One Day, When The Times Has An Economist As A Columnist...

Paul Krugman closes the year with misdirection and deception.  His topic is tax cuts (bad!) and Evil Republicans (what else?).  My emphasis:

How did Republican leaders reconcile their purported deep concern about budget deficits with their advocacy of large tax cuts? Was it that old voodoo economics — the belief, refuted by study after study, that tax cuts pay for themselves — making a comeback? No, it was something new and worse.

To be sure, there were renewed claims that tax cuts lead to higher revenue. But 2010 marked the emergence of a new, even more profound level of magical thinking: the belief that deficits created by tax cuts just don’t matter. For example, Senator Jon Kyl of Arizona — who had denounced President Obama for running deficits — declared that “you should never have to offset the cost of a deliberate decision to reduce tax rates on Americans.”

New and magical?  Everything old is new again!  As an alternative to Keynes, the Ricardian theory is that it is primarily the level of government spending that matters, rather than whether it is financed by taxes or borrowing. (A very accessible summary is here.)

Could it be that Krugman has Klein-itis and can't understand Ricardo because he is more than one hundred years old?  Maybe!  Or maybe we are witnessing early onset Alzheimers - Krugman seemed well aware of Ricardian models back in the late 1990's when he was writing on Japan:

In a fully Ricardian setup the multiplier on government consumption will be exactly 1: the income generated by the purchases will not lead to higher consumption, because it will be matched by the present value of future tax liabilities.

Well, that pre-dates the Florida recount and the Iraq War, so perhaps Krugman's mighty mind has been swamped with new information and the whole Ricardo/Barro rational expectations debate has gone out the back door.  Krugman may disagree with the model, or think its application is not appropriate in the current context, but there have been serious econmists on the other side of that debate for quite a while.  The idea that deficits created by tax cuts don't matter is hardly new or magical, except perhaps to Krugman and any Times readers who lean on him for economic insight.

IF YOU CAN'T TRUST FOX ON THIS:  Per Fox, the Republican message has been that we have a spending problem, not a reveune problem.  Very Ricardian, and how did Krugman miss it?

SO WHO HAS ALZHEIMERS NOW, MR. SMARTY-MOUTH?  Hmm, I see that Krugman mentioned Ricardian modeling just last July, and I blasted at him (he eventually responded, presumably to others, with a few steps in my direction.)

Greg Mankiw also lectured Krugman on the presence of a Ricardian school back in July and includes this:

I am pretty sure Paul would not find this [Ricardian] line of argument persuasive.  As far as I can tell from reading his commentary over the years, he does not believe that the distortionary effects of taxes are particularly large and so they do not figure much into his policy analysis.  But many other economists (and I suspect many stimulus-skeptics like the tea-partiers) believe that taxes have significant incentive effects and can prevent the economy from reaching its full potential.  Their argument seems logically coherent, even if it relies on a different set of parameter values for the relevant elasticities than Paul believes to be true.

Well, if Krugman's memory is as bad as mine he won't be vexing anyone much longer. I just hope he can remember where he stashed his Nobel.

Comments

[BobDenver]

Some day I'm going to comment on one of these economics posts, but I should probably wait until I have something to say.

[Eric]

Forget it, Jake. It's Krugmantown.

[Captain Hate]

Can we have a new year's resolution to ignore Paulie Peanuts?

[BobDenver]

Forget it, Jake. It's Krugmantown.

LOL

[Old Lurker]

On the radio just now is JD Hayworth subbing in for our usual conservative morning talker. He's having fun with the Ezra Klein tape espousing the "Constitution was written more than 100 years ago and is very hard to understand..." quote we had so much fun with here the other day.

But reading TM's stuff above and listening to the Klein clones makes me so aware how much the great divide in our society is between those who can read and appreciate simple history and simple economics...and all those who can do neither. The first group creates most of the wealth and income, and the second feeds off the labors of the producers. We really are at a tipping point where the suplus of parasites is very close to killing the host.

[David Pantaleoni]

Mmmm... so that's why Republican's were getting so hysterical about deficits earlier this year... Maybe when Senator Kyl actually makes the argument you mention (and all its implications) Krugman will address it, huh?

[Cecil Turner]

Good grief. It ought not take a Nobel-winning economist to figure out the current path is unsustainable. A quick gander at the spending graph makes that abundantly clear:

Where is the point at which the whole thing collapses? Personally, I'd rather find out from somebody else's mistake, rather than blowing ourselves up (economically) to prove how sensitive we all are.

If one accepts the premise that taxation affects growth, and that effect is sharply negative above a certain level, then taxation (and maximum government spending) ought to be tied to that level. Taxation levels to support an endlessly rising spending curve obviously makes no sense, and thus Krugman's (and the Democrats') argument places the cart firmly before the horse. I don't know bupkus about Ricardianism, but it really isn't necessary to debunk the just-raise-taxes argument.

[jimmyk]

Mmmm... so that's why Republican's were getting so hysterical about deficits earlier this year...

Exactly, because the deficits were being exacerbated by huge wasteful spending increases. I'm glad you understood that.

Maybe when Senator Kyl actually makes the argument you mention (and all its implications) Krugman will address it, huh?

So Krugman can only discuss economic arguments if they're raised by politicians? Is that what the NYT pays him the big bucks for?

[Porchlight]

Putting Kyl's statement in context:

WALLACE: We're running out of time, so how are you going to pay $678 billion just on the tax cuts for people making more than $250,000 a year?

KYL: You should never raise taxes in order to cut taxes. Surely Congress has the authority and it would be right, if we decide we want to cut taxes to spur the economy, not to have to raise taxes in order to offset those costs. You do need to offset the cost of increased spending. And that's what Republicans object to. But you should never have to offset cost of a deliberate decision to reduce tax rates on Americans.

I think Kyl is saying, in response to Wallace's question, that it's absurd to raise taxes on one group of people (who make over $250K) in order to offset the cost of tax cuts for another group (who make under $250K).

In other words you should never have to offset the cost of a tax cut with another tax hike. There are other ways to offset costs (such as decreasing spending elsewhere).

[DrJ]

OL, you traveling? "Man strips at Va. airport checkpoint in protest."

[Old Lurker]

Cecil, what makes your point even stronger is the fact the spending and taxation by State & Local governments have more than double as a percent of GDP since WWII. Add all three together and the picture becomes clear. And sobering.

Then look at the simple projections of current entitlement "promises" including the benefits of public employees made to the current population based simply on demographic aging and nothing else, and it seems F,S & L taxes will have to approximate 85% of taxable incomes in the remaining lifteimes of the Boomers.

How do we look our children in the eyes and not shrink in shame?

[Porchlight]

If one accepts the premise that taxation affects growth

Aha, I think that is your problem wrt the progressives, Cecil. They don't accept that premise.

Neither do they make a distinction between leaving money in the pockets of those who earn it, and finding new and bigger things for government to spend that money on.

[Old Lurker]

No DrJ, not me. And neither was I the guy Drudge reports who got arrested for abusing himself on another flight. Something about tabasco sauce.

[Doug in CO]

So Krugman doesn't think that raising taxes impairs economic activity, and that decreasing them doesn't encourage economic activity. Then how does he explain using tax policy to regulate economic activity - soda taxes in New York to discourage soda consumption, ethanol subsidies and home mortgage deductions to encourage ethanol use and home ownership. One of the arguments I've heard of why the fair tax will never be enacted is because politicians would then lose the ability to use the tax system to reward or punish behaviors. Logic is not something that liberals feel is necessary in an argument, I guess.

[Old Lurker]

Before I climb down off the soapbox...Cecil's graph has Fed spending at about 45% of GDP. Now since we all know (as Cathy has documented) Obamacare is designed to fail, forcing most healthcare spending onto the Federal plate...add that 15% of the GDP and the State and Local spending too, and you have a near term spending by all governments at 70% of GDP even before Boomers collect SS, Medicare and Public Employee pensions.

[Boatbuilder]

Erik--Hah!

[Rick Ballard]

"I don't know bupkus about Ricardianism"

Sure you do. When you write "A quick gander at the spending graph makes that abundantly clear" you are performing precisely the type of rational expectational analysis which underlies Ricardo's thesis.

Krugman actually anticipated the failure of the pseudo-Keynesian illusionists to fool enough of the people to maintain power. That's probably the source of his shrieking frenzy regarding the insufficiency of the "stimulus".

[glasater]

Paul Ryan given power to bind and to loose

This rule is currently causing House Democrats to freak out like koalas deprived of their eucalyptus leaves/junkies deprived of their heroin/hipsters deprived of their iPhones, for two reasons:

The Democrats never passed a budget in 2010, so this is going to affect spending for this fiscal year. A lot.
Who is going to be the House Budget chair? Why, Rep. Paul “Embrace the sweet pain that comes from cutting entitlements” Ryan.
And when I say “freak out,” I mean freak out: the Democrats are so upset about this that they’ve lost all control of their higher brain functions and have reverted to babbling about Social Security privatization. And unilateralism! We haven’t heard that one in a while.

This is something to ponder...

The article is a very short read also.

[Old Lurker]

You ascribe to them Higher Brain Functions, G?

[David Pantaleoni]

Just a tad emotional, jimmyk? If Republicans were genuinely serious about addressing the deficit they wouldn't be playing hypocritical word games (and Krugman wouldn't have to mind read).

[Rick Ballard]

That's really cool, GL. Our very own spending czar.

Dear Mr. President,

Phbbbbbt.

Sincerely,

Paul Ryan

[NK]

excellent snark TM. AND you happen to be right.

[Paul Zrimsek]

If you buy Ricardian equivalence, you may not suffer the results of the deficit-- but neither do you get to enjoy the benefits of the tax cut, unless you have good reason to believe that the anticipated future taxes will be less distortionary than the taxes you're cutting today.

[glasater]

Heh OL--well, understanding attention spans and all.

Actually, the Moe Lane article is an abbreviation from The Hill article and found in comments this worthy addendum:

Two new rules will give Constitution a starring role in GOP-controlled House

When Republicans take over the House next week, they will do something that apparently has never been done before in the chamber's 221 year history:

FACT: They will read the Constitution aloud.
And then they will require that every new bill contain a statement by the lawmaker who wrote it citing the constitutional authority to enact the proposed legislation.
Call it the tea party-ization of Congress.
"It appears that the Republicans have been listening," said Jeff Luecke, a sales supervisor and tea party organizer in Dubuque, Iowa. "We're so far away from our founding principles that, absolutely, this is the very, very tip of the iceberg. We need to talk about and learn about the Constitution daily."
BY VOTE DEMSOUT 2010/12 on 12/30/2010 at 12:07

With TM's highlighting Ezra Klein's thoughts on the Constitution--it's also a big deal on Twitter--my prediction for the coming year will be a massive attack on that most worthy document.

[jimmyk]

neither do you get to enjoy the benefits of the tax cut, unless you have good reason to believe that the anticipated future taxes will be less distortionary than the taxes you're cutting today.

Or unless you buy the Reagan argument that the government will spend less if you "take its allowance away." I like to think of the tax cut as a signal of the intention to cut spending, if only a little.

[Cecil Turner]

Cecil's graph has Fed spending at about 45% of GDP.

That's all government spending (including state and local), and per the disclaimer on the graph, the recent few years are estimated. The trend line, however, is indisputable.

[Frau Sylvester Abend]

You mean former Enron adviser Paul Krugman?

I hope Rep.Paul Ryan did not cheat as a child at marbles. Terry Lenzner is still working, isn't he?

[Danube of Thought]

It's my understanding that since WWII federal income tax revenues have remained near-constant at a little over 19% of GDP, regardless of the rates. I also had thought that spending was fairly steady at about 20% of GDP until the past two years, when it has been at 25%.

Those spending numbers can't be squared with Cecil's graph. Can anyone shed any light?

[boris]

The federal state and local spending during the Bush years appears to be 35% of GDP. Not too implausible.

[bgates]

how are you going to pay $678 billion just on the tax cuts

The answer to that should always be, "you're asking the wrong question." Look, the NBA maximum contract is something like $121M over 7 years. I don't have one. How on earth, Wallace must wonder, do I pay for not having all that income? Except that when it comes to personal income, the flaw is obvious enough that nobody makes that mistake. Nobody has to "pay for" money they don't get. We just have to balance income and outlays.

[Lightwave]

Or Krugmanites spout bullshit like this:

"There's an even larger plan here. Republicans figure if they cut taxes enough, social programs that are "off the table" will have to take a hit...or be privatized or eliminated completely. The goal of Republicans in 2011 is to take the country back to the Gilded Age of the 20's, before Social Security, before Medicare, before the New Deal. They especially want to eliminate social programs for the poor and for minorities, but keep them for traditional Republican voters."

How this moron keeps ending up on Memeorandum I do not know, but he needs to be put in his place, preferably with a economics textbook to the side of the head.

[Rick Ballard]

"unless you have good reason to believe that the anticipated future taxes will be less distortionary than the taxes you're cutting today."

From the Barro link:

His work on "optimal taxation" and the impact of permanent/temporary government spending on time paths of output, consumption and interest rates have also been followed up intently by other economists. Barro's essential approach was that, while accepting that the size of a deficit would not matter, fiscal policy can still have an effect on the income and consumption profiles of people over time and thus, one can and should carefully examine particular expenditure and tax schemes for differing welfare implications.

The uncertainty occasioned by the pseudo-Keynesian yo-yo in the hands of profligate politicians has diminished my 'enjoyment' to the point where employing methods and policies following Ricardian rational expectations for the next 70 years or so appears preferable.

[Ignatz]

--I also had thought that spending was fairly steady at about 20% of GDP until the past two years, when it has been at 25%.--

As OL pointed out, a lot of the last sixty years of growth has been state and local spending, although much of that was itself enabled or mandated by the Feds.
But that recent 5% and growing jump in Fed spending accounts for nearly all of the gigantic, world war-like trajectory in gov spending on Cecil's graph the last couple of years.

[Porchlight]

I also had thought that spending was fairly steady at about 20% of GDP until the past two years, when it has been at 25%.

DoT,

Could that be discretionary spending you're thinking of? I can't see how we're as low as 20% even two years ago if entitlements are included.

Also I believe Cecil did point out that his graph included state and local spending. So maybe that's the difference.

[Paul Zrimsek]

Or unless you buy the Reagan argument that the government will spend less if you "take its allowance away."

That too. Incidentally, this "Reagan argument" is also a Krugman argument: though his hysterical 2003 Calpundit interview no longer seems to be available, Krugman spent part of it explaining how the Bush tax cuts were actually a plot by shadow dictator Grover Norquist to force spending cuts in future years.

[Old Lurker]

DoT it might square OK since Cecil explained at 12:42 that his graph already includes State & Local spending too and I know your numbers are Fed only. Even with that correction to my earlier post regarding "wait till you add health spending to the govt plate", his 45 become 60 at all levels. So we are cooked either way.

The importance of your point that Federal taxation is very level at about 19% of GDP is significant because it, which is true BTW, illustrates perfectly that taxpayers are dynamic and change their behavior to avoid all attempts by the Feds to get a bigger slice of the GDP for themselves.

We have a spending problem.

[Lightwave]

"Krugman spent part of it explaining how the Bush tax cuts were actually a plot by shadow dictator Grover Norquist to force spending cuts in future years."

Only Krugman would call responsibly balancing the budget a plot.

Tens of millions of Americans do it every month. Why can't we do it as a country, one wonders.

[Specter]

I've had this argument with - let's call them the "oblivious" - from many backgrounds. At times it has been particularly hard to make the point at the local level - but I think that's where people actually sit up and notice - when you make it personal.

I object, and vote against, property tax increases every year possible. When I "discuss" it with the oblivi-ites, they keep pointing to services, schools, and the like. I take them to task when I ask them to extrapolate those paltry 5%+ taxes out 20 years to the point they are retired and on fixed incomes. Imagine what they find - they won't be able to live in "their" town any longer!

Next I encourage them to think about State and Federal spending...they completely shut down. It's so far beyond their comprehension...making it personal opens people's eyes. You don't need an advanced degree in economics to see where life is headed...

[Old Lurker]

DoT LUN is a link some smarty here posted last spring on this subject. It's a good one.

[Cecil Turner]

The data comes from these guys who appear to be aggregating gov't numbers. That initial graph comes from Wikipedia (whom I sourced for the chart, but that doesn't seem to show up as a link) article on spending which uses the same data.

[Old Lurker]

Specter, I employed that same logic when I chaired finance for a private school, and to the same glazed eyes. We all "revered" our beloved teachers and everyone wanted to always pay them more and more. I pointed out that our teachers were already making $75K for teaching on average three classes of on average 8.2 students each for a calendar with 147 days of school. Extrapolating out, they were paid more than senior associates at a K Street law firm...

Oh. And our tuitions were about $30,000 per year for elementary school. More for the older kids.

But we LOVE our teachers. Really we do.

[boris]

A fair amount of federal spending goes to state programs. If the graph is a based on summing nimbers from different data categories it may double count the overlap.

[Liberty60]

The basic problem is that the government spends about 3.5 Trillion; collects about 2.1 Trillion in revenue;
Leaving a 1.4 Trillion deficit.

If Defense, debt service, SS, and Medicare are all off the table for cutting,that leaves about 1/2 Trillion of spending in which to cut.

In other words, it is mathematically impossible to balance the budget without either raising revenue or cutting things which are considered "off the table".

[LosGatosCA]

Forget Laugher Curves, forget Ricardo. Larry Kudlow has summed the conservative values in a single sentence that has no mention of deficits, spending levels, or optimal use of society's resources:

"I've never seen a tax cut or spending program I didn't like."

Laminate it, put it in your wallet and anytime you want to debate an economic theory, count to 5, reach for your wallet, take out the card and read it-out loud if you need to. Let it's simplemindedness envelope you in a warm feeling of certitude.

And you'll never have to walk alone through the valley of empiricism again.

[LosGatosCA]

Tough to post from an iPhone:

Kudlow's qoute is "a weapons system spending program"

[Neo]

Martha Kunkle has come back to life. She died in 1995. Yet her signature later appeared on thousands of affidavits submitted by one of the nation's largest debt collectors, Portfolio Recovery Associates Inc., in lawsuits filed against borrowers. ... After being sued for fraud, Portfolio Recovery Associates decided in early 2008 that any documents bearing Ms. Kunkle's name had "defects" and shouldn't be used when trying to collect debts, a company spokeswoman said.

.. no shit Shakespeare ... one big Doh

[Danube of Thought]

I misread the title of Cecil's chart--"US Government Spending"--to mean the Feds, as opposed to "government spending in the US."

[Jim Miller]

I love that Mankiw sarcasm: "As far as I can tell from reading his commentary over the years, . . ."

What Mankiw is saying, of course, is that Krugman has not made a clear argument on the question, but, with some effort, one can guess what the Nobel prize winner means -- probably.

(I wouldn't be surprised to learn that Mankiw hoped to provoke Krugman into clarifying his position.)

[Tom Maguire]

excellent snark TM. AND you happen to be right.

I'd love to think that's not coincidence. Some days chicken salad, and some days chicken shit...

Maybe when Senator Kyl actually makes the argument you mention (and all its implications) Krugman will address it, huh?

A Google on "we have a spending problem not a revenue problem" yields fewer hits than I had hoped, but my point is illustrated.

[Chubby]

((We have a spending problem.))

It's not in the nature of pickpockets to be wise stewards.

[Chubby]

(just going with Dickensian theme)

[Walter]

I ask them to extrapolate those paltry 5%+ taxes out 20 years to the point they are retired and on fixed incomes.

I was talking with my next-door neighbor who moved into his house in 1942 (and joined the army the next week, but that's another story). He said his annual property tax bill is more than the entire amount he paid for the house back then.

[Chubby]

oops I got my threads mixed up, this is not the Dickensian thread

[Cecil Turner]

. . . it may double count the overlap.

I don't think it does. If you sum federal and state/local spending it adds up to just a bit more (about 5%) than the total spending chart. Which is exactly as it ought, if it's all correct and single-counting.

I misread the title of Cecil's chart--"US Government Spending"--to mean the Feds, as opposed to "government spending in the US."

Yeah, it's poorly labelled when used as a stand-alone graphic, but that's mostly my fault for stripping out the surrounding context. (And the result is reminiscent of the "eats, shoots, and leaves" punctuation lady.)

[Jim Ryan]

Trolls who display a smug satisfaction in believing that raising taxes will cause an increase revenue unwittingly embarrass themselves.

It would be nice if it were fun to watch, but it's tedious and boring after the first few years.

[Cecil Turner]

In other words, it is mathematically impossible to balance the budget without either raising revenue or cutting things which are considered "off the table".

If you project the curves just slightly, you'll find revenue is irrelevant to that argument. Obviously it's impossible for the government to raise the entire GDP in taxes. Hence in the long run it's mathematically impossible to balance the budget without "cutting things which are considered 'off the table.'" Which leads immediately to the conclusion that considering things "off the table" is the unworkable construct.

"I've never seen a tax cut or spending program I didn't like."

Not sure if you mean the double negative, but there are lots of spending programs I don't like. And the lefties seem to hate tax cuts. So that appears to be the gist of the disagreement.

[Chubby]

((Trolls who display a smug satisfaction in believing that raising taxes will cause an increase revenue unwittingly embarrass themselves. ))

People who dedicate their entire lives justifying and figuring out ways to take OPM (thanks Rick Ballard) are thieves at heart.

[Old Lurker]

I could not agree with Cecil more about the virtual irrelevance of revenues. First, as DoT's point supports....do as you will about rates and loopholes and the producers will arrange things so they give up about 19% of GDP regardless. The first line of defense is legal tax planning, and the defense of last resort is outright cheating. In between are various degrees of behavior modification but when the dust settles, all they get is 19% anyway. One way or another the revenue will not be forthcoming above that magic line.

The more important point is that, as Cecil shows, any projection of any of these entitlements (SS, Medical, Pensions etc etc) and this time Kim really does get a hockey stick. In short order these programs consume it all.

The sooner we admit that and tell all the takers...certainly the Boomers as we start to tap in...and certainly the public/teacher unions...that it was all a Ponzi Scheme and that Bernie is in jail, the better. Take it ALL away. Design a safety net with some foodstamps and free clinics (sorry about the long lines) and public pensions of some amount we can fund in real time, and tell the rest to fend for themselves. While I am king for the day, I will reduce the tax code/regs from 100,000 pages to about 100. I'll deputize JOM lawyers to re-ratify the Constitution stripped of most court inspired "improvements" and then we can start anew.

[Ignatz]

--The sooner we admit that and tell all the takers...certainly the Boomers as we start to tap in...and certainly the public/teacher unions...that it was all a Ponzi Scheme and that Bernie is in jail, the better.--

You're assuming they don't know its one already, OL.
The takers don't care as long as they get theirs and aren't the ones who end up in jail.

[Old Lurker]

True that Iggy. True that.

[Old Lurker]

"Fienberg says only half of BP's $20B fund will be needed to pay all economic claims" LUN via Bloomberg.

I assume no refund to BP will be forthcoming.

This being what happens when private property is usurped through political pressure and mob rule bypassing the judicial process. If those guys had had any balls, they would have said "see you in court".

[Old Lurker]

Would have been funny if someone like Carl Ichan had been a major shareholder of BP. He'd be suing the directors big time.

[Hank]

OT: On CNBC today I witnessed an incrdeible statement by Caroline Heldman (at around 5:00 in the video LUN). Deficits don't matter because "we are the only country in the world that coins its own money" and our money is "simply numbers in a spreadsheet at the Fed," so "we are in a unique position in the world." Does this sound right?

[Old Lurker]

Huh?

[DrJ]

I sure hope you got the quote wrong, because the quotes are gibberish.

Who is Caroline Heldman, anyway?

[Old Lurker]

Wow and I thought Obama was an exception to the usual idiots from Occidental. The only quibble to your quote Hank was "we are the only country in the world that coins its own money that is internationally accepted..." Don't tell the Swiss or the Japanese.

[Old Lurker]

DrJ watch the tape and scroll over to about 4:30 in...Hank quoted it correctly.

[DrJ]

OK, I looked up who she is: an associate prof of politics at Occidental. Here's her teaching schedule:

Fall 2009 classes
Pols 101 American Politics and Public Policy
Pols 202 Gender and American Politics
Pols 365 The American Presidency

Spring 2010 classes
Pols 101 American Politics and Public Policy
Pols 103 Research Methods in Politics and Public Policy
Pols 295 Disaster Politics: New Orleans in the Wake of Hurricane Katrina

If I were a parent who had a kid in one of her courses, I'd ask for my money back.

[Hank]

Sorry, her segment starts at 3:00 (my bad eyes). I should have given her affiliation -Occidental College, Department of Politics (?) - at first, I thought she was in the Economics dept and I was completely flabbergasted.

[DrJ]

Wow.

I did watch the clip, which I don't often do (I read a lot more quickly). She's certainly no inflation hawk. But she doesn't have to be, since she's seen no sign of it.

Yowza.

[Hank]

I'm not sure why our currency being internationally accepted (will it always be so?) means that we don't need to worry about deficits and we can just print our way out it? Why does that make us unique? Not sure.

[Hank]

She seems to appear on CNBC and Fox a fair amount, maybe as an example of the best and brightest of the Left. Someone should introduce her to Ezra Klein.

[Rick Ballard]

"Someone should introduce her to Ezra Klein."

Cue Dueling Banjos.

[Chubby]

((Deficits don't matter because "we are the only country in the world that coins its own money" and our money is "simply numbers in a spreadsheet at the Fed," so "we are in a unique position in the world." Does this sound right?))

As I understand it, the federal reserve prints the money, and the government borrows with interest, so it is not the "nation" that is creating its currency. Thomas Jefferson, Andrew Jackson, and one or 2 others, did want the U.S. government to issue its own currency, and thus save huge interest payments that are such a large part of the deficit.

[narciso]

She's remarkably ignorant of many things, as many appearances on Hannity could attest, and Donald Douglas has pointed on more than one occasion

[Old Lurker]

I am completely confused by what she is saying, and she is so off base it is astounding.

[Danube of Thought]

Great link, OL.

I guess I must have been napping when Larry Kudlow became the spokesman for conservative values.

The problem with dealing with the takers in CA--the public employee pensioners--is that their benefits in many instances are protected by the state constitution. Bankruptcy is the only slut ion I can see, but even if the federal bankruptcy law were amended to allow states to file, the state would have to consent to the proceeding.

[glasater]

Caroline Heldman is on TV only because she's a relatively good looking gal.
She spouts this gibberish every time she's on the tube and talks over anyone trying to speak something sensible.
She is awful!!

[MarkD]

"You mean former Enron adviser Paul Krugman?"

Yes, that one. The one with the Nobel Prize like Jimmy Carter and Yasser Arafat and Al Gore and Barrack Obama. Deserving of the same respect, he is.

[Ignatz]

--Bankruptcy is the only slut ion I can see...--

It would take bgates to do justice to that typo.

[narciso]

She is glasater, the impression I get is, borne out in the LUN. I would suggest that she and Klein get together, but it would be like Gozer and Zuul in it's consequences

[narciso]

On more reassuring news, in the LUN

[Danube of Thought]

Good God--my bad. I thought I had this iPad thing nailed down but the auto-correct has a mind of its own.

[centralcal]

Hank - welcome to JOM. Hope we see more of you. Oh, yes - Heldman. Isn't she a robotic piece of work?

For some reason she is on The Factor frequently. I think it is because she is so obviously an Obama Lefty Stepford Alien Pod that she is easily made fun of.

Quite the PR spokesman for Occidental!!! lol.

[Threadkiller]

--“Bankruptcy is the only slut ion I can see, but even if the federal bankruptcy law were amended to allow states to file, the state would have to consent to the proceeding.”--

">http://www.cnbc.com/id/40791768"> Alabama Town’s Failed Pension Is a Warning

”The situation in Prichard is extremely unusual — the city has sought bankruptcy protection twice — but it proves that the unthinkable can, in fact, sometimes happen.

This struggling small city on the outskirts of Mobile was warned for years that if it did nothing, its pension fund would run out of money by 2009. Right on schedule, its fund ran dry.

Then Prichard did something that pension experts say they have never seen before: it stopped sending monthly pension checks to its 150 retired workers, breaking a state law requiring it to pay its promised retirement benefits in full.

And it stands as a warning to cities like Philadelphia and states like Illinois, whose pension funds are under great strain: if nothing changes, the money eventually does run out, and when that happens, misery and turmoil follow.

[centralcal]

Hey DoT - we like humor here. A slut ion sounds . . . well, google worthy! lol.

[Danube of Thought]

Time for a year-end pronouncement. I know it only happened a couple of days ago, but the biggest event of 2010 for me was the successful installation of the Narcisolator, thereby erasing the Sick Puppy altogether.

[Ignatz]

--Oh, yes - Heldman. Isn't she a robotic piece of work?--

Having never heard of this cretinous airhead (that's Doctor Airhead with a PhD naturally) I looked her up and did find it reassuring that she has taken the pledge not to have any imbecilic offspring.

Malthus may have been all wet but he did the world service by ensuring the most unctuous busy bodies amongst us were the only ones stupid enough to take him to heart.

[Ignatz]

--Time for a year-end pronouncement. I know it only happened a couple of days ago, but the biggest event of 2010 for me was the successful installation of the Narcisolator, thereby erasing the Sick Puppy altogether.--

Heh. Having not installed it I can say that TM functions as a pretty decent narcisolator all by himself, since the SP has only been here a time or two since he had the seat of his knickers set all aglow.

And since I won't be around I'll say a Happy New Year to one and all, right now!

[caro]

"I've never seen a tax cut or spending program I didn't like."

LosGatos,that doesn't sound like Kudlow to me. How about a link?

[centralcal]

Oh - Ignatz - you're leaving for a better party, huh? Happy New Year to you and to your family.

See you in 2011?

[centralcal]

I love narcisolator and Tom Maguire. If one fails, the other will pick up the slack!

[Danube of Thought]

I think LG modified the quote to "defense spending program" or something.

[pagar]

"breaking a state law requiring it to pay its promised retirement benefits in full."

So if there is no money, what happens? Do they put the Mayor in jail or what? Seems like a hard law to enforce.

[Strawman Cometh]

No doubt Caroline Heldman has seen some of the material referring to the notion that the $ is currently the default reserve world currency. This is the other shoe of our interesting times that has yet to drop, if/when it does, particularly in regard to the oil market, the shit will really hit the fan.

[Sue]

Happy New Year to everyone who won't be around later. I probably will be, unless I fall asleep. ::sigh::

[Danube of Thought]

Egad. Gotta start donning black tie regalia for my sister's annual NYE dinner party.

[sbw]

Hey, all!

The kids are safely ensconced elsewhere to party and sleep or to party and get Designated Drivered home.

The mrs. and I get to relax, alone, and celebrate New Years in whatever way we wish.

Ain't it grand!

My best to you all. Thank you for your good company and fellowship. Good health to you all in the New Year.

And a particular hat tip to TM!

[centralcal]

sbw: I am on a different end - the kids (all girls tonight) are gonna be safely "ensconced" at my house tonight. I am honored and loved by these girl's presence.

I will also be asleep long before they are. Fortunately, they are all still "tweens."

In case the computer is tied up by these lovely girls soon, Happy New Year to the best e-friends a person could ever ask for.

Smooches (to quote Clarice)!!!

[Jack is Back!]

Happy Nemw Year JOMO tribe!

We are close to bbbbbbbbbbeeeeeeedddddd'',,,,,,,,,,