Don’t Look Down is the title of Krugman’s latest, and he has a reason to issue this warning to his readers- should they look down, they might see that his head is up his ass. How many more months before Krugman is forced to admit the economy is recovering?
Speaking of stagnant growth, the Balloon Juice laptop fiasco fund is still mired at five (5) donations for a total of $57.25, and one promise to pay me to quit blogging. At this rate, the laptop fund may rapidly turn in to the Wine and a pint of Cherry Garcia fund.
Eric Lindholm
It’s not just that Krugman presents his case as a cause for concern – EVERYTHING is a crisis in the making. There is no volume control.
David Perron
And here’s a little ditty on tax cuts at OJ. I’m wondering if Kimmitt has anything to say about the recipient of a Nobel in economics and another guy who happens to be (like Krugman) a Clark medal recipient going public with statements like this.
I’m not actually arguing that tax cuts make economic sense based on the article; that would be fallacious. I am a little interested in whether economists other than Krugman are in the habit of going public with resultoids that haven’t been preceded with a large amount of ground-laying work.
Andrew Lazarus
David, for more economics, I recommend Brad DeLong’s web site and blog.
David Perron
Been there, done that. DeLong is ok when he sticks to economics; outside of that he’s above-average silly. Wading through the above-average silliness to get to the good stuff has gotten to be far too much work.
Kimmitt
Those guys ought to be ashamed of themselves.
“The Reagan tax cuts of the ’80s helped promote longer-term growth, but they also increased federal deficits and subsequent interest payments on the debt. The Bush tax cuts will also help future growth, and possibly have already begun to stimulate the economy.”
This statement just is not supportable; if you ask the gentlemen in question to provide any kind of theoretical justification, they’ll point you at an Econ 101 textbook and pretend that it is dispositive instead of a gross oversimplification.
“The need to meet payments on the debt helped pressure Congress and the Clinton administration to enact welfare reform, cut defense spending and increase efforts to rein in federal spending on Social Security and health.”
Of course, we could have simply skipped the middleman and declined to massively increase the size of the military in the first place. Or we could acknowledge that Clinton had to raise taxes to bring the Federal books into line, and that that tax increase (passed in 1993 and implemented in 1994) does not appear to have done much damage over the next six historically expansionary years.
“Besides the direct benefit from lower marginal tax rates on income, dividends or investments,”
I think we can all agree that, ceterus parebis, we would all prefer to pay less in taxes. But:
“there are indirect benefits from the forced reductions in inefficient spending programs. This might be an overly generous welfare system or programs that benefit constituents of powerful members of Congress.”
Why would you possibly believe that inefficient programs would be the ones being cut? Programs with special-interest support, just like when they were enacted, would be the ones which are preserved; there is no greater incentive toward good government in lean times than in good ones.
“The fiscal problems facing many state and local governments, most notably California, are direct results of reckless spending while tax revenues were piling up.”
Wait, so deficits are bad and reckless now?
“Countries that invest heavily in educating their citizens are also those that tend to experience high economic growth following such investments. For these reasons, it is important that tax policies encourage investment in human capital.”
Like, you know, collecting taxes and funding public schools with them? Student loans? Community colleges? Adult education? Lending libraries? Head start? Health care for kids?
“A highly progressive income tax structure tends to discourage investment in human capital because it reduces take-home pay and the reward to highly skilled, highly paid occupations.”
And there is no evidence that the US is anywhere near this point on the Laffer curve. This isn’t Sweden, and you’re lying by omission.
The only statement which isn’t an attempt to mislead is this one:
“Republicans, on the other hand, appear to be favoring a fiscal stimulus, but they are mainly trying to limit future spending on entitlement and other programs favored by Democrats.”
In other words: Vote Republican. You didn’t need that Pell Grant anyway.
David Perron
Kimmitt, I think all of those arguments would be much, much more effective when presented to the men who wrote the article. Just a thought. The rest of us don’t know any more about it than you do.