Moody's : GOP budget plan would cost 700K jobs

[theeedude]

http://www.politico.com/news/stories/0211/50341.html

Moody’s chief economist, Mark Zandi, projected that the House proposal would cut real GDP growth by 0.5 percent in 2011 and 0.2 percent in 2012. That, in turn, would lead to 400,000 fewer jobs being created than expected by the end of this year and a total of 700,000 fewer jobs by the end of 2012.

“While long-term government spending restraint is vital, and laying out a credible path toward that restraint very desirable, too much cutting too soon would be counterproductive,” Zandi wrote. The economy is adding from 100,000 to 150,000 jobs each month, he said, but until that number reaches about 200,000 on a monthly basis, “imposing additional government spending cuts before this has happened, as House Republicans want, would be taking an unnecessary chance with the recovery.”

Hopefully Obama will prevail and we avoid a double dip recession.

 

[bfdd]

double dip recession? i didn't realize we had gotten out of it yet.... i honestly find it funny that you're not in a recession until someone states it officially and that you can be out of a recession int he same way. What kind of fucking morons believe that non-sense?

 

[Moonbeam]

When wetting your pants to cut the budget is the name of the game there's no such thing as an unnecessary chance. Millions of marching morons are hell bent on destroying their lives. So be it. I got mine. Hehehehehehehehehe

 

[Throckmorton]

This nonsense about "we have to eliminate the deficit NOW" is like partying away 8 years in college going into debt, spending 2 years recovering your education, then right before the last semester saying "I can't pile on any more debt!" and dropping out of college.

Republicans know damn well it makes no sense to plunge us back into recession by cutting spending now rather than in the near future.

 

[rudder]

This nonsense about "we have to eliminate the deficit NOW" is like partying away 8 years in college going into debt, spending 2 years recovering your education, then right before the last semester saying "I can't pile on any more debt!" and dropping out of college.

Republicans know damn well it makes no sense to plunge us back into recession by cutting spending now rather than in the near future.

This is true if the person in your example is attending say for example Vanderbilt University, Spending $240,000 on an education that will land him a $40,000/year job. Finally the Chinese parents threaten to cut him off and the student gets tired of them dictating their will because they are lending the money for school. So finally he wises up, joins the Army and signs up for the G.I Bill.

Do you people not realize that borrowed government stimulus money takes money out of the economy? They key here is to get more of your and my money in our own pockets. Just the like 2% payroll tax deduction... If the government spends less... it needs less and we can keep our money. In turn we then put it back into the economy without running it through the inflated monster called the federal government.

 

[Phokus]

double dip recession? i didn't realize we had gotten out of it yet.... i honestly find it funny that you're not in a recession until someone states it officially and that you can be out of a recession int he same way. What kind of fucking morons believe that non-sense?

It depends who you're talking about. Business is booming and profits has been gangbusters. We don't care about the middle or working class anymore. If corporations can make record profits without the rest of America, then who gives a shit anymore, it's not a recession. As long as GDP rises, right?

Fuck the middle/working class, vote republican.

 

[First]

Common sense if you're non-partisan and well educated.

 

[RedChief]

Zandi @ Moody's is using the same incorrect assumptions/calculations Goldman Sachs did.

Economist John Taylor -

There are several things wrong with the analysis used in Goldman Sachs report. First, it does not take account of the beneficial effects of starting now on a credible plan to reduce the deficit. Basic economic models in which incentives and expectations of future policy matter show that a credible plan to reduce gradually the deficit will increase economic growth and reduce unemployment by removing uncertainty and lowering the chances of large tax increases in the future. The high unemployment we are experiencing now is due to low private investment rather than low government spending. By reducing some uncertainty and the threats of exploding debt, the House spending proposal will encourage private investment.

The analysis in this Goldman-Sachs report is based on the same type of “large multiplier” theory that predicted that the stimulus package of 2009 would stimulate economic growth. Research by me and my colleague John Cogan finds that more up-to-date theories, which bring important incentive and expectations effects into account, show far smaller multipliers. In these models a reduction in the growth of spending will immediately crowd in private investment. Moreover, by following the stimulus money, we found that in actuality the stimulus package of 2009 had no material positive effect on economic growth or employment. The same economic theory which said the stimulus would increase economic growth in the past two years, says that reversing that spending will reduce growth now. It was wrong in the past and it is highly likely to be wrong again.

Also, there is also the fact that the Goldman report confuses budget authority with budget outlays, which is what’s actually spent. Basically, it plugs wrong numbers into an already problematic model.

 

[RedChief]

More on this....


First of all, GDP numbers include government spending, but not transfers (unless they are spent), so when the government pumps thousands of billions of dollars into the economy, it looks as if GDP is growing. The reverse is also true: When spending is cut, it looks like GDP is falling.

So the way the GDP accounts for government spending is biased: It assumes that if the government spends $200,000 on a contractor to repave a road, it creates $200,000 of genuine economic value.

But, for the private sector, it is much tougher. If Exxon Mobil pays an engineer $200,000 per year, that only shows up in GDP if the engineer finds an extra $200,000 of oil to sell, or builds a new machine that sells for $200,000.

The way we measure GDP means that any cuts — even cuts in the most inefficient programs — make it look as if GDP is falling as a result. It will make any spending look like it is growing the economy. When the spending stops, GDP goes back down — but we are saddled with loads of debt.

 

[Phokus]

Zandi @ Moody's is using the same incorrect assumptions/calculations Goldman Sachs did.

Economist John Taylor -


Also, there is also the fact that the Goldman report confuses budget authority with budget outlays, which is what’s actually spent. Basically, it plugs wrong numbers into an already problematic model.

Why do you keep posting this bullshit? The stimulus was a) Too small, b) full of taxcuts and c) any savings from cutting government isn't going to create capital at home, it'll go outside this country.

 

[FuzzyBee]

^^ open-minded leftist

 

[RedChief]

Why do you keep posting this bullshit? The stimulus was a) Too small, b) full of taxcuts and c) any savings from cutting government isn't going to create capital at home, it'll go outside this country.

Why do you keep posting this bullshit?

Liberals always believe that a) if they only had the right people in charge, then things would get fixed, b) there is never enough spending.

 

[Phokus]

Why do you keep posting this bullshit?

Liberals always believe that a) if they only had the right people in charge, then things would get fixed, b) there is never enough spending.

Because only a moron would believe what you wrote (aka, republicans).

It's a) simple economics and b) simple arithmetic

Paul Krugman a couple months before congress even voted on the stimulus bill:

http://www.nytimes.com/2009/01/09/opinion/09krugman.html

Even the C.B.O. says, however, that “economic output over the next two years will average 6.8 percent below its potential.” This translates into $2.1 trillion of lost production. “Our economy could fall $1 trillion short of its full capacity,” declared Mr. Obama on Thursday. Well, he was actually understating things.

To close a gap of more than $2 trillion — possibly a lot more, if the budget office projections turn out to be too optimistic — Mr. Obama offers a $775 billion plan. And that’s not enough.

Something more than 1/3rd of the actual stimulus package that Obama had to negotiate with republicans were related to tax cuts/rebates, which, any econ 101 student knows has a lower GDP multiplier effect than spending increases (this is even in that jerkoff economist Greg Mankiw's, noted Bush lackey, econ text book that EVERY college student who takes econ must buy and study).

But only about 60 percent of the Obama plan consists of public spending. The rest consists of tax cuts — and many economists are skeptical about how much these tax cuts, especially the tax breaks for business, will actually do to boost spending. (A number of Senate Democrats apparently share these doubts.) Howard Gleckman of the nonpartisan Tax Policy Center summed it up in the title of a recent blog posting: “lots of buck, not much bang.”

So a) the stimulus was too small to cover the economic downturn and b) more than 1/3rd of the stimulus was worthless anyway.

 

[OrByte]

Zandi @ Moody's is using the same incorrect assumptions/calculations Goldman Sachs did.

Economist John Taylor -


Also, there is also the fact that the Goldman report confuses budget authority with budget outlays, which is what’s actually spent. Basically, it plugs wrong numbers into an already problematic model.

did you read what John Taylor wrote?

he isn't saying ANYTHING

"First, it does not take account of the beneficial effects of starting now on a credible plan to reduce the deficit."

what does that mean to you? Seriously.

Budget outlay (and actual expenditures) means diddly squat without Budget Authority.

Every governmental agency out there is trying to spend up to it's Budget Authority....meaning that Budget Authority is what SHOULD be used for economic analysis and forecasting.

 

[Infohawk]

Why do I get the feeling that these jobs are mostly government jobs and government contractor jobs?

 

[RedChief]

Because only a moron would believe what you wrote (aka, republicans).

It's a) simple economics and b) simple arithmetic

Paul Krugman a couple months before congress even voted on the stimulus bill:

http://www.nytimes.com/2009/01/09/opinion/09krugman.html

Something more than 1/3rd of the actual stimulus package that Obama had to negotiate with republicans were related to tax cuts/rebates, which, any econ 101 student knows has a lower GDP multiplier effect than spending increases (this is even in that jerkoff economist Greg Mankiw's, noted Bush lackey, econ text book that EVERY college student who takes econ must buy and study).

So a) the stimulus was too small to cover the economic downturn and b) more than 1/3rd of the stimulus was worthless anyway.

You mean former Enron adviser Paul Krugman?

 

[Whoozyerdaddy]

Why do I get the feeling that these jobs are mostly government jobs and government contractor jobs?

That was my first thought. I'm not sure how cutting the cost of government negatively affects the private sector.

Unless you're going to play the trickle-down thing and say that government employees lose their jobs and therefore have no money to buy groceries, cars and iPhones or something like that.

Either way, making government smaller is never a bad thing. Especially if you can do it while relieving the tax burden of small business.

 

[Craig234]

I see the name 'John Kogan'... hm, no surprise: Hoover Institute. Reagan administration. Head of Bush's budget transition (surplue to return to massive deficit...)

 

[Craig234]

You mean former Enron adviser Paul Krugman?

Krugman had nothing to do with Enron's accounting scandals. Post one bit of evidence otherwise, say he didn't, or be called a liar for implying otherwise.

In fact, "Krugman was one of the first to argue that deregulation of the California energy market had led to market manipulation by energy companies." From Wikipedia:

In early 1999, Krugman served on an advisory panel (including Larry Lindsey and Robert Zoellick) that offered Enron executives briefings on economic and political issues. He resigned from the panel in the fall of 1999 to comply with The New York Times rules regarding conflicts of interest, when he accepted the Times's offer to become an op-ed columnist.[111] Krugman later stated that he was paid $37,500 (not $50,000 as often reported - his early resignation cost him part of his fee), and that, for consulting that required him to spend four days in Houston, the fee was "rather low compared with my usual rates", which were around $20,000 for a one-hour speech.[111] He also stated that the advisory panel "had no function that I was aware of", and that he later interpreted his role as being "just another brick in the wall" Enron used to build an image.[112]

When the story of Enron's corporate scandals broke two years later, Krugman was accused of unethical journalism, specifically of having a conflict of interest.[113][114][115] Some of his critics claimed that "The Ascent of E-man," an article Krugman wrote for Fortune magazine[116] about the rise of the market as illustrated by Enron's energy trading, was biased by Krugman's earlier consulting work for them.[111] Krugman later argued that "The Ascent of E-Man" was in character, writing "I have always been a free-market Keynesian: I like free markets, but I want some government supervision to correct market failures and ensure stability."[111] Krugman noted his previous relationship with Enron in that article and in other articles he wrote on the company.[111][117] Krugman was one of the first to argue that deregulation of the California energy market had led to market manipulation by energy companies.[118]

 

[Doppel]

Keep running up that debt with rejections of cuts because "later, just not now, the time just isn't right". It will never be right. This government has become a farce. It cannot even agree to cut 2% of the federal budget at a time when 45% of that budget is debt. Bickering over 2%. Unbelievable.

 

[Zebo]

Our whole economy has morphed into basically a debt ponzi scheme. Sure cut off debt (spending) you screw the economy since so much of it is dependent on debt.

Debt was a cheap price to pay for the elite getting all the marbles. They were more than willing to issue rope to hang ourselves with off-shoring, busting up labor, paying people to do nothing in order not to recongnise their plight and tax breaks since not did they profit on the front end, they own the debt on the back end.

 

[ayabe]

How long are we planning on using government spending as the primary driver for demand in this economy? That's what we really need to be asking ourselves. Most of us realize that this slash and burn strategy is in the most direct sense - "a job killer" - but how long can this really go on?

What the hell is the plan? I've heard nothing solid from either side. R's the ball is in your court - trying to defund PBS and Planned Parenthood isn't creating any jobs except for bloggers.

 

[Darwin333]

It depends who you're talking about. Business is booming and profits has been gangbusters. We don't care about the middle or working class anymore. If corporations can make record profits without the rest of America, then who gives a shit anymore, it's not a recession. As long as GDP rises, right?

Fuck the middle/working class, vote republican.

Umm, businesses were doing quite bad when Bush left office.

They are currently doing quite well with Obama in office.

The rest of us are still pretty fucked.

Voting Democrat didn't seem to help much, it only made the corporations even richer. For exhibit A I present the banksters, who went from bankrupt to record profits in Obamas two years, how many has Obamas DOJ indicted again?

 

[Doppel]

What the hell is the plan?

There isn't one.

Voting Democrat didn't seem to help much, it only made the corporations even richer. For exhibit A I present the banksters, who went from bankrupt to record profits in Obamas two years, how many has Obamas DOJ indicted again?

Until the public stop with dem vs repub and realize that both parties are wholly owned by special interests/lobbying and care about nothing other than campaign contributions the public will continue to get it wrong.

 

[Darwin333]

Because only a moron would believe what you wrote (aka, republicans).

It's a) simple economics and b) simple arithmetic

Paul Krugman a couple months before congress even voted on the stimulus bill:

http://www.nytimes.com/2009/01/09/opinion/09krugman.html



Something more than 1/3rd of the actual stimulus package that Obama had to negotiate with republicans were related to tax cuts/rebates, which, any econ 101 student knows has a lower GDP multiplier effect than spending increases (this is even in that jerkoff economist Greg Mankiw's, noted Bush lackey, econ text book that EVERY college student who takes econ must buy and study).



So a) the stimulus was too small to cover the economic downturn and b) more than 1/3rd of the stimulus was worthless anyway.

The same Krugman that wrote an article not long ago calling for something like a targeted 4% inflation rate? Hell, even a targeted 3% rate and we are fubar'd.

Edit: It was targeted inflation not interest rates but the point is the same, a public targeted inflation rate of 4% automatically assumes that interest rates rise above that rate. +4% rates on one year bonds? Kabooom