Replies to post #202257 on Tornado Alley (PROG)

[StephanieVanbryce]

I've been reading & stting on all that this past week .. I was gonna put it by N.'s posts on this board .......I mean my GOD! ... .Kornacki was the first to post it .. at the Next New Deal .. then it went viral .. and actually still is ... I read that one last night and thought it was the shortest one with the 'clearest' and easiest explanation! ... that sort of, HA, FOR SURE! ..puts the KIBOSH!..or a STOP! .. on N's economic philosophy! and Simpson..Bowels .. & all 'so called 'centrists' .. .and goldman & all 'big corporate assholes' .. and all republicans .. ryan in particular . .but ALL of them! .. all of their rhetoric is and has been based on FAULTY data .. and I am wondering if this news will even stop this and their insanity! .. oh yeah ... and Obama .. yes, he also 'is'/'was' (I hope WAS) influenced by their BS! .... " It's different this time " ... ... lmao!

OH YEAH .. and we mustn't leave out CNBC either . .they always have these psychopaths on their shows blabbing these lies ........

[fuagf]

The Economic Argument Is Over — Paul Krugman Has Won

Henry Blodget Today 12:15 AM



For the past five years, a fierce war of words and policies has been fought in America and other economically challenged countries around the world.

On one side were economists and politicians who wanted to increase government spending to offset weakness in the private sector. This “stimulus” spending, economists like Paul Krugman argued, would help reduce unemployment and prop up economic growth until the private sector healed itself and began to spend again.

On the other side were economists and politicians who wanted to cut spending to reduce deficits and “restore confidence.” Government stimulus, these folks argued, would only increase debt loads, which were already alarmingly high. If governments did not cut spending, countries would soon cross a deadly debt-to-GDP threshold, after which economic growth would be permanently impaired. The countries would also be beset by hyper-inflation, as bond investors suddenly freaked out and demanded higher interest rates. Once government spending was cut, this theory went, deficits would shrink and “confidence” would return.

This debate has not just been academic.

Those in favour of economic stimulus won a brief victory in the depths of the financial crisis, with countries like the U.S. implementing stimulus packages. But the so-called “Austerians” fought back. And in the past several years, government policies in Europe and the U.S. have been shaped by the belief that governments had to cut spending or risk collapsing under the weight of staggering debts.

Over the course of this debate, evidence has gradually piled up that, however well-intentioned they might be, the “Austerians” were wrong. Japan, for example, has continued to increase its debt-to-GDP ratio well beyond the supposed collapse threshold, and its interest rates have remained stubbornly low. More notably, in Europe, countries that embraced (or were forced to adopt) austerity, like the U.K. and Greece, have endured multiple recessions (and, in the case of Greece, a depression). Moreover, because smaller economies produced less tax revenue, the countries’ deficits also remained strikingly high.

So the empirical evidence increasingly favoured the Nobel-prize winning Paul Krugman and the other economists and politicians arguing that governments could continue to spend aggressively until economic health was restored.

And then, last week, a startling discovery obliterated one of the key premises upon which the whole austerity movement was based.

An academic paper that found that a ratio of 90%-debt-to-GDP was a threshold above which countries experienced slow or no economic growth was found to contain an arithmetic calculation error .. http://au.businessinsider.com/thomas-herndon-michael-ash-and-robert-pollin-on-reinhart-and-rogoff-2013-4 .

Once the error was corrected .. http://au.businessinsider.com/herndon-responds-to-reinhart-rogoff-2013-4 , the “90% debt-to-GDP threshold” instantly disappeared. Higher government debt levels still correlated with slower economic growth, but the relationship was not nearly as pronounced. And there was no dangerous point-of-no-return that countries had to avoid exceeding at all costs.

The discovery of this simple maths error eliminated one of the key “facts” upon which the austerity movement was based.

It also, in my opinion, settled the “stimulus vs. austerity” argument once and for all.

The argument is over. Paul Krugman has won. The only question now is whether the folks who have been arguing that we have no choice but to cut government spending while the economy is still weak will be big enough to admit that.

The discovery of the calculation error, after all, came only a few months after the United States voluntarily cut spending through a government “sequester.” This sequester is hurting the U.S. economy, and it is also depriving American citizens of some basic services–like a fully staffed air-traffic control system–that most first-world countries regard as a given in a developed economy. And with America’s government deficit already shrinking (thanks to the rollback of some tax cuts and a modest increase in taxes), it is now even clearer that the sequester did not have to be adopted.

Yes, at some point, the American government needs to come together and figure out a smart long-term plan for containing healthcare and military costs, which are the real budget-busters in our government spending. That long-term plan does not need to be adopted immediately, however.

And in the meantime, for the sake of the country, it would be nice if our government came together and agree to restore full funding for basic services.

Because the current state of government dysfunction in the United States is not just economically harmful. It is also embarrassing, depressing, and based on a premise that is now demonstrably false.

SEE ALSO: The Grad Student Who Discovered The Truth About Debt Explains Why The Famous Paper Was Wrong ..
http://au.businessinsider.com/herndon-responds-to-reinhart-rogoff-2013-4

http://au.businessinsider.com/paul-krugman-is-right-2013-4

[StephanieVanbryce]

hmmn__White House Rescinds $4.9 Billion in 2013 Spending Cuts

By Brian Faler - May 3, 2013 9:00 PM PT

The Obama administration is canceling $4.9 billion of the $85 billion in automatic U.S. spending cuts that took effect March 1, a move that restores some funds for defense and diplomacy, according to a White House official.

The decision came after the administration determined that, under rules governing the automatic reductions, it had cut too much from some budgetary accounts for the current fiscal year, said the official, who asked not to be identified.

About $3.7 billion will be restored to the Pentagon’s budget with another $700 million going to the State Department, said the official. The remainder would be dispersed across a number of programs at other agencies.

The change was made after the White House Office of Management and Budget completed recalculations based on legislation to fund government operations for the rest of fiscal 2013 that was signed by President Barack Obama on March 26.

Defense Secretary Chuck Hagel said he’s still reviewing options that may avert furloughs more than three months after the Pentagon said automatic budget cuts may require unpaid leave for as many as 750,000 civilian workers.

Based on the revisions from the budget office, the Pentagon now estimates that it will need to cut roughly $37 billion in the fiscal year that ends Sept. 30, down from about $41 billion that was previously projected.

Government Furloughs

The budget cuts have prompted furloughs of government workers at other agencies, including the Federal Aviation Administration, where reduced staffing by air-traffic controllers that started April 21 led to several days of flight- delays across the U.S.

After being flooded with complaints from constituents, Congress voted April 26 to give the FAA more flexibility in administering the cuts to its budget, a move that ended the need for air-traffic controller furloughs.

Democrats have said the automatic budget cuts would throw 70,000 children off the Head Start program, eliminate four million meals for seniors, take 600,000 people off a nutrition program for mothers and young children, and mean 125,000 fewer vouchers to help poor families pay for rental housing.

http://www.bloomberg.com/news/2013-05-04/white-house-rescinds-4-9-billion-in-u-s-spending-cuts-for-2013.html

he darn well better restore that that last paragraph! ... or he had no damn shame!