Cutting government to ignite economic growth - this has worked in the past?

[Oddball]

"Since Obama was elected, the public sector has lost about 600,000 jobs. If you put those jobs back, the unemployment rate would be 7.8 percent."



Public-sector austerity in one graph - The Washington Post

And who is going to pay for all those public sector employees?

What does that even mean?

Typical that a lolberal looter like you doesn't even know who really pays the bills.

 

[Quantum Windbag]

Moreso recently than in many decades:

That may explain much of the slowness in the recovery.

I am speaking of the federal government as it is the only entity that can be meaningfully discussed on a board such as this. There is too much variation between states to think that including all state local and federal statistics will result in any meaningful discourse.

Right now federal spending is 25% of GDP, the highest since WWII.

A loss of 600,000 jobs is meaningful. They were lost because government was made smaller.

According to conservatives, that downsizing of government should have accelerated job growth and led to a more robust recovery.

Strangely enough, it did. Most states are reporting higher revenues this year, even California has improved in that area, despite all the cuts to the state budget. Yet, for some reason, the national economy is not doing as well. Could that that be because the difference between the states cutting spending and the feds not cutting it?

 

[signelect]

I was at the post office eariler today, 6 of us were in line but only 1 employee was at the counter. A postal employee has a great deal, good pay, clearly no hard work and heaven forbid that they have to tkae care of some customers. One of the best government reitrement and health benefits. Yes cut back on government spending and let the private sector grow the economy.
After all just a week or so ago Obama said the private sector was doing well. Of course he doesn't live in the private sector so how would he know.

 

[Wiseacre]

There are several studies, notably by Reinhart and Rogoff that indicate when a country's debt to GDP ratio approaches 90% that economic growth is adversely effected. A default usually occurs if insufficient action is not taken to reduce the debt load. Nobody, and I mean NOBODY, has ever spent their way out of a debt overhang and into prosperity. Spending generally results in a temporary boost, the effects depend on the efficacy of the spending; the problem is that it's temporary. When the extra spending stops, so does the growth.

You're drawing really broad conclusions from Reinhart and Rogoff that their data doesn't really support. They acknowledge that their data set for GDP/debt ratios north of 90% are not very common. Furthermore, the claims of danger are built on the idea that the bond market will demand higher and higher interest rates after crossing the "threshold". Reinhart rejected that idea, pointing to Japan.

No better example exists than right here over the past 3.5 years. Look how much extra spending has occurred since 2008 and TARP. and a tax rebate. We lowered the prime interest rate down to nearly nothing, and what do we have to show for it? 1.9% growth in Q1 2012, many project about 2% for the year.

Versus the likely counter-factual of zero.

They didn't reject the idea, based on only the Japan case. They did note there are extenuating circumstances peculiar to Japan. But it's true that Japan has been the exception to the rule, their debt to GDP ratio is way up there but they're still doing okay and the bond market has not hurt them much. And it's probably fair to say that there are other factors that can subdue economic growth or mitigate it. But it's also true that R&R's research does show a correlation:

" the relationship between government debt and real GDP growth is weak for debt/GDP ratios below a threshold of 90% of GDP. Above 90%, median growth rates fall by 1%, and average growth falls considerably more. "

A Decade of Debt, Carmen M. Reinhart and Kenneth S. Rogoff, 2011


In their study, they said that 92% of the cases were under the 90% threshold for the ratio, over the past 200 years or so. Since they examined over 1300 cases, the number is not insignificant IMHO. Only 2 cases exceeded the 120% threshold, Japan and Britain from 1946-1950.

 

[Wiseacre]

Quote:
No better example exists than right here over the past 3.5 years. Look how much extra spending has occurred since 2008 and TARP. and a tax rebate. We lowered the prime interest rate down to nearly nothing, and what do we have to show for it? 1.9% growth in Q1 2012, many project about 2% for the year.
Versus the likely counter-factual of zero.


Dunno what that means. What I do know is that we've spent a lot of money over the past 3.5 years, and we're still fucked.

 

[Polk]

There are several studies, notably by Reinhart and Rogoff that indicate when a country's debt to GDP ratio approaches 90% that economic growth is adversely effected. A default usually occurs if insufficient action is not taken to reduce the debt load. Nobody, and I mean NOBODY, has ever spent their way out of a debt overhang and into prosperity. Spending generally results in a temporary boost, the effects depend on the efficacy of the spending; the problem is that it's temporary. When the extra spending stops, so does the growth.

You're drawing really broad conclusions from Reinhart and Rogoff that their data doesn't really support. They acknowledge that their data set for GDP/debt ratios north of 90% are not very common. Furthermore, the claims of danger are built on the idea that the bond market will demand higher and higher interest rates after crossing the "threshold". Reinhart rejected that idea, pointing to Japan.

No better example exists than right here over the past 3.5 years. Look how much extra spending has occurred since 2008 and TARP. and a tax rebate. We lowered the prime interest rate down to nearly nothing, and what do we have to show for it? 1.9% growth in Q1 2012, many project about 2% for the year.

Versus the likely counter-factual of zero.

They didn't reject the idea, based on only the Japan case. They did note there are extenuating circumstances peculiar to Japan. But it's true that Japan has been the exception to the rule, their debt to GDP ratio is way up there but they're still doing okay and the bond market has not hurt them much. And it's probably fair to say that there are other factors that can subdue economic growth or mitigate it. But it's also true that R&R's research does show a correlation:

" the relationship between government debt and real GDP growth is weak for debt/GDP ratios below a threshold of 90% of GDP. Above 90%, median growth rates fall by 1%, and average growth falls considerably more. "

A Decade of Debt, Carmen M. Reinhart and Kenneth S. Rogoff, 2011


In their study, they said that 92% of the cases were under the 90% threshold for the ratio, over the past 200 years or so. Since they examined over 1300 cases, the number is not insignificant IMHO. Only 2 cases exceeded the 120% threshold, Japan and Britain from 1946-1950.

You may not think it's insignificant, but Reinhart has publicly stated the data set is too small to draw strong conclusions from.

 

[Polk]

Quote:
No better example exists than right here over the past 3.5 years. Look how much extra spending has occurred since 2008 and TARP. and a tax rebate. We lowered the prime interest rate down to nearly nothing, and what do we have to show for it? 1.9% growth in Q1 2012, many project about 2% for the year.
Versus the likely counter-factual of zero.


Dunno what that means. What I do know is that we've spent a lot of money over the past 3.5 years, and we're still fucked.

First, I reject the notion that the nation is "still fucked". Would faster growth be preferable? Absolutely. However, unemployment is falling, corporate profits are high, and GDP is back above the pre-crisis level. It's not perfect, but it's certainly better than the abyss we would be in if we had let the financial system collapse.

 

[Wiseacre]

Quote:
No better example exists than right here over the past 3.5 years. Look how much extra spending has occurred since 2008 and TARP. and a tax rebate. We lowered the prime interest rate down to nearly nothing, and what do we have to show for it? 1.9% growth in Q1 2012, many project about 2% for the year.
Versus the likely counter-factual of zero.


Dunno what that means. What I do know is that we've spent a lot of money over the past 3.5 years, and we're still fucked.

First, I reject the notion that the nation is "still fucked". Would faster growth be preferable? Absolutely. However, unemployment is falling, corporate profits are high, and GDP is back above the pre-crisis level. It's not perfect, but it's certainly better than the abyss we would be in if we had let the financial system collapse.

UE isn't falling fast enough for me. When it's still over 8% this long, 3 years after the recession was officially over, sounds like "fucked" to me. When the participation rate is the lowest it's been in what 50 years, the only reason the UE rate is over 10% is cuz so many people gave up looking, I'm thinking there's a whole lot of people who agree with me more than you. Many Wall Street analysts are downgrading their forecasts to approx 2% growth in GDP, with cautions that it could go lower. Some say there's a fair chance we'll be in a double dip before the year is out. Sounds like "fucked" to me.

 

[Polk]

Interestingly enough, since you brought them up, you should read Reinhart and Rogoff's book (This Time Is Different). According to their research, full recovery from a financial crisis takes, on average, a decade. The participation rate isn't really that meaningful. It's been declining over time as the population becomes grayer. Many countries that people would say have a strong economy than ours have lower participation rates.

 

[Soggy in NOLA]

Cutting government to ignite economic growth - this has worked in the past?

In the U.S.?

When?

Jesus.. what are you Fabian Socialists so fucking scared of? It's like we're trying to kill your mommy or something.

 

[Pheonixops]

Cutting government to ignite economic growth - this has worked in the past?

In the U.S.?

When?

When was it ever tried?

Didn't Ronald Reagan decrease the size of government like his proponents declare?

 

[rdean]

You are a moron, cutting government spending is all about balancing the budget, not economic growth, dipshit.
economic growth comes from........drumroll.......business making money and........expanding (that means they hire more people)

Course they wont' do that without demand and a modern infrastructure. But you knew that. You did know that, didn't you? Oops, sorry.

The 'demand' your logic dictates is borrowing from the grandkids and spending it on handouts for the peeps.

Unsustainable. See: Greece

So you admit there will be not new jobs.

 

[rdean]

Growing government to ignite economic growth - this has worked in the past?

Where?

When?

its not about Growing Government you idiot.

its about building a common future with good infrastructure investment.

You know the shit Bush completely ignored

You are a moron, cutting government spending is all about balancing the budget, not economic growth, dipshit.
economic growth comes from........drumroll.......business making money and........expanding (that means they hire more people)

And they hire people because - drum roll - there is a demand.

Oh wait, there is no demand. Republicans have made sure of that. Nevermind.

You don't really think companies just "hire" people out of the blue? No one could be that......

 

[rdean]

I am speaking of the federal government as it is the only entity that can be meaningfully discussed on a board such as this. There is too much variation between states to think that including all state local and federal statistics will result in any meaningful discourse.

Right now federal spending is 25% of GDP, the highest since WWII.

A loss of 600,000 jobs is meaningful. They were lost because government was made smaller.

According to conservatives, that downsizing of government should have accelerated job growth and led to a more robust recovery.

Strangely enough, it did. Most states are reporting higher revenues this year, even California has improved in that area, despite all the cuts to the state budget. Yet, for some reason, the national economy is not doing as well. Could that that be because the difference between the states cutting spending and the feds not cutting it?

Yea, it did. Because we are barely coming back from a deep recession. Note: I said "barely". If Republicans had their way, there would be no recovery. If they get back in office, you can bet on it.

 

[Oddball]

Cutting government to ignite economic growth - this has worked in the past?

In the U.S.?

When?

When was it ever tried?

Didn't Ronald Reagan decrease the size of government like his proponents declare?

No, no he didn't...And his smallest budget was bigger than Jimmah Cahtaha's biggest.

So cutting gubmint still hasn't been tried.

 

[Soggy in NOLA]

Course they wont' do that without demand and a modern infrastructure. But you knew that. You did know that, didn't you? Oops, sorry.

The 'demand' your logic dictates is borrowing from the grandkids and spending it on handouts for the peeps.

Unsustainable. See: Greece

So you admit there will be not new jobs.

Yoda? Is that you?

 

[bripat9643]

And they hire people because - drum roll - there is a demand.

Oh wait, there is no demand. Republicans have made sure of that. Nevermind.

You don't really think companies just "hire" people out of the blue? No one could be that......

The liberal theory that giving money to parasites creates "demand" was debunked many years ago. Every dollar given to a parasite has to be taken from a productive American.

 

[Pheonixops]

Cutting government to ignite economic growth - this has worked in the past?

In the U.S.?

When?

1776.

It worked.

LOL, please elaborate!

 

[Pheonixops]

Cutting government to ignite economic growth - this has worked in the past?

In the U.S.?

When?

You guys can not even understand the simplest of economic Concepts. Why should anyone explain them to you.

Why not "educate" the people who want to learn from your "wisdom"?

 

[Pheonixops]

Ease the tax and regulatory burden on the people, cut the spending and allow people of faith to worship according to the dictates of their heart and you will see unprecedented economic growth.

I understand your point about easing the tax and regulatory burden, but how does "cutting the spending"and "allow people of faith to worship according to the dictates of their heart " spur economic growth?