CBO Schools Tea Party Freshman In Basic Economics

[Full-Auto]

Just more proof that teabaggers are stupid.

How is it proof that anyone is stupid? All it proves is that the CBO can write letters that show that they believe in Keynes theories.

Given the historical accuracy of that dept.

They should just shut up.

 

[Google]

Rep. Tim Huelskamp (R-KS), a Tea Party-backed freshman who voted against the final debt limit bill, recently asked to hear from the Congressional Budget Office about the impact of government spending on economic growth. It's an article of faith on the right that vastly shrinking government will unleash the forces of private enterprise, and faced with CBO's opposing view, Huelskamp wanted to know the answer to two questions:

1). What current federal departments, agencies, programs, or portions thereof do not contribute to economic growth?

2). In the programs that CBO believes do contribute to economic growth, what level of spending cuts would amount to a level you believe would be significant enough to "probably slow the economic recovery"?

But if the newly elected member of the Budget Committee was hoping the non-partisan CBO would buy into his premise, he'll be sorely disappointed.

In a response letter Thursday, CBO-chief Doug Elmendorf gives Huelskamp a layman's lesson in Keynesian economics: Under current economic circumstances, new federal spending would help economic growth, and current and future cuts could stymie it, particularly if they hit key government investment.

"When demand for goods and services falls short of the economy's ability to produce them, as is the case currently, increasing government spending can increase aggregate demand and thereby narrow the gap between the economy's actual and potential levels of output," Elmendorf writes.

The precise details matter. The more robust the economy, the lower the impact. But, according to Elmendorf, "when the Federal Reserve's ability to lower short-run interest rates is constrained because those rates are already near zero, as they are currently, the short-run effects of changes in government spending on output tend to be larger than usual."

To illustrate the point, Elmendorf notes that deficit reduction measures that cut spending by $100 billion next fiscal year, and hundreds of billions more over the coming decade "would decrease real (inflation-adjusted) gross national product (GNP) in 2012, 2013, and 2014 by amounts ranging from roughly 0.1 percent to 0.6 percent depending on the year and the assumptions used." In other words, the GOP's current governing theory is damaging the economy and, by implication, costing jobs. And for those Republicans who want to cut more, " a reduction in primary deficits that followed the same gradual time path but was twice as large would produce macroeconomic effects that were roughly twice as large."

There are important growth-related reasons to reduce deficits if and when the economy improves -- it reduces the extent to which government spending "crowds out" private investment, by undertaking functions the private sector can do more efficiently. But we're not there yet and, according to CBO, won't be until the end of the decade. Spending cuts like the ones describe above, "[a]t the turn of the decade, from 2019 through 2021...would increase [GNP] by roughly 0.5 percent to 1.4 percent."

But again the specifics matter, and if the GOP wants to slash across the board, they'll do damage anyhow.

"Some types of spending, such as funding for improvements to roads and highways, may add to the economy's potential output in much the same way that private capital investment does," Elmendorf writes. "Other policies, such as funding for grants to increase access to college education may raise long-term productivity by enhancing people's skills. The positive longer-term impact of deficit reduction on GNP would be smaller if the policies that reduced deficits included cuts in productive government investments."

Huelskamp's original letter is here. Read Elmendorf's response here.

MORE: Cut And Grow Fail: CBO Schools Tea Party Freshman In Basic Economics | TPMDC

If government spending is so beneficial to economic growth, why isn't it working?

 

[Google]

And here they are denying history and economics

This administration has increased deficit spending by leaps and bounds. Where is the economic benefit

 

[bripat9643]

Someone needs to school the CBO in the fact that Keynesian economics is pure crap. It's been proven to be Voo-Doo over and over again. Empirical evidence has dashed all it's fundamental premises to pieces.

Good luck proving that specious premise, kid.

It has already been proven. The New Deal is sufficient proof of that. The Carter administration is more abundant proof.

 

[Remodeling Maidiac]

So I guess your pretty disgusted at the fact that Obama flunked CBO economics 101 huh? They failed every bill he's bragged about.

 

[edthecynic]

Argument to Authority.

Keynesian economics has failed, both in the 1930s, and now. Obama spent a trillion dollars in keynesian spending - did it pull us out of the recession? Uhhhh nooooooooooo........
and now we appear headed back into a double dip.

Leftwingers continue to piss on peoples legs, and tell them it's raining.

Your own answer actually contradicts yourself!!!!!
If the stimulus didn't pull us at least partially out of the Bush Depression, how could we possibly be headed BACK into another dip?????????

It's pretty obvious that the stimulus did help the economy as we were pulled forward while the stimulus spending was greatest, but now that the stimulus spending has declined so has the economy.

 

[C_Clayton_Jones]

In other words, the GOP's current governing theory is damaging the economy and, by implication, costing jobs.

Indeed. This is the danger related to adhering blindly to economic dogma.

 

[Truthseeker420]

Milton Friedman was an idiot

Friedman had some reasonable insights into the inefficiencies of government.

However he made a number of unforgivable errors, which ironically endeared him to the Establishment and enhanced his reputation.

First, he trashed Austrian Business Cycle Theory.

Second, he was a fiat money guy, supporting fiat money over gold (up until the end, when he started having doubts – too late in my view).

Third, he supported central banking. How he could be a “free market guy” and support monopoly fiat and monopoly price fixing of interest rates is beyond me.

Fourth, he destroyed Chile by implementing policies which systematically removed social investment and safety nets that (arguably) govts should provide, whilst keeping monopoly fiat in place. He should have advocated the elimination of monopoly fiat and allowed the continuation of social safety nets. He was clearly a tool of the major US banks in Latin America.

Fifth, his policies destroyed New Zealand, partially destroyed Australia, and partially destroyed many other countries including the UK and the US.

Antal E. Fekete does a wonderful job of destroying Friedman’s theories here, in a speech he delivered in late 2006, just after Friedman’s death. He also wrote a brilliant piece critiquing both Keynesianism and monetarism here, entitled (tellingly) Götterdämmerung.

If you are shocked by the title of my post, please read these two pieces immediately.

I will never forget Friedman sitting on the edge of Victoria Harbour in the late 1970s openly admiring the “free market” of Hong Kong. Hong Kong has the highest number of billionaires in Asia but 18% of the population live below the poverty line. Pollution problems are very serious. If you ask the average Hong Konger are they happy I guarantee they’ll say no. Housing is hideously expensive and is a huge tax on the working people (despite the supposedly low rates of tax there). Social services for the aged are extremely poor. Worst of all no one can buy and sell in gold – the monopoly HK dollar is pegged to the US dollar. So the economy is subject to the same mad monetary swings as the US.

It is not so much a “Free Market” as one “Trapped in a Monopoly Money Hell”. If they could be allowed to trade in any currency they liked, I’d be more sanguine about HK. Until that fundamental issue is addressed, the Hong Kong people will never be free.


Milton Friedman was an idiot « Karma is King

 

[ShackledNation]

An Introduction to Keynesian "economics" is an introduction to elitist propaganda and irrational thought. There are a number of books refuting Keynes.

If the CBO followed Austrian economics then they can claim to have economic authority.

 

[hortysir]

Rep. Tim Huelskamp (R-KS), a Tea Party-backed freshman who voted against the final debt limit bill, recently asked to hear from the Congressional Budget Office about the impact of government spending on economic growth. It's an article of faith on the right that vastly shrinking government will unleash the forces of private enterprise, and faced with CBO's opposing view, Huelskamp wanted to know the answer to two questions:

1). What current federal departments, agencies, programs, or portions thereof do not contribute to economic growth?

2). In the programs that CBO believes do contribute to economic growth, what level of spending cuts would amount to a level you believe would be significant enough to "probably slow the economic recovery"?

But if the newly elected member of the Budget Committee was hoping the non-partisan CBO would buy into his premise, he'll be sorely disappointed.

In a response letter Thursday, CBO-chief Doug Elmendorf gives Huelskamp a layman's lesson in Keynesian economics: Under current economic circumstances, new federal spending would help economic growth, and current and future cuts could stymie it, particularly if they hit key government investment.

"When demand for goods and services falls short of the economy's ability to produce them, as is the case currently, increasing government spending can increase aggregate demand and thereby narrow the gap between the economy's actual and potential levels of output," Elmendorf writes.

The precise details matter. The more robust the economy, the lower the impact. But, according to Elmendorf, "when the Federal Reserve's ability to lower short-run interest rates is constrained because those rates are already near zero, as they are currently, the short-run effects of changes in government spending on output tend to be larger than usual."

To illustrate the point, Elmendorf notes that deficit reduction measures that cut spending by $100 billion next fiscal year, and hundreds of billions more over the coming decade "would decrease real (inflation-adjusted) gross national product (GNP) in 2012, 2013, and 2014 by amounts ranging from roughly 0.1 percent to 0.6 percent depending on the year and the assumptions used." In other words, the GOP's current governing theory is damaging the economy and, by implication, costing jobs. And for those Republicans who want to cut more, " a reduction in primary deficits that followed the same gradual time path but was twice as large would produce macroeconomic effects that were roughly twice as large."

There are important growth-related reasons to reduce deficits if and when the economy improves -- it reduces the extent to which government spending "crowds out" private investment, by undertaking functions the private sector can do more efficiently. But we're not there yet and, according to CBO, won't be until the end of the decade. Spending cuts like the ones describe above, "[a]t the turn of the decade, from 2019 through 2021...would increase [GNP] by roughly 0.5 percent to 1.4 percent."

But again the specifics matter, and if the GOP wants to slash across the board, they'll do damage anyhow.

"Some types of spending, such as funding for improvements to roads and highways, may add to the economy's potential output in much the same way that private capital investment does," Elmendorf writes. "Other policies, such as funding for grants to increase access to college education may raise long-term productivity by enhancing people's skills. The positive longer-term impact of deficit reduction on GNP would be smaller if the policies that reduced deficits included cuts in productive government investments."

Huelskamp's original letter is here. Read Elmendorf's response here.

MORE: Cut And Grow Fail: CBO Schools Tea Party Freshman In Basic Economics | TPMDC

If a frog had wings he wouldn't bump his ass every time he jumped.

 

[oreo]

this whole lie of the government doesnt create jobs is just insane.

How can anything be more blatently wrong?

Obama borrowed and spent over 1 trillion dollars 2-1/2 years ago and there ARE NO JOBS. In fact--unemployment has gone up--even though he promised it wouldn't go over 8%.

The very next week--while he was telling us we were in the greatest economic crisis since the great depression he signed off on another 450 BILLION that had over 9000 earmarks--political goodies -- and FAVORS.

So basically he spent 1 trillion 450 billion dollars and there are NO JOBS.

Proving once again that massive Federal Government Spending does not create long term private sector job growth. The only thing that has been growing in leaps and bounds is the size of the Federal Government while the private sector continues to shrink.

 

[hortysir]

This is a mighty big IF:
*** Some types of spending, such as funding for improvements to roads and highways, may add to the economy's potential output in much the same way that private capital investment does," Elmendorf writes.***

Problem was, and is, Obama wasn't specific.
He just threw the money up in the air and hoped it changed something.

Turns out, lol, those shovel-ready, snicker, jobs weren't quite as, lmao, shovel-giggle-ready as they thought.

 

[Truthseeker420]

this whole lie of the government doesnt create jobs is just insane.

How can anything be more blatently wrong?

Obama borrowed and spent over 1 trillion dollars 2-1/2 years ago and there ARE NO JOBS. In fact--unemployment has gone up--even though he promised it wouldn't go over 8%.

The very next week--while he was telling us we were in the greatest economic crisis since the great depression he signed off on another 450 BILLION that had over 9000 earmarks--political goodies -- and FAVORS.

So basically he spent 1 trillion 450 billion dollars and there are NO JOBS.

Proving once again that massive Federal Government Spending does not create long term private sector job growth. The only thing that has been growing in leaps and bounds is the size of the Federal Government while the private sector continues to shrink.

View attachment 14689

Obama stimulus plan did not spend over a trillion dollars, 1/3 pof the stimulus was tax cuts, not all the money has been given out yet, and some of the Republican states are misusing the funds to give their rich friends tax breaks.

 

[oreo]

This is a mighty big IF:
*** Some types of spending, such as funding for improvements to roads and highways, may add to the economy's potential output in much the same way that private capital investment does," Elmendorf writes.***

Problem was, and is, Obama wasn't specific.
He just threw the money up in the air and hoped it changed something.

Turns out, lol, those shovel-ready, snicker, jobs weren't quite as, lmao, shovel-giggle-ready as they thought.

CBO Warns Obama: Exploding US Debt a Huge Risk
Thursday, 29 Jul 2010 11:13 AM
Article Font Size

By: Dan Weil

The mushrooming U.S. government debt burden may cause a new financial crisis by spurring a sharp rise in interest rates, warns Doug Elmendorf, director of the Congressional Budget Office (CBO).

Countries such as Greece already have seen such crises, as their debt buildups sent interest rates soaring and drove away international bond investors.

The CBO projects that U.S. federal government debt will reach 62 percent of GDP by Sept. 30, up from 36 percent just three years earlier. Only once before has that figure surpassed 50 percent, during and just after World War II.

The debt, of course, is created by massive budget deficits, with the White House projecting a gap of $1.47 trillion this year.

Elmendorf sees two possible outcomes for our current predicament � one mild, one harsh.

As for the mild alternative, �It is possible that interest rates might rise gradually as investors� confidence in the U.S. government�s finances declined, giving legislators sufficient time to make policy choices that could avert a crisis,� he wrote in a blog on CBO�s website.

�It is also possible, however, that investors would lose confidence abruptly, and interest rates on government debt would rise sharply, as evidenced by the experiences of other countries.�

NOTE--that the Obama administration was warned about the spending according to the date of the above report over 1 year ago.

CBO Warns Obama: Exploding US Debt a Huge Risk [Archive] - Slickdeals.net

 

[hortysir]

Elmendorf speaks with forked tongue......

 

[Truthseeker420]

This is a mighty big IF:
*** Some types of spending, such as funding for improvements to roads and highways, may add to the economy's potential output in much the same way that private capital investment does," Elmendorf writes.***

Problem was, and is, Obama wasn't specific.
He just threw the money up in the air and hoped it changed something.

Turns out, lol, those shovel-ready, snicker, jobs weren't quite as, lmao, shovel-giggle-ready as they thought.

CBO Warns Obama: Exploding US Debt a Huge Risk
Thursday, 29 Jul 2010 11:13 AM
Article Font Size

By: Dan Weil

The mushrooming U.S. government debt burden may cause a new financial crisis by spurring a sharp rise in interest rates, warns Doug Elmendorf, director of the Congressional Budget Office (CBO).

Countries such as Greece already have seen such crises, as their debt buildups sent interest rates soaring and drove away international bond investors.

The CBO projects that U.S. federal government debt will reach 62 percent of GDP by Sept. 30, up from 36 percent just three years earlier. Only once before has that figure surpassed 50 percent, during and just after World War II.

The debt, of course, is created by massive budget deficits, with the White House projecting a gap of $1.47 trillion this year.

Elmendorf sees two possible outcomes for our current predicament � one mild, one harsh.

As for the mild alternative, �It is possible that interest rates might rise gradually as investors� confidence in the U.S. government�s finances declined, giving legislators sufficient time to make policy choices that could avert a crisis,� he wrote in a blog on CBO�s website.

�It is also possible, however, that investors would lose confidence abruptly, and interest rates on government debt would rise sharply, as evidenced by the experiences of other countries.�

NOTE--that the Obama administration was warned about the spending according to the date of the above report over 1 year ago.

CBO Warns Obama: Exploding US Debt a Huge Risk [Archive] - Slickdeals.net

View attachment 14690

How could that be? CBO said that 55% of the national debt was due to the Bush tax cuts, the rest was from Bush wars and Bush economic crash.

 

[ShackledNation]

Someone needs to school the CBO in the fact that Keynesian economics is pure crap. It's been proven to be Voo-Doo over and over again. Empirical evidence has dashed all it's fundamental premises to pieces.

Good luck proving that specious premise, kid.

I don't have to prove it myself, it has been proven countless times. Here is a book that refutes it chapter by chapter:
http://mises.org/books/failureofneweconomics.pdf

An article that is 5 pages by the same author:
http://www.fee.org/pdf/the-freeman/ebeling1104.pdf

Also see William Hutt's "The theory of idle resources" specifically dealing with Keynes' theory of idle resources
http://www.scribd.com/doc/55669319/The-Theory-of-Idle-Resources-William-H-Hutt

Another book on the topic, I have not read this one:
[ame=http://www.amazon.com/Where-Keynes-Went-Wrong-Governments/dp/1604190175]Amazon.com: Where Keynes Went Wrong: And Why World Governments Keep Creating Inflation, Bubbles, and Busts (9781604190175): Hunter Lewis: Books[/ame]


Keynes basically remade the case for mercantilism. He mischaracterized classical economists, lumped all economists that didn't agree with him as "classical" despite the fact there were differences of opinion, had an incredibly hard to follow and obfuscating writing style, and loaded his work with fallacies and meaningless platitudes that appealed to those in power despite their contradiction to economic reality.

The US and Japan followed Keynes and the results were the most prolonged depressions in either of our histories. The US has been basically following Keynes ever since, and we are on the verge of financial collapse. So yes, I do believe Keynesian economics is a joke and a travesty to what was once a respectable field. The greatest parasite on economic growth is and has been the General Theory of Economics produced by John Maynard Keynes.

 

[oreo]

this whole lie of the government doesnt create jobs is just insane.

How can anything be more blatently wrong?

Obama borrowed and spent over 1 trillion dollars 2-1/2 years ago and there ARE NO JOBS. In fact--unemployment has gone up--even though he promised it wouldn't go over 8%.

The very next week--while he was telling us we were in the greatest economic crisis since the great depression he signed off on another 450 BILLION that had over 9000 earmarks--political goodies -- and FAVORS.

So basically he spent 1 trillion 450 billion dollars and there are NO JOBS.

Proving once again that massive Federal Government Spending does not create long term private sector job growth. The only thing that has been growing in leaps and bounds is the size of the Federal Government while the private sector continues to shrink.

View attachment 14689

Obama stimulus plan did not spend over a trillion dollars, 1/3 pof the stimulus was tax cuts, not all the money has been given out yet, and some of the Republican states are misusing the funds to give their rich friends tax breaks.

Link to Republican governors giving their "rich" friends tax breaks out of the stimulus--

Or did you just make that up--

Here is a very interesting article for you. New Jersey--lost 70 BILLION dollars in state tax revenue in 5 years--because the wealthy simply left the state. They had--had enough.

N.J. loses $70B in wealth during five years as residents depart | NJ.com

 

[edthecynic]

... over 9000 earmarks--political goodies -- and FAVORS.

Now wait a minute, haven't the Teabaggers flip-flopped on earmarks after Moochele Bachmann was an earmarker, and now earmarks are "the will of the people"??? What day of the week is it?

May 16, 2011
RUSH: I have never been one to base my entire view of a politician on whether or not they supported earmarks, 'cause it's not that much money. I understand the moral aspect and I understand that earmarks open up the opportunity for blackmail and this kind of thing. I understand all the arguments about them. You know, McCain hardly a purist, made earmarks the centerpiece of a failed presidential campaign. It just ain't that big a deal! It certainly is not enough to disqualify somebody from being pure. James Inhofe of Oklahoma, one of the leading conservatives in the Senate, insists that earmarks are actually a more responsive way to reach the voters -- respond to the voters, the will of the people -- than leaving such decisions to unelected bureaucrats. He wants to spend the money.

He says (paraphrased): "Look, this earmark money is going to be spent. I'd rather the elected representatives of the people do it than some faceless bureaucrat at some agency or some president."

 

[rdean]

You can't teach people who hate education.