Alan Greenspan is very polite about the budget deficit:
FT.com Home US: Mr Greenspan also expressed concern about the effect of plans for further tax cuts and increases in government spending. He warned "deficits do matter" and expressed dismay at what he characterised as a breakdown in budget discipline in Washington. He reminded lawmakers the US government was facing a "significant" budget problem as the "baby boom" population ages and draws on more healthcare and retirement benefits. "I'd like to see that addressed more seriously than it is," he said. "I must say the silence is deafening."...
I'm surprised that the Republican senators and representatives had the nerve to show up for his testimony.
Posted by DeLong at May 21, 2003 04:13 PM | TrackBack
It in that book by By Benjamin Barber, Jihad vs. McWorld and I think this book is the most relevant book today.
This books outlines the failing of democracy in a commercialized world...
Benjamin writes: Yet in all this high-tech commercial world there is nothing that looks particularly democratic. It lends itself to surveillance as well as liberty, to new forms of manipulation and covert control as well as new kinds of participation, to skewed, unjust market outcomes as well as greater productivity. The consumer society and the open society are not quite synonymous. Capitalism and democracy have a relationship, but it is something less than a marriage. An efficient free market after all requires that consumers be free to vote their dollars on competing goods, not that citizens be free to vote their values and beliefs on competing political candidates and programs.
Bejamin also says that: For all their defects, Jihad and McWorld (McWorld meaning "the corporate world") have their attractions. Yet, to repeat and insist, the attractions are unrelated to democracy. Neither McWorld nor Jihad is remotely democratic in impulse. Neither needs democracy; neither promotes democracy.
The only people making money right now are only Bush's highest paying campaign contributors...
As long as OPEC is fixing prices and Bush thinks that is just jim dandy per a TIME magazine article last year, the oil companies are never going to come down on the oil prices again and there is never going to be a "glut on market" that pulled the US out the 1985 ecomonic down turn.
The tech industry is dead in this country...
Honeywell, TI (Texas Instruments), Motorola and hundreds of other types of tech companies should just move to Europe. Those jobs that folks had in that industry are gone and all the people that got laid-off are never going find work in that field again because the tech industry is not ever going to make a come back. Those company might as well move to Europe and see if they can work out better tax deals and stop being a US based companies.
Not much is being said about this man by name of
George Soros, who "is not one to miss an opportunity to help the poor, proffer gratuitous policy advice or make billions from smashing a vulnerable currency.---"
"--Soros Shorts US Dollar" flashed across trading screens and the greenback received an instant battering - helping the Australian dollar up towards US66c. Some traders say Mr Soros had made himself another fortune before the cameras stopped rolling.
Mr Soros, friend of the poor, then took a swipe at the inequity of President George Bush's tax cuts: "The Administration is basically using the recession to redistribute income to the wealthy."
Another news source (AP) says:
Billionaire urges bigger UN role in running Iraq
AP 2003-05-21 02:54:56
UNITED NATIONS -- Billionaire financier and philanthropist George Soros warned yesterday that a U.S.-backed resolution on postwar Iraq would create an indefinite American protectorate authorized by the United Nations and paid for by Iraq's oil wealth.
He urged the Security Council to give the United Nations more power to build a democratic government in Iraq and limit the U.S. and British occupation, handing out a list of changes that would be needed in the latest draft resolution to accomplish this. But he said all he could hope for at this late stage was changing "a few words here and there."
Iraqis are never going to know democracy without that "bigger role" George is talking about...
Sorro started a "watchdog group" to montor how Bush spends the Iraqi oil money... But unless he planning on buying a major new media outlet he is not going to have any place to report it, if he does find corruptions???
Poor guy, he reminds of onetime presidential candidate Ross Perot except that Perot was a pretty damn corrupt guy.
Unfortunately, the silence of the so-called liberal media on what Greenspan said on budget deficits today is also deafening. NPR this afternoon reported Greenspan's statements on U.S. economic prospects, but had nary a word about the ill effects of tax cuts that deepen the current federal deficit.
Until the media gets a spinal implant and begins to take a more critical stance about what's happening in Washington instead of sucking up in order to have access to politicians, Republicans will have no fears about showing up at such events.
Posted by: David Wilford on May 21, 2003 07:28 PMSelective hearing. In their view "Deficits do matter" only applies to spending by Democrats, not tax cuts by the GOP. The GOP sits smugly by as they hear AG trash Democratic spending.
Posted by: bakho on May 21, 2003 07:35 PMSelective hearing. In their view "Deficits do matter" only applies to spending by Democrats, not tax cuts by the GOP. The GOP sits smugly by as they hear AG trash Democratic spending.
Posted by: bakho on May 21, 2003 07:40 PMSmall victory, folks -- See page A4 in today's WSJ. It relates the results of its own survey, which shows that the public likes the Bush tax cut plan (which one?) less now that the debate has taken place so publicly in Congress than it did some time back.
In the poll, 64% of respondents think there are better ways of mending the economy than tax cuts, while 55% would rather see the same money spent on health care coverate than tax cuts. This is not, of course, exactly Greenspan's message, though the "better ways to mend the economy" bit is pretty close. Even a feckless bunch of journalists can't leave all the people fooled all the time.
Posted by: K Harris on May 22, 2003 05:07 AMHaving looked at the transcript of the AG testimony, I think the FT article is misleading. AG said that fiscal policy needed to be "Budget neutral and not necessarily "Revenue Neutral". AG was not beating on tax cuts. He was beating on spending.
This is from the transciprt:
"HILL: I want to make sure that I heard you right. Did you say that any kind of tax cut should be revenue neutral?
GREENSPAN: Not necessarily revenue -- budget neutral. In other words, I must admit that in the debate that's been going on on the issue of fiscal policy it really is a debate between whether or not deficits are increased by spending or by tax cuts. I'm waiting to hear the third stool -- I was going to say the third foot. I was wondering what kind of an animal.
(LAUGHTER)
But what is missing here and was never missing in previous discussions is restraint on spending.
I am increasing of the view that the huge surpluses which we created in our budget, which were wonderful things to observe, have severely undercut fiscal restraint: the type of restraint that existed before the surpluses emerged.
And as our chairman indicated, we are looking at the potentials of the significant demographic problem as we get beyond 2011, and it's something which requires a really very close look at the size of the commitments for spending that we're making.
GREENSPAN: And I think that I would very much like to see that issue addressed far more than it is. I must say, the silence is deafening. "
I hear AG saying that discussing spending cuts would be a good idea. The GOP wants to delay that discussion until after the next election.
I wonder what the conservative theorists have in mind with the extreeme deficit that will be piling up in years to come. Is it an attempt to permanently mash social spending by forcing the government to pay of debt for years and years, or are they thinking ahead that much?
Posted by: anon on May 22, 2003 11:46 AMhttp://www.nytimes.com/2003/05/21/politics/21MEDI.html
Many Republicans believe private plans will save money for Medicare. But many economists are skeptical.
Senator Santorum said he would go further than the Bush proposal. Congress, he said, should gradually end the traditional Medicare program as an option for new beneficiaries in the future, leaving them to choose from a variety of
private plans. "I believe the standard benefit, the traditional Medicare program, has to be phased out," Mr. Santorum said.
Here are AG's thoughts on unemployment from yesterday's hearings:
"The start of the war and its early successes, especially the safeguarding of the Iraqi oil fields, were greeted positively by financial and commodities markets. Stock prices rallied, risk spreads narrowed, oil prices dropped sharply, and the dour mood that had gripped consumers started to lift: precursors that historically have led to improved economic activity. The quick conclusion of the conflict subsequently added to financial gains.
We do not yet have sufficient information on economic activity following the end of hostilities to make a firm judgment about the current underlying strength of the real economy. Incoming data on labor markets and production have been disappointing. Payrolls fell further in April and industrial production declined as well.
Because of the normal lags in scheduling production and in making employment decisions, these movements likely reflect business decisions that, for the most part, were made prior to the start of the war, and many more weeks of data will be needed to confidently discern the underlying trends in these areas. "
Mr Bush declared the war in Iraq over. However, the uncertainties surrounding Iraq are not over. Our troops are still in Iraq and Senator Lugar suggest they will be there at least 5 years. Our troops are still dying in Iraq. The outcome of Iraq is still in doubt whether or not the war outcome is in doubt. What if Mr. Bush just wanteed to get rid of Saddam and get out quick? Is that a different outcome than committing troops for 5 years and hundreds of billions in costs?
Not only were Nuke waste and historic sites unsecured but also lots of small arms, RPGs, etc. Will some of that walk across the Syrian border and into Hamas or worse?
There is still uncertainty among our trading partners in Europe. This will take a long time to sort. So AG in implying a lag between the end of war declaration by Mr. Bush and business being comfortable with the result may have hit it correctly.
Really, then, how much of an employment can we expect? Were investment plans really curtailed by the approach of war? Why? I do hope AG is right, but this slow growth period is so worrisome.
Posted by: lise on May 22, 2003 01:17 PMI think Kevin Phillips has a good grasp of the historical perspective on economic bubbles in his book Wealth and Democracy. Two points stand out. It takes time to recover from the bubble. The sectors that were overbuilt during the bubble are not usually the ones that finally emerge to lead the economy forward again.
To me this means we should be investing in new sectors that will be important in the future. Renewable energy and a replacement for the internal combustion engine come to mind.
Posted by: bakho on May 23, 2003 12:40 PMbakho,
Trouble is, who is the "we" who "should" be doing this investing? Without a doubt, the government has had a hand in many recent technological advances, but in most cases, research projects that led to or fostered commercial technologies were undertaken by the government (Pentagon, mostly) to advance specific programs, rather than as a effort to pick winners. I don't know how, or whether, green investment projects fit in, though I do like them in theory. Nanotech seems likely to get a bigger boost from the Pentagon for the next little while (seen any little hovery things reading over your shoulder this week?), but whether it will prove a significant economic factor is an unknown.
Posted by: K Harris on May 25, 2003 04:58 PM