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We're all Keynesians now

Races for the Senate, U.S. House, etc. and other issues of national importance.

We're all Keynesians now

Postby kurt_w » Wed Dec 05, 2012 9:53 am

The "fiscal cliff" is basically a sudden, drastic dose of budget austerity. Unless we do something to stop it, taxes will go up and spending will be cut sharply.

Keynesian economics would suggest that, in the context of an already-weak economy, this would run the risk of putting the brakes on economic growth. If the anti-stimulus is severe enough -- as Britain's austerity program has been -- it could even increase the deficit rather than cutting it.

If you are worried that the "fiscal cliff" will harm the economy -- as most Republicans now appear to be -- then you are implicitly accepting the core of traditional Keynesian economics.
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Re: We're all Keynesians now

Postby rabble » Wed Dec 05, 2012 10:56 am

The thing I find interesting is that nobody, here or in Washington, even seems to remember that the fiscal cliff is just a law that can be repealed or modified.

All that "repeal Obamacare" must have worn everybody out. We can throw out THAT law but the fiscal cliff law whatever its name is, can't be touched. We can't even seem to get our minds around the fact that it's a man made cliff
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Re: We're all Keynesians now

Postby kurt_w » Wed Dec 05, 2012 11:12 am

Yes, it's all rather silly. And it all started with that ridiculous debt-ceiling battle eighteen months ago.

Basically, Congress was facing one pointless, self-imposed "crisis" (we want to spend X, we want to collect Y taxes, but Y is less than X so we need to borrow [X-Y] but this self-imposed limit won't let us borrow [X-Y] so crisis!)

They came up with a last-minute solution to avoid doom, but in the process decided to set up another self-imposed crisis (the "sequester") that would force their temporally-later selves to do the hard work of figuring out how to not have to borrow [X-Y] in the future.

Now that it's the future, they are panicking over the self-imposed "crisis" of the sequester. Some people, e.g. David Brooks, think that the solution is to avert part of the pain (retain the current, low tax rates on income up to $250,000) and to postpone dealing with the borrowing problem. Although our temporally-current Congress would obviously be procrastinating, we'd force their temporally-future selves to stop procrastinating ... by setting up an even more painful self-imposed "crisis" if they fail to reach agreement.

It's all rather absurd.
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Re: We're all Keynesians now

Postby minicat » Wed Dec 05, 2012 11:19 am

Basically, our government just needs to straighten the fuck up. Chances of that happening: approximately 0 percent.
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Re: We're all Keynesians now

Postby Ned Flanders » Wed Dec 05, 2012 12:10 pm

minicat wrote:Basically, our government just needs to straighten the fuck up. Chances of that happening: approximately 0 percent.


Agreed. This should be interesting.
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Re: We're all Keynesians now

Postby Detritus » Wed Dec 05, 2012 12:17 pm

minicat wrote:Basically, our government just needs to straighten the fuck up. Chances of that happening: approximately 0 percent.

Frankly, I would put the chances for that happening in the negative range.
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Re: We're all Keynesians now

Postby kurt_w » Wed Dec 05, 2012 12:40 pm

I understand that the wingnuts are advocating another debt-ceiling fight early in 2013.

If Congress can't agree on a way to raise (or just remove) the debt ceiling, I'm really not sure what the Executive Branch is supposed to do when the money runs out. None of the White House's options seem very conservative-friendly:

    (1) Decide that the debt ceiling is unconstitutional (c.f. Amendment XIV, Section 4). If anyone objects, let the court figure it out.

    (2) Engage in any of various possible subterfuges such as minting trillion-dollar platinum coins, selling government property to the Fed for $2 trillion and then buying it back for a dollar, etc.

    (3) Have the White House unilaterally decide what spending to keep and what to cut, in order to keep total spending below the debt ceiling. This would be a vast expansion of presidential power -- for example, President Obama could choose to eliminate all federal spending in Congressional districts of any representatives who failed to vote to raise the debt ceiling. While the howls of outrage would be amusing, this doesn't seem like a good solution. Presumably, to protect its own role in making decisions on spending, Congress would have to do away with the debt ceiling of its own accord.

    (4) Start paying government bills with some kind of IOUs. Defense contractors and little old ladies on Social Security would get some kind of paper saying "We can't pay you now, but we'll pay you when Congress gets its act together." Would banks accept these IOUs as cash?
If you assume that Congress can't agree on a way to resolve the debt-ceiling crisis, what other possible action is there for the White House to take? Congress can say two completely contradictory things ("Spend money on X, Y, and Z! But don't spend any money!") but the White House has to actually govern.

So what other options am I missing? Seriously.
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Re: We're all Keynesians now

Postby minicat » Wed Dec 05, 2012 1:07 pm

kurt_w wrote: Congress can say two completely contradictory things ("Spend money on X, Y, and Z! But don't spend any money!") but the White House has to actually govern.

So what other options am I missing? Seriously.


well... Congress is supposed to be governing as well, rather than engaging in a constant battle of one-upsmanship. Therein lies the problem. It does seem the obstructionism and partisan absolutism by Republicans the past couple years has to be as ridiculously anti-American as the situation could get, but I wouldn't discount the ability of the Dems to come up with something even more stupid at their next chance to block rather than govern.
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Re: We're all Keynesians now

Postby Detritus » Wed Dec 05, 2012 1:15 pm

kurt_w wrote:So what other options am I missing? Seriously.

Let's be creative here. The White House could issue a Finding that Republican intransigence poses a threat to national security and give them all a carefully guided tour of GITMO. Or they could announce immediate cuts, beginning with the salaries, access to benefits, and all services (heat, water, electricity, etc.) to Republican offices. Or they could declare a state of siege (see option 1). Or the White House could do whatever the Republicans demand, like they did last time.
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Re: We're all Keynesians now

Postby kurt_w » Wed Dec 05, 2012 1:25 pm

OK, let's add those to the list:

Detritus wrote:The White House could issue a Finding that Republican intransigence poses a threat to national security and give them all a carefully guided tour of GITMO.


I guess that would be a new option (5).

Or they could announce immediate cuts, beginning with the salaries, access to benefits, and all services (heat, water, electricity, etc.) to Republican offices.


I think that's basically a version of my option (3).

Or they could declare a state of siege


Not sure exactly what that would involve in practical terms.

Or the White House could do whatever the Republicans demand, like they did last time.


Except that what happened last time was that the Democrats and Republicans in Congress did reach an agreement, both houses passed a bill, and Obama signed it. My question is: what happens if Congress doesn't reach any agreement? Obama can't sign a bill that Congress doesn't pass...

As pleasing as the Gitmo option might be, I can't really see it happening. So that leaves the White House only the four choices I listed, right? If Congress doesn't act to remove the debt ceiling, the White House has to actually do something.
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Re: We're all Keynesians now

Postby minicat » Wed Dec 05, 2012 1:46 pm

Detritus wrote:Let's be creative here. The White House could issue a Finding that Republican intransigence poses a threat to national security and give them all a carefully guided tour of GITMO. Or they could announce immediate cuts, beginning with the salaries, access to benefits, and all services (heat, water, electricity, etc.) to Republican offices. Or they could declare a state of siege (see option 1).


I like the way you think.
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Re: We're all Keynesians now

Postby Stella_Guru » Wed Dec 05, 2012 4:39 pm

rabble wrote:The thing I find interesting is that nobody, here or in Washington, even seems to remember that the fiscal cliff is just a law that can be repealed or modified.

"Starve the beast." Undermine the peoples trust. Deliberately create a shortfall and then use the inevitable unbalance to call for further cuts in programs that the wealthy don't need but the rest of us do. Offer essentially the same solutions as the other party. What's that you say? "Lower the tax rates for the top 2% next year, not now."
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Re: We're all Keynesians now

Postby green union terrace chair » Thu Dec 06, 2012 2:52 am

The partisan squabbling is the same as ever. If you take sides in this R v D debate, you're a fool and a sucker for the "fight." It's the same old shit.

Just let it all burn already ... starting with an effigy of Maynard.
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Re: We're all Keynesians now

Postby kurt_w » Thu Dec 06, 2012 6:54 am

green union terrace chair wrote:The partisan squabbling is the same as ever. If you take sides in this R v D debate, you're a fool and a sucker for the "fight." It's the same old shit.

Just let it all burn already ... starting with an effigy of Maynard.


I'd describe that attitude as adolescent nihilism. It's a typical outlook for people who don't feel they have anything invested in a system and assume that they'd be better off if the whole thing just got rebooted. But IMHO most people in the US who feel that way are probably underestimating the extent to which they benefit from the world as it is, despite all its ugliness and apparent dysfunction, and are probably underestimating the risks of ending up with a much worse situation after "just letting it all burn already".
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Re: We're all Keynesians now

Postby kurt_w » Thu Dec 06, 2012 7:44 am

[double post deleted...]
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