Krugman: GOP Austerity Causing Unemployment

[Zander]

Let's start with a simple formula-

GDP = C + I + G (+ or - Net Exports)
C= Consumption (normally the largest component of GDP)
I= Investment or Savings
G= Government spending

If we cut G (Government spending) we are going to have lower GDP, obviously. But is that going to cost jobs? Probably. But it doesn't matter. Obama's and Krugman's idea of "new jobs" is to create more Government jobs. The problem is Government jobs are non-productive. Government already consumes about 44 percent of GDP. This means the average American worker has to produce enough goods and services to support himself—and the overpaid, non-productive government worker.

Actually it's closer to 20%. And government doesn't consume GDP, it creates it. And the average government worker creates value not just for himself, but for everyone who benefits from his services - whether they're students, drivers, people who just enjoy living in a free, democratic country.

So, pretty much everything you said was wrong.

No, it actually about 42% for 2011- $6.2 trillion of government spending on $15 trillion of GDP
Let me google that for you

So following your logic, pretty much everything you said was wrong.

 

[NYcarbineer]

With a weak economy and a weak job market, there is simply no logical reason to cut government spending at this time. And no one seems to want to provide one.

Wait 5 years. Get the economy growing. Get the job market booming again. THEN we can cut spending and lay off workers and they'll actually have some place to go.

There is plenty of logical reasons to do so. If the government spent less money on regulations and enforcement we would have more money to spend on improving infrastructure, which is a lot more important than making sure minnows have a place to swim.

Your problem is that you think government spending leads to jobs. Currently, government spending tends to kill jobs.

Show us how jobs are killed if the government buys a thousand Chevy trucks from GM.

 

[Quantum Windbag]

With a weak economy and a weak job market, there is simply no logical reason to cut government spending at this time. And no one seems to want to provide one.

Wait 5 years. Get the economy growing. Get the job market booming again. THEN we can cut spending and lay off workers and they'll actually have some place to go.

There is plenty of logical reasons to do so. If the government spent less money on regulations and enforcement we would have more money to spend on improving infrastructure, which is a lot more important than making sure minnows have a place to swim.

Your problem is that you think government spending leads to jobs. Currently, government spending tends to kill jobs.

Show us how jobs are killed if the government buys a thousand Chevy trucks from GM.

Show me how the government spending on the EPA and its plan to reduce smog and ozone levels be requiring plants to implement technology that does not even exist does not kill jobs.

Please note, I did not say all government spending kills jobs, just that it tends to do so currently. If you actually learn to read you might make some intelligent contributions to the discussion.

 

[Zander]

With a weak economy and a weak job market, there is simply no logical reason to cut government spending at this time. And no one seems to want to provide one.

Wait 5 years. Get the economy growing. Get the job market booming again. THEN we can cut spending and lay off workers and they'll actually have some place to go.

There is plenty of logical reasons to do so. If the government spent less money on regulations and enforcement we would have more money to spend on improving infrastructure, which is a lot more important than making sure minnows have a place to swim.

Your problem is that you think government spending leads to jobs. Currently, government spending tends to kill jobs.

Show us how jobs are killed if the government buys a thousand Chevy trucks from GM.

Not all government spending hurts the economy.

 

[Quantum Windbag]

How does the government create GDP? Keynesian theory treats private sector and public sector spending separately because the private sector spending supports public sector spending. Every dollar the government spends comes from the private sector, the government does not create GDP.

This can be clearly seen if we use the production method to determine GDP, government actually figures in as an expense in this model. If we use GDP(I) government subsidies actually factor in as a negative.

That's not quite correct.

In the Keynesian model, government supports private spending because the private sector is not spending. Keynes argued that recessions were often due to a lack of demand, so when a recession hit and private demand pulled back, government demand should increase to offset the lack of private demand.

In the national accounting function, G is consumption as well as investment. It is a net positive. The argument against Keynesian spending is that as G rises, C and I declines. Keynes supporters argue otherwise.

You might be right about that. Keynes always gave me a headache because he had everything backwards to common sense.

 

[ScienceRocks]

How does the government create GDP? Keynesian theory treats private sector and public sector spending separately because the private sector spending supports public sector spending. Every dollar the government spends comes from the private sector, the government does not create GDP.

This can be clearly seen if we use the production method to determine GDP, government actually figures in as an expense in this model. If we use GDP(I) government subsidies actually factor in as a negative.

That's not quite correct.

In the Keynesian model, government supports private spending because the private sector is not spending. Keynes argued that recessions were often due to a lack of demand, so when a recession hit and private demand pulled back, government demand should increase to offset the lack of private demand.

In the national accounting function, G is consumption as well as investment. It is a net positive. The argument against Keynesian spending is that as G rises, C and I declines. Keynes supporters argue otherwise.

You might be right about that. Keynes always gave me a headache because he had everything backwards to common sense.

Why do people take keynesian seriously?

 

[percysunshine]

Krugman got a Nobel prize.

Isn't that kind of like the kiss of death? Obama got one, and started bombing Libya.

 

[bigrebnc1775]

If government spending is necessary to sustain the recovery, is it crazy to pursuing cuts in spending now, while unemployment is still about 9%?

Conservatives don't want to believe this, but if the government fires people that means more people unemployed.

Hard to believe, I know.

To create more more for the government you need to create more tax payers. Thge government can't pay their bills because there are fewer tax payers.

 

[Zander]

If government spending is necessary to sustain the recovery, is it crazy to pursuing cuts in spending now, while unemployment is still about 9%?

Conservatives don't want to believe this, but if the government fires people that means more people unemployed.

Hard to believe, I know.

To create more more for the government you need to create more tax payers. Thge government can't pay their bills because there are fewer tax payers.

b,b, bu, bu, but what about the magnificent, benevolent and omnipotent FED???

 

[Trajan]

propping the housing market is not a rep virtue nor should it be, this is lasting longer and not shaking out, becasue we are carrying it ala F&F etc.

We are borrowing 3 billion a DAY, so until that is cut AND THEN we reduce outs we have not cut Net to revenue spending, we are just trying to apply a tourniquet. we are caught, if we stop borrowing we cannot fund everything we have OVER committed to, and the debt just keeps going up, if we cut we have to take the hit, and we both know Toro, we are going to have to take the hit NO MATTER what happens...its just now or later and I don't mean a lot later either, like 3-4 years IF that.

We have to cut at some point in time. That is certain. It seems very foolish to me to do so in this environment, however. The excess housing market will be cleared out by 2013 or so. The economy should normalize in 2014 or 2015. That is when we should start getting serious about cutting spending. That is why it will be very interesting to watch the political dynamics if the Republican majority takes an axe to everything, stunting the recovery when things start getting better.

first-

The excess housing market will be cleared out by 2013 or so. The economy should normalize in 2014 or 2015.

I have to ask, do you have some special knowledge you've been holding back? and to think I just repped you yesterday...give it up!what do you k now???and how long have you know it?

second-

That is when we should start getting serious about cutting spending. That is why it will be very interesting to watch the political dynamics if the Republican majority takes an axe to everything, stunting the recovery when things start getting better.

so let me ask, would you be fine with cutting all borrowing? and living on our income?

 

[Trajan]

Conservatives don't want to believe this, but if the government fires people that means more people unemployed.

Hard to believe, I know.

To create more more for the government you need to create more tax payers. Thge government can't pay their bills because there are fewer tax payers.

b,b, bu, bu, but what about the magnificent, benevolent and omnipotent FED???

gold has GOT to get to 2K so I can sell it before they make me or come take it away....

 

[Oldstyle]

With a weak economy and a weak job market, there is simply no logical reason to cut government spending at this time. And no one seems to want to provide one.

Wait 5 years. Get the economy growing. Get the job market booming again. THEN we can cut spending and lay off workers and they'll actually have some place to go.

Have you not been paying attention the past month? Our credit rating just got downgraded because we didn't address the deficit. If we continue to borrow money and not address entitlements and spending we WILL be downgraded again. We don't have a choice...spending cuts have to be made. PLEASE...get that through your head. This isn't some Republican plot to take away your "goodies" away...it's a fiscal reality.

 

[Flopper]

With a weak economy and a weak job market, there is simply no logical reason to cut government spending at this time. And no one seems to want to provide one.

Wait 5 years. Get the economy growing. Get the job market booming again. THEN we can cut spending and lay off workers and they'll actually have some place to go.

Have you not been paying attention the past month? Our credit rating just got downgraded because we didn't address the deficit. If we continue to borrow money and not address entitlements and spending we WILL be downgraded again. We don't have a choice...spending cuts have to be made. PLEASE...get that through your head. This isn't some Republican plot to take away your "goodies" away...it's a fiscal reality.

Deficit = Spending -Revenue. There are two variables in the equation, something that's often forgotten.

 

[percysunshine]

With a weak economy and a weak job market, there is simply no logical reason to cut government spending at this time. And no one seems to want to provide one.

Wait 5 years. Get the economy growing. Get the job market booming again. THEN we can cut spending and lay off workers and they'll actually have some place to go.

Have you not been paying attention the past month? Our credit rating just got downgraded because we didn't address the deficit. If we continue to borrow money and not address entitlements and spending we WILL be downgraded again. We don't have a choice...spending cuts have to be made. PLEASE...get that through your head. This isn't some Republican plot to take away your "goodies" away...it's a fiscal reality.

My credit rating is just fine. I can borrow as much money as I want to.

So the government has a credit score of 57/850. Big deal, they can't borrow any more.

Not my problem.

 

[Trajan]

How does the government create GDP? Keynesian theory treats private sector and public sector spending separately because the private sector spending supports public sector spending. Every dollar the government spends comes from the private sector, the government does not create GDP.

This can be clearly seen if we use the production method to determine GDP, government actually figures in as an expense in this model. If we use GDP(I) government subsidies actually factor in as a negative.

That's not quite correct.

In the Keynesian model, government supports private spending because the private sector is not spending. Keynes argued that recessions were often due to a lack of demand, so when a recession hit and private demand pulled back, government demand should increase to offset the lack of private demand.

In the national accounting function, G is consumption as well as investment. It is a net positive. The argument against Keynesian spending is that as G rises, C and I declines. Keynes supporters argue otherwise.

yes and let it be said, deficit spending under the right auspices is productive, BUT, when your debt and deficits are approaching crisis levels this $1.80 to $1 of spending return is obviated, rendering imho Keynes not workable in this present context and the forward context on that we would need and require record revenue, with a 'take" of 20% of gdp for a decade to make up the difference and the cyclical bus. model say thats not workable.

 

[whitehall]

Does Krugperson actually think every American works for the government? The private sector quit hiring because it is unsure of the crazy democrat socialist policies and taxation programs. The government stopped spending because it is plumb out of money like the rest of us. The 112 congress is barely 7 months old, how could they be responsible for unemployment? Maybe it's Bush's fault?

 

[NYcarbineer]

There is plenty of logical reasons to do so. If the government spent less money on regulations and enforcement we would have more money to spend on improving infrastructure, which is a lot more important than making sure minnows have a place to swim.

Your problem is that you think government spending leads to jobs. Currently, government spending tends to kill jobs.

Show us how jobs are killed if the government buys a thousand Chevy trucks from GM.

Show me how the government spending on the EPA and its plan to reduce smog and ozone levels be requiring plants to implement technology that does not even exist does not kill jobs.

Please note, I did not say all government spending kills jobs, just that it tends to do so currently. If you actually learn to read you might make some intelligent contributions to the discussion.

Wow, do you go beep beep beep when you back up?

 

[Toro]

I have to ask, do you have some special knowledge you've been holding back? and to think I just repped you yesterday...give it up!what do you k now???and how long have you know it?

We've had the work done for us. It is simple math. If you look at the number of homes being built today plus attrition versus household formation, at some point, the supply imbalance gets wiped away. From the analysis we've seen, that occurs in 2012 or 2013. Household formation is about 1.1-1.2 million a year. We're only building 400-500k homes a year. We were building ~2 million a year during the Housing Bubble. That's why we have excess capacity. But that is being wiped out. What I expect to happen - since it always seems to happen - is that when the market gets into equilibrium, this tremendous negativity will be prevalent for some time thereafter. But it will be wrong, and housing will become a net positive to the economy.

so let me ask, would you be fine with cutting all borrowing? and living on our income?

I think that when the economy is running at full bore, we should be running surpluses and paying down debt. That's why I was so enraged by the Bush tax cuts, at least the cuts in 2003. It's a big reason why I've moved away from the Republican camp over the years. A "fiscal conservative" used to mean being fiscally responsible. Now it is "tax cuts solve every problem," which is ridiculous. Obama's spending would bother me immensely in a different environment. But we are in a unique time, and I think the GOP are wrong on this, at least on the timing. However, even though I think the timing is misguided, there seems to be a greater emphasis on balancing the budget within the GOP than during the past 30 years, which is good long-term.

 

[Oldstyle]

With a weak economy and a weak job market, there is simply no logical reason to cut government spending at this time. And no one seems to want to provide one.

Wait 5 years. Get the economy growing. Get the job market booming again. THEN we can cut spending and lay off workers and they'll actually have some place to go.

Have you not been paying attention the past month? Our credit rating just got downgraded because we didn't address the deficit. If we continue to borrow money and not address entitlements and spending we WILL be downgraded again. We don't have a choice...spending cuts have to be made. PLEASE...get that through your head. This isn't some Republican plot to take away your "goodies" away...it's a fiscal reality.

Deficit = Spending -Revenue. There are two variables in the equation, something that's often forgotten.

Trust me, I haven't forgotten revenue. But when even Christina Romer is cautioning against raising taxes in as fragile an economy as we have...then it's pretty plain to see that we aren't going to be going that way anytime soon despite all the rhetoric from the Democrats. So if you can't raise taxes, how about we lower spending? Are you seriously telling me there isn't rampant waste in the Federal Government? Come on...you KNOW it has to be done! So let's stop the political game playing and do it!

 

[oreo]

If government spending is necessary to sustain the recovery, is it crazy to pursuing cuts in spending now, while unemployment is still about 9%?

Conservatives don't want to believe this, but if the government fires people that means more people unemployed.

Hard to believe, I know.

Well I guess it's LIBTARD night on the board.

The federal government DOES not earn money --it takes from others to support these government workers. Furthermore the new congress was not seated UNTIL JANUARY 21, 2011--and have NOT made any policy changes to the economic stimulus bill that was rammed down our throats 2-1/2 years ago.

And since the 868 BILLION dollars in stimulus money--that was promised to create MILLIONS of private sector jobs--that turned into TEMPORARILY--"saving Government workers" jobs has run out--YES government workers are now getting their pink slips.

Are you suggesting that we borrow more from China to keep government workers employed?



'With this 868 BILLION borrowed and spent taxpayer dollars--unemployment with remain below 8.2%--and it will create millions of private sector jobs"--Barack Obama