Think before gloating over Bush's spectacular fiscal incompetence

[rah]

Originally posted by MikeH
Giving back billions in tax cuts was an election promise wasn't it, how has that got anything to do with 9/11?

The surplus that was supposed to cover the tax cuts shrank considerably due to 9/11. 9/11 was a big contributor to the economic slide. Granted there would have been/was a slide to begin with, but a lot of layoffs and falling confidence can be directly attributed and helped it pick up steam.

[Whaleboy]

Yes, a considerable amount. But don't worry, they'll just blame that on Bush too.

Reagun

Agathon (minus ad hominems):

If theres one thing I cant stand its populist, reactionist, simple minded (insert expletive here) politicians.

[MikeH]

Absolutely, 9/11 totally changed the economic situation and proceeding with the cuts under those changed circumstances is lunacy (even if you didn't think it was a bit dumb in the first place). Who's fault is that? It's irresponsible to make tax cuts in a climate like that. Especially when you are increasing spending...

Because at the same time he's committed the country to an overseas war that is costing tens of billions of dollars without increasing taxes to pay for it. That increases the deficit even more. Not to mention the fact that his inability to build an international coallition to help in Iraq is now costing the US even more money in peacekeeping and rebuilding, hence the current compromised in the UN to try and get more international help.

So 9/11 was bad for the economy, I totally agree. But Bush's policies made the situation much worse.

I think I read the other month that US unemployment levels were at a 20 year high?

[Solly]

Absolutely, 9/11 totally changed the economic situation and proceeding with the cuts under those changed circumstances is lunacy (even if you didn't think it was a bit dumb in the first place). Who's fault is that? It's irresponsible to make tax cuts in a climate like that. Especially when you are increasing spending...

If Bush had changed his tax cuts after being elected, those who voted for him would be less likely to next time around as he'd broken a promise. Democrats wouldn't vote him anyway...

Don't blame the politicians, blame the people that elect.

[FrustratedPoet]

blame the people that elect.

Or don't elect, as the case may be.

[Solly]

Huh FP?

[FrustratedPoet]

That was supposed to mean both
1. Bush wasn't really elected democratically blah blah blah. The usual lefty troll ( ), and
2. The people who don't elect their leader (ie. by choosing not to vote) are also to blame. It still amazes me how anyone who doesn't excercise their right to vote has the almighty gall to complain about anything the government does.

I seem to have trouble making myself understood today.

[rah]

Yeah, I agree that after 9/11 the tax cut should have been trimmed a bit.

Individuals judge a lot of things on their personal experiences. Since Bush has been elected, my salary has increased a good chunk, my tax burden is less due to the tax cuts. So while I don't necessarily agree with a lot of the things that he has done, I have benefitted and would vote for him again. (of course, subject to change at a moments notice. )

[JohnT]

"Yeah, I agree that after 9/11 the tax cut should have been trimmed a bit."

IIRC, it was trimmed "a bit." From ~$800 billion to $350 bil.

[MikeH]

And the proportion of your taxes that now goes on paying off interest from international debts rather than on actual services has increased massively.

[rah]

Originally posted by MikeH
And the proportion of your taxes that now goes on paying off interest from international debts rather than on actual services has increased massively.

But the average person doesn't realize that impact. They're just counting what's in their own pocket.

And yes John, but I still believe it should have been trimmed farther. While the money that I got back was nice, I could have done without it.

[Solly]

Did you spend it or save it Rah?

[rah]

Spent it, just like the president told us to.

I'm a good little na... I mean american.

[MikeH]

I hope you spent it on stuff made in America.

[Adam Smith]

Just a couple of comments

He said that a tax cut that was not designed to stimulate the economy would stimulate it. But it did not.

Any tax cut will stimulate the economy, at least in the short run. Stiglitz knows this.

Now, after handing billions to rich Americans through tax cuts, the Bush administration is passing the hat around, asking for contributions from other countries to help to pay for the Iraq war.

I agree that this is a bad policy. It is starting to look like Lyndon Johnson guns (Vietnam) and butter (Great Society programs) in the 1960's. The results were not pretty.

it is inevitable that it will focus on China, with its large trade surplus

By not allowing its currency to rise in value, China is using export industries to soak up workers who were laid off by rusting and inefficient state industries. In the long run this is probably a good thing economically, if not politically.

Reagan's irresponsible tax cuts combined with America's paltry savings, meant the US had no choice but to borrow abroad.

Tax cuts are a standard response to the high unemployment we had in the early 1980's. Stiglitz knows this. However, if you cut taxes to people who save 80 percent of their income, have to cover 100 percent of the resulting deficit with borrowing, you just reduced the amount of money available for investment, making matters worse in the long run. The trick is to find ways to reduce government spending without losing services. This means health care reform, social security reform, and defense procurement reform. Not too many politicians have the guts to take on these issues.

demonstrable lack of competence in macroeconomic management

Interesting Stiglitz should make this charge with respect to the US when many countries have larger deficits as a percent of GDP even after instituting the fiscal reforms he mentions.

close to a quarter of American imports were covered by some form of trade restriction at the peak of Reagan protectionism

Since when was this a Reagan issue? Then, as now, Democrats in Congress are responsible for the vast majority of protectionism. See e.g., 1984 Democratic Party Platform, Democratic votes against NAFTA and WTO, and the current presidential campaigns of Gebhart and others. Stiglitz certainly knows this.

Edit: spelling

[Imran Siddiqui]

Absolutely, 9/11 totally changed the economic situation and proceeding with the cuts under those changed circumstances is lunacy (even if you didn't think it was a bit dumb in the first place). Who's fault is that? It's irresponsible to make tax cuts in a climate like that.

PA is correct in response to this (I didn't just say that ).

Bush remembered the lessons of his father's administration, cheifly being that Bush I's party base abandoned him after Clinton attacked him for raising taxes after his 'No new taxes' pledge.

[MikeH]

Shows what a retarded pledge it is.

[Imran Siddiqui]

Well, if you want to win.

[MikeH]

The Conservatives used the same thing (tax cuts before elections as bribes) to win several elections but after they'd well and truly cocked everything up so much that no-one trusted them any more the electorate eventually learnt not to only base their voting on tax promises.

[Imran Siddiqui]

Well in this country Republicans haven't totally 'cocked' things up yet, even if you think Bush might have .

Reagan is still looked upon very fondly.

[Drake Tungsten]

As the US thrashes around for someone to blame, it is inevitable that it will focus on China, with its large trade surplus, just as the deficits of the Reagan era led to a focus on Japan two decades ago.

Paragraphs like this make it hard to take this article seriously. Is he really implying that Reagan was just using Japan as a scapegoat in the 80's?

[GePap]

Originally posted by Verto
Is 9/11 not at ALL responsible for at least SOME of this mess?

Economically? No. Even the increased speding on defense and Homeland security does not meet the difference. So even if you could claim that 9/11 helped make the deficit record-sized (which is not very good arguement, givn that Iraq has no been put into the projection, and it was a war of choice, not a direct outcome of the attack like Afghanistan) The policies of the admin. and the republican congress are the primary reason.

I think the more inetresting bit is he fact that the US government is now financed to a fair degree by foreign savings: the money of the little old ladies of Germany, France, China, Japan, SK, and so forth is the money that keeps our fighters in the air, or our kids with college loans...and I agree with Stiglitz that this won;t work as a permanent situation.

[Imran Siddiqui]

I think the more inetresting bit is he fact that the US government is now financed to a fair degree by foreign savings

It has been for quite a while. The US is very attractive investment and that is nothing new nowadays.

[MikeH]

Originally posted by Imran Siddiqui
Well in this country Republicans haven't totally 'cocked' things up yet, even if you think Bush might have .

Reagan is still looked upon very fondly.

Yet. It took 19 years for voters here to change the gov't.

[Imran Siddiqui]

Well, I doubt that Republicans will befall a Tory collapse. Different systems will result in different outcomes. If Bush loses in 2004, the Republican candidate for Prez will probably be an uber-moderate designed just to win. And Republicans will continue to be a force in Congress.

Remember, even when the Democrats were at the hight of their power after WW2 (at least in Congress), you had a Republican President win in 1968.

[GePap]

Originally posted by Imran Siddiqui
It has been for quite a while. The US is very attractive investment and that is nothing new nowadays.

That does not mean there won;t be anything new in the future, and the US is doing ntohing whatsoever about it's spendthrift ways. As Stiglistz says, if something were to change...well, then we would have problems.

[Imran Siddiqui]

That does not mean there won;t be anything new in the future, and the US is doing ntohing whatsoever about it's spendthrift ways. As Stiglistz says, if something were to change...well, then we would have problems.

Well, if things were to change so that we weren't a good investment oppertunity then I think we'd have BIGGER problems than a reduction in foreign investment .

If we were to become less and less of a valuable investment, we would, of course, change. The government would push citizens to save more to increase US investment. It might be painful for a bit, but it would balance out.

[GePap]

Given the anti-governemnt stream of the rep. party, and the "it's my money, let ME spend it as i whish" mentality that permiates this country, tyring to make people save might be poltiically as suicidal as, lets say, ending SS.

Oh, and the issue is NOT about the Us being a good investement oportunity, but the only good one. If any significant competition came up, bilions upon billions the governemnt now counts on would not be there, and that would begin the problems.

[Whaleboy]

*elijah's disinterest grows to new levels*

FHS, aren't we covering old ground here?!??

Whats happening? I don't care about lame governmental stuff anymore! It all sucks.

[Imran Siddiqui]

tyring to make people save might be poltiically as suicidal as, lets say, ending SS.

So raising interest rates and making investment more profitable would be politically suicidal? What?

If any significant competition came up, bilions upon billions the governemnt now counts on would not be there, and that would begin the problems.

There has always been some competition out there, but the US has been the top dog. Some of the reasons are because of the pro-business climate of the country which some feel will result in greater gains with less red tape and corporate taxes. If there exists some competition, I'm sure the US would slowly shift from foreign investment to domestic. Everything would not collapse simply because people start investing in Euro-land.