Pages

Monday, January 13, 2014

Sumner's Faulty Logic on Fiscal Stimulus

       One thing you can't accuse him of is failing to spike the ball enough-whatever the truth is, he'll declare victory and then demand that everyone lay prostrate on the ground before him and admit defeat. On fiscal stimulus he makes so many so many claims that just don't follow it gets you a little dizzy.

       "Regardless of what you think about extended UI, everyone should agree on the following:  If we really do need 73 week extended UI 5 years after Obama took office, then the 2009 stimulus bill failed. Perhaps it failed because it was too small, or because the GOP blocked further stimulus, but it clearly failed."

      http://www.themoneyillusion.com/?p=25754


     Yes, that's real clear alright-clear as mud. To say it was a failure would be to claim that things would be better today if we didn't have it. I mean we've had 4 years of austerity since-we've followed the Market Monetarist playbook-and we still aren't back to the 2007 highs.

     Yes, the last 4 years were MM policies.

      "I think the debate over “austerity” is the wrong debate.  The demand-siders are right that many countries need more demand.  But if the central bank won’t allow more demand, then the best option might be to boost AS by making your economy as lean and mean as possible.  That might involve shrinking the government."

       http://www.themoneyillusion.com/?p=18616


       Admire the causistry of the argument-'A debate over austeirty is the wrong debate. By the way let's shrink the government. Demand siders are right. Let's have some supply side structural reforms.'

       It looks like Congress is finally nearing a budget deal that will take away the constant short term crises. We might actually have some level of-dare I say normalacy? Maybe even 'regular order?'

       "One positive sign came from Alabama Sen. Richard Shelby, the ranking Republican on Appropriations. In anticipation of the filing, he met with his fellow Republicans on the panel. Shelby said later he would support the bill and asked his colleagues to support it as well."

      “I’m on board,” Shelby told POLITICO. “If the House comes with a big vote, we’ll get a big vote, too.”
“It’s not everything anybody wanted, but we’ve been working hard at it, and it will lead us, hopefully, to regular order.”

       "
Taken as a whole, these numbers define a new plateau — some would say realism — for the remainder of Obama’s presidency."

       "
House-Senate negotiators rolled out a $1.1 trillion spending bill Monday night — a giant package that fills in the blanks of the December budget agreement and promises to restore some order to government funding over the next year."

       "
The very evident give-and-take caps more than six weeks of often intense bargaining within the Appropriations Committees and sets the stage for what the leadership hopes will be a rapid series of floor votes sending the bill on to Obama by this weekend."

       Read more: http://www.politico.com/story/2014/01/spending-bill-unveiled-102128.html#ixzz2qLtR9P2f


     The god news is that the fudning is signficantly above sequester levels with some things like Head Start or the new popular Tiger Grant program. Still, at the end of the day, nonmilitary spending in this 'new realism'for the Obama Presidency is 10% lower than it was when George W. Bush stepped down. 

     "What’s most telling is to compare the numbers now with spending levels six years ago for fiscal 2008 — the last full budget cycle under Obama’s predecessor, President George W. Bush."
     "Total discretionary spending for 2008 was $1.176 trillion, more than half of which, or $642.1 billion, was designated for the Pentagon and military operations — in Iraq then as well as Afghanistan."
      "That left $534.4 billion among the 11 other appropriations bills, almost exactly what will be the case now in the 2014 omnibus. The big difference is inflation. And when the Bush dollars are adjusted upward to reflect changes in the cost of living since 2008, it shows that Obama will be left with about 10 percent, or $53 billion, less than his predecessor."


Read more: http://www.politico.com/story/2014/01/spending-bill-unveiled-102128_Page2.html#ixzz2qLuq8Rqy

     So Sumner wants to place the blame on our slow recovery to fiscal stimulus? How does a slow recovery show the weakness of fsical policy when we've cut fiscal spending by 10%?

   

No comments:

Post a Comment