Can you NAIRU?

[oldfart]

I believe that an understanding of how economists approach economic policy discussions and what they have in the toolbag is useful to the score or so of posters here who want to try a little analysis on their own. For the rest, understanding the terms may make your invective directed at each other at least a bit more entertaining. So....

Back in the old days, discussions of the relationship of unemployment and inflation centered around the "Phillips curve" which showed a trade-off between unemployment and inflation. Originally there was really no theory behind it; "The Phillips curve started as an empirical observation in search of a theoretical explanation." Phillips curve - Wikipedia, the free encyclopedia

The effort to create a theoretical framework to explain the observed results has to center on the role of wages, as this is the main connection between the labor market (where unemployment is observed) and the product market (where inflation is observed). So economists started talking about the "non-accelerating inflation rate of unemployment" (NAIRU). But this concept itself leads to confused thinking, as it is wages that connect inflation to unemployment. So a better concept has been the "non-accelerating wage (increase) rate of unemployment", (NAWRU).

William Phillips published his original paper in 1958 and the analysis caught on in the '60s. By the early '70s a problem arose when it obviously did not do a good job of explaining "stagflation", the period of high unemployment coupled with high rates of inflation. The obvious culprit was that there were non-wage causes of inflation as well, most prominently oil price shocks. This effort led directly to the "rational expectations" models of the '70s and the NAIRU.

By 1988 Robert J. Gordon of Northwestern University had analyzed the Phillips curve to produce what he calls the triangle model, in which the actual inflation rate is determined by the sum of
demand pull or short-term Phillips curve inflation,
cost push or supply shocks, and
built-in inflation.
The last reflects inflationary expectations and the price/wage spiral.

I can testify from personal experience that segmented theories of inflation close to Gordon's "triangle model" were commonplace in economic classrooms of the late '60s and after and were common in graduate schools as well, so I'm not sure why the Wikipedia author gave such credit to Gordon. Anyway, this is the current model in use today with variations. The first component of inflation, the "demand-pull" component describes movement along the short-term Phillips curve while the other two are explanations of what shifts the Phillips curve over time.

So just what is NAWRU supposed to mean? First, it is an observed phenomena which fits into the triangle model of Gordon, but is not itself a theory. There is observed a rate of unemployment consistent with a given rate of inflation that will not increase unless acted upon by some other mechanism than the labor market (like oil shocks or a "Minsky moment" about anticipated rates of inflation being dramatically too low). Sometimes this is called a "natural rate" of unemployment, but this runs the danger of being confused with the Wicksellian "natural rate of interest" which is determined by the "round-aboutness" of the structure of production (You really don't want to get into Swedish capital theory do you? All of you damned Austrians put those hands down!).

At this rate of unemployment, the labor market exhibits sufficient slackness that labor is unable to increase wages (either nominal or real depending on the model) at a rate that would accelerate inflation. Despite the name "demand-pull" inflation, there is a a cost or supply side element to this argument; as long as wage increases are less than the increase in labor productivity, the labor cost per unit of production will stay the same or decrease. In fact, labor costs per unit of production have been decreasing over the past thirty years in real terms, but the lion's share of the benefit has gone to capital and rents, not labor, with the trend accelerating dramatically in the last five or six years.

So reductions in the unit labor cost of production have not resulted in increases in real wages as much of classical economic theory would predict, it has been redistributed to those who receive profits and rents. These people have a lower propensity to consume (a higher propensity to save) and have resulted in a world awash in savings and deficient in demand, causing unemployment to rise. In the model terms, the Phillips curve is shifting so that the NAWRU is steadily increasing. This in a nutshell is the premier economic problem of our time.

It is a vicious cycle. High unemployment weakens labor's bargaining power and results in lower real wages while increased productivity lowers unit labor costs and increases profits to record levels, received by a class that attempts to save most of this increase rather than spend it. The resulting increase in income inequality moves the economy along the Phillips curve to ever higher levels of NAWRU, i.e. higher unemployment with no inflation, setting the cycle to repeat. This cycle is not going to correct itself, without intervention it will only get worse with the standard of living of almost all Americans declining and eventually output suffering as well so that even the wealthy will see profits fall.

With this theoretical structure, there are a couple of possible remedies to break the cycle. The most promising is to increase demand. Investment spending is primarily a function of the demand for the end product (a "derived demand") and will only go up when the cycle is broken. Net exports are problematical to increase. Consumption can be increased if the wealthy can be persuaded to spent extremely lavishly, but there appears to be a limit to how many yachts, airplanes, banana republics, and Congressmen they can be induced to buy; and it will not be enough. That leaves two possibilities, increase consumption by the rest of the population (which will require that they become less income-constrained) and government spending. The first is realistically a reversal of existing trends in income inequality, a government policy to redistribute income away from the top to everyone else. The second is called stimulus. I favor both.

So this is the case presented by "progressive" economists. If you don't agree, feel free to describe your framework and explain the trends of the last forty years. How does your model of the economy show an improvement in economic conditions coming about?

 

[Rshermr]

As you say:
"So reductions in the unit labor cost of production have not resulted in increases in real wages as much of classical economic theory would predict, it has been redistributed to those who receive profits and rents. These people have a lower propensity to consume (a higher propensity to save) and have resulted in a world awash in savings and deficient in demand, causing unemployment to rise. In the model terms, the Phillips curve is shifting so that the NAWRU is steadily increasing. This in a nutshell is the premier economic problem of our time."

And this is what the available impartial studies all tend to say. Though you have managed to say that with fewer words. But it seems so obvious.

Then, oldfart makes the following statement:
"It is a vicious cycle. High unemployment weakens labor's bargaining power and results in lower real wages while increased productivity lowers unit labor costs and increases profits to record levels, received by a class that attempts to save most of this increase rather than spend it. The resulting increase in income inequality moves the economy along the Phillips curve to ever higher levels of NAWRU, i.e. higher unemployment with no inflation, setting the cycle to repeat. This cycle is not going to correct itself, without intervention it will only get worse with the standard of living of almost all Americans declining and eventually output suffering as well so that even the wealthy will see profits fall."
Again, obvious from all you can see in the real world. And supported by lots of studies. Unfortunate so few will ever understand or care to do so, because it explains where to look for solutions.

Speaking of solutions, you say:
"With this theoretical structure, there are a couple of possible remedies to break the cycle. The most promising is to increase demand. "
Which is obvious. But you have to have enough economic background to understand what that means, how to implement it, why it works, and the history of prior attempts. It is true, but of course, many do not want to believe it.

And you say: "That leaves two possibilities, increase consumption by the rest of the population (which will require that they become less income-constrained) and government spending. The first is realistically a reversal of existing trends in income inequality, a government policy to redistribute income away from the top to everyone else. The second is called stimulus. I favor both."

Wish I could disagree. But I know of no other policies that have ever worked when unemployment is high. You have it. But I suspect you will see few responses to this thread. Because it is simply to easy to prove that what you propose works and has worked.

 

[expat_panama]

...redistribute income away from the top to everyone else. The second is called stimulus... ...I know of no other policies that have ever worked when unemployment is high...

Historically, the biggest reversals we've had with unemployment were in the early '60's and the early '80's:

Many would argue that massive tax-cuts were the foundations of both of those recoveries. Contrast that to the the biggest political shifts toward wealth redistribution, that of the late '60's & '70's and the current trend.

 

[editec]

As you say:
"So reductions in the unit labor cost of production have not resulted in increases in real wages as much of classical economic theory would predict, it has been redistributed to those who receive profits and rents. These people have a lower propensity to consume (a higher propensity to save) and have resulted in a world awash in savings and deficient in demand, causing unemployment to rise. In the model terms, the Phillips curve is shifting so that the NAWRU is steadily increasing. This in a nutshell is the premier economic problem of our time."

And this is what the available impartial studies all tend to say. Though you have managed to say that with fewer words. But it seems so obvious.

Then, oldfart makes the following statement:
"It is a vicious cycle. High unemployment weakens labor's bargaining power and results in lower real wages while increased productivity lowers unit labor costs and increases profits to record levels, received by a class that attempts to save most of this increase rather than spend it. The resulting increase in income inequality moves the economy along the Phillips curve to ever higher levels of NAWRU, i.e. higher unemployment with no inflation, setting the cycle to repeat. This cycle is not going to correct itself, without intervention it will only get worse with the standard of living of almost all Americans declining and eventually output suffering as well so that even the wealthy will see profits fall."
Again, obvious from all you can see in the real world. And supported by lots of studies. Unfortunate so few will ever understand or care to do so, because it explains where to look for solutions.

Speaking of solutions, you say:
"With this theoretical structure, there are a couple of possible remedies to break the cycle. The most promising is to increase demand. "
Which is obvious. But you have to have enough economic background to understand what that means, how to implement it, why it works, and the history of prior attempts. It is true, but of course, many do not want to believe it.

And you say: "That leaves two possibilities, increase consumption by the rest of the population (which will require that they become less income-constrained) and government spending. The first is realistically a reversal of existing trends in income inequality, a government policy to redistribute income away from the top to everyone else. The second is called stimulus. I favor both."

Wish I could disagree. But I know of no other policies that have ever worked when unemployment is high. You have it. But I suspect you will see few responses to this thread. Because it is simply to easy to prove that what you propose works and has worked.

WOW...real thinking in economic issues. How refreshing.

The decline of workers incomes in the USA stems from three conditions:

1. the decline of American domination of production following WWII.

2. FREE TRADE policies

3. ADvances in production stemming from advancing techologies (including changing business models).

Of those three, I suspect (read: I do not have the data) that advancing technology is now the primary driver in the steady erosion of the value of ALL HUMAN LABOR INCLUDING THINKING TASKS!


If that is the case?

Then this problem cannot be solved with government spending, more taxes on the weathy or any of the SAME OLD THINKING that worked in KEYNES days.

We need to change the SOCIAL CONTRACT because the current contract is based on an econo9mic assumption that NO LONGER has validitiy.

Classical economic theory suggests that there will always be more demand than supply.

Classical economic systems (capitalism, socialism, communist, even frascsm) are all based on that assumption.

Those systems are all designed to respond to a world with more demand than supply.

Is that the world we live in now?

I think it isn't.

That is really and truly no longer true. (oh there is an unlimited demand to live forever so HC might be one aspect of the economy where that is STILL TRUE).

I realize I have drifted off the topic of inflation and how to recover this economy.

But Keynes do not have the solution.

Hyak does NOT have the solution, either.

Both of the theories are based on a world that no longer exists.

 

[editec]

...redistribute income away from the top to everyone else. The second is called stimulus... ...I know of no other policies that have ever worked when unemployment is high...

Historically, the biggest reversals we've had with unemployment were in the early '60's and the early '80's:

Many would argue that massive tax-cuts were the foundations of both of those recoveries. Contrast that to the the biggest political shifts toward wealth redistribution, that of the late '60's & '70's and the current trend.

And they may be partially right about that.

AFter all. Kennedy's tax cuts made the wealthy even wealthier.

Then GUNS AND BUTTER really drive the economy into overdrive.

Sadly, LHJ and the DEMS could not bring themselves to TAX high enough to pay for the war in VN and the war on poverty, too.

And that's when the deficit spending really went awry.

 

[oldfart]

Wish I could disagree. But I know of no other policies that have ever worked when unemployment is high. You have it. But I suspect you will see few responses to this thread. Because it is simply to easy to prove that what you propose works and has worked.

Thanks for the kind comment. We have a limited audience on this board interested in how economic analysis is actually done, but there are some. If we could only find a good neo-classical without creating a sock puppet......

 

[oldfart]

Historically, the biggest reversals we've had with unemployment were in the early '60's and the early '80's:

Many would argue that massive tax-cuts were the foundations of both of those recoveries. Contrast that to the the biggest political shifts toward wealth redistribution, that of the late '60's & '70's and the current trend.

The big problem with economic history is that ceteris is not parabus. What pops out at me from the FRED graph is the effect of the 1973 oil shock. My gut tells me that tax cuts work well when dealing with supply shocks and not so well when confronted with a generalized lack of aggregate demand.

Tax cuts also have a relatively large distributional effect and it is very sensitive to the type of tax cuts implemented. As I argue in the OP, increasing income inequality has a tendency to result in inadequate demand. The neo-con approach was to fill this gap with military construction and procurement spending. There is a tendency for fiscal stimulus for the lower 80% of the population to take the form of a few highly visible tax credits and targeted spending programs. General reductions in tax rates tend to skew the benefit to those in higher income levels who typically consume less and save more. The very affluent and major corporations get most of their tax benefits in arcane tax provisions ("carried interest" and "transfer pricing" come to mind), industry specific tax rules ("percentage depletion", "bonus depreciation" and special accelerated depreciation provisions for restaurants, FICA credit for tips) and very large essentially no-bid contracts with the government.

So I think that both the stimulus effect and the distributional effect of both spending and tax policy is highly sensitive to the arcane details. This means that if we are going to make any economic progress, we have to have some folks watching the store very carefully to avoid pissing away most of the benefit of fiscal policy.

 

[Rshermr]

...redistribute income away from the top to everyone else. The second is called stimulus... ...I know of no other policies that have ever worked when unemployment is high...

Historically, the biggest reversals we've had with unemployment were in the early '60's and the early '80's:

Many would argue that massive tax-cuts were the foundations of both of those recoveries. Contrast that to the the biggest political shifts toward wealth redistribution, that of the late '60's & '70's and the current trend.

So, you are suggesting that tax cuts during periods of low unemployment rates are a good thing. The ue rate, when the tax rates were reduced in 1964, was 5.4%. So, yup, reducing taxes is generally a good thing when the ue rate is low, and the economy is doing well. However, that is NOT generally true when the ue rate is high.

So, you go on to mention the 1980's. The ue rate was 7.3% and dropping when reagan lowered taxes hugely in 1981. And the resultant rise in the unemployment rate followed quickly, taking the rate to the second highest in the following history to 10.8% by Nov of 1982. Reagan's administration quickly began tax increases and borrowing to finance stimulative spending. The result was the greatest increase in the nations national debt, which tripled. And the result of those efforts was a major decrease in unemployment and a shift to a strong economy. Reagan did not again try tax decreases UNTIL the ue rate was low.

So, no. There was no indication in either the 1960's or the 1980's that tax decreases helped a bad, high unemployment economy. Only in the 1980's was the ue rate relatively high when tax decreases happened did we see a result, which was the WRONG result. Things got worse, as economist expected.

Here. Check the ue rate over time. And try a little honesty.
http://www.davemanuel.com/historical-unemployment-rates-in-the-united-states.php

 

[expat_panama]

...redistribute income away from the top to everyone else. The second is called stimulus... ...I know of no other policies that have ever worked when unemployment is high...

Historically, the biggest reversals we've had with unemployment were in the early '60's and the early '80's... ...massive tax-cuts were the foundations of both of those recoveries...

So, you are suggesting that...

No, YOU are stating flat out that redistribution cures unemployment and I 'm telling you we're not convinced.

 

[Rshermr]

Historically, the biggest reversals we've had with unemployment were in the early '60's and the early '80's... ...massive tax-cuts were the foundations of both of those recoveries...

So, you are suggesting that...

No, YOU are stating flat out that redistribution cures unemployment and I 'm telling you we're not convinced.

Funny, I made no such comment. Income redistribution as it has occurred since the 1980's has been TO the wealthy. Not to the working class, or the middle class, or below. And it has had arguably bad implications for our economy. Really. A little research would help you.

By the way, do you have a mouse in your pocket or are you a spokesman for some group???

 

[expat_panama]

...YOU are stating flat out that redistribution cures unemployment and I 'm telling you we're not convinced.

Funny, I made no such comment...

Kind of like "I never said 'if you could keep your doctor and your insurance'." OK, you said---

...redistribute income away from the top to everyone else. The second is called stimulus... ...I know of no other policies that have ever worked when unemployment is high...

--and I still say many would argue that massive tax-cuts were the foundations of both of those recoveries, and we can contrast that to the the biggest political shifts toward wealth redistribution, that of the late '60's & '70's and the current trend.

 

[Kimura]

We need to dump NAIRU. We should get it out of our heads we need unemployment to control inflation. This model is outdated and rife with problems. We should replace it with a national employment buffer stock. We can hire from the bottom up, through a Job Guarantee, and eliminate inflationary pressures. You create a stabilization mechanism of full employment through a national employment buffer stock.

We can push labor demand out to the maximum, as opposed to the current targeting of the output gap. We can then tie spending directly to employment, and with automatic stabilizers, we’ll know how much the federal government needs to spend at any given time. Basically, for instance, we need to employ X amount of people, so we require Y amount of dollars so to speak.

This will also have the effect of helping out the private sector. They have a pool of labor they can tap, as opposed to unskilled and untrained labor, which will decrease costs associated with job training.

In terms of macro benefits, it would be inflation control. The federal budget would decrease counter-cyclically as the private sector improves by hiring into the private sector. We can also keep the supply of labor at indefinite minimum wage. The won’t fix all of the inherent problems in the labor market, but it’s orders of magnitude better than NAIRU.

 

[oldfart]

We need to dump NAIRU. We should get it out of our heads we need unemployment to control inflation. This model is outdated and rife with problems. We should replace it with a national employment buffer stock. We can hire from the bottom up, through a Job Guarantee, and eliminate inflationary pressures. You create a stabilization mechanism of full employment through a national employment buffer stock.

We can push labor demand out to the maximum, as opposed to the current targeting of the output gap. We can then tie spending directly to employment, and with automatic stabilizers, we’ll know how much the federal government needs to spend at any given time. Basically, for instance, we need to employ X amount of people, so we require Y amount of dollars so to speak.

This will also have the effect of helping out the private sector. They have a pool of labor they can tap, as opposed to unskilled and untrained labor, which will decrease costs associated with job training.

In terms of macro benefits, it would be inflation control. The federal budget would decrease counter-cyclically as the private sector improves by hiring into the private sector. We can also keep the supply of labor at indefinite minimum wage. The won’t fix all of the inherent problems in the labor market, but it’s orders of magnitude better than NAIRU.

I think I understand your proposal, but just to be sure let me restate it. Suppose that instead of starting with a government budget, the government began with a list of projects. To work well, some of these projects would have to take new and comparatively unskilled workers and provide them with a mix of job training and work experience. Some proposals have the military playing a major role and others contemplate something that looks like a cross between the old CCC and the Job Corps.

The government would then set a target for employment that would allow for frictional unemployment and target labor market shortages which might become inflationary. "Structural unemployment" would be targeted to decline at as rapid a pace as feasible. The project list would be applied with an eye to not only reducing unemployment, but also to reducing labor shortages in specific categories in the private sector and increasing the overall quality of the labor force. The budget comes out in the wash. Do I have it right?

This is what has been called an "industrial policy" and is a pretty good description of how Germany does economic policy. It integrates the budget, labor force policies, foreign trade, and macroeconomic stability much better than our current wretched alphabet soup of agencies and programs. It would undoubtedly work and be better than what we have now. For that reason it I completely impossible politically. For one objection, it requires indicative planning which we do now, but don't talk about. It could only work if we could keep the usual suspects from looking under the bed for hidden central planners or behind curtains for the world Jewish banking conspiracy.

 

[Rshermr]

...YOU are stating flat out that redistribution cures unemployment and I 'm telling you we're not convinced.

Funny, I made no such comment...

Kind of like "I never said 'if you could keep your doctor and your insurance'." OK, you said---

...redistribute income away from the top to everyone else. The second is called stimulus... ...I know of no other policies that have ever worked when unemployment is high...

--and I still say many would argue that massive tax-cuts were the foundations of both of those recoveries, and we can contrast that to the the biggest political shifts toward wealth redistribution, that of the late '60's & '70's and the current trend.

Clipping quotes out of context is dishonest, of course. Provide the post # where you suggest I said that redistribution cures unemployment. Or simply apologize for lying.
And they would be wrong. Tax decreases make perfect sense at times in good economies. You simply have simplified it to the republican economic policy, which is LOWER TAXES. All I am saying is that that has never worked during bad economic times because it has been accompanied by decreases in gov spending. Which has actually DECREASED aggregate demand.
You deny it. But it is historically always true. Sorry.

 

[Kimura]

We need to dump NAIRU. We should get it out of our heads we need unemployment to control inflation. This model is outdated and rife with problems. We should replace it with a national employment buffer stock. We can hire from the bottom up, through a Job Guarantee, and eliminate inflationary pressures. You create a stabilization mechanism of full employment through a national employment buffer stock.

We can push labor demand out to the maximum, as opposed to the current targeting of the output gap. We can then tie spending directly to employment, and with automatic stabilizers, we’ll know how much the federal government needs to spend at any given time. Basically, for instance, we need to employ X amount of people, so we require Y amount of dollars so to speak.

This will also have the effect of helping out the private sector. They have a pool of labor they can tap, as opposed to unskilled and untrained labor, which will decrease costs associated with job training.

In terms of macro benefits, it would be inflation control. The federal budget would decrease counter-cyclically as the private sector improves by hiring into the private sector. We can also keep the supply of labor at indefinite minimum wage. The won’t fix all of the inherent problems in the labor market, but it’s orders of magnitude better than NAIRU.

I think I understand your proposal, but just to be sure let me restate it. Suppose that instead of starting with a government budget, the government began with a list of projects. To work well, some of these projects would have to take new and comparatively unskilled workers and provide them with a mix of job training and work experience. Some proposals have the military playing a major role and others contemplate something that looks like a cross between the old CCC and the Job Corps.

The government would then set a target for employment that would allow for frictional unemployment and target labor market shortages which might become inflationary. "Structural unemployment" would be targeted to decline at as rapid a pace as feasible. The project list would be applied with an eye to not only reducing unemployment, but also to reducing labor shortages in specific categories in the private sector and increasing the overall quality of the labor force. The budget comes out in the wash. Do I have it right?

This is what has been called an "industrial policy" and is a pretty good description of how Germany does economic policy. It integrates the budget, labor force policies, foreign trade, and macroeconomic stability much better than our current wretched alphabet soup of agencies and programs. It would undoubtedly work and be better than what we have now. For that reason it I completely impossible politically. For one objection, it requires indicative planning which we do now, but don't talk about. It could only work if we could keep the usual suspects from looking under the bed for hidden central planners or behind curtains for the world Jewish banking conspiracy.

Right. We need around 3.6 trillion in infrastructure investments alone. We can start with a jobs programs around this. It could move aggregate demand in the right direction.

Ultimately, I'd like the Job Guarantee to be a part of public policy, so we can employ any and all productive capacity in the economy. Many MMT economists have done some extensive work on JG proposals. Most it of stems from Minsky.

In terms of organization, it would be funded by the federal government, but handled by non-profits, the states, local municipalities, etc.

 

[expat_panama]

Tax decreases make perfect sense at times in good economies.

By saying that you're contradicting Keynes--

Keynesianism recommends counter-cyclical policies.[12] An example of a counter-cyclical policy is raising taxes to cool the economy and to prevent inflation when there is abundant demand-side growth

--and these two presidents:
[ame=http://www.youtube.com/watch?v=aufAtuTwKlE&feature=player_detailpage]FLASHBACK: Obama Says You Don't Raise Taxes In A Recession - YouTube[/ame]
[ame=http://www.youtube.com/watch?v=_AAEp0J_hzU]kennedy tax cut - YouTube[/ame]Lost in this discussion is the fact that governments are not able to raise revenue beyond the maximum percentage that the economy can support. Sure, they can raise tax rates indefinably, but revenue falls when the governments seize people's means of wealth creation.

 

[Rshermr]

Tax decreases make perfect sense at times in good economies.

By saying that you're contradicting Keynes--

Keynesianism recommends counter-cyclical policies.[12] An example of a counter-cyclical policy is raising taxes to cool the economy and to prevent inflation when there is abundant demand-side growth

--and these two presidents:
[ame=http://www.youtube.com/watch?v=aufAtuTwKlE&feature=player_detailpage]FLASHBACK: Obama Says You Don't Raise Taxes In A Recession - YouTube[/ame]
[ame=http://www.youtube.com/watch?v=_AAEp0J_hzU]kennedy tax cut - YouTube[/ame]Lost in this discussion is the fact that governments are not able to raise revenue beyond the maximum percentage that the economy can support. Sure, they can raise tax rates indefinably, but revenue falls when the governments seize people's means of wealth creation.

You are suggesting that I am in favor of tax increases in times of ANY economy, good or bad. This is apparently to complex for you. Presidents including Reagan have raised taxes to provide revenue for stimulus spending. Presidents including Reagan have borrowed to provide revenue for stimulus spending. Neither of these things are necessary, however, unless you are concerned with keeping the deficit from rising, as Reagan was. So, that was their concern.

And correct, raising taxes during bad economic times was not Keynes teaching. But then, in today's world, he may have seen things differently. Since it is politically impossible to raise taxes when the economy does well. Or had you missed that.

The issue I make is NOT that raising taxes helps a bad economy. The point I make is that stimulative spending, properly done, DOES help a bad economy. And tax increases or borrowing are not necessary to do so.

Relative to the video's both are wrong. Kennedy pushed for tax decreases to lower income individuals, which would have been mildly helpful. But his tax decreases were implimented by Johnson at a time when the economy was very good and unemployment was low.

Relative to Obama, he was pushing for a stimulus that required tax decreases. About a third of the stimulus was in the form of tax decreases. And, per the cbo, overall those tax decreases had very little effect. And, by the way, the least stimulating effects of the stimulus were tax decreases to the wealthy. Pretty much NO impact of any kind.

So, try to understand that I have no problem with tax decreases or tax increases from an economic standpoint. But, saying that tax decreases will help pull the us out of an economic downturn is ignorant. And historically has never happened.