November 18, 2002
Wile E. Coyote Explains Bush Administration Fiscal Policy

Wile E. Coyote Explains Bush Administion Fiscal Policy

One of the weirder things one hears from Republicans these days is that our current medium-sized (and our larger prospective future) federal deficits are not the accidental results of lack of policy-making competence on the part of the Bush team but part of a clever strategy to advance the long-run Republican goal of shrinking federal spending as a share of the whole economy. How is this strategy supposed to work?

  1. Republicans cut taxes to create a large and unsustainable deficit.
  2. The deficit comes to be perceived as a serious problem.
  3. Democrats who believe that sound finance leads to faster economic growth clean up the deficit.
  4. In the course of cleaning up the deficit, spending falls as a share of GDP--and so Republican aims are achieved.

It is weird to hear this argument because of four things:

  • It requires that Republicans accuse their own standard bearers of a considerable degree of public mendacity.
  • It is unpatriotic.
  • It is self-denying.
  • It appears to be false.

Mendacity. To say that our current and future deficits are part of a clever plan to shrink the government spending share of GDP in th elong run is to say that all those Republicans lied when they assured Americans throughout the 2000 campaign and the 2001 legislative push for the tax cut that their fiscal policy was a fiscal policy of surpluses, and that federal government finances were in such good shape that we could afford a large rich-weighted tax cut without running a serious risk of erasing the government surplus. It is conventional in politics to claim that the other party's standard bearers are liars. It is most unconventional to boast that one's own standard bearers are liars.

Unpatriotic. The whole point of the strategy is to do something that makes the country worse off--create a large deficit that slows economic growth, raises the chances of higher inflation in the future, and diminishes the government's capacity to undertake any expensive new initiatives in the future that national security might require--and then to count on the fact that one's political opponents care more about the well-being of the country than you do to fix the situation.

Self-Denying. The whole point of saying "don't worry: it's all part of our clever plan" is to keep people from being upset at the Bush administration and to calm them down. But the whole strategy can only work if point (2) above comes to pass: if people perceive the deficit as a serious problem caused by a serious misstep by the Bush administration. But if the deficit isn't the result of a serious misstep, why should anyone worry about it? Thus to the extent that the claim that the deficit is part of a clever plan is believed, the plan is not so clever at all.

False. Fourth and last, what reason is there to believe that a deficit puts downward pressure on federal spending measured as a share of GDP? A one percentage point of GDP increase in the federal deficit directly and immediately boosts federal interest spending the following year by roughly 0.06 percentage points of GDP (at the average interest rates of the past two decades). A one percentage point of GDP increase in the federal deficit reduces investment in America and economic growth next year by a more uncertain amount--0.1% of GDP is my usual rule-of-thumb guess. Such a reduction in real GDP means that, with federal spending at roughly 20% of real GDP, the federal spending share grows by roughly 0.02 percentage points of GDP.

Thus one dollar of extra deficit would have to induce at least eight cents of cuts in federal program spending the following year in order for the spending share to stay even. If the pressure for spending cuts is less than eight cents on the dollar of deficit--either because constituency groups that approve of the spending program are well-organized, or because Democrats turn out to care no more for the well-being of the country than Republicans, or because people hear that the deficit is not the result of a serious misstep and hence doesn't need to be dealt with quickly--then the "clever plan" is really clever only in the sense that Wile E. Coyote's plans are clever.

What are the facts? Below is a chart covering the period 1980-2000 and showing the deficit on the horizontal axis and the following year's change in the federal spending share on the vertical axis. There is no visible relationship between the deficit and the change in the federal spending share. There is no statistically significant relationship at all. It is true that the high deficits of the early 1990s prompted Bill Clinton to make spending restraint a priority: but spending restraint remained a priority as the Reagan-Bush deficits were erased. And certainly during the 1980s there are no signs that the higher the deficit, the greater the restraint on spending growth.

Posted by DeLong at November 18, 2002 01:34 PM | Trackback

Email this entry
Email a link to this entry to:


Your email address:


Message (optional):


Comments

Bravo!

Posted by: Ted Barlow on November 18, 2002 02:10 PM

Genius, I say. Maybe it all really is rationalizing away Reagan's deficits.....

Posted by: Jason McCullough on November 18, 2002 02:21 PM

Just because the plan makes no sense doesn't mean it isn't a rationale for them. If evidenciary-based analysis had any thing to do with current GOP fiscal thinking, would anybody still be insisting Bush's fiscal policy makes any sense for the country? Right now, the only thread that keeps their argument out of the patently absurd is their dogged belief in the aptly named Laffer Curve.
If you ask me, they have to come up with any kind of rationale, and this starving the Federal Government theory is just one, to explain why what they are doing isn't harming the country... Addicts to the you-can-have-your-cake-and-eat-to tax and spend policies will come up with anything to delay the reckoning.
And with this Bush Presidency, which can do no wrong, there won't be a Dick Darmen to hold an intervention.

Posted by: John McKinzey on November 18, 2002 03:16 PM

Who GETS interest on the debt? There's an interst group here. (Pardon the pun.) It's a huge, huge transfer of wealth from the taxpayers, to ... ?

Posted by: IssuesGuy on November 18, 2002 03:17 PM

"Thus one dollar of extra deficit would have to induce at least eight cents of cuts in federal program spending the following year in order for the spending share to stay even."

Am I mistaken, or doesn't each dollar of extra DEBT have to produce the same $.08 in reduced federal program spending next year and every year?

And if that effect were confirmed, then every $1T in debt held by the public would have thrown the federal budget off trend line by $80B ... or about $300B in aggregate ... or about 3% of GDP ... which seems not far off the post-Reagan glidepath.

Posted by: RonK, Seattle on November 18, 2002 05:51 PM

One should also note that this plan is inordinately complicated. Why not just create the deficit by cutting taxes and then have the Republicans solve the problem by cutting spending while still in power? It seems perverse to enact a long-term strategy whose success depends upon one's own defeat at the polls.

Posted by: Matthew Yglesias on November 18, 2002 06:26 PM

'Why not just create the deficit by cutting taxes and then have the Republicans solve the problem by cutting spending while still in power?'

Cutting spending is unpopular; best to leave that to the Democrats when you inevitably get turned out at some point.

Posted by: Jason McCullough on November 18, 2002 06:40 PM

The government's fiscal and monetary policies have failed.

Posted by: on November 18, 2002 07:18 PM

The idea that the piffly tax cut we got this year was big enough to contribute to a deficit is laughable. The deficit is being caused by increased expenditures, mainly on the War on Terror. I imagine that another factor is decreased income tax revenues from those sources that took a financial hit from 9/11.

Posted by: Alan K. Henderson on November 18, 2002 09:37 PM

And yet somehow I'm not laughing...

The increased expenditures from the War on Terror are "piffly" compared to the sums in the tax cut.

Of course declining tax revenues is part of the picture (a big part), but then, the Bush projections were wildly optimistic to justify the tax cut in the first place. Everyone knew it at the time, and everyone knows it now.

Posted by: Jeff on November 18, 2002 10:11 PM

yes I agree- i originally thought you were saying that it isn't actually the republican's plan, not that the plan seems to never work. So I guess I understand now.

Posted by: Dennis O'Dea on November 18, 2002 10:24 PM

Curious as to which Republican has made this argument?

Posted by: Dinesh Gaitonde on November 18, 2002 11:43 PM

Well, certainly no credible major Republican politician would argue this publicly. The mendacity and all...

But it's something I hear from my GOP friends a lot that this is a long term goal in the party to shrink the size of government. I'm sure others can site better references than I, but that's the best I got.

Posted by: Jeff on November 19, 2002 02:09 AM

The Republican agend a is a matter of collusion between the power they hold and extme wealth, especially wealth Texas style. Everything else is window dressing so whatever they say about the deficit is there to confuse the gullible.

Posted by: on November 19, 2002 05:37 AM

Very interesting points from Brad. But what exactly is the alternative? Government spending is difficult to cut even in periods of deficit. I of course agree that if we have tax cuts we should also reduce the size of the budget, but that's ignores politics. So I'll put it in bulletpoints:

1) Political imperatives demand the Republican approach (given their belief in shrinking the size of the government).

2) It's difficult to criticize the Bush administration on this count because they could not foresee 9/11, the ensuing war on terrorism and the increased spending which is the main cause of today's deficit (as another poster accurately stated). It's a combination of events.

3) Clinton deserves much more credit than he receives for his restraint on spending. He's in a difficult spot because this restraint conflicts with his party's inclinations, while the opposition party focuses on his corruption and personal failings.

Posted by: JT on November 19, 2002 06:38 AM

Brad,

can you color code your graph with the 'Party-In-Charge-Of-Congress'?

It might be interesting to see if there is a pattern: do Democratic congresses run spending skywoard as is often claimed?

Ultimately, Congress is responsible for spending. So, forgetting about the President for a minute, who really runs spending up during deficits?

Posted by: Suresh krishnamoorthy on November 19, 2002 07:52 AM

Gary Becker and Milton Friedman have written papers (articles?)making the same point that Wile E. Coyote is now making so not an original idea. Presumably, one would need to specify a theoretical political economy model (and some empirical analysis) to determine if it is a plausible theory (sort of analogous to Milton Friedman's regret as a civil servant in recommending the government collect income taxes at source - he and Becker argue that a high deadweight cost of taxation will restrain government and so enhance growth and budget surpluses - any analysis seen on that?)

HdG

Posted by: HdG on November 19, 2002 07:54 AM

I have heard the "starve the government to decrease its size" argument from my conservative friends. I don't buy it. It essentially boils down to cut income (taxes) first, cut spending later. This never works. Cutting taxes makes people happy. Cutting spending makes people angry. This is the classic irresponsible idea that you can do the easy part first and the hard part later, only to find that the hard part is really hard, and so you don't do it at all. The responsibly mature, indeed necessary, long term solution is to cut spending first and to lower taxes as you cut spending. You have to earn tax cuts by cutting spending, something that both parties seem to have a hard time grasping, though the level of incomprehension varies over time. Politicians should not get the political rewards of cutting taxes without doing the requisite work of cutting spending first.

Posted by: PR on November 19, 2002 08:40 AM

Have to say, as HdG and others point out, this is not a new idea. I heard it associated with Reagan. One critique of Professor DeLong's analysis. He (you) takes total outlays as what the Republicans want to diminish, outright or as a share of GDP. That's why interest payments matter in DeLong's analysis. Interest payments transfer wealth from one bunch (tax payers) to another (bond holders), but they are not unilateral. They don't constitute a government program that makes voters feel beholden to a particular party. While Republicans may want to cut overall outlays, not all forms of outlay are alike. Defense spending is not high on the list to cut and there is no reason to think interest payments are. Rather, social spending is the correct target to consider. As interest payments rise, even in a static budget, "bad" outlays would have to fall. If there is an effort, by a Clinton-like Democrat or by Republicans "forced" to do so by the public's memory of the causes of the Clinton boom, to cut spending, it would mean an even greater reduction in "bad" spending. This is another kind of "crowding out" - crowding out of social programs. This seems to me a fair explanation of the Bush administration's insistance that war with Iraq is affordable, and the tendency to ignore costs in the later years, when policing Iraq would cost a fortune. It runs up the deficit while offering an argument that there is a more important use of funds than educating kids or feeding the indigent.

Looking at Republicans as monolithic makes the self-denying and mendacity points stronger, but Republicans needn't be seen as monolithic. Some, even some who have the ear of the President, may hold the described views. And in some way, those views may have the desired effect of "forcing" a reduction in social programs.

Posted by: K Harris on November 19, 2002 09:20 AM

The GOP plan makes more sense and works better, by its own lights, than Brad gives it credit for. There is less to the flaws cited than appearances suggest.

Mendacity: this presumes a unified, logically consistent, permanent Republican line. But in parliamentary and party politics, contrary and inconsistent statements can always float around in the same ether. The salient focus here would be the so-called deficit hawks who voted for the tax cut. At the time of the vote, given the budget projections, there was room for the cuts. After the 1981 cuts, the deficit hawks got tax increases passed throughout the 1980s, all with Reagan or Bush's signatures.

Unpatriotic. Only if you believe that big deficits will be allowed to persist and push up interest rates. Many Republicans believe neither. Deficits did not prevent military spending from taking off in the 1980s, nor did they cause it to fall after 1986. Nor can you find anyone now calling for brakes on security-related spending because of the budget outlook.

Self-denying. For the strategy to work, it's not necessary for Republican constituents to think the deficit is a problem. Only Democratic constituents. It's a device to force Democrats to wear hair shirts, promise to raise taxes, and lose elections. It works pretty well.

False. Only if you equate interest payments with other public spending. The Rs hate entitlements because they sap self-reliance and public services because the private sector can provide them better. I remember reading that Reagan once described interest payments as a mere transfer, a more subtle observation than most would give him credit for. Non-interest spending relative to GDP did fall after 1980. (I will post a graph on my site.) Total spending has been no better than flat since 1980, so you could say that a fiscal policy debate dominated by fear of deficits has been associated with an absence of major new spending initiatives. It's hard to prove this, but the lack of year-to-year correlation is not a disabling criticism.

Whatever its effectiveness, this strategy is often advocated on the editorial pages of the Wall Street Journal. For the 1980s debate, see White and Wildavsky (The Deficit and the Public Interest: The Search for Responsible Budgeting in the 1980s) and check the index for references to "childrens allowance." (On network television, Reagan called the Congress children whose allowance needed to be taken away.)

Posted by: Max Sawicky on November 19, 2002 09:22 AM

Odd to see shreds of the old "trifecta" banner hoist again in this forum. AKH, JT ... are you kidding, or what?

War On Terror's out-of-pocket costs are statistically insignificant. 9/11 destruction/reconstruction costs may be zero or negative. The big deficit drivers are general economic weakness, tax cuts (growing year by year), and possibly an accelerated pace of tax evasion.

Treatment of interest is a more interesting topic. True, it's a transfer (though disproportionately a transfer offshore) ... but the debate is driven by the budget as formally accounted, not by real-world economic analysis of the federal enterprise.

Posted by: RonK, Seattle on November 19, 2002 10:42 AM

Anyone who doubts this was ever an explicit strategy might easily satisfy his/her curiosity by googling the quoted phrase "starve the beast".

Posted by: RonK, Seattle on November 19, 2002 11:03 AM

RonK: You're right about #2 and I'm wrong. The fact is that the deficit is largely the result of events unrelated to the tax cut. I still hold to #1, though.

The "Unpatriotic" label is defective. If you believe that long-term shrinkage of the government is vital and worth a reduction of a few tenths of a percentage in GDP growth (probably to be recaptured later), then you are not committing an "unpatriotic" act and are helping your country.

Posted by: JT on November 19, 2002 12:51 PM

I am not an economist and I am ashamed to admit it but I fall asleep during some of these discussions (can somebody recommend some basic reading to educate myself?)
BUT...
if any American government wants to cut expenditures why not look at the massive corporate welfare we engage in? It seems to me a goddamn insult to my common sense to be told that capitalism and free markets are the only way to go and then find out that the biggest recipient of farm subsidies in this country is Monsanto!

Posted by: Emma on November 19, 2002 02:54 PM

Well, of course. The principal activity of the government of the United States is to take property from some citizens and give it to others, be they senior citizens, corporation shareholders, etc., purely on the basis of the recipients' superior ability to convince lawmakers that the recipents' votes are critical to re-election. The Republicans are entirely hypocritical (take a look at the pork in the Homeland Secuirty Bill) because they desire power, and know that bribing voters is critical to retaining it , while the Democrats truly believe that the forcible transfer of property originally gained through voluntary exchange is an entirely legitimate use of state power, as long as the recipients are people favored by the Democrats. The Democrats equate a tax cut with a property transfer, because they do not believe there is any fundamental difference between obtaining property by coercive state power, and retaining property that was gained through mutual transaction. The Republicans favor tax cuts simply because their constituents have more property to retain, not due to any principled beliefs.

Posted by: Will Allen on November 19, 2002 03:28 PM

True, it's [interest] a transfer....No,no, no, no and so on. Interest is a transfer in the same way that the money you pay for your lolipop is a transfer from your pocket to a storeowners pocket. So all exchanges are transfers. Interest on the debt however is more than a transfer it is the the price the federal government pays for borrowing. As the federal government enters into the market its volume of borrowing drivesd up the interest rate making it more difficult for the Fed to cut interest rates in future downturns. Future deficits which will be very large, thus mean abnormally high interest rates, and therefor lower potential growth and higher unemployment. Brad expl;ained this why not try rereading his comments a second time.

Posted by: Lawrence on November 19, 2002 07:22 PM

In re: CalPundit, Kevin Drum.

Even if goverment spending as a %GDP is "relatively small" at about 20%, additional won't money injected into a stalled economy will not make a difference in fighting debt-deflation.

Even if the Fed pushing more money into the economy, you can't get people who have "no pent up demand" to go out and buy. We need new approaches. Keep up the good work, CalPundit, Instapundit, and J-Bradford Delong.

Posted by: on November 19, 2002 08:23 PM

(Correction to previous post, November 19, 2002 08:23 PM )

Correction: this is the link to CalPundit's discussion on the deficits as %GDP.

Posted by: on November 19, 2002 08:35 PM

This is an amusing contrast to the way things worked 50 years ago, as recalled by my Republican friends:

1. Democrat-supported spending increases create a "large and unsustainable deficit."
2. The deficit is perceived (mostly by Republicans) as a serious problem.
3. Republicans who believe in sound finance advocate, then vote for, raising taxes to "clean up the deficit." Democrats provide just enough votes to pass the tax increases, but otherwise keep their mouths shut.
4. With increased revenues, Democrats increase spending again, all the while loudly contrasting Republican tight-fistedness with Democrat generosity. More Democrats are elected.
5. Democrats repeat as many times as they can sucker the Republicans into voting to raise taxes.
Ronald Reagan broke the "tax" part of this "spend-elect-tax-spend-elect" cycle. His refusal to provide Republican-sponsored tax increases to pay for Democrat-endorsed spending did produce larger deficits. It also forced the Democrats to consider the fiscal consequences of their political goals, and shifted in the political balance in ways that we're still experiencing today.

Posted by: Old Grouch on November 20, 2002 11:01 AM

Couple of things. The great benefit of Clinton in White House (aside from the entertainment value) was the elimination of the deficit and resulting downward pressure on interest rates.

But. If Hillary-healthcare had been passed, the deficit would likely have ballooned rather than shrunk. As hard as Clinton tried, he couldn't get Hillary-care passed (thankfully), even with control of both Houses in Congress. Also, the Clinton years saw the fiscal benefit of the "Peace Dividend". Without the huge reductions in military spending, the deficit picture in the late 1990s wouldn't look so pleasant. Did the Democratic Party have a grand plan to be "fiscally-responsible" and invest the benefits of Reaganomics ending the cold war in deficit reduction by downsizing the military? Of course not.

In the real, incredibly messy world of negotiated legislation, lots of stuff happens as cats and dogs get traded back and forth. Nobody has a plan that gets implemented much . . . . .

Posted by: Anarchus on November 20, 2002 04:10 PM

Anarchus -- Passage of Hillary-care would not have substantially altered the government share of health care expenditures (very nearly 50% in either case), and the attempt is generally credited with breaking a cycle of health care cost inflation (recently resumed).

Other benchmarks of possible interest: US govt h/c expenditure per capita is already on par with competing first-world "socialized" systems ... and dead-weight burden of private sector h/c bureaucracy (contesting eligibility, approvals, payment responsibility) absorbs a bigger slice of GDP than the entire non-defense federal workforce.

Posted by: RonK, Seattle on November 21, 2002 10:55 AM

You assume the cost projections of Mrs. Clinton's health care regime were accurate. There is no reason to make such an assumption.

Posted by: Will Allen on November 21, 2002 12:24 PM

You have no reason to assume that I assume any such thing, nor to assume that I do or do not have any reason for making any such assumption, nor to assume that I am unacquainted with countervailing reasons (well-founded or otherwise).

For that matter, I have no reason to assume your conclusions would ever be influenced by any choice of assumptions, evidence or argument.

But thanks for not calling me a thug.

Posted by: RonK, Seattle on November 21, 2002 12:57 PM

I only attribute thuggishness to those who use force to obtain that which they cannot gain by mutual agreement, and that which is unnecessary to avoid tyrannt or anarchy, so I fail to see how such gratitude applies in this instance. You are welcome, in any case. Now, to your assumptions. I quote: "Passage of Hillary-care would not have substantially altered the government share of health care expenditures... " . In order for this statement to be logically true, two assumptions must be made about future events, 1) What total health care expenditures would be in the U.S., and 2) What Mrs. Clinton's proposal would have looked like after subsequent Congressional input. Since both future events are essentially unknowable (one cannot even extrapolate what the first assumption should be from the non-Hillary care reality), your statement enters the realm of pure speculation. Your speculation as to who will win the World Series ten years from now has as much validity.

Posted by: Will Allen on November 21, 2002 01:46 PM

RonK,

You say The big deficit drivers are... tax cuts (growing year by year), and possibly an accelerated pace of tax evasion.

Can you explain why you see larger tax cuts coupled with larger tax evasion? A simple-minded first look would imply that lower taxes reduce the incentive for tax evasion. It sounds like you know about some specific growing threat of tax evasion (e.g., new types of deductions that lots of people can fraudulently claim).

Posted by: Tom on November 21, 2002 03:07 PM

Tom -- There are two main bodies of evidence. One is direct -- the explosion of recent vintage, big-ticket avoidance (arguably legal) and evasion (illegal) schemes discovered through audits, or revealed by whistleblowers, or encountered in the course of corporate accounting scandals, or revealed in the course of their own speakeasy marketing campaigns. Some of these are as elaborate as Enron's off-book vehicles, and are enabled by big-name professionals who previously would have had nothing to do with such poisoned fruit.

The second is indirect. Tax revenues have tailed down more steeply than the best predictive models would indicate, even after adjusting for the cap gains bubble burst, etc.

Why would evasion increase when rates are relatively low? Could be a shift in the prevailing ethos ("it's your money, you're being overcharged") ... could be an attempt to sustain unrealistic lifestyles, post-bubble ... could be a threshold phenomenon ("everybody else at the club is doing it") ... could be crimes of opportunity, aided by securitization, globalization and internet mobility/anonymity, during an epoch of budget-cutting in IRS compliance areas.

Posted by: RonK, Seattle on November 21, 2002 06:46 PM

RonK,

So, you are not making a prediction, but stating an emperical observation from recent history. And, since it is unclear what caused the shift to more tax avoidance, it is unclear if that trend will continue.

Thanks.

Posted by: Tom on November 22, 2002 04:29 PM

There is auxiliary anecdotal and empirical evidence for most of the cited specific causal factors ... WSJ has covered some eye-poppers in the past year or so.

I do predict the trend will accelerate until some number of things are done to reverse it. Rossotti's departure and the dark-of-night Homeland Security provisions (negating enactments earlier this session to restrict federal contracts for "Bahama HQ" corporate tax refugees) are bad signs.

Posted by: RonK, Seattle on November 22, 2002 11:19 PM

In trying to answer the question of whether federal deficits can constrain federal spending why choose to study the period of 1980 - 2000? From 1984 to 2000 the business cycle was muted, an abnormal situation primarily due to blind luck (see: http://www.federalreserve.gov/pubs/ifdp/2002/730/ ).

Why not instead examine what happens to the relationship between deficits and spending after the collapse of massive speculative asset bubbles ?

Whatever Delong has been smoking, we could make more money by selling it than by discussing economics, especially since the use of substances tends to due well during rough economic times.

Posted by: What is Brad Delong smoking ? on November 24, 2002 09:59 PM

In trying to answer the question of whether federal deficits can constrain federal spending why choose to study the period of 1980 - 2000? From 1984 to 2000 the business cycle was muted, an abnormal situation primarily due to blind luck (see: http://www.federalreserve.gov/pubs/ifdp/2002/730/ ).

Why not instead examine what happens to the relationship between deficits and spending after the collapse of massive speculative asset bubbles ?

Whatever Delong has been smoking, we could make more money by selling it than by discussing economics, especially since the use of substances tends to due well during rough economic times.

Posted by: What is Brad Delong smoking ? on November 24, 2002 10:00 PM

In trying to answer the question of whether federal deficits can constrain federal spending why choose to study the period of 1980 - 2000? From 1984 to 2000 the business cycle was muted, an abnormal situation primarily due to blind luck (see: http://www.federalreserve.gov/pubs/ifdp/2002/730/ ).

Why not instead examine what happens to the relationship between deficits and spending after the collapse of massive speculative asset bubbles ?

Whatever Delong has been smoking, we could make more money by selling it than by discussing economics, especially since the use of substances tends to due well during rough economic times.

Posted by: What is Brad Delong smoking ? on November 24, 2002 10:01 PM

In trying to answer the question of whether federal deficits can constrain federal spending why choose to study the period of 1980 - 2000? From 1984 to 2000 the business cycle was muted, an abnormal situation primarily due to blind luck (see: http://www.federalreserve.gov/pubs/ifdp/2002/730/ ).

Why not instead examine what happens to the relationship between deficits and spending after the collapse of massive speculative asset bubbles ?

Whatever Delong has been smoking, we could make more money by selling it than by discussing economics, especially since the use of substances tends to due well during rough economic times.

Posted by: What is Brad Delong smoking ? on November 24, 2002 10:02 PM

Btw, I meant the "Brad DeLong smoking" reference as a compliment - I had been to a birthday party and was drunk (even high you might say) on a combination of too much choclate and sugar + Kahlua + ice and milk + Jaegermeister (thank you, Jaegermeister).

For some weird reason, my one post occurred 4 times in intervals of 1 minute each - which might be even kookier than Alan Greenspan (who used to be part of a quasi-cult that once even espoused militant atheism).

Posted by: What is Brad DeLong smoking ? on November 25, 2002 11:40 AM

Btw, I meant the "Brad DeLong smoking" reference as a compliment - I had been to a birthday party and was drunk (even high you might say) on a combination of too much choclate and sugar + Kahlua + ice and milk + Jaegermeister (thank you, Jaegermeister).

For some weird reason, my one post occurred 4 times in intervals of 1 minute each - which might be even kookier than Alan Greenspan (who used to be part of a quasi-cult that once even espoused militant atheism).

Posted by: What is Brad DeLong smoking ? on November 25, 2002 11:41 AM

Sounds like, "Pump the oil out of the ground now and let the next poor schmuck worry if the well runs dry." What two leaders made a living on that thesis?

Posted by: Brad Stritashall on January 11, 2003 10:23 AM

Our economy is in trouble today because Clinton didn't do his job. While running for election, Bush said, "The country is headed toward a recession" I sold my stocks in 1998--I am not an economist. I just knew that things didn't feel right--to bad more people didn't trust their guts instead of their greed--they would have gotten out sooner too.

Posted by: Lee Smith on January 25, 2003 03:18 PM

shut up, you're stupid

Posted by: dan rather on April 22, 2003 11:03 AM

shut up, you're stupid

Posted by: dan rather on April 22, 2003 11:04 AM
Post a comment
Name:


Email Address:


URL:


Comments:


Remember info?