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Old 08-09-2010, 02:04 PM   #21
Timber Loftis
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Default 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.
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Old 08-09-2010, 02:08 PM   #22
Timber Loftis
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Default 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.
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Old 08-09-2010, 07:07 PM   #23
SecretMaster
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Default 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."
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Old 08-10-2010, 05:11 PM   #24
SecretMaster
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Default Re: Double dip Recession?

http://www.newyorker.com/talk/financ...alk_surowiecki
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Old 08-10-2010, 08:20 PM   #25
Felix The Assassin
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Default Re: Double dip Recession?

Quote:
Originally Posted by SecretMaster View Post
Looks like I need to take some "un" paid vacation. Uncle Sam giveth, and takeith away, regardless!
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Old 08-12-2010, 11:48 AM   #26
Timber Loftis
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Default Re: Double dip Recession?

Quote:
Originally Posted by SecretMaster View Post
From the article:
Quote:
A better tax system would have more brackets, so that the super-rich pay higher rates. (The most obvious bracket to add would be a higher rate at a million dollars a year, but there’s no reason to stop there.) This would make the system fairer, since it would reflect the real stratification among high-income earners.

...

Critics like to describe tax hikes as hurting small business, because small-business owners make up a sizable percentage of people in the top two brackets and because small-business owners, unlike Wall Street traders, are popular on Main Street. It would be harder to mount a defense of millionaires, which may be why this year a Quinnipiac poll found overwhelming support, even among Republicans, for a millionaire tax.
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.
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Old 08-24-2010, 11:48 AM   #27
Timber Loftis
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Default 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.
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Old 08-24-2010, 04:22 PM   #28
SecretMaster
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Default 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
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Old 08-25-2010, 10:28 AM   #29
Timber Loftis
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Default Re: Double dip Recession?

Quote:
Originally Posted by SecretMaster View Post
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
This "Green Revolution" term as it is defined seems a misnomer to me.
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Old 08-25-2010, 09:44 PM   #30
SecretMaster
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Originally Posted by Timber Loftis View Post
This "Green Revolution" term as it is defined seems a misnomer to me.
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.
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