Slog
News & ArtsFriday, January 9, 2009
Politics Calling Out Krugman
Posted by Eli Sanders on Fri, Jan 9, 2009 at 11:20 AM
Somewhat apropos of PC's comment here, and in response to Paul Krugman's column today saying that his economic stimulus falls short of what's needed, Barack Obama announces that he's open for ideas:
If Paul Krugman has a good idea in terms of how to spend money efficiently and effectively to jump-start the economy, then we're gonna do it.
One guess as to what Krugman's next column is about...
1
Back and forth. This media to politician dialectic is as exciting as a 10 minute rally between Sampras and Courier.
2
Well, it's good to know Paul Krugman is on Obama's radar. When it comes to addressing this nation's enormous economic, environmental, and security challenges, though, another NYT columnist who I wish was on Obama's radar.
6
How refreshing, too, for Paul Krugman to be more than just a prophet in the wilderness these days.
7
@3 Bjorg's beard grown for Wimbledon, McCenroe's tantrums, Connors' tiny racket - the players recently have been 'robots' so to speak.
9
Holy shit, PC? Susan his still here? I thought she disappeared after the election. I can't believe you're feeding that troll, Eli. Just don't complain about crap posts on the Slog if you're going to encourage them.
10
I can accept Krugman's assertion that tax cuts have proven to be an ineffective stimulus tool. But there's another, bigger problem I have with the proposed tax cuts. I could swear reading (someone correct me here) that Obama is looking at cutting the payroll tax.
There's one missing link in terms of (A) eventually paying for all this government spending without crippling the economy, and (B) setting the price points that will enable the homegrown green economy to take off on its own. That missing link is this: some kind of carbon tax or a gas tax increase.
Now, the one missing link in making a gas tax or carbon tax politically feasible is to balance it off with an equivalent tax cut elsewhere. The "elsewhere" that gas/carbon tax advocates on both the left and right have pinpointed is the payroll tax. If you just go ahead and cut the payroll tax "for free," without coupling that tax cut with the gas/carbon tax, that whole concept unravels.
There's one missing link in terms of (A) eventually paying for all this government spending without crippling the economy, and (B) setting the price points that will enable the homegrown green economy to take off on its own. That missing link is this: some kind of carbon tax or a gas tax increase.
Now, the one missing link in making a gas tax or carbon tax politically feasible is to balance it off with an equivalent tax cut elsewhere. The "elsewhere" that gas/carbon tax advocates on both the left and right have pinpointed is the payroll tax. If you just go ahead and cut the payroll tax "for free," without coupling that tax cut with the gas/carbon tax, that whole concept unravels.
11
@9 et al: Sorry, I'm not on a first-name basis with all the trolls, didn't know PC was one of them. Whatever the history, the PC comment today put a thought in my mind that led to a post so, you know, credit where it's due. But thanks for the back-story, good to know.
12
I've never seen a president or president elect for that matter take his cue from a pundit for a daily rag. What's next, Obama conferring with Maureen Dowd?
13
Mr e:
Thanks, again for the attention. But as already stated about 45 times, susan ain't me. You keep lying about that I wonder why?
Now as to the substance. do you have an idea about:
1. whether we face risk of depression.
2. whether Mr. Obama's plan is or isn't enuf to stave it off.
3. assuming the dollar amount, is there enuf "change" in it (ie, transit over roads, innovative technology as opposed to shovelling dollars to the gov. of Oklahoma, etc.)
4. is Obama being a tringulating sell out compromiser who will leave us in depression out of fear to do enuf, or not?
Is he selling out on the economy, just like on gay marriage rights?
If you don't have something to say about these topics of the day, please take your pit bullish responses (what I mean is your response is at the level of a pit bull; pure attack, no thought, no argument, no actual opinion about any issue) and, um, go away.
Thank you kindly.
Your friend in unity,
Thanks, again for the attention. But as already stated about 45 times, susan ain't me. You keep lying about that I wonder why?
Now as to the substance. do you have an idea about:
1. whether we face risk of depression.
2. whether Mr. Obama's plan is or isn't enuf to stave it off.
3. assuming the dollar amount, is there enuf "change" in it (ie, transit over roads, innovative technology as opposed to shovelling dollars to the gov. of Oklahoma, etc.)
4. is Obama being a tringulating sell out compromiser who will leave us in depression out of fear to do enuf, or not?
Is he selling out on the economy, just like on gay marriage rights?
If you don't have something to say about these topics of the day, please take your pit bullish responses (what I mean is your response is at the level of a pit bull; pure attack, no thought, no argument, no actual opinion about any issue) and, um, go away.
Thank you kindly.
Your friend in unity,
14
Cutting SS and Medicare receipts from tax collection is actually a way of implementing tax cuts for the working poor and the middle class.
Because once you're rich enough, you don't pay them.
Seriously, anyone making $250,000 for a family is not paying more tax on either measure than someone making $210,000. And a billionaire pays the same as the person making $250,000.
Because once you're rich enough, you don't pay them.
Seriously, anyone making $250,000 for a family is not paying more tax on either measure than someone making $210,000. And a billionaire pays the same as the person making $250,000.
15
@2, I think Friedman is very much on Obama's radar, as an object to track closely in order to keep a safe distance at all times.
16
A federally mandated cap on credit card interest would do hell of a lot more good than a tax cut. People facing 30% interest have no chance of paying off debts and cannot afford to buy anything that would stimulate the economy. If we get tax cuts most of it is going to go to servicing old debt, which will not help revive stagnant business.
17
Obama the Chicago politician is not about to reward Krugman who consistently ripped his social welfare policies during the campaign. Nor is Obama going to be as ambitious as Krugman says we should be, because his economic "recovery" team is loaded with conservative centrists who Krugman has strayed from in the last 10 years.
21
Friedman posted his challenge to Obama in this week's RS. Oh, forgot, that's not hipster enough. Nevermind.
23
http://www.ncpa.org/studies/s232/s232.ht…
There is a diminishing return on debt created by the federal government in terms of GDP. Simply going into more debt, when you're already up to your arms in it, to prevent something that was caused by going into hoc at the consumer level isn't going to fix the long term issue of an ever increasing debt service for the U.S.
The free lunch crowd like Krugman is simply on the side of government now, not the private sector like 2002-2006 when risk didn't matter.
There is a diminishing return on debt created by the federal government in terms of GDP. Simply going into more debt, when you're already up to your arms in it, to prevent something that was caused by going into hoc at the consumer level isn't going to fix the long term issue of an ever increasing debt service for the U.S.
The free lunch crowd like Krugman is simply on the side of government now, not the private sector like 2002-2006 when risk didn't matter.
24
@16, the people affected by 30% credit card rates don't comprise the majority or a major piece of consumer spending. The amount of debt one can accrue at a 30% rate is limited.
And the far greater issue is that not just interest rates but the fact that so much consumer spending is done through debt. If anything ,rates for credit cards have been far too low for too long incentivizing a negative savings rate (savings is deferred consumption and with smaller real interest rate (real value of savings loss can shift based on inflation and savings account or investment return rates. if you put in money in a 3% APY MMA and inflation is 4% you've taken a negative 1% on the value of your money. Compare that though to the APR on purchase (say 20%) where you are paying 16% over a year on that purchase adjusted for inflation.
Really, the government needs to make incentives for saving more attractive rather than making debt less bad, because no matter how you slice it, debt is no substitute for savings.
And the far greater issue is that not just interest rates but the fact that so much consumer spending is done through debt. If anything ,rates for credit cards have been far too low for too long incentivizing a negative savings rate (savings is deferred consumption and with smaller real interest rate (real value of savings loss can shift based on inflation and savings account or investment return rates. if you put in money in a 3% APY MMA and inflation is 4% you've taken a negative 1% on the value of your money. Compare that though to the APR on purchase (say 20%) where you are paying 16% over a year on that purchase adjusted for inflation.
Really, the government needs to make incentives for saving more attractive rather than making debt less bad, because no matter how you slice it, debt is no substitute for savings.
25
Surely you must be joking Mr. Deflation. Krugman has fought for retaining the New Deal for years - here from 2002
http://query.nytimes.com/gst/fullpage.ht…
The free lunch crowd like Krugman is simply on the side of government now, not the private sector like 2002-2006 when risk didn't matter.
Surely you must be joking Mr. Deflation. Krugman has fought for retaining the New Deal for years - here from 2002
http://query.nytimes.com/gst/fullpage.ht…
26
Dude, I think the point most people are missing is that the soon to be president *READS* THE FUCKING PAPER. And then, after reading said paper, asks a critic to come up with some solutions. But not just any critic @12, but with a respected economist.
Fuck yeah Obama!
Fuck yeah Obama!
27
The New Deal wasn't a free lunch and no government spending is. If anything the New Deal inspired the belief that the government can spend it's way out of hard times without consideration to how the money is spent, how the money was created, or the long term impact of nominally cheap debt on the nation.
The New Deal inspires the most superficial answers to complex and troubling problems facing the nation's economy.
The New Deal inspires the most superficial answers to complex and troubling problems facing the nation's economy.
28
@24 - nice try, but you're wrong.
Or haven't you noticed even luxury goods aren't exempt from the retail downturn.
Try diving into the numbers a bit more.
Or haven't you noticed even luxury goods aren't exempt from the retail downturn.
Try diving into the numbers a bit more.
29
@24 I agree that debt is bad, the problem is that people who are poor and have have really bad credit shouldn't be lent large sums of money at all, by credit card, paycheck lending or mortgage, if it is likely they will be unable to pay it back. Interest over even 20% makes repayment problematic, so why do it? It just creates debt slavery and does nothing for the economy at large except increase bankruptcies.
30
@28 You're an idiot Will. You don't have any numbers on credit demographics.
@29, This has two causes though;
The risk of lending had been diminished because the cost of borrowing by lenders was similarly reduced. The gap in interest rates could ensure a tidy 20% profit if one lent out at 25%. That profit, that short term profit is what motivated the floodgates to open and so long as the default rate was low, they would continue to lend.
The second reason that the consumer took on these loans though was because of either financial ignorance (like not reading the terms) or because they had no discernible way to consume a good or service without credit. In the latter case forgoing the good or service may have led to a perceived lower quality of life by the individual. In other cases it might have been necessary to pay for a monthly expected cost. The reality is that over the past 30 years we have experienced a rise in debt instead of rising wages and while the lowest paid people can't be blamed for providing for themselves, debt is surely the worst way to provide for them.
I don't think putting a ceiling on interest rates charged will yield results quite as idealistically as intended. I think it requires a more nuanced approach where there is an incentive to both saving for future consumption, and the cost of lending is high enough to warrant more discerning lending practices.
@29, This has two causes though;
The risk of lending had been diminished because the cost of borrowing by lenders was similarly reduced. The gap in interest rates could ensure a tidy 20% profit if one lent out at 25%. That profit, that short term profit is what motivated the floodgates to open and so long as the default rate was low, they would continue to lend.
The second reason that the consumer took on these loans though was because of either financial ignorance (like not reading the terms) or because they had no discernible way to consume a good or service without credit. In the latter case forgoing the good or service may have led to a perceived lower quality of life by the individual. In other cases it might have been necessary to pay for a monthly expected cost. The reality is that over the past 30 years we have experienced a rise in debt instead of rising wages and while the lowest paid people can't be blamed for providing for themselves, debt is surely the worst way to provide for them.
I don't think putting a ceiling on interest rates charged will yield results quite as idealistically as intended. I think it requires a more nuanced approach where there is an incentive to both saving for future consumption, and the cost of lending is high enough to warrant more discerning lending practices.
32
A good idea is a good idea, no matter how many people it statistically affects.
Per post 30, 'deflation and debt are bad', you've never held an Advanta business credit card -- or a citibank card or a barclay/juniper's card -- to be spouting off about "the people affected by 30% credit card rates don't comprise the majority or a major piece of consumer spending. The amount of debt one can accrue at a 30% rate is limited." Whatever conventional wisdom was 5 years ago in the credit world does not wash today. People are now more affected by usurious rate-jackings on items they'd already purchased but had not paid in full at the end of the billing cycle, now more than ever. Advanta is the worst of the lot. Business owners with 750+ FICOs and perfect payment histories business and personal wise have found their interest rates rate-jacked anyway from 9% (if they're lucky) above their promised fixed rate to 30% over. And then there's the recent Citibank rate-jack mess, which affected a heck of a lot more people than Advanta. And you know why? because the banks can. And they will write out on paper that the reason why is because of the current economic climate. If you're with Advanta, you can not negotiate a new interest except to pay off the card and close it down -- which is fine if you can pay in full. It's not so fine when you can not at 30%+, but could at 8%.
There's a reason why people complained long and hard about interest rates. The USA is not at Mexico levels of interest rates on credit cards (though you're screwed if you're poor and get a payday loan, at 100%+ interest), but this is still a problem.
I don't know how inkweary of post 16 could implement putting a cap on interest rates, but my understanding is that long ago there used to be one before the 80s and the explosion of credit being offered to more people than ever. I like the idea of a cap on interest rates.
More...
Per post 30, 'deflation and debt are bad', you've never held an Advanta business credit card -- or a citibank card or a barclay/juniper's card -- to be spouting off about "the people affected by 30% credit card rates don't comprise the majority or a major piece of consumer spending. The amount of debt one can accrue at a 30% rate is limited." Whatever conventional wisdom was 5 years ago in the credit world does not wash today. People are now more affected by usurious rate-jackings on items they'd already purchased but had not paid in full at the end of the billing cycle, now more than ever. Advanta is the worst of the lot. Business owners with 750+ FICOs and perfect payment histories business and personal wise have found their interest rates rate-jacked anyway from 9% (if they're lucky) above their promised fixed rate to 30% over. And then there's the recent Citibank rate-jack mess, which affected a heck of a lot more people than Advanta. And you know why? because the banks can. And they will write out on paper that the reason why is because of the current economic climate. If you're with Advanta, you can not negotiate a new interest except to pay off the card and close it down -- which is fine if you can pay in full. It's not so fine when you can not at 30%+, but could at 8%.
There's a reason why people complained long and hard about interest rates. The USA is not at Mexico levels of interest rates on credit cards (though you're screwed if you're poor and get a payday loan, at 100%+ interest), but this is still a problem.
I don't know how inkweary of post 16 could implement putting a cap on interest rates, but my understanding is that long ago there used to be one before the 80s and the explosion of credit being offered to more people than ever. I like the idea of a cap on interest rates.
33
Krugman says spending with immediate effects is that on medical areas. Mr.Obama says any good idea is welcome. Then he will welcome it. Many people are losing their health care insurance together with their jobs. It will be good.
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