Turnbull echoes discredited US Republicans

It is interesting that the discredited US Republicans and Australia Liberals are singing from the same sheet music. Obama and Rudd’s stimulus packages are too large and should use tax cuts as their main weapon.

As John Amato argues at the Huffington Post:

Obama was elected to bring change to the economy, not to debate the merits of tax cuts all over again. We had that discussion for 18 months and Obama won. Tax cuts lost. Why is the media ignoring that fact?
Why aren’t there hundreds of economists on my TV explaining the stimulus package?

Too large. Should be replaced by tax cuts. This mantra echoes in Australian conservative rhetoric:

Defying the widespread support for the package from economists and business groups, Coalition MPs met early yesterday and backed Mr Turnbull’s argument that, despite the political risk, the package was too big and risked passing massive debts to future taxpayers.

Instead, he proposed a smaller package of up to $20billion based on bringing forward tax cuts already planned for July this year and next year.
Battle lines drawn on $42bn plan

It seems that John Howard was not the last to take his lead from Republican politicians.

Kevin Rennie

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84 Responses

  1. Kevin,

    The trouble with your argument is that the “discredited” Republicans appear to have the support of voters on this one.

    Rasmussen: Support for Stimulus Package Falls to 37%

    Wednesday, February 04, 2009

    Support for the economic recovery plan working its way through Congress has fallen again this week. For the first time, a plurality of voters nationwide oppose the $800-billion-plus plan.

    The latest Rasmussen Reports national telephone survey found that 37% favor the legislation, 43% are opposed, and 20% are not sure.

    Two weeks ago, 45% supported the plan. Last week, 42% supported it.

    Opposition has grown from 34% two weeks ago to 39% last week and 43% today.

    […]

    Furthermore: 50% Say Stimulus Plan Likely to Make Things Worse

  2. The Republican scaremongering in full swing.

    Thank god Australians have more nous.

  3. More facts and figures coming out on the December stimulus here.

    Economic Security Package worked. Shock.

    …and the difference between the US and here on the stimulus;

    Stimulus package Facebook activism

  4. On the 7:30 Report a stat just raised by Robert Rice from the US about the economic crisis there.

    Just before this economic crisis 2% of Americans held 20% of its wealth. The last time that happened was in 1928.

  5. Adrian

    Weren’t there people on here shrilling that the first stimulus package had done nothing, and therefore neither will the second

    I wonder how that pans out??

    Kevin Rudd’s first economic stimulus package helped create jobs, says Treasury

    I don’t know how this information is going to modify the oppositions stance, since they have already stated loudly and clearly that the they are blocking it, mainly because, from all evidence, bolt said it didn’t work.

  6. Adrian of Nowra, on February 5th, 2009 at 7:52 pm

    An interesting partial analysis you raise, Adrian. Perhaps there is scope for both lowering taxes and raising wages, so that both taxes and income are more harmonised, and the consumer base doesn’t become eroded. And yet…we seem to have calls for a wage freeze.

  7. “It seems that John Howard was not the last to take his lead from Republican politicians.”

    Spot on.

    And I reckon the American polls are full of sh*t. Trim a few bits & pieces from the stimulus package (50 billion or so), anything that sounds too ‘Big Brotherish’ supporting, and I reckon the Republican moderates will do the right thing in the Senate & pass the package.

    I doubt the bulk of the American public are stupid & greedy & cynical enuff at this point to allow the Repugs & corporate media to seriously damage their HOPE President so early in the cycle (tho the usual suspects are doing the character assassination stuff full bore already…bit tedious)…

    to do so during this economic meltdown would drive America into a social quagmire & eventually an expanded war. And getting used to plenty more flag-draped coffins & Ponzi Schemes. Not to mention internal conflict nigh on civil war. Wouldn’t that suit the Cheneys of the world?

    Too many corporate crims & political maniacs out there these days. Holding back the flood of GOODNESS. Spreading doubt & fear viruses like toxins in the rivers flowing from chemical factories.

    The Obama supporters have got to play HARDBALL. Get their message across to their representatives clearly & concisely…no “ifs or buts”…the Left of Centre can be too apologetic & compromising at times…& this often leads to the BULLIES stamping on progress & egalitarian policies…hard times call for tough guys & gals. Standing up to the bullies.

    Been awhile since I read To Kill A Mockingbird.

    N’

  8. Good to see that some have finally worked out Turnbull’s tactic to benefit the rich…could of told you yesterday but decided to discuss it over Jack’s site at the big bad Murdoch Media where I apparently work.

    Try to keep up!

    http://blogs.theaustralian.news.com.au/jacktheinsider/index.php/theaustralian/comments/rudd_and_turnbull_in_battle_to_the_bottom/P425/

  9. Kevin,

    I’ll see your HuffPo and raise you a Newsweek, staunch supporters of Obama during the election campaign:

    Losing Control: Obama needs to reassert command of the agenda in Washington

    Feb 4, 2009

    Barack Obama began making his comeback Wednesday, apparently aware that he has all but lost control of the agenda in Washington at a time when he simply can’t afford to do so. Obama’s biggest problem isn’t Taxgate—which resulted in the Terrible Tuesday departure of his trusted friend, Tom Daschle, and the defanging of his Treasury secretary, Tim Geithner. Nor is the No. 1 problem that the president can’t seem to win a single Republican vote for his stimulus package. That’s a symptom, not a cause. The reason Obama is getting so few votes is that he is no longer setting the terms of the debate over how to save the economy. Instead the Republican Party—the one we thought lost the election—is doing that. And the confusion and delay this is causing could realize Obama’s worst fears, turning “crisis into a catastrophe,” as the president said Wednesday.

    Obama’s desire to begin a “post-partisan” era may have backfired. In his eagerness to accommodate Republicans and listen to their ideas over the past week, he has allowed the GOP to turn the haggling over the stimulus package into a decidedly stale, Republican-style debate over pork, waste and overspending. This makes very little economic sense when you are in a major recession that only gets worse day by day. Yes, there are still some very legitimate issues with a bill that’s supposed to be “temporary” and “targeted”—among them, large increases in permanent entitlement spending, and a paucity of tax cuts that will prompt immediate spending. Even so, Obama has allowed Congress to grow embroiled in nitpicking over efficiency when the central debate should be about whether the package is big enough. When you are dealing with a stimulus of this size, there are going to be wasteful expenditures and boondoggles. There’s no way anyone can spend $800 to $900 billion quickly without waste and boondoggles. It comes with the Keynesian territory. This is an emergency; the normal rules do not apply.

    […]

  10. You could be right Legion but only if the tax cuts are targeted towards the lower income demographic.

    That is not what Turnbull is wanting. When they say across the board tax cuts, what he means is that the bulk of the money goes to the wealthy including himself (and Rudd). In other words what he is advocating is trickle down economics which is a complete failure as an economic strategy and always has been.

    2% of the population in the wealthiest country in the world owned 20% of its wealth, and that was growing before the crisis. That illustrates how trickle down economics doesn’t work.

  11. Oops; try this link:

    http://www.newsweek.com/id/183204

  12. 7:52

    Sorry that should have been Robert Reich.

  13. The truth comes dribbling out…where’s my old mate John McPhilbin?

    AUSTRALIANS have been given a grim warning for the coming year with Treasury officials tonight revealing the global recession is far worse and will last longer than originally thought.

    WOW!

    http://www.news.com.au/business/story/0,27753,25013111-462,00.html

    Oh! What a tangled web we weave, when first we practice to deceive…

    …and how many deceptions have/are we about to suffer!

    Sharpen madam guillotine, grease the tumbrills, vive la revolutione! Vive la republique!

    It has to change!

    Suncorp has just sent its CEO to the gallows – not enough!

    Time to rid our society of The Robber Barons once and for all!

    They are destroying our lives!

  14. Just a reminder:

    I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country . . . corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed.
    – Abraham Lincoln

    The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism – ownership of government by an individual, by a group, or by any other controlling private power.
    – Franklin D. Roosevelt

    RIGHT ON!
    N’

  15. Just a throwaway article, via Joshua Gans, by Daron Acemoglu : The Crisis of 2008: Structural Lessons for and from Economics (pdf). Quite an interesting read for the American context, and perhaps elsewhere.

  16. From what I have experienced Right Wing Policiticians have always been shrill screamers regarding any spending and any taxation since I can remember. Yet the most indebted nation in the world has been run by the Republicans for 20 of the last 28 years with their tax cuts ( especially for the wealthy) work strategy.

    Amazingly tax cuts were implemented by Reagan, Bush Snr and Bush Jnr for the wealthy and big business. If their philosophy is correct then the USA should be booming like a rocket.

    Instead what has happened is it has sputtered to a halt and is now going over the cliff. The wealth earned for the last 20 years has vanished for anyone who was not senior management and managed to bail with a golden parachute or complete insider trading of their shares before the poor uninformed shareholders found out the real truth. The middle class is all but extinct with 90% of the wealth now owned by 10% of the population.

    Wal Mart continues to boom and so does Macdonalds during these tough times. Problem is they pay wages so low their full time staff need government assistance. Wal Mart has been responsible for the destruction of hundreds of thousand of small businesses. Those EXACT same businesses that the Republicans through the Joe campaign and the Liberals here claim to support. Wal Mart imports all cheap products. In many many towns throughout the USA Wal Mart is the only remaining store, having closed 1) The plumbing store 2) The Drug Store ( Chemist) 3) The hardware store 4) The bakery 5) The local corner stores 6) The electrical store 7) The video and dvd store etc etc.

    Want to see whats happening here then look at Bunnings and Woolworths.

    Super Amart in Australia has stopped selling any Aussie made products because it can source cheaper products from overseas (of dubious quality and health factors).

    Lowering taxes has destroyed the tax base of the USA in favour of the wealthy to the extent the country is now a basket case. Lowering taxes has created a deficit of amazing proportions for every man woman and child, yet this is exactly what the Liberals want to do here.

    From my observations the majority of jobs created in the USA over the last 10 years were service industry jobs which are the first to go when economic times toughen. The same has happened here.

  17. Excellent points shaneinqld. If Costello had got his way w/ the Workchoices/IR reforms – don’t forget he was keen on expanding them – he would have delivered us the Walmart nation just in time for the economic downturn.

    Many Corporations would’ve used the reforms in a RUTHLESS way.

    This was a treasurer who couldn’t find a billion for the PBS but was quite willing to direct money into well-off private schools & private healthcare & private childcare…& ensured tax cuts for the wealthy was used to help drive house prices up to ensure that the average family was indebted to the eyeballs…whilst the cash injected investors turned HOMES into INVESTMENT PROPERTIES.

    N’

  18. Another POV on the tax debate:

    http://www.counterpunch.com/nader02052009.html

    N’

  19. Just had an interesting look at taxation rates in the USA and their history by the federal government.

    In 1963 the top tax rate was 91% and the bottom rate was 10%.

    In 1964 the top rate was reduced to 70% and the bottom rate remained at 10%.

    In 1981 the top rate was reduced to 50% and the bottom rate remained at 10%.

    So in 18 years, so far the wealthy have had a tax cut of 45% almost half of their original tax slashed.

    In 1986 the top rate was reduced to 28% ( a further 44% drop in their tax). the bottom rate was INCREASED from 10% to 15%. So the poor had a 50% tax INCREASE.

    During the 1990s the top rate was increased back up to 39%.

    In 2001 the top rate was reduced back to 35% and the bottom rate was reduced back to 10%.

    So in the last 45 years the wealthy have had their tax cut by 62% so for every $100 they used to pay in tax they now only pay $35.

    For the low income earner their taxation liability is exactly the same as it was 45 years ago.

  20. I know there would be many of the right leaning bloggers here doubting my comments regarding Wal Mart.

    I personally visited Gilroy ( the Garlic Capital of the World) in California a couple of years ago and stayed with friends for a week. Mother works for Post Office and Father works for Defence.

    Wal Mart opened and the main street is all but deserted with virtually every shop that sells anything Wal Mart sells closed and the windows boarded up.

    A tragedy being played out all over the country and now world wide.

  21. Shane

    And the cry of the right is about the damage that is being done to Main St USA, without any relfection that the proliferation of Mall St USA , not Wall St USA, is the main reason for the damage.

  22. Shane, I agree with that and you should see the way I was slapped down when I said the emergence of Aldi was not something necessarily worthy of celebration. And it’s not just milk bars etc that are affected. Note the increase in minimum acreage required for building homes in rural Australia resulting from lobbying by the Murray Goulburns etc. Bit by bit more and more people are shoved into cities or regional centres that have no space for them. Country towns die. It’s tragic and neither side of politics seems the slightest bit interested in arresting the trend.

  23. CBO: Obama stimulus harmful over long haul

    President Obama’s economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.

    CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.

  24. Yeah TB and Nasking, we were almost a walmart nation. If Howard had got his way, Australian workers would be in deep sh-t right now, working longer hours for less so employers could maintain and even expand on their profits.

    Right now in the actual Walmart nation, Republicans are trying to obstruct Obama’s nominations for some top officials. Industry groups are hysterically screaming socialism at the very thought of the Employee Free Choice Act which provides more protections for workers and requires employers to recognise a union elected by authorisation cards.

    …the widely praised Hilda Solis, currently a Democratic U.S. representative from California, is being blocked by Senate Republicans for her progressive views supporting American workers.

    After Delay, Panel to Vote on Solis Nomination

    “Obama has spoken out strongly in favor of many union-backed issues and has said that one of his economic goals is to address some of the imbalances that have caused wages for most Americans to stagnate while top wage earners received sharp pay increases.

    “I don’t see organized labor as part of the problem,” Obama said last week after signing three pro-labor executive orders and appointing a task force to examine issues important to the middle class. “To me, it’s part of the solution.”

    Yesterday, organized labor turned up the pressure on Congress to consider the Employee Free Choice Act, which would make it easier for workers to organize unions. Workers gathered on Capitol Hill to begin delivering petitions with a reported 1.5 million signatures.”

    “I don’t see organized labor as part of the problem,”
    …”To me, it’s part of the solution.”

    Yeah, take that tom of melbourne!

  25. Kitty

    Can I just add: Unions Boo!

  26. Tony of South Yarra, on February 6th, 2009 at 11:16 am

    And how much US government debt was racked up over the last eight years of the Bush administration after being handed a healthy surplus?

    That was done on the back of saying permanent tax cuts that mainly went to the rich would reduce debt in the long run.

  27. The news that the Senate Health, Education, Labor, and Pension committee has postponed consideration of Labor Secretary nominee Hilda Solis because her husband only yesterday paid off tax liens, some of which had been pending for up to 16 years, confirms that there’s an inexplicable, widespread problem in the Obama vetting process (as if Geithner, Daschle, Richardson, Killefer, et al hadn’t already demonstrated that).

    The disclosure forms that presidential nominees have to fill out are interminable—they take days to fill out; think about how long it takes to do your taxes, and multiply by at least ten. So are the interviews. Then there’s the FBI background check and the IRS tax check. The White House counsel’s office questions the nominee on any arguably controversial thing he may have said or written, any dispute or litigation he may have been involved in, and anyone that might have any reason whatsoever to say anything negative about the nominee. Caesar’s wife received less scrutiny.

    And at the end of the process the nominee is asked one final catch-all question: Is there anything that could cause you, your family, or the President embarrassment if it became public?

    Either Obama and his nominees aren’t easily embarrassed, or the vetters have tin ears the size of satellite dishes.

  28. (My previous comment is entirely a quote from National Review.)

  29. Despite the Coalition’s efforts to demonise unions at the last federal election, I don’t think that the arguments against unions are necessarily against their existence, but against the power that they often wield and the manner in which they often wield it. The report last week about trains in Melbourne, and I still haven’t discovered its truth or otherwise, illustrates the point. I don’t object to the organisation of employee groups for the protection of employees from exploitation by their employers. I do object when this crosses the line into bullying not just of the employer, but the employees they either don’t represent, or are supposed to represent. I have been on the wrong side of a number of exploitative employers, yet have managed to avoid bullying unions, in fact, I’ve never really been associated with a union. But I know plenty who have.

    So I really don’t think it’s helpful to keep hitting the one poster, Tom, who seems to articulate not too badly, some examples of union poor behaviour, with the old “Unions Boo” stuff. He’s one against many on here. Go for your life with Neil, he’s a different kettle of fish. But that expression simply drowns out debate and I don’t think is fairly applied to Tom.

  30. Oh, slightly off topic but who saw this coming!

    Former VP Cheney: Sometimes You Just Have to Cringe

    Cheney warns of new attacks

  31. But that expression simply drowns out debate and I don’t think is fairly applied to Tom.

    Don’t be needlessly concerned james, it won’t bother ‘the paradox’ known as tom of melbourne, one little bit!

  32. I actually don’t particularly care about Tom, either, he can take care of himself. It’s more about, on this blog at least, any reference to poor union behaviour just gets met with “Unions Boo” without dealing with the substance of the arguments. Surely those most in favour of union existence should be those most concerned about poor union behaviour.

  33. Tony of South Yarra, on February 6th, 2009 at 11:39 am

    Is Hilda Solis responsible and/or interchangeable for her husband?

    Guess that makes the politicians in Australia who have shifted share portfolio’s, businesses and asset ownerships into their wives names, still responsible and untruthful in regard to their pecuniary interests?

  34. James

    I have no problem in getting stuck into any union or employer orr ALP or Liberal party.

    What I see however is a Liberal Party to tarnish all unions by the dishonest actions of a few. Yet when it comes to the actions of employers we are told not to tarnish all employers by the dishonest actions of a few. To me this is blind ideology.

    I would like to see the numbers of times unions have been charged for dishonest activities over the last ten years compared to the number of dishonest actitvities by employers and corporations in regards to their employees or shareholders with action being taken by the ACCC, ASIC, ASX, or the Employment Advocate.

    I think the difference in numbers would astounding.

  35. I actually don’t particularly care about Tom…

    Oh, I don’t mind the old shill!

    Surely those most in favour of union existence should be those most concerned about poor union behaviour.

    Whilst poor union behaviour is reprehensible, i’ll be concerned when poor employer behaviour is given the same acknowledgement, concern and punishments.

  36. Shane, have a look at the ASIC website, you might be surprised, you too, Kittylitter.

  37. James you gave 1 the ASIC. I gave 4 in an effort to be balanced to both sides

  38. Of the last 9 ACC news release 5 were for companies acting outside guidelines.

  39. Sorry should have been ACCC

  40. James – “I actually don’t particularly care about Tom”

    Kittylitter – “Yeah, take that tom of melbourne!”

    Well James & Kittylitter, I’m amazed that you don’t consider me to be such a sensitive character.

    Soooooo hurtful, sob.

  41. Just had an interesting look at taxation rates in the USA and their history by the federal government.

    It’s worse than that. You’ve only considered federal income tax. There’s also payroll tax, social security tax (highly regressive) – and state taxes (including sales taxes on most purchases in most states). This means the effective tax rate for the poor is a fair bit higher than you might think. The rich also have opportunities to structure their affairs that are not available to the poor, and access to accountants who are good at minimizing (some might say “avoiding”) significant amounts of tax, so many rich people pay tax at effective rates less than most of the poor.

    While we’re at it, the Republicans like to say the US has some of the highest corporate tax rates in the developed world, but they’re also hiding behind misleading statistics. IIRC 94% of businesses paid ZERO tax last year, and the average tax rate paid was (again, IIRC) somewhere in the mid-teens.

  42. Lotharsson

    Thanks for the update. I deliberately avoided state and other taxes as they are so complicated in their system.

    If the mega rich are not careful they will destroy the hand that feeds them by their own greed.

  43. Well, Tom, you were mean to me for having a 4WD……

  44. Shane, I think I misunderstood you. I took you to mean that not enough employers had been charged. That’s not what you meant, though, right?

  45. Soooooo hurtful, sob.

    Yeah, yeah, I’m amazed that you are faux grizzling.

    Of the last 9 ACC news release 5 were for companies acting outside guidelines.

    james, whilst unethical tactics for profiteering by business is targeted at ACCC what is not shown is the numerous examples of mistreatment and abuse of employees by ruthless managers/owners.

    I think it was Tony Abbott who acknowledged there were some bad examples as ‘bad apples’ or such, he pretty much gave shaneinqld’s example of “not to tarnish all employers by the dishonest actions of a few.”

    To make matters worse, Abbott did not encourage illegally and badly treated employees to seek recompense or punishment, he just said they should ‘move on’ to another job!

    I would suggest that any statistics on the issue are severely understated, the employees who won’t accept the bad wages and conditions do quit and move on, but the nasty employers remain in business and just keep doing the same thing to other innocent victims.

  46. CBO: Obama stimulus harmful over long haul

    That doesn’t seem entirely surprising – a.k.a. “there’s (almost) no such thing as a free lunch”. Ever wonder why people sacrifice potential future returns on investment by spending money on insurance?

    To put it another way, not doing stimulus is likely to be extremely harmful over the short haul. Which would we prefer?

  47. James

    Mate I think you know exactly what I meant 🙂

  48. Kitty

    Thanks for reminding me, Tony Abbott is live today on your say and I shot him a question yesterday, will see if it got through or if it got trashed.

  49. Believe it or not it got through and he repsonded. I give him credit he has allowed both of my blogs through to date.

  50. Here’s an interesting slant that I received recently in an email. It compares the weather to the current economic climate:

    –Let’s dispense with the usual recap of bad news today and go straight to more important matters, like the weather.

    –“Is that rain?” asked a co-worker the other day.

    –“No. It’s the sound of leaves blowing down the street,” we speculated.

    –And it was.

    –Huge drifts of leaves have accumulated on the footpaths in the past week, swirled around by the wind and piling up in banks along the street. All the leaves on the plane trees that line Melbourne’s streets seem to have died at once during last week’s heat wave. Normally, in the autumn, the leaves fall at a statelier pace. The days get cooler and the seasons change at a more natural rhythm.

    –But not this year. They fell all at once. The whole natural cycle was condensed into just a few days, thanks to the heat wave that scorched the trees last week. And alongside huge piles of dead leaves burnt brown you’ll find the occasional dead brown possum.

    –We stumbled on three the other day, walking up St. Kilda Road. It’s a veritable banquet of organic matter for the flies. The poor little possums lay on the ground, their prehensile tales curled up in a tidy little spiral. By the looks of things, dead possums do not bounce.

    –The plane trees are not native to Australia (they were imported from Britain to Victorianise the place). The possums ARE native. But neither one is suited to the kind of extraordinary heat that set upon the city last week.

    –Sure, there are hotter places in the world. But if something is designed to live in one environment and finds itself in another, it probably won’t last long if it’s not adaptable. Tomorrow is expected to be another 43 degree day in Melbourne. Which brings us to the economy.

    –Recessions are perfectly natural in the business cycle. Human beings take risks with borrowed money during a growth phase. Some risks pay off. Some don’t. A recession is a reckoning up of the risks. The bad investments are liquidated, asset values readjust, and the next cycle begins.

    –You can only get a depression when the government and the monetary authorities take unusual steps-driven by political motives-to prevent the natural process of recession. This is why today’s policy moves are setting us up for a Depression. And it’s not the first time.

    –It’s widely believed that the Great Depression had its origins in the slow response of the Fed to the banking collapse that followed the stock market crash. That failure, so the theory goes, was followed by too little fiscal innovation and government spending by then U.S. President Herbert Hoover.

    –But all of that claptrap is exactly wrong, we humbly suggest. The Depression was a foregone conclusion the minute the business cycle was hijacked by manipulation of the credit cycle. A recession is natural. A Depression is always man-made.

    –That’s right; the origin of the Depression is in the credit boom that preceded it. The credit boom of the 1920s made it inevitable that the natural rhythm of the business cycle would be amplified and made more severe. The boom was boomier. The bust was…worse than it had to be.

    –It was made worse by government policies that put America into debt, allocated capital in the most inefficient hands possible while crowding out business investment, and locked in wages and prices higher than they ought to have been, further delaying the vigorous rebound in employment and wages you usually get in a recovery.

    –To repeat, recessions are a natural and unavoidable part of the business cycle. Depressions are the bill you pay for trying to avoid recessions with even looser monetary policy and more government spending to stimulate consumption. What you need is a cleansing break. What you get is a money-induced fever of pointless economic activity, full of noisy cash registers, signifying nothing.

  51. wow, you are Johns friend alright. The vision of you and John talking is a long one. 😆

    Seriously i enjoy reading your comments

  52. Krugman on the risk of the deflationary trap.

    With some indicative evidence drawn from the very same CBO report that was referred to earlier (unless there’s a 2nd CBO report). Note that Krugman points out that actual deflation is far from certain.

    Speaking of certainty, the CBO report (PDF) also points out at the bottom of p25 that “the macroeconomic impacts of any economic stimulus program are very uncertain”.

    They state on p26:

    CBO has developed a range of estimates of the effects of H.R. 1 on GDP and employment that encompasses a majority of economists’ views. According to these estimates, implementing H.R. 1 would increase GDP relative to the agency’s baseline forecast by between 1.2 percent and 3.5 percent by the fourth quarter of 2010 and increase employment at that point in time by 1.2 million to 3.6 million jobs (see Table 4). In that quarter, the unemployment rate would be 0.7 percentage points to 1.9 percentage points lower than the baseline forecast of 8.7 percent. The effects of the legislation would diminish rapidly after 2010. By the end of 2011, H.R. 1 would increase GDP by 0.5 percent to 1.4 percent, would raise employment by 0.7 million to 2.1 million jobs, and would lower the unemployment rate by 0.4 percentage points to 1.1 percentage points.

    In contrast, the Washington Times (which IIRC is roughly the print equivalent of Fox News) in their news report de-emphasised these effects in favor of their dramatic headline…and do not provide any indication that the projections have large amounts of uncertainty.

    BTW, the CBO also projects on p27 that “temporary (well-targeted) tax cuts for people” would be the second least effective class of tactic, as measured by cumulative GDP impact over several quarters. Their reasoning includes that “…a significant portion of the tax cut would probably be saved”, unlike most other options.

    And in this report I can’t find the CBO stating that GDP will be negatively affected by “0.1 to 0.3%” by 2019. There may be another CBO report that claims that, but there were false reports put out by Republicans a week or so ago that the CBO said (IIRC, paraphrased) tax cuts good, stimulus spending bad – so I’d prefer to see a reference to the actual report text before I believe it.

  53. Depressions are the bill you pay for trying to avoid recessions with even looser monetary policy and more government spending to stimulate consumption.

    Hmmm, an awful lot of economists will tell you how wrong that is…and arguing by analogy is fraught with traps for the unwary.

    What you need is a cleansing break. What you get is a money-induced fever of pointless economic activity, full of noisy cash registers, signifying nothing.

    Only if you do it wrong. You really want a significant portion of your stimulus to invest in things that will increase productivity when the economy starts to improve again…

    BTW, who gets to decide what is “pointless” and what is “pointful (?)” and how do you tell the difference?
    economic activity?

  54. That, from Mat, Forstat, articulates it beautifully.

  55. Turnbull is dead meat. A ‘something’ will go through the Senate and if it isn’t exactly what Rudd has suggested, then it will be because Turnbull has been obstructionist. And so therefore, if it doesn’t work then it will be Turnbull’s fault..too clever by half.

  56. Aquanut

    You think John can be long winded. Professional hazard!

    I think we get it from working with senior executives that had no idea how businesses really operated so we had to spell everything out in fine detail . John tells me all the time how hard it is trying to break the habit. I understand what he means now – and that’s no insult to any patient enough to read through long explanations.

  57. Min, Turnbull is not dead meat until the gang of three decide so.

    There will be a lot of adjustment to the bill…the Greens have put their two leaves in.

    http://www.theaustralian.news.com.au/story/0,25197,25016010-601,00.html

    Expect more of the same from the two independents as well…nothing like holding the balance of power.

    I watched a snippet of Barnaby questioning Henry which indicated the whole package was formulated on the back of an envelope…same old reactionary stuff!

  58. Scaper. Obviously Brown will use the opportunity to get a few extras such a solar. I think that it is well thought out bearing in mind that you have to get it through the Senate, and so something for schools, something for the environment etc. And all means jobs.

    As above I believe that the Greens will support it. The one that I don’t trust is Fielding as he has shown himself to go which ever way the wind blows. Family Impact Statements, insisted it these once or twice and then nuffin’. Fielding has also shown himself to be weak when confronted with lobbyists.

  59. “Fielding has also shown himself to be weak when confronted with lobbyists.”

    Got a link to substantiate that statement?

    I’ve had advice to the contrary.

  60. Of course not scaper. Where on earth would Fielding state ‘I am weak when confronted with lobbyists’. This is a personal opinion.

    But what about: Fielding scuttles Medicare changes
    BY DANIELLE CRONIN
    25/09/2008 11:24:00 AM
    Family First senator Steve Fielding enraged the Government last night by killing its already compromised Medicare Bill in the upper house.
    Senator Fielding joined the Coalition to vote down the Government’s planned changes to the Medicare levy surcharge thresholds, while Independent senator Nick Xenophon and the Greens sided with Labor.

    Prior to making this decision Fielding admitted to being lobbied by the health care group.

  61. Oh, I see now…if a politician listens to a lobby group and his decision is swayed he is weak?

  62. Scaper, yes given that Fielding did a complete 360 degree turn.

  63. Oh, it is a weak man that changes his mind, eh?

  64. It is a weak man who has made up his mind yet does a 360 degree turn after meetings with lobbyists.

  65. So you were at that meeting???

  66. Fielding is only an opportunist. He wanted to be a politician for the sake of being a politician. No substance, no platform, but at least he wasn’t preselected through some grubby deal between union hacks and factional warlords.

  67. The factional warlords of the Liberal party you mean, and they are meaner, more underhanded and more ruthless than anything the unions or left can produce.

  68. Min, on February 6th, 2009 at 3:37 pm Said:

    It is a weak man who has made up his mind yet does a 360 degree turn after meetings with lobbyists.

    You mean 180 degrees, 360 brings him back to his original stance.

  69. Thank you Adrian. I was never good at maths. Am just wondering what lures will be needed for Fielding to vote pro package. I believe that he is a wild card in spite of his supposed ‘family first’ stance, that is he has voted anti-family in the past when pressured by lobbyists.

  70. Adrian, of course the factional warlords are meaner than those of the ALP. The blue rinse set do have a particularly viscous streak.

  71. You mean 180 degrees, 360 brings him back to his original stance.

    Only if he’s on the level. He could end up below his original position if he follows a spiral path 😉

  72. If he ended up lower Latharsson then he would have to be following a helical path, not a spiral one.

  73. So the PM said he was an economic conservative before the election and now he is a social capitalist???

    A 180 degree turn…must be weak.

  74. In Turnbull’s defence, one of his original complaints was that he was only given 48 hours to assess the bill. I don’t know how long they normally get, but that strikes me as being a bit too short.

    To continue his defence, it could be argued that Rudd is echoing Obama in piling on the stimulus – and that the echo isn’t necessary here (at least not yet). The US is up against ZIRP – zero interest rate policy. For all practical purposes it can’t cut interest rates any further. That means the US has lost the ability to use one of the main economic levers to address the current crisis, and is looking at a potential deflationary trap. Australia can still lower interest rates if that would help, so we don’t necessarily have to stimulate in the same way that the US must. (That data point on its own doesn’t prove Australian stimulus is a bad idea, but it doesn’t mean it’s good either. You have to figure that out based on current circumstances & expectations.)

  75. …he would have to be following a helical path…

    Er, yes, that’s what I meant…good catch.

  76. So the PM said he was an economic conservative before the election and now he is a social capitalist???

    Wait, wait – Rudd’s echoing Bush? Is Rudd’s social capitalism different from Bush’s lemon socialism?

    It’s all too postmodern – I can’t keep track of it any more 😉

  77. scaper, economic conservatism is a braod term, and can be described in varous ways.

    Wikipedia has it as “Fiscal conservatism is the economic philosophy of prudence in government spending and debt”

    It must be highlighted that many opinionists have worried that the stimulus package is too small. So to them, it is still economically conservative.

    Of course, the libs, who are the epitome of economic conservatism (sic) would know better what it is.

    And I think I will still go on the advice of treasury, they have more cred in the field than armchair economists and political ideologs (ie churnbull).

  78. Why wasn’t the Reserve Bank consulted before this so called package was announced???

  79. scaper…, on February 6th, 2009 at 4:29 pm

    g’day scaper, good day at the office?

    Mate, ’cause its nothing to do with the RBA and Treasury agrees with it – Dr Henry said so at the Senate Committe…

  80. Obviously you didn’t see Barnaby question Henry!

  81. Gee, Fielding wants four billion of the package to assist the unemployed…how weak!!!

  82. scaper…, on February 6th, 2009 at 4:35 pm

    Oh! Yes I did…

    Dr Henry agrees with the government – he probably developed it!

  83. Who would have thunk, a government working in collusion with the treasury department over a multi-billion dollar package.

    It IS a brave new world.

  84. [b]scaper…, on February 6th, 2009 at 4:35 pm Said:[/b]

    Obviously you didn’t see Barnaby question Henry!

    Certainly did, and he left Henry stumbling a couple of times. Abetz did even better with the first question of the enquiry, a perfectly good and straightforward question that had the Treasury reps silent without an answer.

    But nothing Barnaby or Abetz got out or didn’t get out changed the overall content of the story being told in the answers.

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