The Center for American Progress strengthens itself as it adds the excellent John Irons:
Posted by DeLong at October 25, 2004 11:52 AM | TrackBackBudget Failures - Center for American Progress: While an exceptionally strong and sustained economy would certainly help, this deficit will not "just go away" – a shift in policy will be required to return to fiscal solvency. In fact, the CBO's 10-year baseline deficits of $2.3 trillion already project solid growth of over 4 percent for next year and over 3 percent for the next five.
In fact, far from being primarily caused by the economy, this current budget situation is the direct result of failed tax and budget policy. The economic performance under current policy has been far less than ideal, and has not lived up to what was promised. Despite assurances that there was plenty of money for tax changes, the record surpluses of just a few years ago have been turned into massive, permanent deficits in record time; and a disproportionate share of the benefits have gone to high-income individuals. Despite predictions that the tax changes would spark the economy and job creation, median incomes have declined and job growth has been disappointing.
These disappointing outcomes are also coupled with increases in poverty and a surge in the number of uninsured. In short, the changes to the tax code over the last four years have not worked for the nation and have not worked for the majority of Americans.
On the budget side, massive deficits together with growth in military spending are squeezing other vital domestic investments. To date, Congress has failed to pass a budget and has passed just four of the 13 annual appropriations bills. "Continuing resolutions" to keep the government from shutting down have been the rule, not the exception – and massive impenetrable omnibus bills are being used to sweep unfinished business under the rug.
What is needed is a fundamental shift in the direction of tax and budget policy, including:
Tax reform – A new tax system needs to be put in place that 1) encourages job creation, technical innovation, and long-term growth, 2) reverses the trend of providing huge tax breaks for the wealthy with little left over for the middle class, and 3) raises additional revenue to finance vital domestic investments and international priorities.
Budget reform – Fixing the process by which annual spending levels are determined is a necessity. Some elements of a reform might include implementing the balanced, bipartisan PayGo rules that worked in the 1990s, setting sensible spending targets, and keeping the system as open and transparent as possible. Setting tax cut priorities before assessing spending needs is irresponsible – we need to assess needs and then think about what revenue is needed to keep the system sound and stable.
Failure to adopt tax and budget reforms will keep us on the same track of reckless fiscal irresponsibility, and the debt ceiling gimmicks will continue. The cost of the continuing failure to provide domestic investments, and the burden of unsustainable deficits, will inevitably fall on the shoulders of average Americans and our children. We can and must do better.
John S. Irons is the associate director for tax and budget policy at the Center for American Progress.
Government deficits are a problem tomorrow, not today. Because they are a problem tomorrow, there is little response to concrete deficit solutions during a campaign. Be vague and promise to limit government spending while we happily grow out of the deficit. Do not mention specific programs, and do not nention raising taxes. Accuse the other candidate of pushing for too much spending or for raising taxes. This is the tack to take in campaigning. However, tomorrow will eventually come so after elections there should be attempts controls the growth of government deficits.
Posted by: anne at October 25, 2004 12:06 PMhttp://www.nytimes.com/2004/10/25/business/25aon.html?
Deceptive Practices Are Found at Aon, Too
By JOSEPH B. TREASTER and ALEX BERENSON
In six months of examining documents from insurance companies and brokers, investigators for the New York attorney general have discovered evidence at the Aon Corporation of deceptive and coercive practices, a person close to the inquiry said yesterday.
Until now, the sweeping investigation by Eliot Spitzer, the attorney general, has centered on Marsh & McLennan Companies, the world's largest broker, with headquarters in New York. In a civil lawsuit nearly two weeks ago, Mr. Spitzer accused Marsh of cheating customers by faking bids, fixing prices and steering business to the highest-paying insurance companies.
Investigators are pushing to complete their work on Aon, the world's second-largest broker, with headquarters in Chicago, and could bring a civil lawsuit against the company within two weeks, said another person who has been briefed on the case.
The investigators are also expected to file lawsuits shortly against some smaller national insurance brokers, this person said. Mr. Spitzer's accusations against Marsh and criminal charges that he brought against two executives of the American International Group and one executive of Ace Ltd. have shaken the insurance industry and investors. The stock prices of all big insurance brokers and insurance companies have fallen sharply, and several attorneys general and insurance regulators across the country have started or widened separate investigations.
On Friday, shares of Aon rose 54 cents, or 2.8 percent, to $19.80 on the New York Stock Exchange; they were trading at about $28 a share two weeks ago.
The discovery of improprieties at Aon broadens Mr. Spitzer's investigation to a company that, along with Marsh, dominates the insurance brokerage business. Together, they control more than 70 percent of the market.
http://politics.slashdot.org/politics/04/10/25/1834231.shtml?tid=225
Would John Kerry Defang the DMCA?
Is there anyone with intellectual authority out there who can pick up this thread and run with it?
This is *very* important to techies/ electronic frontier types and could swing some votes Kerry's way. These types are very sceptical about Democrats being owned by big content owners.
(picked up on dailykos.com)
Posted by: John at October 25, 2004 02:07 PMhttp://www.nytimes.com/2004/10/25/politics/campaign/25cnd-clinton.html?
Clinton Gets Rock Star's Welcome at Kerry Rally in Philadelphia
By MARIA NEWMAN
Former President Bill Clinton received a rock star's welcome today in Philadelphia when he came out of his convalescence from heart surgery seven weeks ago to campaign alongside John Kerry just a few days before a tightly contested presidential election.
Thousands of people crowded Love Park in Philadelphia's Center City and watched Mr. Clinton and Mr. Kerry walk onto a stage arm in arm as they were showered with red, white and blue confetti as if they at a victory rally. Mr. Clinton, looking thin but fit, seemed touched by the reception of the wildly cheering crowd.
"If this isn't good for my heart, I don't know what is,'' he said.
Mr. Kerry drew cheers when he countered: "Isn't it great to have Bill Clinton back on the trail?''
The two men appeared before the crowd for less than an hour, possibly a concession to Mr. Clinton's condition. The former president was scheduled to travel to Miami later today to stump for Mr. Kerry, while the Democratic candidate was to travel to Michigan and Wisconsin.
While Mr. Clinton acknowledged his recent heart surgery in his first public appearance since his procedure, he turned quickly to the task at hand, namely to pump up Mr. Kerry's campaign.
"I'm very grateful to be here today, and I want to thank all the people of Philadelphia and throughout the country for their emails and prayers and letters of support,'' he said. "From time to time I have been called the Comeback Kid. In 8 days though, John Kerry is going to make America the comeback country.''
While Mr. Clinton spoke for only a few minutes, an uncharacteristically short address for him, his speech was as punchy in trying to make the case for Mr. Kerry as the one he delivered in Boston during the Democratic Convention.
"I know well that no one's presence can change a single vote,'' he said. "But I hope my reasons can affect a few votes.
"You've got a clear choice between two men with great convictions and different philosophies, different policies with very different consequences for this city, this state, our nation and the world,'' he said. As he has been at home recovering for the last few weeks, he said he has had time to carefully study the campaigns of Mr. Kerry and President Bush.
John Irons is one of the best on the economy and Budget. The old Keynesian growth ideations need be left behind--having never once actually been proven effective. The greatest stimulus for the Economy is tax rates which pay for Government services, so that Government in not in unfair competition with the Private Sector for Goods, Resources, and Capital. lgl
Posted by: lgl at October 25, 2004 02:39 PMWell, I have never gotten over appreciating Keynes. The Japanese evidently made serious errors in monetary and fiscal policy during the 1990s, but Keynesian spending well cushioned the economy and middle class households through the difficult decade.
Posted by: anne at October 25, 2004 03:14 PMhttp://www.morganstanley.com/GEFdata/digests/latest-digest.html
October 25, 2004
Cracked Facade
Stephen Roach (New York)
The delicate equilibrium in world financial markets may be starting to unravel. The dollar has broken out of its recent range, credit spreads are widening, equities are sagging, and riskless sovereign bonds are well bid. The message is worrisome: For an unbalanced and increasingly vulnerable world economy, the unrelenting rise of oil prices spells mounting risks of global recession in 2005. Financial markets are only just beginning to comprehend this possibility.
There are lots of moving parts to this story. But the one that intrigues me the most right now is the dollar — down 3% against the euro and nearly 4% against the yen in the past two-and-a-half weeks. In my view, this move in the dollar is a “drop in the bucket” for a US economy with a 5.7% current account deficit that could easily climb in the 6.5% to 7.0% zone in the next year. The problem, of course, is that my currency view has been a lonely one over the past nine months. The Teflon-like greenback has begun to reverse some the depreciation of the previous couple of years — unwinding about three percentage points of the 13% real trade-weighted decline that had occurred since early 2002. But in recent weeks, I have felt less lonely, as the official community — both in the US and around the world — has come out in the open in expressing concerns about America’s gaping twin deficits and what they mean for the dollar. Fedspeak has been especially focused on this issue, with at least five Federal Reserve governors and regional bank presidents weighing in on this key risk. I don’t believe in conspiracy theories, but I don’t think this collective expression of concern is an accident.
A weaker dollar has long been the centerpiece of my global rebalancing framework. Macro deals best with global imbalances by changing the world’s relative price structure. With the dollar the world’s most important relative price, depreciation is a perfectly natural way for the global economy to restore some semblance of equilibrium.
Posted by: anne at October 25, 2004 03:22 PMhttp://www.morganstanley.com/GEFdata/digests/latest-digest.html
October 25, 2004
Cracked Facade
Stephen Roach (New York)
The delicate equilibrium in world financial markets may be starting to unravel. The dollar has broken out of its recent range, credit spreads are widening, equities are sagging, and riskless sovereign bonds are well bid. The message is worrisome: For an unbalanced and increasingly vulnerable world economy, the unrelenting rise of oil prices spells mounting risks of global recession in 2005. Financial markets are only just beginning to comprehend this possibility.
There are lots of moving parts to this story. But the one that intrigues me the most right now is the dollar — down 3% against the euro and nearly 4% against the yen in the past two-and-a-half weeks. In my view, this move in the dollar is a “drop in the bucket” for a US economy with a 5.7% current account deficit that could easily climb in the 6.5% to 7.0% zone in the next year. The problem, of course, is that my currency view has been a lonely one over the past nine months. The Teflon-like greenback has begun to reverse some the depreciation of the previous couple of years — unwinding about three percentage points of the 13% real trade-weighted decline that had occurred since early 2002. But in recent weeks, I have felt less lonely, as the official community — both in the US and around the world — has come out in the open in expressing concerns about America’s gaping twin deficits and what they mean for the dollar. Fedspeak has been especially focused on this issue, with at least five Federal Reserve governors and regional bank presidents weighing in on this key risk. I don’t believe in conspiracy theories, but I don’t think this collective expression of concern is an accident.
A weaker dollar has long been the centerpiece of my global rebalancing framework. Macro deals best with global imbalances by changing the world’s relative price structure. With the dollar the world’s most important relative price, depreciation is a perfectly natural way for the global economy to restore some semblance of equilibrium....
For what it’s worth, I suspect that the dollar’s slide will accelerate sharply in the aftermath of the US presidential election — probably more so in the event of a Kerry victory than would be the case in a Bush win. Senator Kerry’s focus on trade and jobs puts him more in the camp of embracing market-based resolutions to global imbalances. In either case, however, the dollar’s coming depreciation will pose a great challenge for an unbalanced global economy. The flip side of a weaker dollar spells currency appreciation elsewhere — forcing the export-led economies of Asia and Europe to embrace the reforms long needed to unshackle domestic demand. If Asia continues to resist, it faces a growing protectionist threat from both Europe and the United States. I remain convinced that the world’s unprecedented external pressures will be vented in one way or another — through markets or politics, or some combination of both.
Posted by: anne at October 25, 2004 04:57 PMAnne,
I agree with a commentor a few days ago who said that you find enough important articles and have lucid, enlightening takes on them that you ought to start your own blog!
Posted by: James S. W. at October 25, 2004 09:56 PMIn the opinion piece that Brad DeLong thought worth discussing, it is suggested that the aim of national administrations should be fiscal solvency.
Why is this not the aim in the United States? The need to attract votes is one answer. Deficits and more borrowing are therefore the way ahead, with the debt perhaps reaching 40% of GNP. A relatively small level of indebtedness, but a huge figure in absolute terms given the current size of the US economy.
However are there enough savings in the world to fund this profligacy - and what if other countries follow the US example and stop saving?
mortgage leads
Posted by: mortgage leads at October 26, 2004 03:35 AMIn the opinion piece that Brad DeLong thought worth discussing, it is suggested that the aim of national administrations should be fiscal solvency.
Why is this not the aim in the United States? The need to attract votes is one answer. Deficits therefore seem to be the way ahead, with the debt perhaps reaching 40% of GDP (The Economists' Voice: Second Issue). Not a huge level of indebtedness relative to the size of the world's biggest national economy, but enormous in absolute terms.
However are there enough savings in the world to fund this profligacy - and what if other countries follow the US example and stop saving?
mortgage leads
Posted by: mortgage leads at October 26, 2004 04:20 AMOh, la-de-dah. What a long-winded way of saying something that any third grader knows. YOUR HALLOWEEN CANDY LASTS IN DIRECT PROPORTION TO HOW MUCH YOU EAT IT!! HAHAHAHA
Now, Mr. DeLong, do you think that I can get a job at the CENTER FOR AMERICAN PROGRESS too???
More SOCIALIZED GAMBLING IS WHAT WE NEED!
Posted by: wood turtle at October 26, 2004 05:30 PMOh, la-de-dah. What a long-winded way of saying something that any third grader knows. YOUR HALLOWEEN CANDY LASTS IN DIRECT PROPORTION TO HOW MUCH YOU EAT IT!! HAHAHAHA
Now, Mr. DeLong, do you think that I can get a job at the CENTER FOR AMERICAN PROGRESS too???
More SOCIALIZED GAMBLING IS WHAT WE NEED!
Posted by: wood turtle at October 26, 2004 05:31 PMSTOP THAT MR. DELONG! YOU ARE BEING VERY VERY NAUGHTY. I KNOW YOU ARE SNEAKING IN THOSE EXTRA POSTS TO TRY AND MAKE US LOOK DUMB!!
AND I WON'T STAND FOR IT.
You can say that again. HAHAHAHAHAHA.
Posted by: wood turtle at October 27, 2004 02:06 AMSTOP THAT MR. DELONG! YOU ARE BEING VERY VERY NAUGHTY. I KNOW YOU ARE SNEAKING IN THOSE EXTRA POSTS TO TRY AND MAKE US LOOK DUMB!!
AND I WON'T STAND FOR IT.
You can say that again. HAHAHAHAHAHA.
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