Honestly I didn't think I read this right, but....I did.
Obama said:
he would delay rescinding President Bush's tax cuts on wealthy Americans if he becomes the next president and the economy is in a recession, suggesting such an increase would further hurt the economy.
and even further:
Even if we're still in a recession, I'm going to go through with my tax cuts
This is trickle upon economics, a supply-side Reagan philosophy that is not proven to work. Where is it written that running these budget deficits and giving tax cuts to the super rich helps the economy?
Their own Congressional Budget Office has said these tax cuts failed to stimulate the economy.
The short-term effects of EGTRRA and JGTRRA in stimulating aggregate demand in the economy have largely dissipated by now, and the supply-side effects of those policies are uncertain but are probably small
Even The Street is pointing out this could trash the US dollar, due to the deficits:
That brings us back to the real issue being played out in the global markets for U.S. debt and for the dollar. If politicians make all these promises to buy our votes, what is the ultimate cost, and how do we fund it? Do we print more dollars to pay off the political supporters, and destroy the value of the currency? Or do we go hat in hand to global central banks, hoping they'll lend us money by purchasing our debt?
There are quite a number of analysis showing the Bush tax cuts did not help the economy, CBPP, EPI.
Where in any recession economy mode is it written that not rescinding the Bush tax cuts would help in anyway?
Comments
It's things like this that convince me that
at hear Sen. Obama is and remains a neo-liberal.
What pisses me off the most about this, is that it buys into the line that the government can do no good.
Obama can't be taking Blinder and the other decent economists very seriously.
I seriously considered taking a shot on this, and posting a diary up over at big orange on this.
Blinder has an excellent stimulus plan that offers continuing returns, and focus on stimulating demand. These tax cuts for the wealthy are, as you say, supply side economics. The problem with the US economy has been demand destruction as the prices of basic consumer goods has raced up like a Triple Crown winner on speed, not a lack of supply.
There's too much finance capital out in search of returns as it is now. I mean the tech stock bubble and the real estate bubble come from the same problem: footloose cash in search of a short term return.
Jerome a Paris over at ET has it down with his idea of the Anglo-Disease, you've got these jackasses on Wall Street offering hyped returns that crowd out investment in other parts of the economy like manufacturing. There's not relationship between the market capitalization of the firm and the market value of the firms assets and long term prospects.
GM and Ford currently have market capitalizations that make them look more like startups instead of staples of the US economy. It's like back in the late 1970s when Winnebago had a larger capitalization than Ford. It was totally out of whack. And it's precisely this disconnect between the market capitalization of firms (their value in terms of being sold like any other commodity) and their productive power (their investment value as an asset that can be expected to produce additional wealth) that is the problem.
We are a nation obsessed with market capitalization at the cost of productive power, and this has lead us to starve, sell off, and bash those parts of the economy that have actual productive power, i.e. the ability to actually produce items of value. Friederich List must be turning in his grave seeing what's happened to the American system of Political Economy.
Blinder
Well, I don't know about those other sites, especially those political agenda ones...
But I would assuredly appreciate a Blinder primer on his recommendations.
He's a large main stream economist and I'm familiar with his offshore outsourcing work and would love to read a Blinder primer is he is making policy recommendations or huge overview analysis reports.
So have at it, I know we would assuredly appreciate an overview, boiled down into layman.
On this statement, I really was shocked and am seriously wondering who is he listening to for the only organization I am aware of who claim the Bush tax cuts helped the economy are groups like the Heritage foundation and their analysis has major assumption, statistical holes.
I mean who credible really says this? Mankiw? He isn't credible to me.
I'd suggest googling
the Hamilton Project on Bush's tax cuts. This sounds like it's straight out of their playbook.
The truly ironic thing here is that we've gotten to the point where tax policies like this aimed at redistributing income to the wealth (who presumably have more than their fair share of entrepreneurs who will supply goods that will create their own demand) reduce total social output, which is the argument that they use for keeping wages low (that redistributing income will lead to economic losses for the economy overall.)
The main thing about Blinder is that he has this clunkers for cash idea that shows the right way. The simple recognition that lower income workers are unable to make capital investments that lower long term recurring costs makes a hug difference. The biggest problem is access to capital.
I should write on this. I want to, but I'm really busy with school.
I suppose that it is time that I just write the damned diary that's in my head.
But procrastination is the east path.
I linked to you over at European Tribune.
I don't know if you've read any of the stuff that Jerome has written on the "Anglo disease" but I highly recommend it. Most economic literature says that government spending and access to credit markets "crowds out" other uses of that money that could have higher returns. Jerome applies the same idea to financial capital. (i.e. hedge funds, and the other creatures at work on Wall Street) Saying that it crowds out investment in other areas of the economy that may create higher social returns.
Hamilton Project
This one is sure news to me. We need to start digging.
ok, Economists View has a post from 2007 on the Hamilton Projects view of tax cuts.
(The video link is broken)
I don't see where the Hamilton Project is saying the Bush tax cuts worked here.
I was very surprised to see support of a VAT tax by them.
I really don't know
what the view out of the Hamilton Project is, but in general their solution to these things is more education. It's the only place that I can figure that Obama would have got this idea that the tax cuts actually created an economic stimulus.
Venom
May have the answer....pander. But Jez in terms of the pander vote, what's going on here for does anyone in the US beyond the super rich think those are a great idea?
These are individual taxes vs. corporate taxes where things get more muddied.
Although some super rich hedge fund whatever assuredly doesn't want those tax cuts repealed but who the hell ever said they were a good idea in the first place beyond a few "drown the US government in a bathtub" super rich lobbyists?
Not surprised at all.
If the polls are valid, and they stay this close for the next 60 days, then expect more of this. Obama will attempt to sound as centrist or center-right as he can to woo in Republican voters. He knows he won't alienate his base that much, or at least risk losing a portion that could sway the election. Hell, don't be surprised if he comes out and says he will keep the Inheritence Tax in it's current status!
I don't know about that
If he really wanted to get voters, he would be presenting a much stronger trade reform policy agenda and he never has.
I don't believe there is any polling out there which says giving tax giveaways to the super rich is popular and that includes your GOP/conservative voters. Maybe I'm wrong,
but I don't think I've ever seen any poll claiming the Bush tax cuts were popular, even among most Republicans.
In terms of pandering, I'm fairly certain the thing that would win voters is trade reform. They want to see all NAFTA based trade agreements plain renegotiated to keep jobs in the United States, they especially want to see the China trade agreement renegotiated.
I mean go to Ohio, Pennsylvania, Michigan, Indiana, West Virginia...any of these states decimated, whose economy was heavily manufacturing based....and that's the key word of the day, trade. Crosses party lines.
Of course it would be nice to not have pander and to have a trade strategy that adopt a VAT, that would have a dynamic change process based on the trade deficit, that would give special consideration to manufacturing and services which are critical to the US national interest or the United States has a strong economic interest to develop here...
Within each one of those trade deals are hundreds and hundreds of clauses and conditions and each one needs to be analyzed and if it's plain not working for the United States....say unfair tariffs on automobiles such as an example...it plain needs to be renegotiated.
The arbitrage of market weaknesses by these multinational corporations is on steroids and that's where the real holes need plugging.
MUCH older than Reagan
Supply Side Economics has been tried *several* times in the last 120 years or so- AND EVERY SINGLE TIME THE RESULT HAS BEEN A BUBBLE THEN A RECESSION OR DEPRESSION.
But of course, that's what the elites want- a return to third world economics, not a functioning country.
-------------------------------------
Maximum jobs, not maximum profits.
Get off the Tax Cuts, would ya?
Yahoo's, most popular article today is about, of all things, Obama and McCain's tax plans.
Who would ever imagine the most popular article of all news stories would be an overview of the costs of tax plans?
It shows that both of them will push up the budget deficit even higher. This nation is so in the red it's affecting the US dollar and is not sustainable.
Yet all we hear are tax cuts, tax cuts, tax cuts as if that is the only economic policy prescription possible.
The key words tax cuts must do very well in focus group testing for in terms of economic plans, this is seemingly irresponsible from both parties and will hurt the US economically.