusion than you do.”

Ahhh… so now you are a mind reader of Bernanke and Greenspan, in order to circumvent the obvious meaning of their words.

Thanks, I suspected something similar as a reply.

NOWHERE, does Bernanke speculate on the political and social upheaval of a 14% decline in standard of living. Remember that the Great Depression ONLY saw 10% of the workforce put out of work.

But, for you, I guess Bernanke has to spell it out or you will keep you glass happily half full. But, Greenspan DID spell it out. But, you won’t accept that either.

Delude on!

Posted by: David R. Remer at December 22, 2007 03:29 PM
Comment #241263

Craig said: “With all do respect David you are simply taking tiny quotes out of their thoughts that fit your view of the world.”

Au contraire, mon ami, It is you who is taking their rosier discussions OUT OF THE context of their more dire predictions IF certain things don’t happen. Bernanke speaks positively about the economy all the time, BUT, he does so on the assumptions that Congress and the White House address EFFECTIVELY the entitlement looming crisis and in a timely fashion, or, he does so on the assumption that he is looking at the economy on a short time line.

The only time I am aware, Bernanke HAS spoken of the long term economic scenarios are in the article I linked to from January of this year. He is afterall, a political appointee, and hence, may not mar the reputations of those who keep him in his position. HIS FOMC reports are all very short range estimates and don’t yet encompass the coming deficit spending from Soc. Sec. or the dramatic increases in Medicare. So, they sound just fine.

Posted by: David R. Remer at December 22, 2007 03:35 PM
Comment #241265

David:


David:

He is not saying they will see a 14% cut in standard of living. Wow you jump to the negative quick!!

He is saying it is 14% lower than it would have been!! IE standard of living is increasing but it will increase less!!


READ BERNANKE!!!!

Posted by: Craig Holmes at December 22, 2007 03:51 PM
Comment #241266

David:

I can see from this remark the sourse of your information:

The only time I am aware, Bernanke HAS spoken of the long term economic scenarios are in the article I linked to from January of this year. He is afterall, a political appointee, and hence, may not mar the reputations of those who keep him in his position. HIS FOMC reports are all very short range estimates and don’t yet encompass the coming deficit spending from Soc. Sec. or the dramatic increases in Medicare. So, they sound just fine.

Use this sourse:

http://www.federalreserve.gov/newsevents/speech/2007speech.htm


This gives the entire speech.

I do apologize. I understand now why your comments on Bernanke are sound bites. You are getting them from major news sourses.

It is better to read the entire speech. If you stroll through his speeches you will see many times where he looks long term.

Here is the best Bernanke on the subjects you care most about that I know of.

http://www.federalreserve.gov/newsevents/speech/bernanke20061004a.htm

Best of luck!!

Posted by: Craig Holmes at December 22, 2007 04:08 PM
Comment #241295
Roosevelt was pulled toward greater spending by Hopkins and Ickes, and as the 1936 election approached he decided to gain votes by attacking big business. Roosevelt rejected the advice of Morgenthau to cut spending and decided big business was trying to ruin the New Deal by causing another depression that voters would react against by voting Republican. It was a “capital strike” said Roosevelt, and he ordered the FBI to look for a criminal conspiracy (they found none). Roosevelt moved left and unleashed a rhetorical campaign against monopoly power, which was cast as the cause of the new crisis. Ickes attacked automaker Henry Ford, steelmaker Tom Girdler, and the superrich “Sixty Families” who supposedly comprised “the living center of the modern industrial oligarchy which dominates the United States.” Left unchecked, Ickes warned, they would create “big-business Fascist America—an enslaved America.” The President appointed Robert Jackson as the aggressive new director of the antitrust division of the Justice Department, but this effort lost its effectiveness once World War II began and big business was urgently needed to produce war supplies.

Rhinehold asked: “What is invalid about this statement:”

David replied: First of all the fact that it lacks a source and context. That will do for starters.

Ok, let’s say that passage was from Freedom from Fear: The American People in Depression and War, 1929-1945 By David M. Kennedy.

Now, let’s address what was actually stated, is it valid or not?

Nothing?

Posted by: Rhinehold at December 23, 2007 05:55 AM
Comment #241298
Craig Holmes wrote: d.a.n: Ok so you want us to emulate socialist countries:
  • 028 Canada 65.40% (2006 est.)
  • 030 France 64.70% (2006 est.)
  • 033 Austria 63.00% (2006 est.)
  • 046 Switzerland 51.00% (2006 est.)
  • 047 Netherlands 50.80% (2006 est.)
  • 054 Sweden 46.40% (2006 est.)
  • 058 Norway 44.80% (2006 est.)
  • 062 United Kingdom 42.20% (2006 est.)
  • 064 Spain 39.90% (2006 est.)
  • 067 067 Finland 37.70% (2006 est.)
  • 089 Denmark 28.10% (2006 est.)
  • 094 Iceland 23.50% (2006 est.)
  • 096 Ireland 22.80% (2006 est.)
  • 100 New Zealand 19.90% (2006 est.)
  • 105 Australia 14.10% (2006 est.)
Craig, I prefer some Socialism any day over Plutocracy, Corpocrisy, Corporatism, and Corruption.

The U.S. Government is FOR-SALE and corrupt, and all of those nations above score better on the Transparency International Corruption Index.

You want to talk about economic freedom?
Then try to explain and rationalize away these 10 REGRESSIVE/OPPRESSIVE SYSTEMS in the U.S:

  • (01) Massive Federal Debt ($9.2 Trillion National Debt, $12.8 Trillion Social Security debt, $450 Billion PBGC pension debt, hundreds of Billions of unfunded Medicare liabilities, hundreds of billions of unfunded liabilities for two wars in Iraq and Afghansitan, Trillions of dollars on interest alone on all of that debt.

  • (02) illegal immigration, and our politicians that despicably pit Americans and illegal aliens against each other;

  • (03) a ridiculously complex, perverted, and regressive tax system;

  • (04) inflation; dishonest and excessive money creation;

  • (05) dozens and dozens of regressive sales taxes;

  • (06) corporate taxes that are really more hidden regressive sales taxes that come out of employees incomes and get passed on to consumers as yet another regressive sales tax;

  • (07) property taxes that are often REGRESSIVE, since (like all sales taxes are REGRESSIVE), as income decreases, the property tax increases (as a percentage of income); also, property taxes are double, triple, quadruple, quintuple, … , N-tuple taxation because it is repeated every year! A home owner is taxed every year on what the home owner already owns;

  • (08) Caps (e.g. currently $97,500) on Social Security taxes is a REGRESSIVE tax.

  • (09) Our government is FOR-SALE. An amazingly tiny, tiny 0.15% of all 200 Million eligible voters make 83% of all federal campaign donations (of $200 or more). 90% of all elections are won by the candidate that spends the most money (usually the incumbent);

  • (10) Unnecessary wars; We have had 7 wars in the last 90 years (about 1 war every 13 years). A war in Afghanistan and in Iraq are ongoing as of late 2007. Some of those wars were probably unnecessary (i.e. Vietnam, and Iraq-2 which was largely based on invalid intelligence about Weapons of Mass Destruction that was never verified). What is more REGRESSIVE than that? It is not just REGRESSIVE. It is OPPRESSIVE.

Craig Holmes wrote: Let me try again. Your thesis is basically that America has peaked and without serious action there is going to be an huge finanical crisis like we have never seen since the great depression and maybe even greater.
Craig, as you have already acknowledged, there are is a projected decline in the standard of living for many Americans for several years to come.

What I think will happen is a continued and steady decline of the U.S. as the 10 REGRESSVIE/OPPRESSIVE Systems above worsen and cause more and more damage to the economy.

Craig Holmes wrote: Not so Bernnake. Bernnake’s thesis is about economic justice between generations. If you read him completely you will see time and time again that he will say that if we do not act now, then our children will not have the same opportunites that we do. He even WITH MANY DISCLAIMERS says that the federal reserve has estimated that without action their standard of living will be about 14% less than it would have been without prompt action. Now he also estmatates productivty to increase by about 2% a year. So he is basically saying that our inaction will set the country back by about 7 years.
So, what are you celebrating? Do you think a few percent of growth makes everything OK?

OK, when that wealth is going only to a few?
OK to ignore the big picture.
Another Great Depression is not far fetched, because of the high probability of “inaction”.

Craig Holmes wrote: Above d.a.n gave his suggestion of modeling socialism.
Nonsense.

I’ve never suggested that Socialism is the solution.
Putting words in other peoples’ mouths, are really lame attempts to salvage a weak and failing argument (always a sure sign of frustration of a losing argument).
I don’t care for excessive Socialism and never said that I did.
However, I prefer some Socialism any day over Plutocracy, Corpocrisy, Corporatism, and Corruption.
How about you?

Craig Holmes wrote: Bernanke says that is an option. However he says that a country that spends 50% of GDP on government behaves far different that one that spends 20% or so like we do. What he sees is that we could become like Europe.
First of all, our total Federal Debt to GDP is actually $22_Trillion_DEBT / $14_Trillion_GDP = 157%

Those ENRON Style book-keeping tactics fail to include the $12.8 Trillion borrowed and spent from Social Security, $450 Billion PBGC pension debt, hundreds of Billions of unfunded Medicare liabilities, hundreds of billions of unfunded liabilities for two wars in Iraq and Afghansitan, Trillions of dollars on interest alone on all of that debt.

Craig Holmes wrote: d.a.n has a solution. We can emulate the countries he is listing I would cross link your earlier article about how high spending could go on Entitlements and then look at Norway, Austria etc and see what they are spending in government solutions.
More Nonsense, and a totally false characterization of my suggested solutions (One-Simple-Idea.com).

There you go again … putting words in other peoples’ mouths, are really lame attempts to salvage a weak and failing argument (always a sure sign of frustration of a losing argument).
which won’t salvage a weak and failing argument

Craig Holmes wrote: d.a.n’s solution works. Bernanke’s point is that if we choose Dan’s approach, we need to be aware that it has it’s opporutnity costs as well.
Huh ? ! ?
Craig Holmes wrote: You see the future in terms of “If we don’t take drastic action america is really in trouble”.
Yet, things keep getting worse.

So, how long are you going to keep saying “If we don’t take action?

Craig Holmes wrote: Bernanke take the position that we can help our children to have a better future with prompt action. You see finacial ruin as the end if we don’t take action. Bernanke sees that our children will not be quite as well of if we don’t take prompt action.
Maybe. Maybe not. Another Great Depression is not far fetched.

Yours and Bernanke’s viewpoints seem optimistic to me.
However, there are several things that are now to levels the have never been that worse since the Great Depression.

Things will get worse if those 10 REGRESSIVE/OPPRESSIVE SYSTEMS (above) continue to take their toll.

Posted by: d.a.n at December 23, 2007 08:40 AM
Comment #241300

Rhinehold,

Except for attributing motives to people which cannot be substantiated, it reads as a pretty factual account. The ironies however are pregnant in the passage you quote.

First, it was enormous big spending and borrowing by the federal government that did, indeed, bring the nation out of the depression.

Second, the enormous wealth gap that existed through the 1920’s was a growing threat toward the American economy and that threat was realized on Black Thursday, 1929 and several years that followed.

Third, let’s look at Hoover’s answers: As Thomas Blantz, History Professor at Notre Dame writes in his review of Kennedy’s book:

To address the farm problem, the president called congress into special session in early 1929 to pass the Agricultural Marketing Act. When the Crash occurred, he pleaded with business leaders to hold the line on wages and employment, and he undertook a $140,000,000 public works program. He signed the Hawley-Smoot Tariff only reluctantly, favoring its high duties on farm products but not on industrial goods. He was willing to experiment with new agencies—the National Credit Association, the Federal Home Loan Bank Board, and the Reconstruction Finance Corporation—but these came too late. He early on underestimated the severity of the collapse, remained orthodox on the gold standard and balanced budget too long, and, in the author’s judgment, “remained a manager, not a politician” (p. 65), unable to lead congress or the country.

Some at least, of what you attempt to blame on FDR was actually begun and enacted by Herbert Hoover. But, since much of the action was too little too late, FDR inherited in his election in the 1930’s, a nation on the brink. He acted. He acted decisively. He acted extra-constitutionally and broke laws. He was both wrong on many of his actions and right on many of his actions.

So, your point is? The fact remains, the nation improved as best it could at the time given the enormous consequences of the Dust Bowl which occurred as a result of ignorance by farmers exploiting the land for every cent with a complete disregard for their obligation to that land, a formula for capitalism that continues to this day. One only need to look at the Iraq War for oil, the long planned invasion of Iran, and the false pretenses erected as pretext for both and the enormous losses in human life and suffering as a consequence of this overreach for capitalist gains in the Middle Eastern oil fields.

The fact is, Capitalism works best when it is well regulated and overseen for deleterious excesses like monopolization and oligopolies which seek to undermine and eliminate competition which is a fulcrum for successful capitalism to work in the best interests of the society.

Posted by: David R. Remer at December 23, 2007 09:11 AM
Comment #241304
Second, the enormous wealth gap that existed through the 1920’s was a growing threat toward the American economy and that threat was realized on Black Thursday, 1929 and several years that followed.
And, it may be happening again. 1 in 5 people own 83% of all wealth, and while GDP has grown, inflation is rampant (a 1950 U.S. Dollar is now worth only 11 cents), and incomes have stagnated or fallen for over 30 years (especially considering there are more workers per household). The solution is not hand-outs and a welfare state. Part of the solution is to remove these numerous regressive/oppressive systems. That would be a good start.
The fact is, Capitalism works best when it is well regulated and overseen for deleterious excesses like monopolization and oligopolies which seek to undermine and eliminate competition which is a fulcrum for successful capitalism to work in the best interests of the society.
Again, corpocrisy, corporatism, corruption, and numerous regressie/oppressive systems are gradually, but surely chipping away at our society. Government is becoming a plutocracy, and the scary part is the apathy and complacency of the majority of voters that continue, 90% of the time, to reward and re-elect the candidates that merely spend the most money on their campaign; rewarding Congress with 95%-to-99% re-election rates.
  • Posted by: d.a.n at December 23, 2007 10:18 AM
    Comment #241305

    Craig, the linked speech you refer to PREDATES the speech in which he states we are already very tardy in addressing the entitlement crisis.

    Are you cherry picking instead of reading the whole speech yourself?

    He begins the speech with “In coming decades, many forces will shape our economy and our society, but in all likelihood no single factor will have as pervasive an effect as the aging of our population.”

    Of course, he is speaking from economic terms about the unfunded mandates of 44 trillion dollars for Soc. Sec. and Medicare. So, this speech is on topic. He even says: “Although demographic change will affect many aspects of the government’s budget, the most dramatic effects will be seen in the Social Security and Medicare programs, which provide income support and medical care for retirees and which have until now been funded largely on a pay-as-you-go basis.”

    He goes on to say that entitlements portend more than doubling of the federal spending as a percentage of GDP, 7 to 15% by 2050. Since, there is already a growing political conflict in this country over the current federal budget as a % of GDP, one begins to see the political implications of it rising more than double. A monumental threat to our political system is in store if we follow that route, as Greenspan has already stated.

    Craig, keep in mind here, I am using YOUR SOURCE for this, which makes me wonder if you shouldn’t be questioning your reading of the content, instead of mine. Bernanke states in your linked reference:

    As the population ages, the nation will have to choose among higher taxes, less non-entitlement spending, a reduction in outlays for entitlement programs, a sharply higher budget deficit, or some combination thereof.

    There is nothing ROSY in that depiction, Craig. NOT ONE DAMN THING! Let’s take a look at the what those choices will mean for Americans one by one:

    “higher taxes” = political warfare between Reaganites and supply-siders and the Middle Class and Democratic Domestic spending favorers. Also means less money available for all other consumption outside medical care.

    “less non-entitlement spending” = less revenues for infrastructure, global climate change efforts, education as emerging nations dominate in education, and less foreign spending with the plethora of positive and negative implications on our leadership role.

    “a reduction in outlays for entitlement programs” = a breach of contract between the U.S. government’s politicians and the American people and tax payers. This is potentially the greatest threat to the security of America’s future and government. If the government breaches this contract after taking money from workers their entire lifetimes on that contract, it constitutes an abuse far greater than any King George exacted upon the Colonialists. This is the seed for the next Revolution or Civil War. It only remains to be seen if this avenue is pursued, whether that seed shall be nurtured by patriotism or killed by authoritarian martial law type tactics.

    Obviously, this consequence is NOT something which Bernanke could or would speak of while entertaining the notion of keeping his position. But, his reneging on this contract is pregnant with the political and social implications. Not to mention the human suffering, and 10’s of millions more Americans dropping into poverty in their retirement years as a result. Talk about the disposability of the elderly as useless and unjustifiably a drain on national resources, the option of simply reducing entitlement spending promotes just that kind of value psychology which will not go unfought in the halls of representative and elective government.

    “a sharply higher budget deficit” = means a sharply higher budget deficit year after year for about 5 to 6 decades. That quite and very simply results in economic collapse. There is no way reality can generate the revenues, or the generosity of foreign lenders to support a national debt of 53 Trillion dollars, (the current 9 trillion plus the 44 trillion in unfunded mandates posed by SS and Medicare through 2075).

    And finally, Bernanke’s last option: “or some combination thereof” which equals something quite unpredictable and nebulous at this point given gridlock of the political parties and their absolute insistence on pork spending in the face of the dire options and futures painted by Greenspan and Bernanke.

    Bernanke in mentioning this option of course presumes the option can be successful. That is a presumption of the first order. Secondly, if to be successful, it presumes the right combination of the options he mentions and in the right ratios to each other, entitlement cuts, spending cuts, higher taxes, etc.

    Where in the current political sphere do YOU see any will to cut entitlements, cut spending, AND raise taxes? It does not exist.

    Bernanke stipulates that one possible salvation can come from our increasing our savings rate TODAY! Yes, he stipulates, TODAY. That is not happening. And there is no incentive anywhere in the political atmosphere to create such savings motivations, especially in light of the sub-prime mortgage on going threat to bottom lines of both home owners and corporations for at least the next year. So, one of the key salvations Bernanke spoke of in 2006 is not even in play as we enter 2008.

    Then Bernanke goes off on this non-sensical hypothetical about the future remaining exactly the same as the present demographically and in terms of consumption only to arrive at the following statement:

    These numbers shouldn’t be taken literally but the basic lesson is surely right—that the decisions that we make over the next few decades will matter greatly for the living standards of our children and grandchildren. If we don’t begin soon to provide for the coming demographic transition, the relative burden on future generations may be significantly greater than it otherwise could have been.

    Craig, months after he made this speech you reference in your link, Bernanke revised the entire scenario when he said in Jan. of 2007, the time to act on the wealth disparity [which threatens our ability to effectively address the entitlement crisis by shrinking available funds for savings] is 10 years ago.

    Sorry, guy, but, it is you, not I who is failing to read and understand Greenspan’s and Bernanke’s speeches.

    Bernanke says in the linked speech: “The choice of which generations should bear the burden of population aging has consequences for economic efficiency as well as for intergenerational equity…” is a ruse. The fact of the matter is this is a false choice. In reality, the daughters and sons of the aging retirees will bear the brunt equally with their aging parents and grandparents for the incongruence of federal revenues and spending and demand for independent retirement living and health care. Regardless of the outcome, all living generations will suffer the consequences of our present failure to act decisively and effectively to address these monumentally threatening issues.

    In an attempt to put a positive spin on this whole thing, Bernanke says rather naively: “First, restructuring the finances of our entitlement programs to minimize their reliance on deficit spending will enhance national saving and reduce the burden on future generations.”

    Of course, the import of that statement is that sacrifices in current quality of lifestyles and living habits would have to take place in ORDER to accommodate such optimistic increases in national savings. Which makes this option a very hot potato to be tossed back and forth across the aisle in Congress with enormous implications for incumbent reelections.

    Bernanke closes his speech with deceptive politically motivated understatements, to whit: “Finally, the imperative to undertake reform earlier rather than later is great.” and “However, if reform is delayed and fiscal exigencies ultimately force changes in these programs with little notice to potential retirees, their ability to adjust their behavior appropriately could be much reduced.”

    Which constitutes a nearly complete abdication of the dire consequences for failure to act timely and effectively, in order to not cause a political turmoil, which of course must occur before timely and effective action CAN take place.

    So, in closing, I refute your assumption that I rely upon snippets to make my ‘confused and misunderstood conclusions’ about the writings of Greenspan and Bernanke. Indeed, it is you who apparently read their words, without comprehension or critical analysis and offer those words up as support of a preference to see the glass half full.

    The reality of the future depends on what real steps we take today. And nearly none of Bernanke’s recommendations are being implemented in large and decisive way they must be implemented if his rosier outcome is occur. And do NOT forget that his rosier outcome is predicated on a hypothetical research scenario which, he himself admits on several occasions, is based on a false and unrealistic assumption set demographically and in terms of consumption (and saving) behavior.

    The bottom line is this, Craig, everything Bernanke proposes as possible salvations rest ENTIRELY upon a cooperative and responsible government enacting those salvations. That reality DOES NOT EXIST. Therefore, any attempt to rely upon Bernanke’s speculations for a potential rosy outcome are predicated on assumptions about a political environment that simply does NOT exist.

    Which raises the spectre Greenspan spoke of, the end of democratic capitalism as a viable system for addressing modern issues and challenges.

    Posted by: David R. Remer at December 23, 2007 10:19 AM
    Comment #241311
    First, it was enormous big spending and borrowing by the federal government that did, indeed, bring the nation out of the depression.

    No, it aided the recovery but if the business environment had been advesarial, as it was in 1937 when the recession occurred despite record (at the time) spending. This shows us that spending alone is not enough, the environment has to be friendly to spur investment as well. This is one of the major mistakes that FDR made, one that people want to ignore for some reason.

    Some at least, of what you attempt to blame on FDR was actually begun and enacted by Herbert Hoover.

    Yes, I’ve stated that before as well. People like to say that the Depression was brought on by a ‘hands off’ attitude towards business but Hoover was anything but hands off. In fact, this was pointed out by FDR when he was running for President. He accused Hoover of “reckless and extravagant” spending, of thinking “that we ought to center control of everything in Washington as reapidly as possible”, and of presiding over “the greatest spending administration in peacetime in all of history”. John Nance Garner, FDR’s running mate, charged that Hoover was “leading the country down the path of socialism”.

    I love the quote I read during that time (paraphrasing, I can’t find it just this moment…) that said that “FDR’s fix for too much government is more government.”

    Hoover was anything but ‘hands off’. The Smoot-Hawley Tarrif was not the first, but possible the most onerous of the government programs that Hoover had signed. And as you pointed out, the reason that FDR was able to get so much done in the first 100 days is because he just coopted much of what Hoover was working on to create the New Deal.

    So, your point is? The fact remains, the nation improved as best it could at the time

    I disagree. I contend that had FDR not turned his ire towards business and created the advesarial atmosphere that existed between the mid to late 1930s, which caused the 1937 recession, that the recovery could have come much sooner. He was already spending massive amounts, but because business was being attacked they prudently put their money away and did not invest, causing the deficit spending to not be effective.

    Basically, in order for the US economy to prosper it needs both good protections against extremes (no monopolies, fair free markets, anti-fraud measures, FDIC, etc) and then less manipulation by government beyond that (no tarriffs, free-trade protections, low/no taxation except at the retail level, etc.) Keeping politics out of the running of non-political entities is key to not only ensuring that business decisions are made with a view of expansion and growth but also preventing a major political football from being used by the parties, creating a wedge issue and spurring a class warfare atmosphere that we just do not NEED.

    We see it every day, especially on the left side of the blog here, that business is seen as the enemy. The reality is that business needs workers and workers need business, but all to many times they are spurred into an irrational hatred of each other. Business risks their wealth and property in order to make more, knowing that they could lose it all. To do this they provide jobs and opportunities for non-business individuals. They in turn take advantage of these jobs and opportunities with the goal of helping the business make that wealth. Without this symbiotic relationship our economy would fail, and I think that length of the depression and specifically the recession of 1937, is a perfect example of this, one that too many people want to dismiss as they continue to want to recreate those same mistakes today.

    Bad government action by Hoover’s administration caused a depression when a recession could have been the most that occurred, bad monetary practices, worse laws like Smoot Tawley that cut out a third of the markets that farmers and business had at the time, and not acting quickly enough when a few banks started to fail caused the deep depression that we saw. But in the same way, had the mistakes of FDR towards business not occurred, had he accepted deficit spending completely and not overtaxed business (the signing statement is still incredulous to me) and created an atmosphere of non-investment, then we not only would not have had the recession of 1937 but would have been out of the depression before then, before WWII.

    Posted by: Rhinehold at December 23, 2007 02:16 PM
    Comment #241313

    Rhinehold said: “No, it aided the recovery but if the business environment had been advesarial,”

    There are many moving parts to a recovery from Depression, NONE OF WHICH can occur without an enormous infusion of liquidity for both consumers and producers to jump start the production-consumption cycle. Which is precisely the role FDR’s massive government borrowing and spending served in projects that put people and companies to work on public and private consumables and infrastructure and of course, in 1941 on the War Machinery and Industry.

    Rhinehold said: “I contend that had FDR not turned his ire towards business and created the advesarial atmosphere that existed between the mid to late 1930s”

    I find that statement utter nonsense. The fact is, business caused the depression and Dust Bowl. Any measures to redress business’ causal participation would have made business adversarial. Any remedies whatsoever which moved to change the heretofore near complete freedom of business to create boom and bust cycles, would have made adversaries of big business.

    You lay the blame at FDR’s feet. I suggest there was no possible person to sit in the White House at that time who WOULD NOT have made adversaries of big business while wrestling the nation toward a future in which the Depression would NOT be repeated.

    And lo and behold!, more than 70 years later, no Depression repeated. Of course, now that corporations are back with a vengeance under Libertarian and Republican sponsorship as the growing primary governors of government and private industry practice, another Depression may well be in the offing.

    I agree with you when you say: “Basically, in order for the US economy to prosper it needs both good protections against extremes (no monopolies, fair free markets, anti-fraud measures, FDIC, etc) and then less manipulation by government beyond that (no tarriffs, free-trade protections, low/no taxation except at the retail level, etc.)”

    It needs more than that, but, it needs these as well. It also needs a generally wide spread distribution of wealth such that broad based consumerism remains healthy, a precondition to healthy business.

    Then we quickly disagree again. Your postulation indicates the oil industry is the best agent to alleviate our oil dependence, not government. That the Energy companies are the best agents to address the continually unaswered question of what to do with nuclear waste, instead of government. That the Chemical companies were the best agent to deal with the consequences of DDT, lead, tanning industry run-off, and mercury in the environment, instead of government.

    And of course such a postulation is just plain wrong, because of the social, humanity, and individual suffering costs associated with them and many more, where business casually accepts law suits for such consequences as a cheap cost of doing business (Ford Motor and the Pinto bolt at the rear of the gas tank for example).

    These and thousands of other nightmare tales of laissez faire purism are precisely why Libertarian’s and to a growing degree, the Republican’s embrace of such purism sows the seeds of their own demise if and when they achieve power. Nasty, horrible things occur to the public when business is given a free hand to reduce all interaction with the public, environment, government, and future, to an arithmetic bottom line equation.

    There are other values of equal and often greater value than the profit yardstick.

    We can agree that FDR made grave mistakes. But, when I attempt to perceive the level of historical and economic information and data and theory available at the time, I have a very hard time picturing any person in our entire history of having been capable of wielding the power of the White House during that same period WITHOUT making a number of grave mistakes with hindsight of decades as a guide.

    The fact remains, prior to FDR, America was just another country on the global map. After FDR and until the election of GW Bush, America saw the concurrent rise of greater government regulation of business, greater wealth per capita than nearly any other nation in the world, and the greatest role in geopolitics since the Roman Empire.

    It is pretty nonsensical to try to make the argument that success was a failure. Some of the the principles that guided FDR remained guiding principles from then to now, and grown even more robust. And until 2000 with the tech bubble, and the election of GW Bush, America had reached its apex in the fulfillment of the ideals set out in the Declaration of Independence.

    Now, we are moving sideways, neither progressing nor falling behind the year 2000’s apex. But, this sideways holding pattern will not last in the face of the entitlement, climate change, and education crises looming in our very near future.

    Posted by: David R. Remer at December 23, 2007 02:30 PM
    Comment #241317
    I find that statement utter nonsense. The fact is, business caused the depression and Dust Bowl.

    I thought we just agreed that idiotic actions of government like the Smoot Tawley Tarrif and the failure of the administration to stop the banking runs caused the Depression, which is it? (BTW, Smoot Tawley was so bad that it had a large hand in causing WWII…)

    It is now known that almost all banks that failed were in states with unit banking laws - laws that prohibited banks from opening branches and thereby diversifying their portfolios and reducing their risks. While the US with our unit banking laws at the time had thousands of bank failures, Canada, which permitted branch banking, didn’t have a single failure.

    Tell me exactly what, in your opinion, led to the Depression?

    As for any president being seen as advesarial, THAT is utter nonsense. Let me re-iterate what FDR did during that time…

    * Accused business of instigating a capital strike for the sole purpose of costing him his re-election, had the FBI investigate this (of course they found nothing). The fact is that there was no investing going on because there was incentive not to.

    * Seized individual’s gold holdings and then set gold prices at whims that had nothing to do with sound economic information. He once set the price of gold from his bed while eating breakfast by 21 cents, because 3 and 7 are lucky numbers.

    * Sunk the 1933 London Economic Conference which was convened at the request of major nations to bring down tarriff rates and restore the gold standard. Had this occurred and the tarriff rates were adjusted to encourage trade, how long would the Depression have lasted, when we know it was the uptick in trade after WWII that was a major driving factor in our recovery?

    * The initial setting of a minimum wage (not the minimum wage act, but as part of a previous act) threw an estimated 500,000 blacks out of work. (source is Banjamin M. Anderson, Economics and the Public Welafare: A financial and Economic History of the United States, 1914-1946 p 127 since I’m sure you’ll disagree with this fact).

    * The AAA (Agriculture Adjustment Act) that called for destroying crops and livestock when people were standing in food lines. Perfectly good fields of cotton, corn and wheat were plowed under and healthy cattle, pigs and sheep were slaughtered and buried in mass graves (Secretary of Agriculture Henry Wallace personally gave the order to slaughter 6 million baby pigs before they grew to full size). It was also the first time that farmers were paid to NOT work at all. It may have helped some farmers by raising the prices of their goods, it harmed those who had livestock and crops destroyed but ALSO raised the price of food at a time when people were starving to death.

    * Created the NRA that rasied the cost of doing business by 40%, not something that a depressed economy needed. It was eventually found unconstitutional but not before it did its harm. In fact, during the whole of the time the NRA was in effect, industrial production did not reach the levels it had enjoyed in July 1933. Oh, and anyone who attempted to interfere with the NRA was personally threatened with ‘a punch in the nose’ by the administartor, General Hugh “Iron Pants” Johnson. It was so bad that black markets appeared because of over 500 NRA codes…

    After the worst of the New Deal was thrown out, the economy showed some signs of life. Unemployement dropped to 18 perscent in 1935, 14 percent in 1936 and even lower in 1937. Recovery was on its way. BUT, angered by his programs being found unconstitutional and accusing big business of conspiring to create a ‘capital strike’, FDR went on further rampages against business. Within 1 year the recession of 1937, including a stock market crash of nearly 50 percent between August 1937 and March 1938, took all of the wind out of the sails of recovery. Had FDR not taken this new tact of even more attacks on business when he had done enough right it is very obvious that the depression would have been over by the fall of 1938. Instead, it took another 10 years for that to occur. These attacks included:

    * The Wagner Act, making it ILLEGAL to say no to a union’s demands.

    * Undistributed Profits Tax.

    * Raised the top tax rate (raised in 1932 from 24 to 63, a lot but understandable at a time when necessary) from 63 to 90 percent and proposed a 99.5 percent tax on all incomes over 100,000.

    * Executive Order to tax all income over $25,000 at 100%! Incentive to build wealth and invest at all here? Luckily the congress override that nonsense (and why can’t the current congress override Bush’s EO’s again?)

    * Lowered the personal exemption to $600, a tactic that not only attacked the upper class but for the first time EVER the middle class were hit with taxation. This has been the case ever since.

    * From the summer of 1936 to the spring of 1937 the Fed double reserve requirements on the nation’s banks.

    * During the repacking debacle most businesses kept their wealth close to their vests. New investments during 1936 to 1937 dropped even more than previous years and during a two month period of time in late 1937 the market for steel - a key economic barometer - plummeted from 83 percent of capacity to 35 percent. (When this hit the news FDR took a 9 day fishing trip)

    Columnist Walter Lippmann wrote in March 1938 that “With almost no important exception every measure FDR has been interested in for the past five months has been to reduce or discourage the production of wealth.”

    “Not until both Roosevelt and the war were gone did investors feel confident enough to ‘set in motion the postwar investment boom that powered the economy’s return to sustained prosperity” - Robert Higgs, “Regime Uncertainty” Why the Great Depression Lasted So Long and Why Prosperty Resumed After the War”, The Independent Review, Volume 1, Number 4: Spring 1997, p. 573.

    As business leaders stated of their motives of the time, Lammont du Pont offered in 1937: Uncertainty rules the tax situation, the labor situation, the monetary situation, and practially every legal condition under which industry must operate. Are taxes to go higher, lower or stay wehre they are? We don’t know. Is labor to be union or non-union? … Are we to have inflation or deflation, more government spending or less? … Are new restrictions to be placed on capital, new limits on profits? … It is impossible to even guess at the answers” - Quoted in Herman E. Krooss, Executive Opinion: What Business Leaders Said and Thought on Economic Issues, 1920s - 1960s p. 200

    Public opinion at the time felt the same way, when asked in 1939 “Do you think the attitude of the Roosevelt adinistration toward business is delaying business recovery?” the American people responded yes by a margin of more than two to one.

    Even FDR’s Tresury Secretary agreed when he wrote “We have tried spending money. We are spending more money than ever before and it does not work. We have never made good on our promises. I say after eight years of this Administration we have just as much unemployment as when we started and an enourmous debt to boot!”

    So, my contention is that those that blame the 1920s and 1930s on ‘free-market capitalism’ and ignore the harm that idiotic governmental actions caused are ignoring the facts.

    The cause of the disaster was directly tied back to inane governmental decisions (banking, tarriffs, etc) and the recovery, while initially on a good track for an early result was stimied by direct actions of the administration in their war on business when a much more friendly atmosphere was definately necessary.

    Posted by: Rhinehold at December 23, 2007 05:22 PM
    Comment #241318
    more than 70 years later, no Depression repeated.

    Isn’t this the same argument used by Republicans to convince us we still need anal probes to board a plane? I mean, you’re seriously throwing that out there?

    Posted by: Rhinehold at December 23, 2007 05:33 PM
    Comment #241322

    BTW, an excerpt from Shales book:

    “Both preferred to control events and people. Both underestimated the strength of the American economy. Both doubted its ability to right itself in a storm. Roosevelt offered rhetorical optimism, but pessimism underlay his policies. Though Americans associated Roosevelt with bounty, his insistent emphasis on sharing – rationing, almost – betrayed a conviction that the country had entered a permanent era of scarcity. Both presidents overestimated the value of government planning. Hoover, the Quaker, favored the community over the individual. Roosevelt, the Episcopalian, found laissez-faire economics immoral and disturbingly un-Christian.

    “And both men doctored the economy habitually. Hoover was a constitutionalist and took pains to intervene within the rules – but his interventions were substantial. Roosevelt cared little for constitutional niceties and believed they blocked progress. His remedies were on a greater scale and often inspired by socialist or fascist models abroad.”

    Unfortunately, while both Hoover and Roosevelt erred – proved wrong by the failure of their programs to reinvigorate the American economy – their mistaken visions live on in both the Republican and Democratic parties today. Both major political parties promote economic intervention on a massive scale. Both political parties push for ever more expansive federal power. And both political parties seek to apply those policies to the entire world, using war, if necessary, to advance their attempts at global social engineering.

    Posted by: Rhinehold at December 23, 2007 07:47 PM
    Comment #241324

    David:

    Great. Now you are getting your information from the original sourse instead of sound bites from the news media.

    Now what is your long term forcast for the economy?

    Greenspans is 2.5% real growth in the economy between now and 2030. He is out of office 80 plus years old and puts it in writing.

    All of the issue you bring up everyone knows. What I am saying is that your conclusion if very different.

    So what is your long term forcast for our economy?

    Your response if fine in that you say basically “Bernnake agrees with your sourse Craig that Entitlements are a problem”.

    Well duh, everyone knows entitlements are a problem.

    It’s the conclusion I suspect is very different.

    So do you agree with Greenspans long term prediction?

    Posted by: Craig Holmes at December 23, 2007 08:19 PM
    Comment #241327

    Dan:

    I’ve never suggested that Socialism is the solution.

    No but what you are saying is that you adire their economies.

    My basic thesis with both you and David is that fininacial collapse in not on the way. We will weather the entitlement crisis just fine.

    Here are three major reasons I believe you and David are wrong is stating the American economy is near collapse and we must there for vote all incombants out.

    1. We are not first in line. When we look at the entitlement crisis, or age wave, Japan, Germany and Italy among others are in front of us. They have older populations and we can see how they are doing and conclude that so far they are not in economic collapse. All economies are growing.

    2. We have a better chance to adjust for two reasons; immigration and higher birth rates. Our demographic issues are not as difficult. We can keep our population younger. (Please not that I am not saying that these to advantages take away the problem, but rather that they make ours easier.

    3. The Dan solution. You said that you have no problem with emulating socialist countries. Now I undertand that you are not asking us to become socialist. (neither am I) However as a default solution we see economies that work with 50% of gdp government expenditures. They are operating without fiscal crisis AS PER YOUR POST.

    I hope to shout that we can do better than the Europeans. However there solution works, which means there is a solution.

    When I say in the future “The Dan Solution”, I know you don’t want us to become socialist. My only point will be that when faced with a choice between fiscal collapse and socialism, shoot we will choose socialism. Fiscal collapse will not be our choice.

    Posted by: Craig Holmes at December 23, 2007 08:33 PM
    Comment #241330

    David:

    Here is a Bernake conclusion on this topic from Feb of this year.


    To summarize, because of demographic changes and rising medical costs, federal expenditures for entitlement programs are projected to rise sharply over the next few decades. Dealing with the resulting fiscal strains will pose difficult choices for the Congress, the Administration, and the American people. However, if early and meaningful action is not taken, the U.S. economy could be seriously weakened, with future generations bearing much of the cost. The decisions the Congress will face will not be easy or simple, but the benefits of placing the budget on a path that is both sustainable and meets the nation’s long-run needs would be substantial.

    Here is your conclusion from August of this year.

    There is though, another scenario, far less likely, but, greater than ever before, that public sentiment toward both Democrats and Republicans sours to the point that Democrats still pick up seats, but, an unpredictable number of Democrat incumbents also lose their bid. The anti-incumbent sentiment continues to grow, and Independent registered voters rolls continue to grow. This constitutes a major wild card, with a remote chance of altering the perceived trend today of a Democratic landslide victory in 2008.

    I personally don’t believe this will happen in 2008, however, it will become more likely with each election, and may become probable by 2012 or 2014’s elections. That will coincide with the Social Security and Medicare crisis coming to dominate nearly all other political issues, as the national debt exceeds 11 to 12 trillion dollars, more than double 2000’s. Reality in 2014 will hit like a ton of bricks and both of the duopoly parties and their incumbents will be held to political account as never before. Especially if a number of popular or, known, independent centrists and moderates rise to candidate levels.

    The CBO is actually projecting a budget surplus in 2014.

    Is this difficult? You are a pessimist in economics. It’s pretty obvious.

    CBO sees 2014 as boring, and you see it as enough to bring down the two party system.

    Posted by: Craig Holmes at December 23, 2007 08:51 PM
    Comment #241332

    Rhinehold:

    Excellent discussion between you and David, thank you!!!

    Bad government action by Hoover’s administration caused a depression when a recession could have been the most that occurred, bad monetary practices, worse laws like Smoot Hawley that cut out a third of the markets that farmers and business had at the time, and not acting quickly enough when a few banks started to fail caused the deep depression that we saw. But in the same way, had the mistakes of FDR towards business not occurred, had he accepted deficit spending completely and not overtaxed business….(we)would have been out of the depression before then, before WWII

    I totally agree with the above. Where I disagree with you is when you falsely try to tip the scale with your thumb, by emphasizing every small mistake Roosevelt made while ignoring numerous other factors.

    Business risks their wealth and property in order to make more, knowing that they could lose it all.

    The whole issue of a depression is that they think they will, so they don’t. It isn’t because they are afraid of regulation. Government MUST intervene. Roosevelt didn’t accept Keynes completely as most did not, until they saw the results of WWII deficit spending.

    You can argue that the other trivialities are what turned things around, but for some reason it is only those with other agenda who seem to argue this, such as the authors you’ve quoted.

    Posted by: googlumpus at December 23, 2007 09:14 PM
    Comment #241334
    Roosevelt didn’t accept Keynes completely as most did not, until they saw the results of WWII deficit spending.

    And they shouldn’t, since Keynes wrongly predicted that the economy would return to pre-WWII numbers after the war was over and spending dropped. But it didn’t. Because it wasn’t just spending that solved the issue as I have been pointing out with detailed facts. We were recovering the Depression before 1937 when FDR interferred and business pulled back investment causing the recession of 1937. The truth is that massive amounts of deficit spending wasn’t needed, just a little less attempting to punish the businesses during the recovery.

    The whole issue of a depression is that they think they will, so they don’t.

    And when the government, through their actions, create an almost certainty that they will through either yoyo markets or complete confiscation, they will pull back their investing. Which is what happened as I have shown.

    The facts are that after FDR and after WWII is when the economy recovered, when trade resumed and the environment was more rational to long-term investing. All the money in the world would not have solved the problem if that part of the equation had not changed, as Keynes rightfully predicted, in a manner of speaking.

    Posted by: Rhinehold at December 23, 2007 09:28 PM
    Comment #241335
    It isn’t because they are afraid of regulation. Government MUST intervene.

    I am not saying that business was afraid of regulation, what they were afraid of was confiscation and unpredictability, both of which occured during the New Deal.

    Roosevelt made it clear that he wanted to take all profits from business over what he deemed a ‘reasonable amount’. Not a large percentage, he was able to get away with 90%, was looking to take 99.5% and even issued an executive order for 100% over 25,000. No rational person can accept these as facts and then say that FDR wasn’t anti-business or at least overly-advesarial. How this notion continues confounds me to this day.

    Oh, and I have mentioned before, he was the first president to tax the middle class. This is good governance?

    Posted by: Rhinehold at December 23, 2007 09:33 PM
    Comment #241348

    Rhinehold,

    Yes, It was. Without it, you would have been living in the US of Socialism. Unfortunately, we live in the real world, not Libertarian Utopia, free of real world consequence.

    Posted by: googlumpus at December 24, 2007 03:39 AM
    Comment #241349

    googlumpus,

    That makes no sense, if the idea was deficit spending and there was no need to balance the budget, why tax the middle class then and how does that prevent us from being socialist, or more socialist than we are now?

    And I’m not sure what libertarian utopia you think I am talking about but perhaps I am a little nieve in thinking that the US can exist without government telling its citizens how to live. (And before the usual ‘anarchist’ talk starts, I am not an anarchist)

    For a good look at libertarian policies, New Hampshire and Alaska are pretty good places to start, as well as Colorado and Montana these days as well. http://www.freestateproject.com might be handy too.

    Posted by: Rhinehold at December 24, 2007 03:59 AM
    Comment #241355
    Craig Holmes wrote: d.a.n:
    d.a.n wrote: I have never suggested that Socialism is the solution.
    No but what you are saying is that you admire their economies.
    False. I never wrote that.

    I wrote:

    • (1) Those nations have much smaller DEBT/GDP ratios than the $22T_Federal_Debt/$14T_GDP = 157% of the U.S.

    • (2) And those nations have a better score on Transparency Internationals Corruption Index
    But I understand the need to distort and mischaracterize my statements to salvage a lame and failing argument.

    Craig Holmes wrote: My basic thesis with both you and David is that fininacial collapse in not on the way. We will weather the entitlement crisis just fine.
    Another Great Depression is not far fetched because of the increasing corruption, a Do-Nothing Congress, and a complacent and apathetic electorate that rewards Congress for all of it with 95%-to-99% re-election rates (96.5% seat retention rates on average in Congress since year 1980).
    Craig Holmes wrote: Here are three major reasons I believe you and David are wrong is stating the American economy is near collapse and we must there for vote all incombants out.
  • 1. We are not first in line. When we look at the entitlement crisis, or age wave, Japan, Germany and Italy among others are in front of us. They have older populations and we can see how they are doing and conclude that so far they are not in economic collapse. All economies are growing.
  • Apples-to-Oranges.

    Also, while another Great Depression is not far-fetched, I have many times predicted a continued decline that we have seen for the past 30 years due to the 10 major REGRESSIVE/OPPRESSIVE systems that are taking their toll on the middle-income group. None of us have a crystal ball, so let’s look at the probabilities.
    These are probabilities; not certainties. These is the probable future of the U.S.:

    • (1) BEST CASE:
      • several government reforms are passed;

      • government becomes more transparent and responsible;

      • many of the 10 REGRESSIVE systems are eliminated;

      • the 30 year disparity-trend starts to slowly reverse (i.e. 1% of the population currently owns 40% of all wealth; never worse since the Great Depression);

      • the standard of living slowly rises for several decades, Congress becomes more fiscally responsible;

      • major issues still exist, but are gradually being addressed;

      • GDP grows at a slow but steady rate (a few percent per year), job growth increases;

      • wages and median household incomes start to rise slowly across the board for all income levels;

      • the U.S. will lead in all major sectors;

      • the U.S. leads the way in alternative energy sources as it weens itself off of its addiction to oil;

    • (2) IF WE FIX A FEW THINGS:
      • a slow and slight decline in the standard of living for several decades, and Congress will fail to act responsibly soon enough;

      • the disparity trend continues at the same or slightly slower rate;

      • GDP may grow, but most of the wealth will continue to go to a very few;

      • jobs will continue to leave the country;

      • wages will remain stagnant or fall slightly for several decades;

      • job growth will be small;

      • new technologies will open some new markets and provide some job growth;

    • (3) MOST PROBABLE CASE:
      • a more rapid and significant decline in the standard of living over one decade starting within the next decade;

      • Congress will not only fail to act in time, but will exacerbate situations with continued spending, inflation, larger debt, a failure to curb entitlements and the cost of a federal heatlhcare system, continued cost of war/occupation in Iraq and Afghanistan, and increased corruption;

      • the disparity trend continues at the same rate;

      • GDP growth may grow slightly, but most of the wealth will continue to go to a very few;

      • jobs will continue to leave the country;

      • wages will remain stagnant or fall slightly for several decades;

    • (4) WORST CASE:
      • Number (3) above, along with some natural catastrophe or additional war(s) that we are now not prepared for since we have already been fiscally irresponsible for so long and already have too much debt;

      • corruption in the federal government is rampant;

      • the disparity trend continues at an increased rate;

      • GDP growth stagnates or falls slightly;

      • taxes will be raised significantly;

      • jobs will continue to leave the country;

      • wages fall significantly for several decades; energy vulnerability leads to energy shortages;

      • a recession turns into a another depression that lasts for many years;

    The aging population issue is only one of many factors. Also, all of those nations you just mentioned above:

  • have better Transparency International Corruption Index scores (except Italy)

  • are much smaller than the U.S. in size and populations

  • all have a smaller DEBT/GDP ratio than the U.S.’s 157% (except for Japan with 176.2%)

  • don’t have a huge military complex sucking Trillions annually out of the economy

  • don’t have two ongoing wars in Iraq and Afghanistan

  • don’t have 20 million illegal aliens (2 million illegal immigrants overruning the borders annually), and another 1 million legal immigrants annually

  • don’t have a Plutocracy and a two-party duopoly with numerous illegal barriers to independent and 3rd party candidates

  • don’t have a complacent and apathetic electorate that rewards Plutocracy with 95%-to-99% re-election rates

  • don’t have a currency that is falling like a rock like the U.S. Dollar has been for over 5 years:
    • $1 U.S. Dollar fell from 0.98 EURO to 0.6825 EURO between Jan-2003 and Oct-2007

    • $1 U.S. Dollar fell from 1.80 British Pound (GBP) to 1.07 GBP between Jan-2003 and Oct-2007

    • $1 U.S. Dollar fell from 1.57 Canadian (CAD) to 0.926 CAD between Jan-2003 and Oct-2007

    • $1 U.S. Dollar fell from 1.78 Austrailian (AUD) to 1.077 AUD between Jan-2003 and Oct-2007

    • $1 U.S. Dollar fell from 1.46 Swiss Franc (CHF) to 1.13 CHF between Jan-2003 and Nov-2007

    • $1 U.S. Dollar fell from 3.51 Argentine Peso (ARS) to 3.13 ARS between Jan-2003 and Nov-2007

    • $1 U.S. Dollar fell from 31.8 Russian Roubles (RUB) to 24.59 RUB between Jan-2003 and Nov-2007

    Craig Holmes wrote:
    2. We have a better chance to adjust for two reasons; immigration and higher birth rates. Our demographic issues are not as difficult. We can keep our population younger. (Please not that I am not saying that these to advantages take away the problem, but rather that they make ours easier.
    How is massive immigration and these other burdens going to do anything but make things worse ? ! ?:
    • importing the less educated and more impoverished by millions (2 million illegally and 1 million legally; more than any other nation) per year

    • 32% of all illegal aliens receiving welfare and Medicaid, free medical, and many ohter social services at the cost of U.S. Tax payers expense

    • 29% of all people incarcerated in Federal prisons are illegal aliens

    • hospitals closing all over because they are being overrun by illegal aliens

    • millions of American workers being displaced by a constant inflow of cheap labor

    • increased crime rates
    To recommend massive immigration is to despicably pit Americans Citizens and Illegal Aliens against each other for profit and votes. It is despicable. And that also describes the majority of our own politicians which we reward for all of it with 95%-to-99% re-election rates.

    Craig Holmes wrote: 3. The d.a.n solution. You said that you have no problem with emulating socialist countries.
    False.

    Where did I ever write that?
    Mischaracterizing (actually, outright lying about) what others have written merely demonstrates the weakness of your own arguments.

    Craig Holmes wrote: Now I undertand that you are not asking us to become socialist. (neither am I) However as a default solution we see economies that work with 50% of gdp government expenditures. They are operating without fiscal crisis AS PER YOUR POST.
    Again, Apples-to-Oranges (see list of reasons above).

    You are cherry-picking the information and overlooking a myriad of other significant factors.
    Especially the human factor.
    At any rate, there are only 4 nations with higher DEBT/GDP ratios than the U.S.’s total ratio of $22 Trillion Federal Debt / $14 Trillion GDP = 157%

    Craig Holmes wrote: I hope to shout that we can do better than the Europeans. However there solution works, which means there is a solution.
    Sure there is almost certainly a solution.

    It was never that a solution does not exist.
    The question is whether we have the will to pursue the solutions.
    But that is not likely to happen any time soon as long as a complacent and apathetic electorate continues to reward corrupt, irresponsible, FOR-SALE, incumbent politicians with 95%-to-99% re-election rates. Until then, the voters have the government (a Plutocracy) that they deserve.

    Craig Holmes wrote: When I say in the future “The d.a.n Solution”, I know you don’t want us to become socialist. My only point will be that when faced with a choice between fiscal collapse and socialism, shoot we will choose socialism. Fiscal collapse will not be our choice.
    Maybe. Maybe not.

    I hope the electorate wakes up in time to put a stop to these REGRESSIVE/OPPRESSIVE SYSTEMS.
    Until then, the voters have the government that they deserve.
    The question is WHEN ?
    The sooner the better.
    Because the longer it is before solutions arrive, the more dangerous the situation will become.
    Another Great Depression is not that far fetched.
    Not when you look at history and consider how often humans simply lack the will to make necessary choices, despite the most obvious and probable outcome.
    History is strewn with human, political, and economic strife that can not be so easily ignored (certainly not fixed with massive immigration as you suggest).
    Some hard lessons and painful consequences are already in the pipeline now.
    Not with so many pressing problems growing in number and severity and an arrogant, corrupt, FOR-SALE, Do-Nothing Congress that ignores all of it (while giving themsevles 9 raises between 1997 and 2007).

    Again, the point is not that Fiscal Collaplse will be sudden or is about to happen soon.
    The point is, if we continue on the course we are on now, it is almost a certainty.
    There is a destruction of the middle-income group currently in progress (for 30+ years).
    Our government is becoming (or already has become) a plutocracy, as evidenced by a mere 0.15% of 200 million eligible voters making 83% of all federal campaign donations (of $200 or more); the remaining 99.85% of the 200 million eligible voters can not out-spend the vastly wealthy that abuse vast wealth to control and influence government.
    The seriousness of this situation should not be underestimated, but that is what people do when they:

    • rationalize-away and/or trivialize the numerous pressing problems facing the nation, and growing in number and severity

    • rationalize selective enforcement/violation of the Constitution

    • believe the myth that we can all live at the expense of everyone else

    • believe the myth that massive and continual immigration (legal or not) can help fix our problems

    • believe the myth that things will somehow work themselves out

    • fail to understand the long term seriousness of $22 Trillion of total federal debt and $20 Trillion of personal nation-wide debt.

    • 40% to 50% of voters don’t even bother to vote at all, and too many of those that do vote reward corrupt, FOR-SALE, and irresponsible incumbent politicians for all of it with 95%-to-99% re-election rates.

    • most voters don’t even know who their state and federal senators and representatives are, much less their voting records.

    • most voters pull the party lever; many not even knowing who they are voting for on the straight-party-ticket ballot.

    • most voters, 90% of the time, elect the candidate that spends the most money.

    • most voters are easily bribed with their own tax dollars; especially the older voters lobbying for entitlements. Too many voters have fallen for the myth that we can all live at the expense of everyone else.

    • most voters fall for the partisan warfare, because it is easier to blame the OTHER party than work to solve prolbems; emphasizing minor differences rather than working on unity to solve the many things most of us all already agree upon (the problem and the solution).

    • too many voters are one-issue voters, making them easy to manipulate and bribe with their own tax dollars.

    • most voters simply don’t care … at least, not until the consequences of that disinterest motivates them to become more interested. Voters will become much less complacent, apathetic, and lazy when they are jobless, homeless, and hungry.
    Other than that, everything is rosy!

    Posted by: d.a.n at December 24, 2007 10:22 AM
    Comment #241357

    Rhinehold said: “We were recovering the Depression before 1937 when FDR interferred and business pulled back investment causing the recession of 1937.”

    You are really reaching here, and way, way out of context. The Recession of 1937 you make sound like some consequence of FDR’s actions. Bullcrap. The DustBowl and the depression of 1932-33 were not eliminated overnight in 1934 and 1935. And there was the advent of the Great Dust Bowl which uprooted 10’s of thousands, and made homelessness a norm. Hence, in 1937, there was also an enormous amount of poverty and extremely low wage agricultural jobs in the West Coast states which held consumerism back, underwriting the continued market woes and loss of GDP growth.

    FDR was right to tax the middle class, what the middle class got in return in improvements in quality of life from 1950 through the 1990’s paid them back many times over. The simple absence of the Cold War threat was worth taxing the middle class. NASA created enormous benefits and innovations on the back of middle class taxes.

    I know you aren’t proposing all taxation should have been confined to the very rich. So, when you criticize middle class taxation, just how do you propose the Marshall Plan in Europe could have been paid for, or the outspending race with the Soviet Union could have been won, or the NASA program which may one day save all of the human species and DNA reproduction should the earth cease to be habitable?

    Please provide an alternative FDR might have proposed that would have afforded all this and much, much more like the R&D in medical research on tax dollars, that never would have occurred or only come about many decades later.

    Posted by: David R. Remer at December 24, 2007 10:47 AM
    Comment #241359

    Craig said: “The CBO is actually projecting a budget surplus in 2014.”

    These comments have no credibility. Did you read their assumptions for projecting that surplus? It doesn’t include rescinding the AMT revenues, for example - 80 billion dollars, 50 revenue, 30 interest over time if added to the national debt.

    Read their assumptions, compare them to reality, and then try to argue those projections are meaningful in this political environment.

    BTW, what is the date of that projection? Does it include the sub-prime recessionary consequence? Or today’s MSNBC revelation that credit card holder defaults are rising precipitously as I have been writing about for awhile now as the other shoe to drop? No, the CBO projection does not include these, I would almost guarantee it.

    But, you apparently want to debate with meaningless one liner zingers taken out of context, like interpretation of Bernanke’s speech.

    You want to posit your position of no import, in response to detailed and logically connected refutations of your sources and position as if a simple assertion of the glass half full is sufficient.

    The purpose of debate is revelation. At least this debate has revealed relevant information for at least one reader, by the comments above. And that is a positive thing.

    Posted by: David R. Remer at December 24, 2007 11:01 AM
    Comment #241360

    Craig said: “Greenspans is 2.5% real growth in the economy between now and 2030.”

    There you go, cherry picking to support your position again, rather accept the reality as it is.

    Greenspan has projected EITHER a 2.5% growth rate OR the end of democratic capitalism DEPENDING on what Congress and the White House do in the interim.

    WHY is it, no matter how many times, the facts are presented to you, your comments refuse to accept and use any, but those which support your prejudiced wishful view of the future? Is it because if your future view is kept tidy and rosy, you are free of any obligation or responsibility in the present to act or pay to insure such a future outcome?

    Posted by: David R. Remer at December 24, 2007 11:09 AM
    Comment #241367

    David:

    Greenspan has projected EITHER a 2.5% growth rate OR the end of democratic capitalism DEPENDING on what Congress and the White House do in the interim.

    Please give me your quote from Greenspan in either or language.

    Here is Alan Greenspan’s quote:

    Which brings us to our bottome line. Coupled with the projected 0.5 percent annual increase in hours worked between 2005 adn 2030 that follows from teh demographic assumptions cited earlier, a slightly less than 2 percent average growth in GDP per hour inplies a real GDP growth rate of slightly less than 2.5% per year, on average between now and 2030. that copares with 3.1 percent per year, on average over the past quarter century, when labor force growth was considerably faster.

    In his book he flat projects 2.5% growth rate between now and 30 years.

    Do you have a projection?

    Posted by: Craig Holmes at December 24, 2007 02:40 PM
    Comment #241368

    David:

    These comments have no credibility

    What you are really saying is that the Congressional Budget Office has no credibility.
    They are my source. It is a sourse you use often.

    If the CBO has not credibility on these numbers then why do you use them as a basis for your argument about entitlements?

    Which source would you prefer than I use? Which source do you use?

    Posted by: Craig Holmes at December 24, 2007 02:48 PM
    Comment #241370

    Dan:

    Earlier I asked you to show me countries whose economies you adimire and think we should look to. You gave a list. Basically is is a list of European countries who have government programs far in excess of our own.

    I don’t think you are a socialist or promoting socialism. What I am refuting is your and David’s argument that the economy is about ready to head into the tank because of entitlement spending.

    You obviously have no problem with the countries you gave in your list. My simple point is that as a default position we can “emulate” those ecnomies. Doomsday need not come.

    Those economies are “fine”. They are not what I prefer, but they are “fine,” and we will be fine as well.

    It is also true that they are older than we are. That means we can watch them go through this process first and learn from them. We can learn from their mistakes.

    As for immigration it is not the answer as I have said. However it does help. It waters down our problem by changing the demographics over time. It makes our issue less severe.

    So we don’t have to be draconian in our accessment. Problems yes. Of course!!! Social revolution needed? Hardly.

    Posted by: Craig Holmes at December 24, 2007 02:59 PM
    Comment #241371
    Craig Holmes wrote: In his book he flat projects 2.5% growth rate between now and 30 years.
    While there is GDP growth (and projected for the future too), real median incomes have stagnated or fallen (especially considering an increasing number of workers per household).

    Real Median Household Incomes have barely risen from $40,000 (year 1978) to $43,066 (year 2006). The wealth from the increased GDP has clearly been going mostly to the wealthy, as evidenced by the 1% of the wealthy that own 40% of all wealth (up from 20% in year 1980).

    Just because there is some GDP growth does not mean everything is rosy.

    There is still a growing disparity-trend due to numerous unfair systems; systems that did not all come about by mere coincidence.

    Posted by: d.a.n at December 24, 2007 03:11 PM
    Comment #241372

    Craig said: “What you are really saying is that the Congressional Budget Office has no credibility.
    They are my source.”

    Again a reading deficit impedes your argument. What I said, REALLY SAID, is nothing more nor less than what I said: which was that the CBO’s projection was based on a set of assumptions which have already proven to be false, e.g., the sub-prime mortgage and now the credit bubbles, which were not part of their assumption set. That’s what I said. Perhaps now that I have condensed it for you, you can comprehend what I said instead of projecting wild accusations about what WASN’T said.

    The CBO has a good deal of credibility but, only to the extent that their assumptions are validated in reality. CBO itself cautions readers to consider carefully, their assumptions in their projections. In other words, don’t uncritically cherry pick and expect to have your conclusions validated.

    Posted by: David R. Remer at December 24, 2007 03:20 PM
    Comment #241373

    Craig said: “Please give me your quote from Greenspan in either or language.”

    That’s laughable. I gave you his quotes and link on the end of democratic capitalism. You quoted and linked to his 2.5% growth projection. Either your capacity to understand the ‘Or’ in his two speeches is seriously diminished or, Greenspan is contradictory, in which case, your using him as linked references to your position is counterproductive, and illogical.

    Posted by: David R. Remer at December 24, 2007 03:24 PM
    Comment #241374

    David:
    David:


    WHY is it, no matter how many times, the facts are presented to you, your comments refuse to accept and use any, but those which support your prejudiced wishful view of the future? Is it because if your future view is kept tidy and rosy, you are free of any obligation or responsibility in the present to act or pay to insure such a future outcome?

    This is a fair question so here is my honest attempt to answer it.

    I believe that one of the strongest forces in nature is reversion to the mean. When you and Dan accuse me of being rosy, I am simply standing by my belief that ecnomics tends to revert back to it’s mean.

    There are many means. There is the mean of deficit spending, the mean of economic growth etc. If I were to be forced to “pick one” it would be that of economic growth.

    This is where you and I believe you and I have a fundamental disagreement. I see all the numbers on entitlements. I have seen them for decades. I remember them in 1980 in grad school (Seminary). We were told we should “opt out” of Social Security because the numbers don’t add up. So that is 27 years at least.

    I also see the coming pig in the python that seems to have a tipping point in about 10 years. Some parts of the federal budget are decreasing over time (military), and some increasing, SS medicare and medicaid.

    Those numbers will start to show up on the CBO 10 year forcast pretty soon. I believe Congress and the President will act when the problem gets closer. If they don’t voters will start to replace them because the bond market will start to react.

    I think you believe they will not act. That is unimaginable to me because it goes against their self interest. I have a very hard time imagining Congress voting against their own interest.

    So what will Congress and the President do? They will do many things, but it will boil down to tax increases, spending cuts, and reform. The debate will go back and forth. When Congress raises taxes the anti tax crowd might win in the next election and will trim benefits. Back and forth it will go.

    There are many positive examples of this in our history. Actually it is very hard to find an example of a well known future event causing a huge crisis. Y2K comes to mind as a small example of what I am talking about. We all knew the date.

    This problem you so well bring up is very well known. Of course there are projections all over the place and only one of the many are right. But the basic issue is well understood.

    I think Greenspan is about right in his thoughts. I think he underestimates worker participation in the labor market. I think far more baby boomers will continue to work than he estimates. But it would seem to me that a rosy prediction of a bit below the mean growth is in order.

    My thoughts about your position is that you believe when the bond market starts to drop, Congress will let it drop. I know you have named 2012 and 2014 as a time when things will be looking rough. All we really need to do is to watch 10, 20 and 30 year treasuries.

    You say you see no sign of Congressional action. That is because the trigger hasn’t been pulled. Treasury market falls Congress will act. Congress acts, treasury market will respond.

    You say I don’t respond to your facts. You don’t respond to mine either. I have repeatedly asked you to show me how a country that stays in a range of 60% debt to gdp (although I admit I have asked you in many different ways), gets into fiscal trouble. there are no such examples. You cling so hard to this notion that $9 Trillion dollars has meaning, when it does only when put into context of the size of an economy. You will not budge on that notion. You absolutey refuse to entertain the notion that if the economy grows faster than the debt, that is a good thing. In spite of your having no counter examples to go on of an ecnomy getting into trouble with a stable debt relative to GDP.

    Where you are strong is in articulating that there is a problem coming. I just simply believe that our system can handle well understood problems.

    Posted by: Craig Holmes at December 24, 2007 03:34 PM
    Comment #241376
    Craig Holmes wrote: d.a.n: Earlier I asked you to show me countries whose economies you adimire and think we should look to. You gave a list.
    Not true.

    The discussion was about DEBT/GDP ratios and you asked which countries were doing a better job at controlling DEBT/GDP ratios. For example:

    Craig Holmes wrote:
    So d.a.n which countries do you look to as doing a better job than we are? Which are your shining examples?
    And I provided two lists (see above Comment # 241224 and #241252) as each line clearly related to DEBT/GDP ratios and Transparency International’s Corruption Index:
    • (1) List of countries sorted by DEBT/GDP ratios

    • (2) List of countries corruption scores based on Transparency International’s Corruption Index
    I never wrote that we should emulate those nations’ governments, nor emulate their socialistic policies. Good try though to cloud the issues, change the subject, move the goal posts, and obscure the facts.

    What I wrote was: “I prefer some Socialism any day over Plutocracy, Corpocrisy, Corporatism, and Corruption.”
    That is what the U.S. is becoming (or has become). A plutocracy, due to many unfair advantages for incumbent politicians, these many regressive/oppressive systems, and an electorate that is too complacent, apathetic, and repeatedly rewards irresponsible incumbent politicians with 95% to 99% re-election rates.

    The point is, the U.S. has one of the largest DEBT/GDP ratios (4th place if you include all $22 Trillion of federal debt, 26th place if you only consider the $9.2 Trillion National Debt).
    What I prefer about those nations is small DEBT/GDP and better Corruption Index scores.
    The U.S. scores lower, and has been declining for several years, because it is increasingly nothing more than a plutocracy.

    Craig Holmes wrote: However it [immigration] does help. It waters down our problem by changing the demographics over time. It makes our issue less severe.
    Really?

    For who?
    The wealthy and greedy illegal employers of illegal aliens?
    How is importing the impoverished and less educated going to improve anything (overall)?
    Have you not noticed the massive costs to U.S. tax payers?
    We already allow 1 million per year to immigrate annually (and 3 million illegally).
    The U.S. has the fastest growing population of any nation on the planet.
    What you are suggesting (increased population) will exacerbate everything far into the future.

    Craig, so you think things are great, as evidenced by your statement …

    America as a whole has never been this rich, and it’s getting richer all the time. It’s a great time to be an American
    That’s fine. However, that does not explain away those 10 regressive/oppressive systems, the stagnation (or falling) incomes, and the worsening disparity trend. Focus on GDP alone doesn’t tell the whole story and it does not mean much to the majority of Americans that are being hammered by those 10 regressive/oppressive systems. All that happy talk doesn’t mean much to them, and there is a good reason for it.

    And, based on a growing number of pressing problems, growing in number and severity, it is very likely to get worse before it gets better.
    Yet, watch Do-Nothing Congress give itself another raise next month (like the 9 raises they gave themselves between 1997 and 2007).

    Posted by: d.a.n at December 24, 2007 03:47 PM
    Comment #241382

    Dan:

    Here is my original question:

    Dan:

    So which one is your economy that in your opinion we should emulate?

    Emulate: to try to equal or excel; imitate with effort to equal or surpass: to emulate one’s father as a concert violinist.

    I think you were looking through screens of debt/gdp and had not thought of the socialism part.

    So which economies now do you think we should follow? I still want to know. IF not the list previously provided, where are your shining examples?


    Posted by: Craig Holmes at December 24, 2007 06:29 PM
    Comment #241383

    Dan:

    For who? The wealthy and greedy illegal employers of illegal aliens? How is importing the impoverished and less educated going to improve anything (overall)? Have you not noticed the massive costs to U.S. tax payers? We already allow 1 million per year to immigrate annually (and 3 million illegally). The U.S. has the fastest growing population of any nation on the planet. What you are suggesting (increased population) will exacerbate everything far into the future.

    New immigrants work, retirees do not.

    Greemspan says our immmigration policy is partly to blame for our income inecquity. He says that we have a shortage of highly skilled laborers that increase higher end wages. If we were to reform immigration and allow more high skilled workers this would increase supply and reduce wages at the top.

    Posted by: Craig Holmes at December 24, 2007 07:28 PM
    Comment #241390

    Craig,

    I’m not sure I agree with this idea of increasing skilled worker imports.

    I work in civil engineering. The H1 visa which is used to supposedly import skilled workers, is used by engineering companies to import Indian and Bangladesh engineers, who then pay them seriously depressed wages. They pay American engineers better and use them as their “face”. They are usually more skilled than the imports. Many of these import engineers end up working in Stop and Rob’s because they make more money. It isn’t about a shortage of Engineers, but companies hiring substandard engineers to do substandard work on government contracts and turn a larger profit. Some do eventually earn a P.E. License, but most end up in lower paying jobs. Some of these “degreed” engineers have questionable engineering skills.

    Many of these engineers end up obliged to these companies to maintain their immigrant status. It’s not a whole lot different than the illegal market.

    If it were about an honest shortage, perhaps I’d understand. Perhaps it is different in IT or other fields, but in the one I know, it’s a farce. The engineering companies don’t lower their prices because of these imports.

    Posted by: googlumpus at December 24, 2007 11:21 PM
    Comment #241398
    The Recession of 1937 you make sound like some consequence of FDR’s actions.

    Because it was. I’ve shown the facts and you have yet to show me any other reason for the recession, after we were seeing a recovery in all sectors including unemployment. I’ve shown actions that stifled businesses that are necessary to get a recovery going, rightful accusations that no capital was being reinvested but instead of making the atmosphere more equitable towards doing that, FDR claimed a capital strike and attacked. Several extreme over the top actions taken against business coincide with the reversal of the burgeoning recovery to cause the recession of 1937.

    The dust bowl was the worst in 1933, 1934 and 1935. It displaced a lot of people from the great plains, but it left the eastern seaboard and most of the manufacturing alone. You have yet to suggest how this caused the recession of 1937 even though you assert it as a fact that doesn’t need backing up apparently. Even though it makes no sense when looking at where the economy was failing and why.

    So, unless you have something else besides ‘the dust bowl’ to explain how the national economy, including a major drop in demand for steel just before it started and had nothing to do with the dust bowl, tanked when it was starting into recovery, I’ll just have to believe that you are closed to even thinking about FDR and statist ideals failing at all.

    Which is of course the reality of the situation, I think…

    Posted by: Rhinehold at December 25, 2007 01:42 AM
    Comment #241400
    FDR was right to tax the middle class

    Why? If deficit spending was the answer, how does taxing the middle class figure into it? What real gain did the government or economy see in sucking up that money from the middle class who could have been using it to aid the recovery when the government was already spending more than it received?

    what the middle class got in return in improvements in quality of life from 1950 through the 1990’s paid them back many times over.

    Would you like to explain exactly how FDR’s taxation in the 1930s of the middle class, that wasn’t necessary when deficit spending is accepted, did all of these things?

    What you are doing is relying upon hyperbole to make a point that doesn’t hold water. Was it because of or despite of these things? IF it were because if, you should be able to show direct relationships to support this. Not just use the ‘it was enacted in 1933 and things were good in 1950’ garbage that I keep getting…

    I know you aren’t proposing all taxation should have been confined to the very rich.

    Why aren’t I? In 1933 it would have made the most sense. Why suck up that extra money from the middle class who at that time needed it very badly…

    Please provide an alternative FDR might have proposed that would have afforded all this

    First, FDR did not do all the things you are listing. A sense of rationality is missing when we talk about this era I’m afraid.

    Second, FDR should have backed off from business and increased the recovery, had WWII not come about I doubt the US would be the country it is today, not just because of the sense of unity and patriotism that it sparked but because the failures of the FDR administration in dealing with the depression would have lingered and been blamed upon business further, possibly preventing a recovery until well after a revolution took place.

    Third, there are other ways to pay for things than income taxation, a fact that many progressives and even you seem to ignore or don’t want to talk about. They money comes from the same place, that is true, but can be acquired without using force or create the depression one feels when they get their paychecks and see how much of it is missing before they even get a chance to try and provide for thier families.

    Finally, my point is still valid, attacking business during a depression and stagnating the money supply is BAD POLICY. Even the ‘great and all knowing’ OZ FDR was wrong to do this. These actions were either a part of or the main reason for the stumble of the economy from 1936 to 1939 when the economy was ‘saved’ by WWII. I think an unbiased view of 1937-1938 can show the seeds of a brewing second civil war that we now tell ourselves never existed. All the while ready to repeat it again.

    Posted by: Rhinehold at December 25, 2007 02:04 AM
    Comment #241407

    Rhinehold asked: “Why? If deficit spending was the answer, how does taxing the middle class figure into it?”

    Deficit spending on cotton candy does not solve anything, Rhinehold. Deficit spending was not the answer. Deficit spending in ways that put people to work, paying those middle class taxes, and on public works projects that would elevate the education and socialization of entire areas of the country as well as opening them to the prospect of future development by the private sector, were worthwhile deficit spending measures. But, the middle class tax was necessary to eventually pay off that debt the deficits engendered.

    Or, are you one who believes deficits and debt need never be paid back and the interest on that perpetual debt does not impede economic progress and opportunity? You can’t have it both ways. IF you run deficits, you need revenues to pay them off. Or, you have to believe debt has no cost, everyone can max out debt and default without major consequences.

    Posted by: David R. Remer at December 25, 2007 10:13 AM
    Comment #241408

    Rhinehold said: “I’ve shown the facts and you have yet to show me any other reason for the recession,”

    THE DEPRESSION THAT PRECEDED THE YEAR 1937 AND EVEN FDR’S ELECTION TO OFFICE. DUH!

    THE DUST BOWL WAS FDR’S FAULT?

    Your comment is truly remarkable for the chasmic lack of the obvious. It has lost all sight of the forest for its myopic focus on the tree ahead. The 1937 recession was a continuation of events begun in the 1920’s and early 30’s BEFORE FDR was elected. Get a big picture on this and your arguments might read more persuasively.

    Posted by: David R. Remer at December 25, 2007 10:18 AM
    Comment #241409

    googlumpus said to Craig: “I’m not sure I agree with this idea of increasing skilled worker imports.”

    Quite right. Pro-immigration advocates as a solution to economic problems are utterly and completely blind to the costs of population growth and over population in ever growing urban centers and metropolitan sprawl. They have to be blind to these, or their pro-immigration position has to be compromised and legitimately questioned and critically analyzed.

    Posted by: David R. Remer at December 25, 2007 10:23 AM
    Comment #241415

    David,

    So, your contention is that the depression that started in 1928 was the reason for the recession in 1937, even though the economy was showing signs of a recovery by then? Unemployment was 18 percent in 1935, 14 percent in 1936 and even lower than that in 1937. Yet, in the span of a few months steel demand dropped from 83 percent of capacity to 35 percent, the stock market crashed 50% and unemployment shot back up to over 20 percent. And you want me to believe that this was a continuation of the depression that was now 8 years old and not more recent issues that FDR created by his constant ‘tinkering’ with the economy and attacks on the business community. When even FDR was blaming the continued state of the economy on business not investing enough?

    As for the dust bowl, I never said it was FDR’s fault and your continued insistence that the dust bowl, while a major problem indeed, was the cause of the US not recovering from the depression sooner, is without any factual evidence to back it up. That is like saying that Katrina caused a recession in the US. It was a major event, along with heat waves and drought in the midwest, that displaced many and killed thousands. But it was not country wide and it was not the cause of continuing the depression beyond the length it should have been. It didn’t touch manufacturing and FDR was already destroying crops and livestock…

    You can keep yelling all you want, but you aren’t backing up your statements with factual information, just your opinion, and until you do why should I change my examination of the facts surrounding time period to conform to yours? And I am not the only one to see this either, more and more historians and economists are seeing this as well as they re-examine the time period.

    Posted by: Rhinehold at December 25, 2007 11:40 AM
    Comment #241422

    Rhinehold said: “So, your contention is that the depression that started in 1928 was the reason for the recession in 1937, even though the economy was showing signs of a recovery by then?”

    If your comment’s ignorance of actual history is going to be put into other’s people’s mouths by you, there is little point in trying to discuss anything remotely resembling fact or reality with you. Depression started in 1928?

    I suggest you crack open a history book before attempting to carry on a conversation like this.

    Posted by: David R. Remer at December 25, 2007 12:45 PM
    Comment #241423

    Rhinehold said: “That is like saying that Katrina caused a recession in the US.”

    Were it not for national debt borrowing, Katrina and Rita would have had exerted recessionary pressure on the national economy. And in fact, the region’s economy was in a recession, big time, even with government intervention. New Orleans has still not returned to its former economic level years later. And for your education, regional economic conditions combine to create the national economic assessments. Ergo, Katrina did exert recessionary pressure on our economy. Just as the sub-prime mortgage bubble is now exerting recessionary pressures on our economy. Wall Street now puts the odds of a recession in 2008 at 50%, up from 25% in September.

    Your comment lacks a lot of understanding of reality and real world data.

    Posted by: David R. Remer at December 25, 2007 12:49 PM
    Comment #241424

    David,

    The Great Depression (also known in the U.K. as the Great Slump) was a dramatic, worldwide economic downturn beginning in some countries as early as 1928.

    Now, what part of this statement is wrong? Even if you want to point to the stock market crash as the beginning of the Great Depression IN THE US, that is still 8 years removed from the 1937 recession.

    And you STILL have nothing to back up what you claim caused the 1937 recession since your only other influence you can apply to it occurred when the economy was recovering in 1935 and 1936.

    Your comment lacks a lot of understanding of reality and real world data.

    Whatever, the moment you want to start talking facts and real world data, of which I am the only one presenting, then get back to me. Otherwise, you’re proving yourself a close-minded statist who just doesn’t want to discuss reality. I especially liked the fact that you spent most of the comments to me telling me how deficit spending is what ended the depression and then tell me “Deficit spending was not the answer” and proceed to almost perfectly make the same point I’ve been making…

    You want it to be the way you want it to be. That’s no way to look at history and a perfect example of why we are destined to repeat those failures in the near future.

    Once our current Hoover is done in January 2009 and our newly elected FDR takes over with a friendly congress at their disposal, the progressive/statist utopia will begin, god help us.

    Posted by: Rhinehold at December 25, 2007 01:06 PM
    Comment #241436

    googlumpus:

    I think Greenspan does a good job of at least offering an explaination of the income gap in America.

    Basically, he blames public eduation for low wages. He is right in that the only true solution I know of that will raise the lot of the poor is job training and education. Greenspan is strongly for education reform.

    On the other end, he blamse our immigration policy that allows millions of illegals but few well trained well skilled immigrants to fill our shortage of skilled labor.

    Greenspan’s answer is to the problem of income inequity is to reform k-12 education and immigration policy. In the end he wants to increase the number of skilled workers one way or the other

    Posted by: Craig Holmes at December 25, 2007 05:54 PM
    Comment #241438

    David:

    Again a reading deficit impedes your argument. What I said, REALLY SAID, is nothing more nor less than what I said: which was that the CBO’s projection was based on a set of assumptions which have already proven to be false, e.g., the sub-prime mortgage and now the credit bubbles, which were not part of their assumption set. That’s what I said. Perhaps now that I have condensed it for you, you can comprehend what I said instead of projecting wild accusations about what WASN’T said

    Ok so you believe the CBO isn’t aware of problems in the economy. Come on David. The CBO understands there will be recessions etc etc. Recessions are far worse that what we are in right now. You miss the basic point. You call for a revlotion (of sorts I admit) and CBO calls for surplus in 2012 and 2014.

    Of so now because of this banking situation that as of yet has not brought us into even a recession, you believe CBO’s numbers are absolutly off by such a large margin as to make your predictions obvious?

    So this banking issue is going go cause the federal budget to move from surplus in 20012-14 into such a mess that your predictions will come true.

    Got it.

    Posted by: Craig Holmes at December 25, 2007 07:17 PM
    Comment #241439

    Dan:

    Just because there is some GDP growth does not mean everything is rosy.

    Below average growth (2.5%) is not rosy it is growth a bit below the mean.

    It does mean however that doomsday is not here. On a national scale it means that Greenspan is cautiously optimistic about the future.

    Posted by: Craig Holmes at December 25, 2007 07:20 PM
    Comment #241440

    David:

    That’s laughable. I gave you his quotes and link on the end of democratic capitalism. You quoted and linked to his 2.5% growth projection. Either your capacity to understand the ‘Or’ in his two speeches is seriously diminished or, Greenspan is contradictory, in which case, your using him as linked references to your position is counterproductive, and illogical.

    Enjoy your laugh. However the use of the word “or” is your word not Greenspans.

    Greenspan is very worried about protectionists and those opposed to immigration. That is a great concern of his.

    Greenspan clearly predicts 2.5% economic growth.

    He obviously assumes Congress will continue to do it’s work. He basis this number on projecting the number of laborers to a productivity increases. Thes productivity increases he sees as a constant over several hundred years.

    Posted by: Craig Holmes at December 25, 2007 07:32 PM
    Comment #241483
    Craig Holmes wrote: Greemspan says our immmigration policy is partly to blame for our income inecquity. He says that we have a shortage of highly skilled laborers that increase higher end wages. If we were to reform immigration and allow more high skilled workers this would increase supply and reduce wages at the top.
    Of course Greenspan says that.

    So do lots of other greedy elitists and FOR-SALE incumbent politicians in the bloated, corrupt, plutocratic federal government.

    • And Bill Gates wants more H-1B visa workers. I guess being the richest person in the nation isn’t enough?

    • The U.S. already allows 1 million to immigrate legally per year, and another 3 or 4 million immigrate illegally.

    • The U.S. already gives H-1B Visas to hundreds of thousands of skilled foreign workers, and Bill Gates wants the caps increased?

    • Why don’t we improve our own educations systems and train our own citizens?

    • Nothing like lawfirms like this one (Cohen & Grigsby; www.cohenlaw.com) which teaches corporations how to avoid hiring Americans.

    • Nothing like pitting American citizens and illegal aliens against each other for profits and votes, eh?

    • Nothing like more than corpocrisy, corporatism, and other manifestations of unchecked greed, eh?

    Craig Holmes wrote: If we were to reform immigration and allow more high skilled workers this would increase supply and reduce wages at the top.
    Nonsense.

    Your model of immigration is pure fantasy. Few foreign workers that are already more educated and skilled want to come to the U.S., and the U.S. is importing (by the millions each year) less skilled, more impoverished, and less educated immigrants, which is costing U.S. tax payers a net losses ranging from $70 Billion to $368 Billion per year.

    Over-population, and importing the less educated, less skilled, and more impoverished is not the solution. It will exacerbate and magnify all problems (long term). Have you not see the U.S. population growth in the past 7 years? It has increased from 272.7 Million in 1999 to 300 Million in 2006. Just ask China and India about all of the wonderful advantages of over-population. The world population is already growing by 211,000 per day! In 2006, there was 1.15 acres of arable land per person, world-wide (i.e. 7.68 billion acres / 6.68 billion people). By 2039, there could only 0.59 acres (or less, depending on the rising sea-level) of arable land per person.

    Craig Holmes wrote: Basically, he [Greenspan] blames public eduation for low wages.
    No doubt that our public education system is declining in quality while increasing in cost, but how is importing millions of less educated, more impoverished, and less skilled immigrants going to make Americans more educated?
    Craig Holmes wrote: Greenspan clearly predicts 2.5% economic growth.
    Unfortunately, due to a 30+ year disparity trend, the majority of Americans are not reaping the benefits of that GDP growth and increased productivity; a little detail you often overlook:
    • G=GDP
    • M=Median Income
    • +20%- - - - - - - - - - - - - - G
    • +15%- - - - - - - - - - -G
    • +10%- - - - - - - -G
    • +05%- - - - G
    • +00%GM——M——M————-M
    • -05%- - - - - - - - - ` ` M ’ ‘
    • YEAR:|2002|2003|2004|2005|2006|
    Craig Holmes wrote: He [Greenspan] obviously assumes Congress will continue to do it’s work.
    Huh ? ! ? Our bloated, corrupt, Do-Nothing Congress will do its work? ! ?

    Ohhhh … like giving itself another raise next month (like the 9 times between 1997 and 2007)?
    Like the 10,000 pork-barrel ear-marks in a recent pork-laden omnibus BILL just passed?
    Like hundreds of billions in farm subsidies?
    Like violating the Constitution every day in a number of different ways?
    Like piling more and more debt onto future generations?
    Like plundering surpluses from Social Security?
    Like pitting American citizens and illegal aliens against each other for profits and votes?
    That’s work?
    Working for who?
    They are not working for the American citizens.
    They are mostly interested in filling their own pockets, gettin’ their’s, givin’ themselves more raises, perk$, cu$hy benefits, cu$hy retirement and medical benefits superior to those of most Americans, sellin’ out American workers, and despicably pitting American citizens and illegal aliens against each other for profits and pandering for votes.

    Craig Holmes wrote: He bases this number on projecting the number of laborers to a productivity increases. These productivity increases he sees as a constant over several hundred years.
    Several hundred years ? ! ?

    Craig, your model of immigration, the economy, GDP growth, inflation, monetary policies, taxation, and a number of other things, all remind me of Ponzi schemes that can not sustain themselves indefinitely.

    You seem to think a major economic downturn (like the Great Depression) is unlikely.
    That’s fine.
    In my opinion, I don’t think we will change course in time. The Titantic couldn’t change course in time either. Based on many factors (i.e. the big picture; not just a few cherry-picked facts), another Great Depression is not far fetched within the next decade, and the major reason for it will be wide-spread corruption, 10+ regressive/oppressive systems, and increasing nation-wide fiscal and moral bankruptcy. The next shoe to drop will probably be the massive credit-card defaults, and there will probably be a few more million foreclosures in 2008. The middle-income groups are getting squeezed from all angles (i.e. the 10+ regressive/oppressive systems). Of course, the majority of Americans have some responsibility for all of this too. Afterall, the majority of them continue to repeatedly reward corrupt, bought-and-paid-for, do-nothing, incumbent politicians for all of it with 95% to 99% re-election rates.

    Other than that, everything is rosy !

    Posted by: d.a.n at December 26, 2007 01:21 PM
    Comment #241498

    Dan:

    Craig, your model of immigration, the economy, GDP growth, inflation, monetary policies, taxation, and a number of other things, all remind me of Ponzi schemes that can not sustain themselves indefinitely

    It’s not my model, but Greenspans.

    Over-population, and importing the less educated, less skilled, and more impoverished is not the solution.

    I agree with you completely on this. However I do believe we can benefit as a country from highly skilled affluent immigrants.

    Posted by: Craig Holmes at December 26, 2007 06:29 PM
    Comment #241557
    Craig Holmes wrote: I agree with you completely on this. However I do believe we can benefit as a country from highly skilled affluent immigrants.
    Why not educate and train our own citizens?

    Why continue to sell-out American citizens and despicably pit American citizens against illegal aliens and/or low-wage imported labor?

    Bill Gates and other employers want more H-1B Visas for cheaper skilled workers (for profits; especially the Republican party that carries the water for their big money donors and many illegal employers), and incumbent politicians want the less skilled, less educated, and more impoverished immigrants (for votes; especially the Democrat party which is especially bad about pandereding for votes for decades).

    Few highly skilled and affluent foreigners want to come to the U.S., when they know they too will be pitted against millions of illegal aliens and hundreds of thousands of low-wage imported H-1B workers.

    Our public education is declining in quality by indulging the disrupters, and ingoring the majority of other students. Also, the public school systems are becoming increasingly bloated, top-heavy, and overrun with incomptent, corrupt, and over-paid administrators which reduces salaries for good teachers.

    We have American citizens that can’t get medical insurance or medical care, while hundreds of hospitals are closing because they are being overrun by illegal aliens (84 hospitals in California alone; www.michnews.com/cgi-bin/artman/exec/view.cgi/178/8693), 1.4 million illegal alien households receive welfare (www.cis.org/articles/2007/welfarerelease.html), and 29% of all incarcerated in federal prisons are illegal aliens (source: www.fairus.org/site/PageServer?pagename=iic_immigrationissuecenters0b9c).

    These are just a few of the many manifestations of corpocrisy, corporatism, and unchecked greed within a government that is increasingly plutocratic (where 99.85% of all 200 million eligible voters are vastly out-spent by a tiny 0.15% of all 200 million voters who make 83% of all federal campaign donations (of $200 or more)).

    But then, the electorate bears some responsibility, since they repeatedly reward incumbent politicians with perpetual re-election (essentially rewarding incumbent politicians for selling out American citizens and despicably pitting American citizens and illegal aliens against each other).

    Posted by: d.a.n at December 27, 2007 12:34 PM
    Comment #241579

    Dan:

    Why not educate and train our own citizens?

    I agree completely. The only true way to lift the bottom of the income disparity is by increasing the job skills of our citizens.

    Greenspan wants to attack the issue on both fronts. Decrease wages of the affluent by importing more skilled laborers, and increase the wages of the bottom by reforming public educaton.

    Posted by: Craig Holmes at December 27, 2007 04:20 PM
    Comment #241584
    Craig Holmes wrote: d.a.n:
    d.a.n wrote: Why not educate and train our own citizens?
    I agree completely.
    Craig Holmes wrote: The only true way to lift the bottom of the income disparity is by increasing the job skills of our citizens.
    Job skills is not the biggest problem.

    If it were, why are we importing the less educated, less skilled, and more impoverished by the millions per year?

    And importing 4 to 5 million less educated, less skilled, and more impoverished annually is not helping American workers.

    And importing hundreds of thousands of more skilled, temporary H-1B Visa workers is not helping American workers.

    It is helping the wealthy who want cheap labor for increase profits. That is why Bill Gates lied to Congress (19-MAR-2006) by claiming that Microsoft’s H-1B jobs for new graduates with no experience “start at about $100,000 per year.” Bill Gates lied in the hopes of getting H-1B Visa limits raised. Unfortunately, few (if any) are dumb enough to believe such ridiculous lies.

    Craig Holmes wrote: Greenspan wants to attack the issue on both fronts. Decrease wages of the affluent by importing more skilled laborers, …
    That is a bass-ackwards approach.

    Do you really believe that (i.e. decrease wages of the affluent by importing more skilled laborers)?
    Sounds more like more warfare on the middle-income group?
    The problem with this Ponzi-Scheme, is that the inflow of illegal aliens must continue in order to continue to depress wages.
    If there are some ridiculous salaries you want depress, why don’t you take a look at the fat-cat CEOs getting tens-to-hundreds of millions per year, stock options, and multi-million dollar bonuses.
    Importing more labor (either skilled or less skilled) only makes things worse.
    The U.S. has over 300 million people.
    We do not need to import any labor, and the belief that we need to is nonsense.
    The myth that we need to import more labor is a pure fraud to depress wages so the wealthy can get wealthier (such as Bill Gates asking for H-1B Visa limits to be raised, and law firms and corporations despicably looking for ways to avoid hiring Americans).
    And importing more skilled workers does not decrease the wages of the affluent; it makes the wealthy more wealthy and hammers middle-income workers.

    Craig Holmes wrote: … and increase the wages of the bottom by reforming public educaton.
    Yes, improving education is the only part that makes sense.

    But education is not the major issue.
    And again, how is importing labor (skilled and unskilled) by the millions annually helping the majority of Americans?
    It isn’t.
    It is only helping the greedy employers of illegal aliens.
    The majority of American tax payers are getting $70 Billion to $368 Billion annually being shifted to them due to the myriad of benefits being provided to illegal aliens (e.g. education, healthcare, Medicaid, welfare, law enforcement, job displacement, voter fraud, prisons, border security, 29% of all incarcerated in federal prisons are illegal aliens, etc.).
    The major issue is not education, but it is the steady influx of illegal aliens and H-1B workers for the sole purpose of depressing wages, and increasing profits for the wealthy.
    It is just one of the these 10 regressive/oppressive systems to squeeze the middle-income group.

    Posted by: d.a.n at December 27, 2007 05:49 PM
    Comment #241587

    Rhinehold The answer to your question about the cause of the 1937 recession,
    Reason 1. “The program of government spending was never carried out to the full extent that would have been necessary to bring the economy up to full employment.”
    Reason 2. “Government spending was meant as a helping hand for business, it was interpreted as a threat.”
    It was idelogical issues that caused this problem. The government only spent a portion of what was needed yet business did not pick up the slack because they perceived the New Deal as a slap in the face after years of unquestioned preeminence.
    The government spending $15 bil in 1936 helped but there was still 9mil unemployed. Proof of this can be found by looking at the $103 bil spent in the WWII years when full employment resulted.
    Ideology got in the way. Those that benefitted most from this Country contributed the least in the time of great need. Go figure.

    Posted by: j2t2 at December 27, 2007 06:50 PM
    Comment #241589
    Those that benefitted most from this Country contributed the least in the time of great need. Go figure.
    Too often, that is so true. Posted by: d.a.n at December 27, 2007 06:59 PM
    Comment #241629

    j2t2,

    What a total crock.

    Your assertion is that we just didn’t spend enough, even thought he amount we were spending was giving us a recovery right up until 1937 when the recession hit, quick and hard. And that it was all businesses’ fault and FDR was only trying to help business, which was mis-interpreted?

    Let’s see, which of these was mis-interpreted? The 100% taxation on all income over 25,000 that FDR made part of an executive order? The law that stated business would be found in violation if they refused any union demand? The blocking of talks to resume international trade? The first time taxation of the middle class?

    Historian Jim Powell, in FDR’s Folly, points out that the median joblessness rate throughout the New Deal was 17.2 percent and never went below 14 percent. He says the Depression was worsened and prolonged “by doubling taxes, making it more expensive for employers to hire people, making it harder for entrepreneurs to raise capital, demonizing employers, destroying food…breaking up the strongest banks, forcing up the cost of living, channeling welfare away from the poorest people and enacting labor laws that hit poor African Americans especially hard.” However as Alvin Hansen pointed out at the time, few businesses were attempting to expand. The poor voted at the 80-90% level for Roosevelt according to public opinion polls. A study by Harold L. Cole and Lee E. Ohanian concludes that the “New Deal labor and industrial policies did not lift the economy out of the Depression as President Roosevelt and his economic planners had hoped,” but that the “New Deal policies are an important contributing factor to the persistence of the Great Depression.” They say that the “abandonment of these policies coincided with the strong economic recovery of the 1940s.”

    Even his finance secretary admitted that they failed to do what they set out to do.

    We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and now if I am wrong somebody else can have my job. I want to see this country prosper. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this administration, we have just as much unemployment as when we started. And enormous debt to boot.

    Even the people of the US saw what was going on at the time, in 1939 they believed, 2-1, that FDR was prolonging the depression because of his attacks on the business community.

    Your assertion that FDR was just mis-interpreted and he was actually trying to ‘help’ business is not based in fact and entirely wrong.

    Posted by: Rhinehold at December 28, 2007 09:10 AM
    Comment #241639

    Dan:

    If you want to talk about immigration that is fine. It’s a change of subjects but fine.

    I believe in legal immigration. I think we need to do three things in order to solve our current issues.

    First of all before the three, a believe. Here is the believe, that you can’t stop major trends but you can channel them. For instance if you live in a canyon in the mountains, and there is a huge snow pack and its warm and raining hard, you are going to have a flood. However you might be able to sand bag your cabin and send the waters around your cabin.

    With that believe here is what I believe should be done in order.

    1. Erect large gates that can legally handle the flow and make sure we get back ground checks so that legal immigrant labor is abundant in our country. We need to have companies that specialize in providing legal documented laborers. Employers should have no excuse other than to go threw this system. No supply bottlenecks in legal workers.

    2. Drastically increase fines for hiring illegal immigrants. Once there is no excuse for highering illegals, clamp down on employers that skirt the law.

    The purpose here is to put illegal immagrants out of business. Make them unemployable.

    3. Create quotas for immigrants to become citizens who are young affluents and skilled. Put them in the front of line because that is what we need. Use economic self interest as a motivator for immigration.

    Posted by: Craig Holmes at December 28, 2007 11:50 AM
    Comment #241643

    Dan:

    But education is not the major issue.

    Yes it is the major issue.


    Posted by: Craig Holmes at December 28, 2007 12:16 PM
    Comment #241682
    Craig Holmes wrote: d.a.n: If you want to talk about immigration that is fine. It’s a change of subjects but fine.
    The topic is massive debt being heaped onto tax-payers, which is just one of these 10 regressive/oppressive systems being imposed on American citizens; systems that did not all come about by mere coincidence:
    • (01) Massive National Debt: $9.2 Trillion being heaped onto tax-payers and future generations.
    • (02) Inflation is like a REGRESSIVE tax. The U.S. Dollar has fallen for 5 years against all major world currencies.
    • (03) Government is FOR-SALE. It is a plutocracy, as evidenced by 99.85% of all 200 million eligible voters that are being vastly out-spent by a tiny 0.15% of all 200 million eligible voters that abuse vast wealth to control and influence government with 83% of all federal campaign donations (of $200 or more).
    • (04) The current tax system is effectively REGRESSIVE.
    • (05) We have too many taxes on too many things that are all like hidden sales taxes. All sales taxes are REGRESSIVE.
    • (06) Caps on Social Security taxes (e.g. currently $97,500 in year 2006) is a REGRESSIVE tax.
    • (07) Illegal immigration is like a REGRESSIVE tax, causing job displacement and many burdens and costs to be shifted to U.S. tax payers.
    • (08) Property taxes in many cases are REGRESSIVE, since (like all sales taxes are REGRESSIVE), as income decreases, the property tax increases (as a percentage of income). Also, property taxes are double, triple, quadruple, quintuple, … , N-tuple taxation because it is repeated every year!
    • (09) Unnecessary wars; We have had 7 wars in the last 90 years (about 1 war every 13 years). Two ongoing wars currently in Iraq and Afghanistan. Some of those wars were probably unnecessary (i.e. Vietnam, and Iraq-2 which was largely based on lies, exaggerations, and invalid intelligence about Weapons of Mass Destruction that was never verified). What is more REGRESSIVE than that? It is not merely REGRESSIVE. It is OPPRESSIVE.
    • (10) The U.S. Constitution is being selectively enforced and/or violated (e.g. Article V).
    Craig Holmes wrote: Employers should have no excuse other than to go threw this system. No supply bottlenecks in legal workers.
    Why do we need to import workers when we have 300 million people?
    Craig Holmes wrote: 2. Drastically increase fines for hiring illegal immigrants. Once there is no excuse for highering illegals, clamp down on employers that skirt the law. The purpose here is to put illegal immagrants out of business. Make them unemployable.
    That would be great. But when is that going to happen? The refusal of the government(s) to enforce immigration laws is yet another example of the laws being ignored (like the U.S. Constitution is currently being flagrantly violated).
    Craig Holmes wrote: 3. Create quotas for immigrants to become citizens who are young affluents and skilled.
    Affluent means wealthy (look up the definition). Few wealthy, skilled, and educated foreigners want to come to the U.S. where they too will despicably be pitted against millions of illegal aliens and 3-to-4 million more illegal aliens per year, and hundreds of thousands of H-1B visa workers? Besides, with over 300 million people (and 12-to-20 million illegal aliens) already, why do we need to import more immigrants?
    Craig Holmes wrote: Put them in the front of line because that is what we need. Use economic self interest as a motivator for immigration.
    Pure fantasy. Again, few (if any) wealthy, skilled, and educated foreigners want to come to the U.S. where they too will despicably be pitted against millions of illegal aliens and 3-to-4 million more illegal aliens per year, and hundreds of thousands of H-1B visa workers? Again, with over 300 million people (and 12-to-20 million illegal aliens) already, why do we need to import more immigrants?
    Craig Holmes wrote: Yes it [education] is the major issue.
    I stand corrected. Yes, Education is important, but not the kind of Education you are talking about (i.e. science, math, skills, trades, etc.). The kind of Education that is most important and very badly-needed (as soon as possible) is education about human nature, government, history, the Constitution, the importance of Transparency, Accountability within government, and a firm understanding of these fundamental components that are required for any healthy government, organization, or society.
      Fundamental Components:
    • Conscience = the source of moral and ethical judgment; a sense of right and wrong; a sense of caring. A good Conscience is not merely knowing what is right or wrong, but caring enough to do what is right, and provides the motivation to seek the balance of Education, Transparency, Accountability, and Power required for any successful society, government, or organization;
    • Education = an understanding of the importance of: Education, Transparency, Accountability, Power, Responsibility, Corruption, and the fundamental human desire to seek security and prosperity with the least effort and pain, and that some will resort to dishonest, unethical, or illegal methods to obtain it;
    • Transparency = visibility and simplification of cleverly over-complicated processes to reveal and identify abusers, create outrage, reduce opportunities for abuse, and discourage abuse and dishonesty;
    • Accountability = consequences needed to encourage law enforcement, encourage ethical behavior, and discourage abuse and dishonesty;
    • Power = force required to enforce the laws, discontinue abuse, ensure consequences, punish abusers, and discourage abuse and dishonesty; but unchecked Power without sufficient Education, Transparency, and Accountability breeds Corruption.
    • Responsibility = Power + Conscience + Education + Transparency + Accountability
    • Corruption = Power - Conscience - Education - Transparency - Accountability
    While there is much room for improvement in public education (i.e. science, math, skills, trades, etc.), there is a more fundamental problem that is not only contributing to the declining quality of public education, but also to the increasingly corrupt, FOR-SALE, plutoratic government, illegal immigration, inflation, unfair and regressive taxation, unnecessary wars, selective enforcement/violation of the Constitution and other laws, and other regressive/oppressive systems which did not all come about by mere coincidence. The sooner enough voters understand that, the sooner they’ll be able to start improving their situation. If not, they can then learn the hard way. Either way, they have the government that they deserve.

    The reason why Education of those Fundamental Components (above) is so important is because understanding from sufficient Education might compensate for a lack of Conscience (i.e. or excessive Apathy, Complacency, and Laziness).

    At any rate, we will eventually get our Education (and motivation) one way or another.
    The only question is, will we get it

    • (a) the smart, peaceful, responsible way (and sooner than later)?

    • (b) Or, the hard, painful way (again; later than sooner)?

    Posted by: d.a.n at December 28, 2007 06:46 PM
    Comment #241685

    Rhinehold,
    “Your assertion that FDR was just mis-interpreted and he was actually trying to ‘help’ business is not based in fact and entirely wrong.”

    No not wrong Rhinehold, it just disagrees with your libertarian philosophy. Just because this Cato Institute fellow cherry picks the facts from afar and puts it in a book doesnt make him correct. The facts remain that FDR had to contend with the depression, tremendous social unrest that could have allowed either the Marxist, the Nazi’s or the Fascist to come into power. Of course not all things FDR tried worked and of course there was those in his cabinet as well as others that were in disagreement with him. But I defy you to find another president of any party that was able to do what he did mistakes and all.


    “We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and now if I am wrong somebody else can have my job. I want to see this country prosper. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this administration, we have just as much unemployment as when we started. And enormous debt to boot.”
    Yes Rhinehold they half stepped as I stated previously they did not spend enough to pull out of the depression. Had they had the good fortune to be able to spend the $103 bil spent during the war effort, in the timeframe of 1934-38 then we would have had full employment and the depression would have been over. Unfortunatly that kind of spending wasnt possible during peacetime.

    If business investment would have increased during the same time frame as government spending did things would have went better yet your Cato Institute buddy doesnt mention that does he? Remember business was used to being able to have their way and working people be damned. They were use to calling the shots. FDR changed that and levelled the playing field for working people of this country. Of course these business leaders didnt respect FDR and his plans for a better America. Of course they with held investment monies that could have helped to bring this country out of the depression earlier, but they didnt. These business leaders must take responsibility for their part in extending the duration of the depression.
    Its all about the slandering of FDR by the Libertarian think tank. As if they had or would have had at that time a better solution than what FDR did. fat chance.

    Posted by: j2t2 at December 28, 2007 08:13 PM
    Comment #241727

    j2t2, pretty good response. FDR had no crystal ball, but, he did have the maxim, desperate times call for desperate measures. Not defending that maxim, as it can lead to very wrong and evil agendas, but, not even most Libertarians would try to claim that FDR’s intentions were evil.

    Fact is, pulling out of a depression is extremely difficult. The fact that we pulled out of ours in less than a decade, is testament to many things done right and opportunely timed.

    You are right to point out the backlash against FDR by the magnates. Until the time of FDR, the prevailing philosophy was that success owes nothing to anyone else save a thank you to the flag for the opportunity. It was a naive view of tremendous financial success shared by the few elite and wealthy families of the time.

    But, the lesson of the depression was that business owners and wealthy can be devastated as well, relatively speaking, by a failed economy. Hence, the philosophy of the wealthy sharing as appropriate their wealth to shoulder the cost of government regulation, oversight, and infrastructure, and trade development, won many converts amongst both business owners and the intelligencia.

    The rest of our enormous success followed from that shift in perspective.

    Posted by: David R. Remer at December 29, 2007 12:38 PM
    Comment #241730

    David, thanks, While not a saint FDR did get us through some of the most trying times this country has faced and then laid the groundwork for a better future for the next generation of Americans. What more could be asked of one man. If only we had this kind of statesman to lead us today I feel certain things would be better for the next generation of Americans.

    Posted by: j2t2 at December 29, 2007 01:02 PM
    Comment #241772

    Look at debt-to-GDP before 1942.
    It wasn’t that alarming until after 1942, and skyrocketed during World War 2 (through to 1945).
    Then the debt and Debt-to-GDP ratio fell sharply after World War 2 ended in Sep-1945.

    Then, around 1976-to-1980, many things started to unravel (debt, plundering Social Security surpluses, regressive taxation, government that is increasingly FOR-SALE and plutocratic, corpocrisy and corporatisum, massive out-sourcing, abused H-1B Visa programs, bad trade policies and selling out American citizens, illegal immigration, pitting American citizens for profits and votes, refusal to enforce existing laws, Constitutional violations, inflation from excessive money-printing and dishonest banking policies, predatory lending, usurious 25% (or higher) interest rates, etc.), which started a 30+ year trend that is still worsening.

    Unemployment was very high in the Great Depression. Some of the causes of the Great Depression are questionable, but what is almost certainly true is that there was no single reason.

    And now, there are a number of things (no single reason) that have the real potential to cause another Great Depression. Especially with much more debt, a high Debt-to-GDP ratio (higher than before and during the Great Depression), persistent inflation (a 1950 dollar is now worth 11 cents), and a growing wealth and income disparity.

    The number and severity of problems are increasing, but some still somehow see a rosy picture, and no need for a change in course whatsoever.

    The real danger isn’t that we can’t solve problems, but simply that we won’t, and a incompetent, corrupt, Do-Nothing Congress will reward itself for all of it with another raise next month (like their 9 raises in the last 10 years). All three branches of government are dysfunctional. The Supreme Court supports abuse of eminent domain, allows spying on citizens without civil oversight, ignores Habeas Corpus, and allows the violation of Article V of the U.S. Constitution. And almost all governments (local and federal) ignore immigration laws by refusing to prosecute illegal employers. And how likely is any of that to change when the majority of the electorate rewards incumbent politicians in Congress with 95%-to-99% re-election rates?

    Posted by: d.a.n at December 30, 2007 11:05 AM
    Comment #241819

    j2t2 and David,

    You can continue to pat yoruselves on the back for your FDR worship, but neither of you have even attempted to explain the sharp downturn of 1937, which I think I have done a pretty thourough job of laying at the feet of FDR’s attack on business.

    j2t2, you are correct that the main reason that the depression lasted so long was that business was not investing, but you completely ignore that the REASON that they were not investing was because all incentive to do so was wiped away by FDR’s attacks on them.

    David, you mention that it took less than a decade to recover from the Depression? And you accuse me of needing a history book? It was longer than 10 years and tell me, when was the last time that a depression took that long to recover from? You assume it was a short recovery time (over a decade is not a short recovery time) but give no reason to view it that way.

    Between FDR blocking attempts to get international trade going again and his attacks on business he did prolong the depression.

    The US would have recovered from it no matter who was president, even Bush, because that’s what we do. And because FDR did some things wrong doesn’t make him a bad person or a bad president, he was moving in areas that we had not been in before. But to ignore those mistakes or attribute them to things other than what actually caused them, will make sure that we repeat them.

    Posted by: Rhinehold at December 31, 2007 12:42 AM
    Comment #241840

    Isn’t the Recession of 1937 often considered part of the Great Depression?
    It’s difficult to parse out the two.
    Looking at some of the statistics for 1937, they don’t look that bad or long lasting. It looks like a little bump on a general trend of recovery.

    There were certainly mistakes in the Great Depression. When FDR was asked to do deal with silver, FDR had already confiscated all US gold at $20.67 an ounce and then raised the price to $35. FDR said: “All right. I experimented with gold and that was a flop. Why shouldn’t I experiment a little with silver?”

    So, even FDR admitted that he was “experimenting” with the currency. And we appear to have learned little since then. We may not have large swings in inflation or deflation, but we now have persistent inflation year after year, government has bloated to nightmare proportions, nation-wide debt is huge, government is increasingly plutocratic, and it doesn’t appear like we’ll change course soon enough.

    I think FDR’s biggest mistake was putting almost the entire Navy in one place (Pearl Harbor), making it vulnerable to attack. Like 11-SEP-2001, conspiracy theories about 7-DEC-1941 abound, but there appears to be one thing in common. At the very least, both were a serious blunder and sequence of missed opportunities to prevent the preventable.

    Posted by: d.a.n at December 31, 2007 11:51 AM
    Comment #241853

    Rhinehold says “You can continue to pat yoruselves on the back for your FDR worship, but neither of you have even attempted to explain the sharp downturn of 1937, which I think I have done a pretty thourough job of laying at the feet of FDR’s attack on business.”
    From comment 241587
    Rhinehold The answer to your question about the cause of the 1937 recession,
    Reason 1. “The program of government spending was never carried out to the full extent that would have been necessary to bring the economy up to full employment.”
    Reason 2. “Government spending was meant as a helping hand for business, it was interpreted as a threat.”
    It was idelogical issues that caused this problem. The government only spent a portion of what was needed yet business did not pick up the slack because they perceived the New Deal as a slap in the face after years of unquestioned preeminence.
    The government spending $15 bil in 1936 helped but there was still 9mil unemployed. Proof of this can be found by looking at the $103 bil spent in the WWII years when full employment resulted.
    Ideology got in the way. Those that benefitted most from this Country contributed the least in the time of great need. Go figure.

    Rhinehold continues with “j2t2, you are correct that the main reason that the depression lasted so long was that business was not investing, but you completely ignore that the REASON that they were not investing was because all incentive to do so was wiped away by FDR’s attacks on them.”

    Back in the time frame leading up to the depression the problem with using capitalism as a type of political system was the sad fact that capitalist couldn’t win at capitalism and have any morals about the social system in which we live. Nowhere is this more apperent than during the depression Rhinehold. Those in the investor class chose to let the Country wallow in depression rather than to invest for the greater good of the country. Thats exactly why what you refer to as FDR attacking business was actually misinterpreted by the business/investor class as attacks.
    At that time it was obvious to most people that business excess has led to the depression. The marxist, the nazi and the fascist were ready to show what they could do for the economy. FDR was investing the peoples money back into the Country, just not enough to move the country out of the depression. The fact that the 3R’s of the FDR plan caused the business leaders heartburn during the time of the depression was an attitude problem of the business class not FDR’s.

    Rhinehold, if we stop to think for a moment we could ask ourselves where would we have been had the policies and laws that so upset the business leaders been in place in the 20’s? Perhaps depression would have been avoided and Hoover could have been credited with starting a mass middle class in this Country.
    BTW its not really worship its giving credit where credit is due.


    Posted by: j2t2 at December 31, 2007 01:49 PM
    Comment #241884

    j2t2,

    Again, you completely miss.

    1) Deficit spending was occuring between 1933 and 1939. Yet, while we were recoverying in 1934, 1935 and 1936, for some reason we took a hard downward turn in 1937. You have failed to even attempt to explain why the recovery not only stalled but reverted back. Other than say we weren’t spending enough (when we actually were the 3 previous years…)

    The only conclusion is that something caused this. And what happened in that time frame is the second part of FDR’s new deal and further attacks on business that you claim was really to help them…

    2) These new attacks were not ‘mistaken’. From attempting to confiscate all wealth created to blocking attempts to get international trade going again to making it illegal to say no to any union demand, as I have already detailed, these were not merely misunderstood policies by FDR. These (and others like them) were onerous and stopped investment dead in its tracks. If incentive is removed from investing, there is no reason to invest. And that is the lesson that is being ignored by people like you today.

    It was only after these programs and other policies were relaxed AND trade was resumed AND deficit spending was all done at the same time that the country got back to the business of prosperity. We emerged from the Great Depression despite FDR, not because if him.

    Posted by: Rhinehold at December 31, 2007 10:06 PM
    Comment #241908

    Rhinehold actually as it turns out the government wasnt spending enough to get out of the depression in the previous years as you contend. The unemployment figures indicate that despite stepping in the right direction they were only halfstepping as I have previuosly pointed out.

    In addition to the economic conditions of the time FDR was forced to contend with not only the repubs and conservatives but also those in the democratic party, sounds familiar huh.
    After almost 100 years of repub/elite business class control the changes put into place by FDR were blasphemous in their eyes. While you can’t blame them for not investing as a business decision,you do have to question their patriotism. These elite families and corporations with their politicians leading the way took this country down the tubes and into a depression. They then withheld the investments required to get this country running at a critical time, just prior to the ‘36 elections. Damn Fascist.
    Now Rhinehold not all corporations and businesses were at fault but many could not stand the fact that they had to contend with organized workers and laws that went on to usher in the golden age of America. Of course some were over board and were taken care of thru the political system.

    Posted by: j2t2 at January 1, 2008 03:49 PM
    Comment #241915

    They were dropping consistently and then shot way back up. You are still not answring what caused the recession of 1937, in fact you have to ignore it as a relavent event in order to continue with your assertion that FDR did nothing wrong.

    Keeping a blind eye to events and their causes will mean we will repeat them.

    Let me ask you this one question. In order to spur investment, should a government increase taxation on business or decrease taxation? Is attempting to seize all wealth good incentive to spurring investment?

    “some were overboard” 100% taxation is ‘overboard’? I have a few other choice words for it… Kennedy was exactly right to cut taxes on the wealthy, back when Dems still got it. Now they want to go down the path of not learning…

    As for patriotism, it was the patriotism of both the government and business that put these predatory practices of the government aside as we went into WWII. Had WWII not occurred, it is clear that the recovery from the depression would not have happened until we had a revolution.

    It was only after the attempts to seize all wealth was stopped and international trade was allowed to occur that deficit spending did any good, Keynes was wrong in predicting that the depression would return after deficit spending went down after the war. The reason he was wrong? It wasn’t just deficit spending that got us out of it.

    Posted by: Rhinehold at January 1, 2008 05:24 PM
    Comment #241920

    Rhinehold, I cant make it any clearer than what I have made clear several times as to 1937 recession.If you choose not to beleive so be it, just dont ask me to beleive in the Cato Institute fellow and his nitpicking. Because when you think about it what is the big deal about the recession of ‘37 when the discussion should be what caused the depression to begin with.
    Please also note I have not said FDR didnt make any mistakes what I have said is he was a great leader in the most trying of times certainly the best president of the past century.
    Nessecity and cooperation is what put aside portions of the new deal because if you will remember the new deal was put into place to cure the depression, once full employment and $103 bil of governement spending came into play there was no need for parts of the new deal as the depression was over. Not only that the country didnt go socialist, fascist, communist or Nazi due to the new deal. This despite the rhetoric of the opposition. Funny thing huh.

    Posted by: j2t2 at January 1, 2008 06:49 PM
    Comment #241922
    Rhinehold, I cant make it any clearer than what I have made clear several times as to 1937 recession

    Well, you could, if you actually addressed it. The problem is you don’t. You don’t see a dramatic change in trend as indicative of anything, even though I’ve shown several reasons for it occuring. You still say it is because we weren’t spending enough when we were spending less the three years before and were recovering. That you can’t even acknowledge these facts make your whole argument illogical.

    If you choose not to beleive so be it, just dont ask me to beleive in the Cato Institute fellow and his nitpicking.

    What Cato guy would this be exactly? This is not a nutjob idea put out by one ‘Cato fellow’, it has been the subject of dozens or more books, hundreds of articles, etc, all by economic historians and other historians debating the topic. Your attempt to dismiss the discussion but it only further displays your ignorance of what is being discussed.

    Because when you think about it what is the big deal about the recession of ‘37 when the discussion should be what caused the depression to begin with.

    Knowing what caused the depression is good to know so we don’t repeat it and create another depression. We know this. Knowing what caused the recession is good to know so we don’t repeat it and prevent recovery from a depression or recession or even prevent growth rates from being as high as they could be. We can’t even get diehard FDR/Keynsian fundamentalists to accept that there was a problem.

    Please also note I have not said FDR didnt make any mistakes what I have said is he was a great leader in the most trying of times certainly the best president of the past century.

    Please note that I never said he did everything wrong and wasn’t in place during trying times with a predefined handbook on how to react. But you can say that he made mistakes but you can’t admit to them when they are pointed out. And that is really a problem, isn’t it?

    Some of the people who discuss this…

    Thomas Woods
    David M. Kennedy.
    Thomas J. DiLorenzo
    Robert Higgs
    John T. Flynn
    Henry Hazlitt
    Harold L. Cole
    Lee E. Ohanian

    as well as many others I could point you to if you are really interested…

    No one is going to suggest these people (with the exception of David Kennedy) are Cato fellows. Especially Cole and Ohanian who published this paper:

    http://www.economics.hawaii.edu/research/seminars/02-03/02-21.pdf

    DiLorenzo says of this paper:

    Cole and Ohanian apparently emerged from the rarified world of macroeconomic model building for a long enough period of time to discover that the so-called First New Deal (1933–1934) was one giant cartel scheme, whereby the government attempted to enforce cartel pricing and output reductions in hundreds of industries and in agriculture. This of course was well documented in John T. Flynn’s book, The Roosevelt Myth, first published in 1948. Henry Hazlitt had also written about it some 15 years earlier. “New Deal cartelization policies are a key factor behind the weak recovery, accounting for about 60 percent of the difference between actual output and trend output,” the authors write.

    The fact that it has taken “mainstream” neoclassical economists so long to recognize this fact is truly astounding. For generations their own neoclassical textbooks have taught that cartels “restrict output” to raise prices. It has also been no secret that the heart and soul of the First New Deal was to use the coercive powers of government to prop up wages and prices by cartelizing the entire economy.

    FDR and his advisors mistakenly believed that the Depression was caused by low prices, therefore, high prices—enforced by threats of violence, coercion and intimidation by the state—would be the “solution.” Moreover, it is hardly a secret that if less production takes place, fewer workers will be needed by employers and unemployment will subsequently be higher. Thus, the First New Deal could not possibly have been anything but a gigantic unemployment-producing scheme according to standard neoclassical economic theory.

    FDR’s tripling of taxes, his regulation of business, and his relentless antibusiness propaganda also contributed to a worsening of the Great Depression, but his labor policies were probably the most harmful to the employment prospects of American workers. In this regard the most disappointing thing about the Cole-Ohanian article is that they do not even cite the pioneering work of Richard Vedder and Lowell Gallaway—Out of Work: Unemployment and Government in Twentieth-Century America—first published in 1993.

    Indeed, it is somewhat scandalous that they do not cite this well-known work while making essentially the same arguments that Vedder and Gallaway do. They recite many of the same facts about labor policy: The NIRA codes established minimum wages for less-skilled and higher-skilled workers alike; employers were told that they must bargain collectively with unions, which were given myriad legislated advantages in the bargaining process, all enforced by the newly-created National Labor Relations Board. All of these policies made labor more expensive. Consequently, as the economic law of demand informs us, the inevitable result has to be less employment.

    Strike activity doubled from 14 million strike days in 1936 to 28 million a year later, and wages rose by about 15 percent in 1937 alone. The union/nonunion wage differential increased from 5 percent in 1933 to 23 percent by 1940. Newly-enacted Social Security payroll and unemployment insurance taxes made employment even more expensive. What all of this means is that during a period of weak or declining derived demand for labor, government policy pushed up the price of labor very significantly, causing employers to purchase less and less of it.

    Vedder and Gallaway conducted an econometric evaluation of these labor cost-increasing policies and concluded that most of the abnormal unemployment of the 1930s would have been avoided were it not for these policies. They estimated that by 1940 the unemployment rate was eight percentage points higher than it would have been without the legislation-induced growth of unionism and government-mandated employment costs. They conclude that “The Great Depression was very significantly prolonged in both its duration and its magnitude by the impact of New Deal programs” (p. 141).

    Cole and Ohanian reach the exact same conclusions, but express them in the somewhat convoluted language of the “top economic journals”: “New Deal labor and industrial policies did not lift the economy out of the Depression… . Instead, the joint policies of increasing labor’s bargaining power and linking collusion with paying high wages prevented a normal recovery by creating rents and an inefficient insider-outsider friction that raised wages significantly and restricted employment … the abandonment of these policies coincided with the strong economic recovery of the 1940s.”

    This last conclusion—that the abandonment of FDR’s policies “coincided” with the recovery of the 1940s is very well documented by another author who is also ignored by Cole and Ohanian, Robert Higgs. In “Regime Uncertainty: Why the Great Depression Lasted So Long and Why Prosperity Resumed after the War” (Independent Review, Spring 1997), Higgs showed that it was the relative neutering of New Deal policies, along with a reduction (in absolute dollars) of the federal budget from $98.4 billion in 1945 to $33 billion in 1948, that brought forth the economic recovery. Private-sector production increased by almost one-third in 1946 alone, as private capital investment increased for the first time in 18 years.

    In short, it was capitalism that finally ended the Great Depression, not FDR’s harebrained cartel, wage- increasing, unionizing, and welfare state expanding policies.

    As for the argument that d.a.n. made that the recession of 1937 was no big deal, let’s point this out:

    By 1936, all the main economic indicators had regained the levels of the late 1920s, except for unemployment, which remained high. In 1937, the American economy took an unexpected downturn, lasting through most of 1938. Production declined sharply, as did profits and employment. Unemployment jumped from 14.3% in 1937 to 19.0% in 1938. In two months, unemployment rose from 5 million to over 9 million, reaching almost 12 million in early 1938. Manufacturing output fell off by 40% from the 1937 peak; it was back to 1934 levels. Producers reduced their expenditures on durable goods, and inventories declined, but personal income was only 15% lower than it had been at the peak in 1937. In most sectors hourly earnings continued to rise throughout the recession, which partly compensated for the reduction in the number of hours worked. As unemployment rose, consumers’ expenditures declined, leading to further cutbacks in production.

    All economic indicators were at pre-Depression indicators and while unemployment was high it was lowering each year for three years and was at about half of what it was during the 1929-1932 years. To most people that would look as if a recovery was going on!

    Yet, in just a few months, it all turned around to 1932 numbers. All the work of several years gone, simply because FDR wanted to advance his re-election and started attacking business above and beyond what people were willing to accept. In 1939 the majority of US citizens blamed FDR’s attacks on business as the cause of the prolonged recovery…

    But I’ve said all of this before…

    Posted by: Rhinehold at January 1, 2008 07:28 PM
    Comment #241931

    Rhinehold I wont have time to comment on each and every point you raise but allow me to start on this list.
    First of all I was referring to Jim Powell the senior fellow at the Cato Institute and author of FDR’s Folly’s . You mentioned him as a source in this thread.
    referring to the ‘37 recession again Rhinehold says,”Well, you could, if you actually addressed it. The problem is you don’t.”
    Several times Rhinehold I have stated the following:
    “Reason 1. “The program of government spending was never carried out to the full extent that would have been necessary to bring the economy up to full employment.”
    Reason 2. “Government spending was meant as a helping hand for business, it was interpreted as a threat.”
    It was idelogical issues that caused this problem. The government only spent a portion of what was needed yet business did not pick up the slack because they perceived the New Deal as a slap in the face after years of unquestioned preeminence.
    The government spending $15 bil in 1936 helped but there was still 9mil unemployed. Proof of this can be found by looking at the $103 bil spent in the WWII years when full employment resulted.
    Ideology got in the way. Those that benefitted most from this Country contributed the least in the time of great need. Go figure.”
    You have chosen not to beleive it which is fine but to say I havent addressed it is not the case. Dont make me put it in bold type:).

    Anyway let me continue this later.

    Posted by: j2t2 at January 1, 2008 11:31 PM
    Comment #241934

    j2t2,

    Ok, you’ve addressed it but your response is woefully inadequate in giving a full valid response.

    I’ll say it again.

    1) The spending was no more than in the 3 previous years when unemployment dropped to the 9mil level. During the recession of 37 those unemployment levels rose to 1934 numbers again. What was causing this recovery? The spending didn’t change yet the results did. This is not because there was not enough spent, it is because of other factors. If it hadn’t been enough there wouldn’t have been 3 years of recovery. It is like you are saying the sky is blue because we plant corn in the midwest.

    2) It was not interpreted as a threat, it was a threat. You for some reason want to say that the attempt to tax people at 100% was somehow designed to help them and was misinterpreted. You want to say that blocking attempts to resume internation trade was misinterpreted. Etc, etc… All of the things that FDR did that caused investment to shrink up are to be considered ‘misinterpreted’. Unfortunately, those things are written down and factually easy to check on. You are making a statement as fact that is not based on fact in any way.

    I have chosen not to believe it because I also don’t believe 2+2=5.

    Posted by: Rhinehold at January 1, 2008 11:44 PM
    Comment #241952

    Rhinehold said: “David, you mention that it took less than a decade to recover from the Depression? And you accuse me of needing a history book?”

    Indeed I do. 1930 to 1939 is 9 years. If you wish to include 1929, that is a decade. Either a history book or elementary arithmetic would be helpful to your comments.

    Just prior to the 1937 recession you focus on, out of context to the big picture, the depression had all but abated SAVE FOR UNEMPLOYMENT! Unemployment had not recovered to the levels of the late 1920’s. ERGO, the economy was not in full recovery by the “1937 recession which lasted only through 1938 and early in 1939.

    FDR’s 100% tax was not to be imposed on everyone. FDR’s tax plan was flawed big time. But, FDR’s plan was not as you try to frame it, a simple matter of taking. The other part of that plan was to spend those tax revenues by creating jobs. It was flawed. But, he was responding to the needs of the people of the time, and millions upon millions of Americans benefited and were improved by his years in office and long after. Directly on the heels of his presidency taken up in the midst of America’s worst depression, the nation flourished, was victorious, helped rebuild Europe and Japan, and created the greatest economy the world has ever seen.

    One cannot separate FDR and outcome of WWII and our economy. They are forever inextricably interwoven in the fact based history of America, and America improved her standing domestically and internationally while he was President. Those are the simple facts. They are undeniable.

    One can argue justifiably that some of his ideas were unconstitutional, some were ill-conceived, some were born out of ignorance. But, one cannot plausibly argue that his presidency did not coincide with victorious war efforts, a reprieve from the Depression preconditioned by many factors of the 1920’s and triggered by the stock market crash of 1929, and marked beginning of the greatest growth in citizen prosperity this nation has ever seen.

    He was not a god. He was just a man tried and tested by extraordinary times and challenges. Given that any person in America at that time who might have been president during the same period, would too have been flawed, ignorant on many a topic, and severely challenged by the circumstances, it is hard for me to see where the country might have fared better under anyone else. He got us through challenges that could easily have taken other routes like that of Brazil in the 1960’s and 1970’s, for example.

    Politics and governance will never be about perfection. It will always be about facing and surviving the greatest challenges set before it and threatening a nation’s continuation. By that standard, FDR was a successful, if imperfect, president. Only a biased and prejudged agenda would cherry pick, twist, and distort the history to come to another conclusion by that standard.

    Posted by: David R. Remer at January 2, 2008 08:49 AM
    Comment #241956
    the economy was not in full recovery by the “1937 recession which lasted only through 1938 and early in 1939.

    And it wasn’t in full recovery in 1939 either. In fact, most historians put it a 1941 because of the effects that the war had on employement, but it has been argued that since the war effort was not a permanent solution it wasn’t until the late 40s, early 50s that the depression came to a full and complete stop. It certainly was not over in 1939 as you suggest.

    FDR’s 100% tax was not to be imposed on everyone.

    No, the 100% tax was to be on all income over $25,000. It was aimed at business. Hence the ‘attacks on business’ assertion…

    The reduction of the personal exemption to $600 (which didn’t get rescinded by congress) turned the taxation onto the middle class though, which we’ve already agreed that we disagree on being a misatke.

    He was not a god. … By that standard, FDR was a successful, if imperfect, president.

    You seem to think I am saying that he wasn’t tried by the times and did the best he could. He had some character flaws that presented themselves, as any do while under such scrutiny, and made mistakes in judgement as well as running the executive branch in opposition to how he ran his initial campaign. In fact, I think we agree for the most part. What I am saying is that a look at the actions that FDR took show that he delayed the recovery that could have occurred had he not taken those specific actions. It is a position of hindsight, I freely admit, but one that we should employ to learn from, not repeat those mistakes.

    Posted by: Rhinehold at January 2, 2008 11:20 AM
    Comment #242039

    Rhinehold,”This is not a nutjob idea put out by one ‘Cato fellow’, it has been the subject of dozens or more books, hundreds of articles, etc, all by economic historians and other historians debating the topic. Your attempt to dismiss the discussion but it only further displays your ignorance of what is being discussed.”

    Yes you are right they are not associated with the Cato Institute however your references are all libertarian and therefore suspect when it comes to dealing with the issue, which I find to be a rather underhanded way of attempting to make your point.
    Thomas Woods, is an editor at the Journal of libertarian studies at tghe Ludwig Von Mise Institute.
    David M. Kennedy, Cato Institute
    Thomas J. DiLorenzo is Senior fellow at the Ludwig Von Mise Institute and adherent of the Austrian school of economics.
    Robert Higgs is associated with the Independent Institute
    John T. Flynn was a Liberterian
    Henry Hazlitt of the Henry Hazlitt Foundation is a libertarian.
    Hardly an impartial list.

    Posted by: j2t2 at January 3, 2008 03:46 AM
    Comment #242070

    Ah, so I need to provide more? How many are you providing exactly?

    references are all libertarian and therefore suspect when it comes to dealing with the issue

    BTW, I like how you glossed over Cole and Ohanian, makes it more convenient I suppose, being able to just ignore bits of evidence that doesn’t match your predifined view.

    Posted by: Rhinehold at January 3, 2008 02:18 PM
    Comment #242107

    Rhinehold
    “Your attempt to dismiss the discussion but it only further displays your ignorance of what is being discussed.”
    Rhinehold I have taken your advice regarding my ignorance on the subject and have expanded my horizons by doing so. Additional reading on the subject of the ‘37 recession has caused me to slightly revise my previous statement of the cause.
    Reason 1. “The program of government spending was never carried out to the full extent that would have been necessary to bring the economy up to full employment.”
    Can be changed to …well it can stay the same just add the following ” FDR in an attempt to start balancing the budget cut federal spending in 1937 due to the success of the federal spending the previous 3 years. Business investment did not take up the slack and as a result the Country slid into the ‘37 recession.

    Posted by: j2t2 at January 3, 2008 07:16 PM
    Comment #242228

    And why didn’t they ‘pick up the slack’? Why does a businessman not invest in his business?

    Posted by: Rhinehold at January 4, 2008 04:52 PM
    Comment #242272

    Rhinehold,
    “BTW, I like how you glossed over Cole and Ohanian, makes it more convenient I suppose, being able to just ignore bits of evidence that doesn’t match your predifined view.”
    evidence? evidence, arent you a little full of yourself? Babbling historians and economist hardly constitute evidence, how about opinion instead.
    Courtesy of Wikipedia I offer the following:
    “Virtually all historians believe that the New Deal helped resolve the Great Depression, but a substantial minority of economists believe that it either had no great impact or worsened the depression.[31] A 1995 survey of economic historians and economists asked “Taken as a whole, government policies of the New Deal served to lengthen and deepen the Great Depression.” Of the economists 27% agreed and 51% disagreed. Of the economic historians, only 6% agreed and 74% disagreed. (The rest were in the partly agree/disagree group). [3]
    The minority view is represented by Harold L. Cole and Lee E. Ohanian who argue that the “New Deal labor and industrial policies did not lift the economy out of the Depression as President Roosevelt and his economic planners had hoped,” but that the “New Deal policies are an important contributing factor to the persistence of the Great Depression.


    “And why didn’t they ‘pick up the slack’? Why does a businessman not invest in his business?”
    Once again:
    Those in the investor class chose to let the Country wallow in depression rather than to invest for the greater good of the country. Thats exactly why what you refer to as FDR attacking business was actually misinterpreted by the business/investor class as attacks.
    At that time it was obvious to most people that business excess has led to the depression. The marxist, the nazi and the fascist were ready to show what they could do for the economy. FDR was investing the peoples money back into the Country, just not enough to move the country out of the depression. The fact that the 3R’s of the FDR plan caused the business leaders heartburn during the time of the depression was an attitude problem of the business class not FDR’s.


    Posted by: j2t2 at January 4, 2008 11:53 PM
    Comment #242288

    Quite right, j2t2, that the minority Libertarians must rely upon minority opinion and resources to justify their minority existence at all, has become a cottage industry these days. What’s fun is to see how such minority interests will actually hire credentials to validate pre-determined research results for them.

    Many a Ph.D. out there are whores for sale to the highest bidder for research outcomes matching the employer’s agenda - Exxon Mobil and the research they bought against global climate change, for example.

    Thank you for demonstrating that a good way to debate a Libertarian is to ask for their resources and then research their resources objectively, as you have done. Doesn’t prove that the minority are wrong, necessarily, but when their minority status amongst professional peers is that small, it casts great doubt on the authority of those resources.

    Posted by: David R. Remer at January 5, 2008 02:11 AM
    Comment #242290

    j2t2 said: “Hardly an impartial list.”

    Right, kind of like asking a professional football team at the beginning of the season which team is the best. The answer is absolutely predictable.

    That’s the beauty of empirical science and objective research, peer review, replication, and consensus based on peer review. It is the most powerful tool at mankind’s disposal to chart its future. Sure, it stumbles occasionally from “groupthink”, but, it remains the very best system of acquiring objective information about reality ever devised, and carries over into the cultural academics and probability and statistical sciences as well, as the best tool available.

    Posted by: David R. Remer at January 5, 2008 02:20 AM
    Comment #242292

    Rhinehold, your use of the words recession and depression are now suspect if you claim the depression didn’t end until after the War. That must be more Libertarian interpretation.

    Mike Moffett, economics writer has this to offer:

    A good rule of thumb for determining the difference between a recession and a depression is to look at the changes in GNP. A depression is any economic downturn where real GDP declines by more than 10 percent. A recession is an economic downturn that is less severe.

    By this yardstick, the last depression in the United States was from May 1937 to June 1938, where real GDP declined by 18.2 percent.

    If we use this method then the Great Depression of the 1930s can be seen as two separate events: an incredibly severe depression lasting from August 1929 to March 1933 where real GDP declined by almost 33 percent, a period of recovery, then another less severe depression of 1937-38. The United States hasn’t had anything even close to a depression in the post-war period. The worst recession in the last 60 years was from November 1973 to March 1975, where real GDP fell by 4.9 percent.

    A recession is defined by the BCDC as follows:

    The Business Cycle Dating Committee at the National Bureau of Economic Research (NBER) provides a better way to find out if there is a recession is taking place. This committee determines the amount of business activity in the economy by looking at things like employment, industrial production, real income and wholesale-retail sales. They define a recession as the time when business activity has reached its peak and starts to fall until the time when business activity bottoms out. When the business activity starts to rise again it’s called an expansionary period.

    By the end of 1939, we were in an expansionary period, not a recession nor depression, using actual GDP numbers of the period. It is important to know the definitions of the terms one uses when making claims of an outrageous or controversial nature. Often the use of words outside the context of their definition is the reason the claims are deemed outrageous or controversial.

    Your claim that the Depression hadn’t ended until at least 1941 and perhaps even until after the war is simply an unsubstantiated claim and all the more false when definitions of the terms recession and depression and economic expansion are applied to the actual data of the period.

    This appears to be an appropriate place to ask you what definitions of depression and recession you are using in the context of your comments above. Because by these widely accepted definitions I present, your claim is simply false.

    Posted by: David R. Remer at January 5, 2008 02:43 AM
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