Double dip Recession?
 

And this was on MSNBC of all places. How dare them degrade the POTUS like this!


WASHINGTON — They're a minority, but a vocal one, and they're hovering like storm clouds over a brittle recovery.

They're the Double Dippers — the politicians, economists and analysts who foresee back-to-back recessions.

Their warnings could become self-fulfilling prophecies if they frighten enough people into holding tightly onto their wallets. With consumer spending accounting for two-thirds of economic activity, anything that further rattles consumers can undercut recovery hopes.

Recent data has shown that, after growing moderately for most of the past year, the U.S. economy appears to be slowing. This was underscored by Friday's government report that U.S. economic growth slowed to 2.4 percent from April to May, down from a revised 3.7 percent in the previous quarter. Such statistics are providing more ammunition to the double dippers.
<snipped>

http://www.msnbc.msn.com/id/38507261/ns/politics

Re: Double dip Recession?
 

It was bound to happen Felix. Obama not going Left fast (or far) enough for the left-leaning media. Pretty soon we may see "really" strange bedfellows, MSNBC and Fox actually agreeing with each other!

Re: Double dip Recession?
 

Well, Fox never agree with him regardless of what he tries to do to appease their whacky base. I think he should stop trying the whole bipartisan thing and just go as left as he wants. Screw 'em. As I said before, they don't wanna play so, they lose.

Re: Double dip Recession?
 

Lose it is. This November will be the precursor to 2012. IMHO, Obama knows his chance at a second term is limited, and is slipping away each day, regardless of what he shoves down the peoples throat, or what media machine runs the headline. I foresee his agenda being ramped up liken of his health care fiasco, and in the end, he will depart office as a failure to the progressive party, and to re-election. Whoever replaces him will have a pile of dung to sort through and asses what direction the country will head towards next. You know your in low standing when you don't get an invite to the Clinton wedding, and have your press secretary use a disclaimer of "extra security" requirements. Who would fall for that? Oh, yes, the American people!

Like you said, "they don't wanna play so, they lose". Which is what happened with the bill for first responders. The Dems did not want to play, and lost, and they have majority rule! Bam!

Re: Double dip Recession?
 

Wth? How does any of this relate to republicans losing again?

Re: Double dip Recession?
 

I dunno, I was referencing "they" and how they are losing with majority rule. ;)
What are you lost in the weeds about?

Re: Double dip Recession?
 

all I know is I am unemployed for the first time in my working career and it is due to outsourcing because of the coming health bill amongst other things. sooooooooo

Re: Double dip Recession?
 

Don't see it from where I am. My work is hiring and they want us to work 60 hrs/wk. Some of our work is even being farmed out. Recessions usually hit us hard, this last one almost half of the employees were laid off. They are all back (except the dead wood) and then some. There is a 300' long extension being added to the machine shop and a new 3 million dollar gantry milling machine being built to go in it.

Re: Double dip Recession?
 

I'm out of work myself, though I blame insourcing.

Re: Double dip Recession?
 

How Chelsea Clinton's wedding ties into it.

Re: Double dip Recession?
 

in-sourcing can be just as bad. I should learn a new trade..

Re: Double dip Recession?
 

Try construction! oh wait.....

Re: Double dip Recession?
 

How about the automotive industry, I hear GM has some long term financing.

Re: Double dip Recession?
 

y'all are too much.

Re: Double dip Recession?
 

I don't see how a prolonged recovery is avoidable. The bailout and stimulus monies were too little (or they went to the wrong party, rich bankers - who should have in all fairness gone bankrupt - instead of shovel-ready projects) to give much of a kick-start, and the stupid sheeple have been beaten into believing that balancing the budget is the smart thing to do in a recession -- so the follow-up stimulus funds that should have been approved were never approved. This not only caused jobs that were currently underway to stop mid-project (leaving lots of Chicago's roadways standing with permanent construction barriers everywhere) but also resulted in many people losing their construction jobs.

You either buy into Keynesian economics or you don't. If you believe the government should inject money into the economy, then you don't half-ass it, you go whole hog and do it. Otherwise you risk a horrible double-whammy: more debt plus no recovery.

Just remember that the last person who tried to balance the books in a recession was named Hoover, and we know how well that went.

As for the mid-term elections, the Republicans have certainly engineered enough failed legislative efforts that they will probably pick up some seats. They've also been real good about spinning the legislation that has passed, such as health care, into some big scary commie boogie-monster that's gonna kill us all.

It will be sad. And if they pick up enough seats to get a majority, and then oust Obama in 2 years, we'll face a real crisis. I don't see how more money can be pushed upward to the rich. After 3 republican presidents and congresses that spent all their time pushing money from the middle class to the wealthy, I just don't think we can take any more. If you're not a millionaire and somehow you find yourself voting Republican, you should know that you are NOT voting for yourself, but if the last 30 years didn't prove that to you, nothing will.

Re: Double dip Recession?
 

So you're saying that spending money you don't have is the way to get out of debt?

Re: Double dip Recession?
 

Bit of on oversimplified way of putting it. If you froze all spending entirely the moment the economy crashed, do you honestly think things would get better?

Re: Double dip Recession?
 

So true. These people think they are voting for the "common man". Like I was saying in another thread, the Tea-Baggers think they are rallying for the common man. The sad and horrible truth is they are not, and never were. And I agree, if people haven't gotten the message by now, they never will. But they're busy doing the rest of us in at the same time.

Re: Double dip Recession?
 

Well, Keynesian economics has a twofold proposition. You see, people can't run deficits like the federal gov't can. Neither can states. So, when the money flow stops people and the states can't really do much other than wait for jobs to pick up. But the federal gov't can run a deficit. So, back to this twofold proposition:

- When the economy is in recession, the gov't runs a deficit and injects money into the economy (via direct stimulus or lowered taxes) to spur job creation, lending, investment, etc. It's like kick-starting an engine.

- And when the economy is doing well, the gov't raises taxes, lowers the handouts, and pulls the money back out of the system.

Thus balancing out the extreme in the natural ebbs and flows of an economy.

Ideally. In a nutshell.

The real downfall is that during times of progress the gov't never keeps up the second half of the Keynesian economic system. Why? Because no matter how good the economy is, raising taxes never gets you votes.

So, you can judge the system on its merits for yourself. But, if you are going to undertake the idea that stimulus is needed in a recession, then you better damn sure make sure you inject enough money to actually get that kick-start you're looking for.

This recession we're in could look a lot like Japan's through the 90's, loooong with a slooow recovery. It's a major crisis of the very foundation of our economy that the US is suffering. We lost most all our production, farming it out to overseas locations. Now we've lost huge sectors of our services industries, such as computer services, also gone overseas. At some point we have to ask ourselves what it is we actually make or do that will bring money to us.

Cause right now all the money we have is getting pushed up to the rich, who just invest it overseas where deals are making money these days.

Re: Double dip Recession?
 

Defining Prosperity Down
By PAUL KRUGMAN
I’m starting to have a sick feeling about prospects for American workers — but not, or not entirely, for the reasons you might think.

Yes, growth is slowing, and the odds are that unemployment will rise, not fall, in the months ahead. That’s bad. But what’s worse is the growing evidence that our governing elite just doesn’t care — that a once-unthinkable level of economic distress is in the process of becoming the new normal.

And I worry that those in power, rather than taking responsibility for job creation, will soon declare that high unemployment is “structural,” a permanent part of the economic landscape — and that by condemning large numbers of Americans to long-term joblessness, they’ll turn that excuse into dismal reality.

Not long ago, anyone predicting that one in six American workers would soon be unemployed or underemployed, and that the average unemployed worker would have been jobless for 35 weeks, would have been dismissed as outlandishly pessimistic — in part because if anything like that happened, policy makers would surely be pulling out all the stops on behalf of job creation.

But now it has happened, and what do we see?

First, we see Congress sitting on its hands, with Republicans and conservative Democrats refusing to spend anything to create jobs, and unwilling even to mitigate the suffering of the jobless.

We’re told that we can’t afford to help the unemployed — that we must get budget deficits down immediately or the “bond vigilantes” will send U.S. borrowing costs sky-high. Some of us have tried to point out that those bond vigilantes are, as far as anyone can tell, figments of the deficit hawks’ imagination — far from fleeing U.S. debt, investors have been buying it eagerly, driving interest rates to historic lows. But the fearmongers are unmoved: fighting deficits, they insist, must take priority over everything else — everything else, that is, except tax cuts for the rich, which must be extended, no matter how much red ink they create.

The point is that a large part of Congress — large enough to block any action on jobs — cares a lot about taxes on the richest 1 percent of the population, but very little about the plight of Americans who can’t find work.

Well, if Congress won’t act, what about the Federal Reserve? The Fed, after all, is supposed to pursue two goals: full employment and price stability, usually defined in practice as an inflation rate of about 2 percent. Since unemployment is very high and inflation well below target, you might expect the Fed to be taking aggressive action to boost the economy. But it isn’t.

It’s true that the Fed has already pushed one pedal to the metal: short-term interest rates, its usual policy tool, are near zero. Still, Ben Bernanke, the Fed chairman, has assured us that he has other options, like holding more mortgage-backed securities and promising to keep short-term rates low. And a large body of research suggests that the Fed could boost the economy by committing to an inflation target higher than 2 percent.

But the Fed hasn’t done any of these things. Instead, some officials are defining success down.

For example, last week Richard Fisher, president of the Federal Reserve Bank of Dallas, argued that the Fed bears no responsibility for the economy’s weakness, which he attributed to business uncertainty about future regulations — a view that’s popular in conservative circles, but completely at odds with all the actual evidence. In effect, he responded to the Fed’s failure to achieve one of its two main goals by taking down the goalpost.

He then moved the other goalpost, defining the Fed’s aim not as roughly 2 percent inflation, but rather as that of “keeping inflation extremely low and stable.”

In short, it’s all good. And I predict — having seen this movie before, in Japan — that if and when prices start falling, when below-target inflation becomes deflation, some Fed officials will explain that that’s O.K., too.

What lies down this path? Here’s what I consider all too likely: Two years from now unemployment will still be extremely high, quite possibly higher than it is now. But instead of taking responsibility for fixing the situation, politicians and Fed officials alike will declare that high unemployment is structural, beyond their control. And as I said, over time these excuses may turn into a self-fulfilling prophecy, as the long-term unemployed lose their skills and their connections with the work force, and become unemployable.

I’d like to imagine that public outrage will prevent this outcome. But while Americans are indeed angry, their anger is unfocused. And so I worry that our governing elite, which just isn’t all that into the unemployed, will allow the jobs slump to go on and on and on.

Re: Double dip Recession?
 

America Goes Dark
By PAUL KRUGMAN
The lights are going out all over America — literally. Colorado Springs has made headlines with its desperate attempt to save money by turning off a third of its streetlights, but similar things are either happening or being contemplated across the nation, from Philadelphia to Fresno.

Meanwhile, a country that once amazed the world with its visionary investments in transportation, from the Erie Canal to the Interstate Highway System, is now in the process of unpaving itself: in a number of states, local governments are breaking up roads they can no longer afford to maintain, and returning them to gravel.

And a nation that once prized education — that was among the first to provide basic schooling to all its children — is now cutting back. Teachers are being laid off; programs are being canceled; in Hawaii, the school year itself is being drastically shortened. And all signs point to even more cuts ahead.

We’re told that we have no choice, that basic government functions — essential services that have been provided for generations — are no longer affordable. And it’s true that state and local governments, hit hard by the recession, are cash-strapped. But they wouldn’t be quite as cash-strapped if their politicians were willing to consider at least some tax increases.

And the federal government, which can sell inflation-protected long-term bonds at an interest rate of only 1.04 percent, isn’t cash-strapped at all. It could and should be offering aid to local governments, to protect the future of our infrastructure and our children.

But Washington is providing only a trickle of help, and even that grudgingly. We must place priority on reducing the deficit, say Republicans and “centrist” Democrats. And then, virtually in the next breath, they declare that we must preserve tax cuts for the very affluent, at a budget cost of $700 billion over the next decade.

In effect, a large part of our political class is showing its priorities: given the choice between asking the richest 2 percent or so of Americans to go back to paying the tax rates they paid during the Clinton-era boom, or allowing the nation’s foundations to crumble — literally in the case of roads, figuratively in the case of education — they’re choosing the latter.

It’s a disastrous choice in both the short run and the long run.

In the short run, those state and local cutbacks are a major drag on the economy, perpetuating devastatingly high unemployment.

It’s crucial to keep state and local government in mind when you hear people ranting about runaway government spending under President Obama. Yes, the federal government is spending more, although not as much as you might think. But state and local governments are cutting back. And if you add them together, it turns out that the only big spending increases have been in safety-net programs like unemployment insurance, which have soared in cost thanks to the severity of the slump.

That is, for all the talk of a failed stimulus, if you look at government spending as a whole you see hardly any stimulus at all. And with federal spending now trailing off, while big state and local cutbacks continue, we’re going into reverse.

But isn’t keeping taxes for the affluent low also a form of stimulus? Not so you’d notice. When we save a schoolteacher’s job, that unambiguously aids employment; when we give millionaires more money instead, there’s a good chance that most of that money will just sit idle.

And what about the economy’s future? Everything we know about economic growth says that a well-educated population and high-quality infrastructure are crucial. Emerging nations are making huge efforts to upgrade their roads, their ports and their schools. Yet in America we’re going backward.

How did we get to this point? It’s the logical consequence of three decades of antigovernment rhetoric, rhetoric that has convinced many voters that a dollar collected in taxes is always a dollar wasted, that the public sector can’t do anything right.

The antigovernment campaign has always been phrased in terms of opposition to waste and fraud — to checks sent to welfare queens driving Cadillacs, to vast armies of bureaucrats uselessly pushing paper around. But those were myths, of course; there was never remotely as much waste and fraud as the right claimed. And now that the campaign has reached fruition, we’re seeing what was actually in the firing line: services that everyone except the very rich need, services that government must provide or nobody will, like lighted streets, drivable roads and decent schooling for the public as a whole.

So the end result of the long campaign against government is that we’ve taken a disastrously wrong turn. America is now on the unlit, unpaved road to nowhere.

Re: Double dip Recession?
 

The last time this country "worked" without running a deficit (save for 2 years of Clinton's rule when we were surfing high on an IP bubble) was PRIOR TO Reagan's big tax overhaul in the early 80's. Ever since then, we've had to borrow money to give out basic services and run the country. It's true that every president since Reagan has also been on the bandwagon of forcing money up to the rich, so it's all their fault, but it started with that tax overhaul.

The last time this country could pay for itself, the rich were paying 90% taxes on most of the money they made. Why Reagan sought to undo this is beyond my ken, because even at that tax rate the rich were still fat and happy. But that's what it takes to pay for the "great America" that is sadly now a thing of the past.

If you think that America's "golden age" of 1945-1970(ish) was an era of low government spending and small government, you are very wrong. Those big new roads and schools and libraries and space discoveries and military advancements that occurred during that time were done by government and paid for by taxes. 25 years ago we removed the funding, and it is no surprise that we now have to cast off all those services as well. Our nation is crumbling, in a literal sense.

Re: Double dip Recession?
 

I'm going to throw a book recommendation out there for anyone interested. It's called the Collapse of Complex Societies by Joseph Tainter, and he has a very interesting/thought provoking hypothesis.

http://www.amazon.com/Collapse-Compl.../dp/052138673X

Also a great quote as well.

"Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist."

Re: Double dip Recession?
 

Re: Double dip Recession?
 

Looks like I need to take some "un" paid vacation. Uncle Sam giveth, and takeith away, regardless!

Re: Double dip Recession?
 

From the article:
Prior to the 1986 Tax Reform Act there were 15 brackets.
http://www.taxpolicycenter.org/taxfa...dual_rates.pdf

Of course the top bracket was like $106,000 in 1985. If we go back to prior to the 1981 Reagan tax cuts you will find a top bracket of $215,000 that was taxed at 70%. If you go back to 1964 you'll find a top rate of $400,000 that was taxed at 77%. If you go back a decade further you'll find that from 1954 to 1963 those who made over $400,000 actually faced a top tax rate of 91%.

So, the idea of a "millionaire tax" ($400,000 in 1954 translates to over $3M in 2009 when adjusted for inflation) was around before. I think it is certainly time for its return.

Re: Double dip Recession?
 

Now That’s Rich
By PAUL KRUGMAN
We need to pinch pennies these days. Don’t you know we have a budget deficit? For months that has been the word from Republicans and conservative Democrats, who have rejected every suggestion that we do more to avoid deep cuts in public services and help the ailing economy.

But these same politicians are eager to cut checks averaging $3 million each to the richest 120,000 people in the country.

What — you haven’t heard about this proposal? Actually, you have: I’m talking about demands that we make all of the Bush tax cuts, not just those for the middle class, permanent.

Some background: Back in 2001, when the first set of Bush tax cuts was rammed through Congress, the legislation was written with a peculiar provision — namely, that the whole thing would expire, with tax rates reverting to 2000 levels, on the last day of 2010.

Why the cutoff date? In part, it was used to disguise the fiscal irresponsibility of the tax cuts: lopping off that last year reduced the headline cost of the cuts, because such costs are normally calculated over a 10-year period. It also allowed the Bush administration to pass the tax cuts using reconciliation — yes, the same procedure that Republicans denounced when it was used to enact health reform — while sidestepping rules designed to prevent the use of that procedure to increase long-run budget deficits.

Obviously, the idea was to go back at a later date and make those tax cuts permanent. But things didn’t go according to plan. And now the witching hour is upon us.

So what’s the choice now? The Obama administration wants to preserve those parts of the original tax cuts that mainly benefit the middle class — which is an expensive proposition in its own right — but to let those provisions benefiting only people with very high incomes expire on schedule. Republicans, with support from some conservative Democrats, want to keep the whole thing.

And there’s a real chance that Republicans will get what they want. That’s a demonstration, if anyone needed one, that our political culture has become not just dysfunctional but deeply corrupt.

What’s at stake here? According to the nonpartisan Tax Policy Center, making all of the Bush tax cuts permanent, as opposed to following the Obama proposal, would cost the federal government $680 billion in revenue over the next 10 years. For the sake of comparison, it took months of hard negotiations to get Congressional approval for a mere $26 billion in desperately needed aid to state and local governments.

And where would this $680 billion go? Nearly all of it would go to the richest 1 percent of Americans, people with incomes of more than $500,000 a year. But that’s the least of it: the policy center’s estimates say that the majority of the tax cuts would go to the richest one-tenth of 1 percent. Take a group of 1,000 randomly selected Americans, and pick the one with the highest income; he’s going to get the majority of that group’s tax break. And the average tax break for those lucky few — the poorest members of the group have annual incomes of more than $2 million, and the average member makes more than $7 million a year — would be $3 million over the course of the next decade.

How can this kind of giveaway be justified at a time when politicians claim to care about budget deficits? Well, history is repeating itself. The original campaign for the Bush tax cuts relied on deception and dishonesty. In fact, my first suspicions that we were being misled into invading Iraq were based on the resemblance between the campaign for war and the campaign for tax cuts the previous year. And sure enough, that same trademark deception and dishonesty is being deployed on behalf of tax cuts for the wealthiest Americans.

So, for example, we’re told that it’s all about helping small business; but only a tiny fraction of small-business owners would receive any tax break at all. And how many small-business owners do you know making several million a year?

Or we’re told that it’s about helping the economy recover. But it’s hard to think of a less cost-effective way to help the economy than giving money to people who already have plenty, and aren’t likely to spend a windfall.

No, this has nothing to do with sound economic policy. Instead, as I said, it’s about a dysfunctional and corrupt political culture, in which Congress won’t take action to revive the economy, pleads poverty when it comes to protecting the jobs of schoolteachers and firefighters, but declares cost no object when it comes to sparing the already wealthy even the slightest financial inconvenience.

So far, the Obama administration is standing firm against this outrage. Let’s hope that it prevails in its fight. Otherwise, it will be hard not to lose all faith in America’s future.

Re: Double dip Recession?
 

This might be a bit too "doomer"esque for people, but I think it is a good article that raises some points worthy of considering.

http://campfire.theoildrum.com/node/6877#more

Re: Double dip Recession?
 

This "Green Revolution" term as it is defined seems a misnomer to me.

Re: Double dip Recession?
 

I'm not quite sure what you mean by that, but I think I can maybe explain.

The Green Revolution is often referred to as the huge "advancements" of the 1940's-1970's in agricultural productivity. This huge burst in agricultural productivity (higher and higher yields, cheaper food to produce, etc) is attributed to the application of synthetic fertilizers, pesticide usage, more mechanized use of machinery, irrigation practices, etc.

The downside of all this great "advancement" is that it really is depleting our soils at a phenomenal rate. A lot of people think "oh, its just dirt", but soils play a tremendously crucial role for our success as species. We cannot afford to deplete our soils, and we are doing just that. It really is something overlooked/unheard of by the general populace.

So what George Mobus is suggesting is a CCC equivalent dedicated to restoring our soils for productive agricultural use. Modern day agriculture is extremey energy intensive in all aspects, and as energy continues to rise in price (his assumption) it's going to spell disaster for the giant agricultural machine.

Re: Double dip Recession?
 

See and here I thought "green revolution" would mean the trend of the last 15 years of consumers increasingly demanding less pesticide, more organic foods, free range meats, grass fed beef, etc. What you're calling "Green Revolution" is what a certain movie-maker would call "Food Inc." and I would call "Factory Farms."

Re: Double dip Recession?
 

Oh, I wasn't aware of that association with the term "Green Revolution" I think the more recognized "GR" is the one I mentioned, and also the one that the article was mentioning. Regardless of the nomenclature/terminology, the point still stands. Modern day agriculture is wreaking havoc upon our soils, and sooner or later it will need addressing (or bite us in the ass).

Re: Double dip Recession?
 

The Real Story
By PAUL KRUGMAN


Next week, President Obama is scheduled to propose new measures to boost the economy. I hope they’re bold and substantive, since the Republicans will oppose him regardless — if he came out for motherhood, the G.O.P. would declare motherhood un-American. So he should put them on the spot for standing in the way of real action.

But let’s put politics aside and talk about what we’ve actually learned about economic policy over the past 20 months.

When Mr. Obama first proposed $800 billion in fiscal stimulus, there were two groups of critics. Both argued that unemployment would stay high — but for very different reasons.

One group — the group that got almost all the attention — declared that the stimulus was much too large, and would lead to disaster. If you were, say, reading The Wall Street Journal’s opinion pages in early 2009, you would have been repeatedly informed that the Obama plan would lead to skyrocketing interest rates and soaring inflation.

The other group, which included yours truly, warned that the plan was much too small given the economic forecasts then available. As I pointed out in February 2009, the Congressional Budget Office was predicting a $2.9 trillion hole in the economy over the next two years; an $800 billion program, partly consisting of tax cuts that would have happened anyway, just wasn’t up to the task of filling that hole.

Critics in the second camp were particularly worried about what would happen this year, since the stimulus would have its maximum effect on growth in late 2009 then gradually fade out. Last year, many of us were already warning that the economy might stall in the second half of 2010.

So what actually happened? The administration’s optimistic forecast was wrong, but which group of pessimists was right about the reasons for that error?

Start with interest rates. Those who said the stimulus was too big predicted sharply rising rates. When rates rose in early 2009, The Wall Street Journal published an editorial titled “The Bond Vigilantes: The disciplinarians of U.S. policy makers return.” The editorial declared that it was all about fear of deficits, and concluded, “When in doubt, bet on the markets.”

But those who said the stimulus was too small argued that temporary deficits weren’t a problem as long as the economy remained depressed; we were awash in savings with nowhere to go. Interest rates, we said, would fluctuate with optimism or pessimism about future growth, not with government borrowing.

When in doubt, bet on the markets. The 10-year bond rate was over 3.7 percent when The Journal published that editorial; it’s under 2.7 percent now.

What about inflation? Amid the inflation hysteria of early 2009, the inadequate-stimulus critics pointed out that inflation always falls during sustained periods of high unemployment, and that this time should be no different. Sure enough, key measures of inflation have fallen from more than 2 percent before the economic crisis to 1 percent or less now, and Japanese-style deflation is looking like a real possibility.

Meanwhile, the timing of recent economic growth strongly supports the notion that stimulus does, indeed, boost the economy: growth accelerated last year, as the stimulus reached its predicted peak impact, but has fallen off — just as some of us feared — as the stimulus has faded.

Oh, and don’t tell me that Germany proves that austerity, not stimulus, is the way to go. Germany actually did quite a lot of stimulus — the austerity is all in the future. Also, it never had a housing bubble that burst. And with all that, German G.D.P. is still further below its precrisis peak than American G.D.P. True, Germany has done better in terms of employment — but that’s because strong unions and government policy have prevented American-style mass layoffs.

The actual lessons of 2009-2010, then, are that scare stories about stimulus are wrong, and that stimulus works when it is applied. But it wasn’t applied on a sufficient scale. And we need another round.

I know that getting that round is unlikely: Republicans and conservative Democrats won’t stand for it. And if, as expected, the G.O.P. wins big in November, this will be widely regarded as a vindication of the anti-stimulus position. Mr. Obama, we’ll be told, moved too far to the left, and his Keynesian economic doctrine was proved wrong.

But politics determines who has the power, not who has the truth. The economic theory behind the Obama stimulus has passed the test of recent events with flying colors; unfortunately, Mr. Obama, for whatever reason — yes, I’m aware that there were political constraints — initially offered a plan that was much too cautious given the scale of the economy’s problems.

So, as I said, here’s hoping that Mr. Obama goes big next week. If he does, he’ll have the facts on his side.

Re: Double dip Recession?
 

Emphasis has been added by me to the article below to reflect things that have been discussed before. Such as the notion that the wealthy spend less of their money, which I believe was hotly contested at the time.

How to End the Great Recession

By ROBERT B. REICH
Berkeley, Calif.

THIS promises to be the worst Labor Day in the memory of most Americans. Organized labor is down to about 7 percent of the private work force. Members of non-organized labor — most of the rest of us — are unemployed, underemployed or underwater. The Labor Department reported on Friday that just 67,000 new private-sector jobs were created in August, while at least 125,000 are needed to keep up with the growth of the potential work force.

The national economy isn’t escaping the gravitational pull of the Great Recession. None of the standard booster rockets are working: near-zero short-term interest rates from the Fed, almost record-low borrowing costs in the bond market, a giant stimulus package and tax credits for small businesses that hire the long-term unemployed have all failed to do enough.

That’s because the real problem has to do with the structure of the economy, not the business cycle. No booster rocket can work unless consumers are able, at some point, to keep the economy moving on their own. But consumers no longer have the purchasing power to buy the goods and services they produce as workers; for some time now, their means haven’t kept up with what the growing economy could and should have been able to provide them.

This crisis began decades ago when a new wave of technology — things like satellite communications, container ships, computers and eventually the Internet — made it cheaper for American employers to use low-wage labor abroad or labor-replacing software here at home than to continue paying the typical worker a middle-class wage. Even though the American economy kept growing, hourly wages flattened. The median male worker earns less today, adjusted for inflation, than he did 30 years ago.

But for years American families kept spending as if their incomes were keeping pace with overall economic growth. And their spending fueled continued growth. How did families manage this trick? First, women streamed into the paid work force. By the late 1990s, more than 60 percent of mothers with young children worked outside the home (in 1966, only 24 percent did).

Second, everyone put in more hours. What families didn’t receive in wage increases they made up for in work increases. By the mid-2000s, the typical male worker was putting in roughly 100 hours more each year than two decades before, and the typical female worker about 200 hours more.

When American families couldn’t squeeze any more income out of these two coping mechanisms, they embarked on a third: going ever deeper into debt. This seemed painless — as long as home prices were soaring. From 2002 to 2007, American households extracted $2.3 trillion from their homes.

Eventually, of course, the debt bubble burst — and with it, the last coping mechanism. Now we’re left to deal with the underlying problem that we’ve avoided for decades. Even if nearly everyone was employed, the vast middle class still wouldn’t have enough money to buy what the economy is capable of producing.

Where have all the economic gains gone? Mostly to the top. The economists Emmanuel Saez and Thomas Piketty examined tax returns from 1913 to 2008. They discovered an interesting pattern. In the late 1970s, the richest 1 percent of American families took in about 9 percent of the nation’s total income; by 2007, the top 1 percent took in 23.5 percent of total income.

It’s no coincidence that the last time income was this concentrated was in 1928. I do not mean to suggest that such astonishing consolidations of income at the top directly cause sharp economic declines. The connection is more subtle.

The rich spend a much smaller proportion of their incomes than the rest of us. So when they get a disproportionate share of total income, the economy is robbed of the demand it needs to keep growing and creating jobs.

What’s more, the rich don’t necessarily invest their earnings and savings in the American economy; they send them anywhere around the globe where they’ll summon the highest returns — sometimes that’s here, but often it’s the Cayman Islands, China or elsewhere. The rich also put their money into assets most likely to attract other big investors (commodities, stocks, dot-coms or real estate), which can become wildly inflated as a result.

Meanwhile, as the economy grows, the vast majority in the middle naturally want to live better. Their consequent spending fuels continued growth and creates enough jobs for almost everyone, at least for a time. But because this situation can’t be sustained, at some point — 1929 and 2008 offer ready examples — the bill comes due.

This time around, policymakers had knowledge their counterparts didn’t have in 1929; they knew they could avoid immediate financial calamity by flooding the economy with money. But, paradoxically, averting another Great Depression-like calamity removed political pressure for more fundamental reform. We’re left instead with a long and seemingly endless Great Jobs Recession.

THE Great Depression and its aftermath demonstrate that there is only one way back to full recovery: through more widely shared prosperity. In the 1930s, the American economy was completely restructured. New Deal measures — Social Security, a 40-hour work week with time-and-a-half overtime, unemployment insurance, the right to form unions and bargain collectively, the minimum wage — leveled the playing field.

In the decades after World War II, legislation like the G.I. Bill, a vast expansion of public higher education and civil rights and voting rights laws further reduced economic inequality. Much of this was paid for with a 70 percent to 90 percent marginal income tax on the highest incomes. And as America’s middle class shared more of the economy’s gains, it was able to buy more of the goods and services the economy could provide. The result: rapid growth and more jobs.

By contrast, little has been done since 2008 to widen the circle of prosperity. Health-care reform is an important step forward but it’s not nearly enough.

What else could be done to raise wages and thereby spur the economy? We might consider, for example, extending the earned income tax credit all the way up through the middle class, and paying for it with a tax on carbon. Or exempting the first $20,000 of income from payroll taxes and paying for it with a payroll tax on incomes over $250,000.

In the longer term, Americans must be better prepared to succeed in the global, high-tech economy. Early childhood education should be more widely available, paid for by a small 0.5 percent fee on all financial transactions. Public universities should be free; in return, graduates would then be required to pay back 10 percent of their first 10 years of full-time income.

Another step: workers who lose their jobs and have to settle for positions that pay less could qualify for “earnings insurance” that would pay half the salary difference for two years; such a program would probably prove less expensive than extended unemployment benefits.

These measures would not enlarge the budget deficit because they would be paid for. In fact, such moves would help reduce the long-term deficits by getting more Americans back to work and the economy growing again.

Policies that generate more widely shared prosperity lead to stronger and more sustainable economic growth — and that’s good for everyone. The rich are better off with a smaller percentage of a fast-growing economy than a larger share of an economy that’s barely moving. That’s the Labor Day lesson we learned decades ago; until we remember it again, we’ll be stuck in the Great Recession.


Robert B. Reich, a secretary of labor in the Clinton administration, is a professor of public policy at the University of California, Berkeley, and the author of the forthcoming “Aftershock: The Next Economy and America’s Future.”

Re: Double dip Recession?
 

Now that TL has slowed making a fool of internet topics, and thinking he has pulled the foolish wool over our eyes, here is the the real deal!

And

Now that the smoke has been cleared from the mirrors, only time wil ltell if the POTUS BHO can figure out what he needs to do.
Of the course the article is available!
http://www.house.gov/jec/fiscal/tx-g...t/reagtxct.htm

Re: Double dip Recession?
 

That report is 14 years old. Here is a more up to date report from the same source.
http://jec.senate.gov/public/?a=File...2-95f983f1e89e

Re: Double dip Recession?
 

It might be updated, but it does not refute TL's wooly eye cover.

Re: Double dip Recession?
 

Quit being a douche. Whatever I post here, the intent is never to lie or convey false evidence. You discredit yourself by claiming such, I think most would agree. And I didn't read your link. Because you're a douche. So... quit being a douche.

Re: Double dip Recession?
 

Re: Double dip Recession?
 

A Recovery’s Long Odds
By BOB HERBERT
We can keep wishing and hoping for a powerful economic recovery to pull the U.S. out of its doldrums, but I wouldn’t count on it. Ordinary American families no longer have the purchasing power to build a strong recovery and keep it going.

Americans are not being honest with themselves about the structural changes in the economy that have bestowed fabulous wealth on a tiny sliver at the top, while undermining the living standards of the middle class and absolutely crushing the poor. Neither the Democrats nor the Republicans have a viable strategy for reversing this dreadful state of affairs. (There is no evidence the G.O.P. even wants to.)

Robert Reich, in his new book, “Aftershock,” gives us one of the clearest explanations to date of what has happened — how the United States went from what he calls “the Great Prosperity” of 1947 to 1975 to the Great Recession that has hobbled the U.S. economy and darkened the future of younger Americans.

He gives the Obama administration and the Federal Reserve credit for moving quickly in terms of fiscal and monetary policies to prevent the economic crash of 2008 from driving the U.S. into a second great depression. “But,” he writes, “we did not learn the larger lesson of the 1930s: that when the distribution of income gets too far out of whack, the economy needs to be reorganized so the broad middle class has enough buying power to rejuvenate the economy over the longer term.”

The middle class is finally on its knees. Jobs are scarce and good jobs even scarcer. Government and corporate policies have been whacking working Americans every which way for the past three or four decades. While globalization and technological wizardry were wreaking employment havoc, the movers and shakers in government and in the board rooms of the great corporations were embracing privatization and deregulation with the fervor of fanatics. The safety net was shredded, unions were brutally attacked and demonized, employment training and jobs programs were eliminated, higher education costs skyrocketed, and the nation’s infrastructure, a key to long-term industrial and economic health, deteriorated.

It’s a wonder matters aren’t worse.

While all this was happening, working people, including those in the vast middle class, coped as best they could. Women went into the paid work force in droves. Many workers increased their hours or took on second and third jobs. Savings were drained and debt of every imaginable kind — from credit cards to mortgages to student loans — exploded.

With those coping mechanisms now exhausted, it’s painfully obvious that the economy has failed working Americans.

There was plenty of growth, but the economic benefits went overwhelmingly — and unfairly — to those already at the top. Mr. Reich cites the work of analysts who have tracked the increasing share of national income that has gone to the top 1 percent of earners since the 1970s, when their share was 8 percent to 9 percent. In the 1980s, it rose to 10 percent to 14 percent. In the late-’90s, it was 15 percent to 19 percent. In 2005, it passed 21 percent. By 2007, the last year for which complete data are available, the richest 1 percent were taking more than 23 percent of all income.

The richest one-tenth of 1 percent, representing just 13,000 households, took in more than 11 percent of total income in 2007.

That does not leave enough spending power with the rest of the population to sustain a flourishing economy. This is a point emphasized in “Aftershock.” Mr. Reich, a former labor secretary in the Clinton administration, writes: “The wages of the typical American hardly increased in the three decades leading up to the Crash of 2008, considering inflation. In the 2000s, they actually dropped.”

A male worker earning the median wage in 2007 earned less than the median wage, adjusted for inflation, of a male worker 30 years earlier. A typical son, in other words, is earning less than his dad did at the same age.

This is what has happened with ordinary workers as the wealth at the top has soared into the stratosphere.

With so much of the middle class and the rest of working America tapped out, there is not enough consumer demand for the goods and services that the U.S. economy is capable of producing. Without that demand, there are precious few prospects for a robust recovery.

If matters stay the same, with working people perpetually struggling in an environment of ever-increasing economic insecurity and inequality, the very stability of the society will be undermined.

The U.S. economy needs to be rebalanced so that the benefits are shared more widely, more equitably. There are many ways to do this, but what is most important right now is to recognize this central fact, to focus on it and to begin seriously considering the most constructive options.