Thursday, November 27, 2008

My Friend, Robert Reich´s Ideas on Fixing the Economy!

My friend, Robert Reich, an economic adviser to President Obama, believes Obama´s Jobs Program and government spending are good for our ailing economy.
Many Republicans disagree and call for tax cuts, rebates and limited government spending. Their plans did not work over the last 8 years and will not work in the future!
I tend to agree with my genius friend and my hero Robert!
From Robert Reich´s Blog:
Between now and late January, when the stimulus package will be voted on, we're likely to be treated to a great debate over the wisdom of Keynesianism. Fiscal hawks (Republicans) will claim government is already spending way too much. Even without the stimulus package, next year's budget deficit is likely to be in the range of $1.5 trillion, considering the shrinking economy and what's being spent bailing out Wall Street. The hawks also worry that post-war baby boomers are only a few years away from retirement, meaning that the costs of Social Security and Medicare will balloon.
What the hawks don't get is what John Maynard Keynes understood: when the economy has as much underutilized capacity as we have now, and are likely to have more of in 2009 and 2010 (in all likelihood, over 8 percent of our workforce unemployed, 13 percent underemployed, millions of houses empty, factories idled, and office space unused), government spending that pushes the economy to fuller capacity will of itself shrink future deficits.
Conservative supply-siders, meanwhile, will call for income-tax cuts rather than government spending, claiming that people with more money in their pockets will get the economy moving again more readily than can government. They're wrong, too. Income-tax cuts go mainly to upper-income people, and they tend to save rather than spend.
Even if a rebate could be fashioned for the middle class, it wouldn't do much good because, as we saw from the last set of rebate checks, people tend to use extra cash to pay off debts rather than buy goods and services. Besides, individual purchases wouldn't generate nearly as many American jobs as government spending on infrastructure, social services, and green technologies, because so much of we as individuals buy comes from abroad.
So the government has to spend big time. The real challenge will be for government to spend it wisely -- avoiding special-interest pleadings and pork projects such as bridges to nowhere. We'll need a true capital budget that lays out the nation's priorities rather than the priorities of powerful Washington lobbies. How exactly to achieve this? That's the debate we should be having between now and January 20 or 21st.


Anonymous said...

We are totally out of control in this country. We are borrowing billions from foreign sources who will literally own us, our children and our grandchildren. Be very afraid.

ultima said...

Of course, not all the tax cuts the GOP proposes would be focused on individuals. An important aspect of that approach was to cut the taxes of businesses so they could be more competitive and hire more workers. Perhaps that remains a viable alternative to some outright government spending. Nevertheless, I remain in favor of the necessary spending to repair our infrastructure which will require a budget choking amount in total. Nevertheless, given that this is money that will have to be repaid one way or another, we should make this construction more like some of the depression era programs where the men are enabled to get work to support their families if they have them but not for fancy living with high mortgage payments, multiple color TV sets, cell phones, computers and other unnecessary electonics. During the Great Depression young men went off to the CCC, lived in tents, and sent their wages home to their families. Most thought they were lucky to be able to get any kind of work and help their families. These were often young, unmarried men who supported their parents and younger siblings. Desperate times...

Keynesian economics has its proponents and its detractors. Many say without WW II the pump priming of the FDR years would not have worked. We'll see if Reich gets his way.

There is no indication that Obama is prepared to abandon his promise of another major rebate almost immediately. I confess that I don't fully understand how a depressed economy recovers. Obviously, it is as much about psychology as anything else. Clearly, it is also about the world wide demand for goods and services. Many will postpone purchases until they have a reasonable assurance that the economy is improving. It is a chicken and egg type of thing. Government hopes to create the illusions if not the reality that we are out of the woods by spending money it does not have. It remains to be seen whether the public will respond to the bait or whether it will continue to lay in the weeds waiting for some other sign that all is well before it spends on other than the necessities. We will know when the mood shifts as people begin to buy durables like autos, refrigerators, etc. The Obama plan seems to be clear at this point-- another rebate stimulus package, infrastructure investments, and green research and development. What if all this doesn't work because more illegals offset any new green jobs created and we also allow them to soak up the infrastructure jobs. That's something Obama needs to think about before he pushes amnesty, open borders, and increased immigration. It seems to me that those moves run counter to common sense in an economic crisis.

But as we have seen with Obama's appointment of an ex-La Raza official, he is intent on paying his political debts so he may not honor the niceties of labor economics.

The Arizonian said...

Many Republicans disagree and call for tax cuts, rebates and limited government spending. Their plans did not work over the last 8 years and will not work in the future!

The bold part is something that they have not done the last 8 years.

And are we going to start the 'blame game' for the economic 'crisis' all over again?

The Arizonian said...

But just who is Robert Reich?

He supports 'a wage supplement for lower-income people' -(1)

Dee said...

Robert Reich is an American politician, academic, writer, and political commentator. He served as the twenty-second United States Secretary of Labor, serving under President Bill Clinton from 1993 to 1997.

The Arizonian said...

Dee said:
"Robert Reich is an American politician, academic, writer, and political commentator."

And Adolf Hitler was a soldier, political commentator, social activist, community organizer, politician, writer, and an artist..... So?

"He served as the twenty-second United States Secretary of Labor, serving under President Bill Clinton from 1993 to 1997."

So..... is Obama really about change, or simply reverting to a by-gone era?

The Arizonian said...

Frankly, Obama's cabinet is filling with skeletons:

Raum Emanuel: Chief of Staff
A man, that during a Democratic Party dinner, was stabbing a tabletop with a steak knife calling out the names of Democratsthat didn't follow the party line (traitors as he called them) and shouting 'dead'.

Timothy F. Geithner:
President and CEO of the Federal Reserve Bank of New York, will serve as Secretary of the Treasury, because they have done a bang-up job so far.....

Lawrence H. Summers:
Former Secretary of the Treasury under President Clinton, will serve as Director of the National Economic Council. Where's the 'change'?

Ellen Moran, Director of Communications:
Moran's political experience includes managing campaigns for governor, U.S. Senate, and U.S. House; working on the national campaign staff of Tom Harkin's 1992 presidential campaign; helping plan both Clinton inaugurals; and conducting international democracy work in Indonesia for the U.S. Agency for International Development.
Moran currently serves as executive director of EMILY's List, where she oversees the national staff and charts the overall strategic direction of the organization. This was Moran’s second tenure at EMILY's List, rejoining the organization from the AFL-CIO where she coordinated Wal-Mart corporate accountability activities and served in the Political Department.
Didn't Hillary sit on the board at Wal-Mart?

Dan Pfeiffer, Deputy Director of Communications:
Prior to the Obama campaign, Pfeiffer worked as Senator Evan Bayh's Communications Director, Senator Tom Daschle's Deputy Campaign Manager in 2004 and the Communications Director on Senator Tim Johnson's reelection in 2002. He has also worked for the Democratic Governors Association and the Gore-Lieberman campaign.

David Axelrod, Senior Advisor to the President:
Axelrod has worked for leading Democrats across the country, including Senators Hillary Clinton, Chris Dodd, and Herb Kohl, as well as Governor Tom Vilsack of Iowa, Governor Deval Patrick of Massachusetts, Congressman Rahm Emanuel of Illinois, and Mayor Richard Daley of Chicago, along with mayors of big cities across the country.

Lisa Brown, Staff Secretary:
Lisa Brown is the Executive Director of the American Constitution Society for Law and Policy. Lisa was Counsel to Vice President(Al) Gore from September 1999 through January 2001, and Deputy Counsel from April 1997 through August 1999.
Prior to her government service, Lisa was a Partner in the Washington, D.C. law firm Shea & Gardner.*

Greg Craig, White House Counsel:
Gregory B. Craig served under President Bill Clinton as Assistant to the President and Special Counsel.

Just another puppet administration.....

Dee said...

I think President Obama is doing a very fine job in building his cabinet and I am very very proud he is naming Hillary as Secretary of State!

We needed CHANGE vs the last 8 years!!

This is a CHANGE WE NEED!!

The Arizonian said...

It is not change, but merely a reversion to the Clinton days....

Liquidmicro said...

Terrorism against Americans is already happening, and I have yet to hear Obama even mention or condemn those attacks in Mumbai. Not a word from him in regards to all the Americans killed.

The Arizonian said...

This is the most lop-sided economic 'lecture' I've ever read.
1. John Maynard Keynes had many ideas about economics that have been debunked through example. From Wikipedia:
"He assumed that (marginal) labour productivity decreases with expanding employment. This is incompatible with the empirical findings summarized in Okun's Law. He combined this position with the marginal productivity theory of wages, implying that real wages decrease with increasing employment. This was shown to be empirically incorrect by the economist Dunlop, and Keynes accepted this. Keynes also suggested in the General Theory that inflation would occur only near "full employment" (in his sense), but it has been observed in many cases that inflation creeps up in states of severe underemployment (Stagflation). The assumption entertained by Keynes that inflation can only occur near full employment is still maintained in modern macroeconomics (→NAIRU). Keynes held that the cause of unemployment is a too high rate of savings, or insufficient investment expenditure. He conjectured that the amount of labour supplied is different when the decrease in real wages is due to a decrease in the money wage, than when it is due to an increase in the price level, assuming money wages stay constant. This conjecture relates to the "actual attitudes of workers" and is "not theoretically fundamental," although the New Keynesian economics emphasizes this point."

Not to mention he believed in Social (genetic) Engineering (which is why the libs love him):
"Keynes served as Treasurer for the Cambridge University Eugenics Society between 1911-1913[16], and was on the board of directors of the British Eugenics Society in 1945. In 1946, Keynes still declared eugenics "the most important, significant and, I would add, genuine branch of sociology which exists."[17] Eugenics has since fallen into disfavor, owing to its association with the Nazi movement in Germany."

From Webster:
noun plural but singular in construction
: a science that deals with the improvement (as by control of human mating) of hereditary qualities of a race or breed

2."Fiscal hawks (Republicans) will claim government is already spending way too much."
Or at the very least, spending it on the wrong things. Many 'social programs' are a shame and need to be cut (which Bush proposed, and many rejected, and now Obama suggested the same cuts and is regarded as a saint for it).

3. "The hawks also worry that post-war baby boomers are only a few years away from retirement, meaning that the costs of Social Security and Medicare will balloon."
Are you saying it won't? Care to make a wager?

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