Thank god...I have no choice but to attend to his economics, regardless of who he supports in the primaries.
In particular, now would be a good time to think about the possibility of going beyond tax cuts and rebate checks, and stimulating the economy with some much-needed public investment — say, in repairing the country’s crumbling infrastructure.
A Long Story
By PAUL KRUGMAN
The economic news has been fairly dire this week. The credit crunch is getting worse, and a widely watched indicator of trends in the service sector — which is most of the economy — has fallen off a cliff. It’s still not a certainty that we’re headed into recession, but the odds are growing greater.
And if past experience is any guide, the troubles will persist for a long time — say, into the middle of 2010.
The problems now facing the U.S. economy look a lot like the problems that caused the last two recessions — but this time in combination.
On one side, the bursting of the housing bubble is playing the role that the bursting of the dot-com bubble played in 2001. On the other, the subprime crisis is creating a credit crunch reminiscent of the crunch after the savings-and-loan crisis of the late 1980s, which led to recession in 1990.
Now, you may have heard that those recessions were short. And it’s true that the last two recessions both officially ended after only eight months.
But the official end dates for those recessions are deeply misleading, at least as far as most peoples’ experience is concerned. There’s a reason that the Bush administration, in its (increasingly strained) efforts to tout economic performance on its watch, always talks about jobs added since August 2003. It was only then — two and a half years after the recession began — that the U.S. economy began to experience anything that felt like a recovery.
And the same thing happened a decade earlier: the recession that began in 1990 officially ended in March 1991, but the jobless recovery that followed kept Americans feeling miserable about the economy right up through the 1992 election.
Since the current problems of the U.S. economy look like a combination of 1990 and 2001, the shape of this episode of economic distress will probably be similar to that of the earlier episodes: even if the official recession is short, the bad times will linger well into the next administration.
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Tax Rebate
It is not a tax rebate when people who haven't paid taxes are getting a check.
It is not a tax rebate when not all of the people who have paid tax are getting a check.
It is not a stimulus for our economy when most of the funds will wind up, through Hillary's friends at Walmart, in China.
It is not a stimulus for our economy in that I thought we had gotten past the old Keynesian theory of deficits stimulating the economy. We already have a $200 billion deficit-- how will more debt help?
If we are going to insist on burdening our children and grandchildren with more debt, the least we could do is build or repair some roads, or bridges, or help end our dependency on foreign oil by building more refineries or by slapping solar panels on every flat roof in America-- something that will help the next generation.
Anyone receiving this check should know what it is-- a welfare check drawn on our children's checking account.
This isn't just sour grapes--and on other sites I've received a lashing that anyone earning over $75,000 "doesn't need" a rebate. That's not the point. If the government is doling out a check based on "need"--then guess what? That's welfare. And they should have the guts to call it what it is.
Shame on every politician that supports this wasteful giveaway, and shame on every person who cashes the check.
Hmmmm....
I agree with part of what Tony Iovino says. Naturally, as a student of economics and industrial management, I regard the term "welfare" or "income redistribution" about the same way our host regards the term "identity politics," viz., as something vilified whenever it's inconvenient for the critic.
(BTW, as a student of financial accounting, Mr. Iovino, I can say confidently--you might as well cash that check...and use it to pay off debt that you owe, if any.)
Our economy consists of a congeries of state surrogates, known as corporations, which do indeed redistribute income between the process of generating wealth, and signing paychecks. Only a modest share of national income actually comes from entrepreneurs alone against the dead hand, as it were. Corporations have so much power over the markets upon which they rely for inputs, that they may be regarded as quasi-state entities anyway.
When you're debating the question of whom should receive tax rebate, the real question is naturally, what is a fair tax burden overall? There is something ethically fishy about having one income schedule for establishing one's income tax bill, and another schedule for determining one's rebate: there's no consistent underlying ethical or economic principle behind the final tax burden (income - taxes + rebate). If I were to draw up a general schedule based on what I regarded as fair, the passage of time and ideological shifts would determine if somebody later came along and said, "This curve needs to be steeper," i.e., more progressive, than the original schedule. Does that make it "welfare"?
No.