Just so no one doesn't get that this travesty is doing real harm, it should be understood the harm it's already doing to the economy. Unfortunately, despite what Scott Sumner might like to tell you, the Fed has far from offset the level of fiscal contraction we've had since 2010.
"Macroeconomic Advisers has a new report out about the effects of bad fiscal policy since 2010 — that is, since the GOP takeover of the House. The way it’s written, however, might confuse some people. They say that combined effects of uncertainty in the bond market and cuts in discretionary spending have subtracted 1% from GDP growth. That’s not 1% off GDP — it’s the annualized rate of growth, so that we’re talking about almost 3% of GDP at this point; cumulatively, the losses come to around $700 billion of wasted economic potential. This is in the same ballpark as my own estimates."
"And they also estimate that the current unemployment rate is 1.4 points higher than it would have been without those policies (a number consistent with almost 3% lower GDP); so, we’d have unemployment below 6% if not for these people."
http://www.washingtonpost.com/blogs/plum-line/wp/2013/10/15/as-gop-insanity-continues-damage-to-the-economy-deepens/
This shows that Sumner's wrong about monetary offset and also that Tyler Cowen's wrong about The Great Stagnation thesis-where our unemployment is mostly supply side.
Incidentally, this report by MA was commissioned by the Peterson Foundation-Pete Peterson's foundation. When the PF thinks we've been doing too much austerity maybe it's time to sit up and take notice.
Ironically, then while they call themselves the Tea Party, the Tea Party of the last 4 years has had the opposite effect of the original Tea Party in 1775. Then the effect was to abolish a steep tax however the effect of the 2010 Tea Party is to impose a steep tax on us which is only getting worse with Fitch now warning of a downgrade.
Of course, as Mark Zandi tells it's not just about having a magic date written in stone but rather the more time that passes the more confidence is hurt.
"The point is that with each passing day the debt limit is not increased the more damage it will do to our economy. If lawmakers don’t raise the debt limit by November 1, the economy will fall back into recession. If they can't raise it by the end of November, we will be dooming our economy and the entire global economy to a wrenching economic downturn with implications for years if not decades to come."
http://diaryofarepublicanhater.blogspot.com/2013/10/boehners-plan-b-pushing-us-to-brink-of.html
"Macroeconomic Advisers has a new report out about the effects of bad fiscal policy since 2010 — that is, since the GOP takeover of the House. The way it’s written, however, might confuse some people. They say that combined effects of uncertainty in the bond market and cuts in discretionary spending have subtracted 1% from GDP growth. That’s not 1% off GDP — it’s the annualized rate of growth, so that we’re talking about almost 3% of GDP at this point; cumulatively, the losses come to around $700 billion of wasted economic potential. This is in the same ballpark as my own estimates."
"And they also estimate that the current unemployment rate is 1.4 points higher than it would have been without those policies (a number consistent with almost 3% lower GDP); so, we’d have unemployment below 6% if not for these people."
This shows that Sumner's wrong about monetary offset and also that Tyler Cowen's wrong about The Great Stagnation thesis-where our unemployment is mostly supply side.
Incidentally, this report by MA was commissioned by the Peterson Foundation-Pete Peterson's foundation. When the PF thinks we've been doing too much austerity maybe it's time to sit up and take notice.
Ironically, then while they call themselves the Tea Party, the Tea Party of the last 4 years has had the opposite effect of the original Tea Party in 1775. Then the effect was to abolish a steep tax however the effect of the 2010 Tea Party is to impose a steep tax on us which is only getting worse with Fitch now warning of a downgrade.
Of course, as Mark Zandi tells it's not just about having a magic date written in stone but rather the more time that passes the more confidence is hurt.
"The point is that with each passing day the debt limit is not increased the more damage it will do to our economy. If lawmakers don’t raise the debt limit by November 1, the economy will fall back into recession. If they can't raise it by the end of November, we will be dooming our economy and the entire global economy to a wrenching economic downturn with implications for years if not decades to come."
http://diaryofarepublicanhater.blogspot.com/2013/10/boehners-plan-b-pushing-us-to-brink-of.html
Incidentally, Sumner himself admits that the Fed can't fully offset a government shutdown.
For him, a govt shutdown is a kind of real shock. I wonder what a govt shutdown followed by a debt ceiling default is.
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