Las Vegas Sun

October 1, 2014

Currently: 73° — Complete forecast | Log in | Create an account

J. Patrick Coolican:

Romney’s flawed economic plan is stuck in 1980

Image

Leila Navidi

Republican presidential candidate Mitt Romney speaks at McCandless International Trucks in North Las Vegas Tuesday, September 6, 2011.

Mitt Romney in North Las Vegas

Republican presidential candidate Mitt Romney speaks at McCandless International Trucks in North Las Vegas Tuesday, September 6, 2011. Launch slideshow »

Listening to Mitt Romney detail his economic plan in North Las Vegas on Tuesday, I was reminded of the Talking Heads lyric “same as it ever was” from the song “Once in a Lifetime,” released in 1980.

Same as it ever was, because no matter the condition of the country, the Republican economic plan is always the same. For them, it’s always 1980.

We had some weird tax laws then — including in some cases rates that were too high — that stifled investment and entrepreneurship. We also suffered from high inflation. Taken together, it was called “stagflation.”

The response of President Ronald Reagan was to cut taxes, while the Federal Reserve tightened the money supply, which finally curbed inflation. The result, assisted by falling oil prices, was recovery, although it wasn’t broadly shared, as most of the gains went to upper-income Americans.

But stagflation isn’t what we face today.

“The fundamental problem in today’s economy is that there’s not enough demand,” says David Madland, an economist at the liberal Center for American Progress. In fact, our corporations are sitting on mountains of cash and corporate profits are near record levels, but they’re not hiring because they have no confidence that customers — you and me — feel economically secure enough to make purchases.

This is not some wild-eyed liberal theory. Conservative economists say it too.

“Businesses have responded negatively to the weakness of household demand,” Martin Feldstein, a former chairman of Reagan’s Council of Economic Advisers, recently wrote.

In other words, companies have the money to hire but aren’t going to because they see consumers who are out of work or nervously hoarding instead of spending.

So what does Romney propose? A cut in the corporate tax rate, naturally. He says that American corporate tax rates are the second highest in the developed world, behind Japan.

This is only true in the narrowest sense, as our corporations take advantage of huge loopholes that make their effective rates only slightly above average among industrialized countries and, according to a study released in 2008, often pay nothing at all. The most obvious recent example is General Electric, which made $5.1 billion profit on its U.S. operations in 2010, and expects to have tax liability near zero. Is GE not hiring because its tax bill is too high?

Moreover, this plan to cut taxes, in addition to other tax cuts for the wealthy and an investment tax cut for the middle class, is all the proof you need that Republicans don’t actually care about deficits. As former Vice President Dick Cheney once reportedly said, “Reagan proved deficits don’t matter.”

Both Reagan and President George W. Bush ran up huge deficits during economic recoveries. And despite all the hue and cry among Republicans about deficits, I’d bet big money they stop caring once they win the White House, and this Romney plan is a perfect illustration. He would pay for his big corporate tax cut with a 5 percent cut in nondefense, nonentitlement spending, meaning no cuts to Medicare or Social Security or the Pentagon.

Sorry, but those items make up the vast majority of the budget, so a 5 percent cut just doesn’t get you there.

Romney would also slash regulations. Fewer regulations would make it easier to start and expand businesses.

But our frenzy of deregulation since 1980 in the financial sector led to our current demise. We didn’t oversee mortgage lenders as they gave out bad loans to people who couldn’t repay. We didn’t regulate ratings agencies that gave AAA ratings to the junk. We allowed huge banks to borrow lots of money to bet on those mortgages in what amounted to a giant unregulated casino. Even we here in Nevada know the casino has to be closely monitored.

Romney concedes the need for “greater transparency for interbank relationships, enhanced capital requirements, and provisions to address new forms of complex financial transactions,” while at the same time saying he’d throw out the financial regulatory law that passed in 2010.

And who would write the new Romney regulations? Am I being cynical when I suspect bank lobbyists would write them?

Conspicuously absent from the Romney plan is anything about housing. Construction spending has led us out of just about every recession since World War II. But because there was so much overbuilding — especially in Las Vegas — construction is dormant. And because nationally there are 4 million mortgages seriously delinquent or in foreclosure, construction will remain flat for years. Romney has nothing to say about this. Maybe because it wasn’t a problem in 1980.

As Robert Reich noted in The New York Times this week, since 1980, American productivity has increased 80 percent, while average hourly compensation has increased just 8 percent. Incomes of the top 20 percent of workers rose 55 percent, while everyone else lagged far behind, and the poorest actually got poorer. In 2007, the richest 1 percent of Americans won 23.5 percent of the national income, the greatest share since 1928.

By contrast, from 1947 to 1979, productivity increased 119 percent and average hourly compensation increased 100 percent, with the prosperity shared broadly among all income groups.

What have we done since 1980? We’ve enacted a bunch of policies that Romney thinks we should enact more of.

Join the Discussion:

Check this out for a full explanation of our conversion to the LiveFyre commenting system and instructions on how to sign up for an account.

Full comments policy

Previous Discussion: 32 comments so far…

Comments are moderated by Las Vegas Sun editors. Our goal is not to limit the discussion, but rather to elevate it. Comments should be relevant and contain no abusive language. Comments that are off-topic, vulgar, profane or include personal attacks will be removed. Full comments policy. Additionally, we now display comments from trusted commenters by default. Those wishing to become a trusted commenter need to verify their identity or sign in with Facebook Connect to tie their Facebook account to their Las Vegas Sun account. For more on this change, read our story about how it works and why we did it.

Only trusted comments are displayed on this page. Untrusted comments have expired from this story.

  1. It's pretty simple really. If the private sector stops spending, and the government doesn't spend, nobody is going to buy anything. When nobody buys anything nobody gets paid. If no one gets paid, people get laid off, bills stop being paid on time and more people resort to government support. So I say to you, anti-government spending zealots, why aren't you urging the cash hoarding elite to start spending? Us peons can't spend what we don't have. The recovery must come from the top, and if we need to take the money from the greedy bastards to get the ball rolling so be it. It's time shared suffering actually went into effect. Otherwise, I suggest you turn on the news and see what's been going down in Egypt, Libya, et. al. They lived under a repressive regime for decades. It was only until the disproportion of wealth grew astronomically in those countries that they decided enough is enough. It's not about freedom, democracy, or any of that other stuff, it's about feeding your family. Get us hungry enough and the same will go down here.

  2. There is plenty of consumer demand, just walk into any Wal-Mart or other big box store. But the demand is for inexpensive foreign goods that meet quality expectations.

    There is little or no demand for US labor.

  3. FTZs or foreign trade zones have already been exploited by Rick Perry. Texas has 32 FTZs and 20 active deals going with the Chinese.

    These zones ease the flow of foreign goods into the United States that are chalked full of tax breaks for importers. Perry's office promoted these FTZs in a document entitled Foreign Trade Zones: Texas Wide Open for Business.

    Tax breaks in the FTZs are turned into distributions to PACs that support FTZ operations and growth. Thanks to Chief Justice John Roberts, unlimited funds can be channeled to the campaigns of legislators by groups or foreign governments that have their own interests at stake.

    Of special interest: The Washington Post has documented Perry's work to get Chinese government owned telecommunications company Huawei, to base its U.S. operations in Texas. This is a company that the U.S. government has deemed a threat to national security noting that "three times since 2008, a U.S. government security has blocked Huawei from acquiring or partnering with U.S. companies because of concerns that secrets could be leaked to China's government or military."

    Foreign interests are ready to buy or lease any member of Congress, State or Federal that they can interest for support.

    If Huawei is funding a PAC which funds Perry's associates, we might never know, but Perry doesn't care - this is election time.

    Romney also sees a golden opportunity to create FTZs that might ultimately sponsor other PACs loyal to Romney & Associates.

    The FTZs snub their noses at the American people and it's democratic government because they don't feel obligated to pay for our Security, to pay the costs of the military, fighting Terrorism, or improving our roads and environment. They want the goodies but nothing of the cost to get them. Romney and Perry both agree with this statement by their actions.

    Neither of the two are concerned about foreign governments funding American campaigns because their only interest is in winning the election, albeit with Chinese money. Even Mohammad allows infidels to work on Muslim soil if they are making money for the Imans and the mosques.

    Romney's economics are flawed for America, but perfect for China. Good ruck.

  4. Mr Reid. No, Fannie and Freddie did not cause the housing crisis.
    Look at these charts:
    http://krugman.blogs.nytimes.com/2010/06...
    At the height of the bubble, it was private players, not Fannie and Freddie, who were doing the securitizing.
    And neither did the Community Reinvestment Act cause the crisis, because during the height of the boom, subprime loans were being made by players not subject to the CRA.
    But please, since there are so many flaws with my argument, go on.

  5. Stagflation is actually rising unemployment and rising inflation.

    Krugman has actually lost the respect of most of the economic community. That said, while reasonable people can disagere on the issue, it is laughable that Fannie and Freddie had no part to play. Krugman is really stretching the facts there.

    Part of the problem isn't that Freddie and Fannie were originating the loans but they were backing them.

    So yes, when you ignore significant chunks of what was going on then it had nothing to do with it. ;)

  6. On your nostalgianomics: http://www.cato.org/pub_display.php?pub_...

    "Krugman and his colleagues offer a highly selective and misleading account of the relevant changes. Looking back at the early postwar decades, they cherry-pick the historical record in a way that allows them to portray that time as an enlightened period of well-designed economic policies and healthy social norms. Such a rosy-colored view of the past fails as objective historical analysis. Instead, it amounts to ideologically motivated nostalgia."

  7. ...40 percent of the subrpime securitization was bought up by Frannie and Freddie I believe. and the CRA had a much wider net than Krugman will admit.

    To say the government played no role is nonsense. To say greed played no role is also nonsense.

  8. Well done Mr. Coolican. It is very refreshing to see well researched knowledge. Hank Greenspun would be very proud of your work. Keep it up!

  9. Last time I looked at non-party-based Accounting, the formula was Revenue - Expenses = Profit (or Loss). But we are treated to Republican Party Accounting in which Expenses = Spending = Deficit and Democratic Party Accounting in which Taxes = Revenue = Surplus.

    If we could get rid of the two Parties and their fantasy-based "plans", we could probably fix this mess. After all, the country has an economy of close to $15TN with about 84% employment which aren't bad starting points for fixing real (as opposed to ideological) problems.

    Right now, unemployment seems to be concentrated in residential Construction and leisure services. There is, however, a huge gap developing between the small number of housing units being built and what ought to be a much larger demand for those units based on the historical rates of household formation. There are two reasons for this gap: (1) tightened credit and down payment requirements and (2) unemployment is highest among age younger (would-be) workers who would normally be establishing credit histories and savings prior to household formation. If we can put household formation back on track, then residential construction unemployment would disappear as builders raced to fill orders to deal with the pent-up demand. The demand for existing housing would also increase, which would raise house prices, and have people feeling wealthier. That would increase consumer spending, which would help put folks back to work in leisure services, reducing unemployment in that group. And with more folks employed and feeling wealthier, retail and manufacturing would also see increased demand.

    But we are now in Silly Season, ...

  10. Ill respond again (pardon, I'll keep making a fool of myself, as Mr. Reid says) when not on my phone and have access to a keyboard.

  11. Starting from the bottom: "Deficits are a spending problem." Except, you know, when they're not, like when we cut taxes in 1981 and had massive deficits as a result. Read David Stockman's book. Then, in 2001 and 2002 and 2003 we cut taxes again. (And got in two wars we didn't pay for.) Deficits resulted. As for the current deficit, most of it can be attributed to the Bush tax cuts, the recession (which has caused a spike in Medicaid, food stamps, but also collapsed revenues), and the wars. The stimulus is nearly finished, so it can't be blamed for the deficit. Check out the chart with the long term budget outlook: http://www.cbpp.org/cms/?fa=view&id=...
    As for Fannie and Freddie, like I said, the majority of the securitization was being done by financial institutions other than Fannie and Freddie during the crucial years. Why? Because there was tons of money to be made. Read this McClatchy piece: http://www.mcclatchydc.com/2008/10/12/53... Key passage: "Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble. During those same explosive three years, private investment banks -- not Fannie and Freddie -- dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie, according to a number of specialty publications that track this data."
    Did I say Fannie and Freddie had nothing to do with the meltdown? Ok, maybe I should have said they had not much to do with it. (And what about unregulated credit default swaps?)
    Banks were forced to lend? Check out this investigative piece about Washington Mutual, a thrift not subject to the CRA http://seattletimes.nwsource.com/html/bu...
    they became a predatory lender to increase profits.
    Yes, I know what stagflation means. Sorry, I shouldn't have assumed we all knew the period I was talking about included rising inflation and unemployment.
    Paul Krugman recently was awarded the Nobel.

  12. "Paul Krugman recently was awarded the Nobel prize"

    an appeal to hero fallacy. I can find other Nobel prize winners who agree (on some issues) and disagree with him on others - dead or alive. I've also heard many academic and professional economists question Krugaman's incentives now that he makes considerable money as a left-wing gadfly rather than a serious academic. His current newspaper work contradicts some of his own past academic work. I'm ok with him selling out, I just don't think people should think he's a serious economist anymore.

    That said, I think it is complete nonsense to assume the Bush tax cuts cause the mess

    1) Tax revenue increased through 2007 - government spending increased faster.
    2) No evidence that government takes surplus and keeps it for long. Look what Nevada's Democrats did. They looked to close a small budget shortfall in 2003-04 and eased over $1 billion more than they needed, then proceeded to spend every extra dime until it all became essential government services.
    3) Government tax revenues seem to float around 18-19 percent of GDP pretty constantly.
    4) Federal Government spending has ballooned to over 25 percent of GDP - the highest level since WWII ended
    5) Toss in local and state government and we spend more as a percent of GDP than we did during WWII

    Its pretty clear the problem is spending, not taxing.

    http://mercatus.org/publication/federal-...

    http://www.taxpolicycenter.org/taxfacts/...

  13. Increases in govt spending are largely due to massive health and defense cost inflation. The uss Gerad R Ford super carrier is under construction at a cost of between 9 and 14 billion. Up from about $50 million for a carrier in WW2. Medical costs will exceed $150 trillion over the next 40 years. This is greater than gross world GDP today.
    Medicaid is bust. Medicare is currently having difficulty. Reductions in spending necessitate a revamp of how these programs are funded and a reduction in the money paid to medical inputs. Spending is a problem in the sense that about 138 million Americans are receiving some type of assistance. The burden is huge.
    Manufacturing and strong economic growth tends to be in countries with the cheapest labor costs. With millions willing to work for a few bucks a day labor intensive industries that can avail themselves of the low cost labor won't be back in my life time.

  14. Talking about interbank relationships, transparency and regulation are minuscule issues compared to the problems in dealing with 78 million retiring people and not having a youthful country to cover the cost of the elderly.
    Revamp the tax code, reduce regulation....fine...the fiscal issues won't change and outsourcing won't change.
    A casino worker in Macau makes about $700 a month. MGM pays $400 million in medical for 40,000 workers. Medical costs per worker in Vegas exceed total labor costs in Macau. When labor costs in the third world rise to our level then outsourcing will stop. Give it about 50-100 years.

  15. Patty wrote this: " I can find other Nobel prize winners who agree (on some issues) and disagree with him on others - dead or alive. I've also heard many academic and professional economists question Krugaman's incentives now that he makes considerable money as a left-wing gadfly rather than a serious academic. His current newspaper work contradicts some of his own past academic work. I'm ok with him selling out, I just don't think people should think he's a serious economist anymore." So name those Nobel Prize winners and explain why they are correct.

  16. I got my BA in Econ from UCLA decades ago. Econ is NOT a science. Economists disagree on nearly everything. You can get an award for a theory one year and be wrong on everything the next 50. Some of us believe govt spending provides a buffer during weak economic times, some don't. Thats life.
    Stock market losses combined with a bear market in real estate have cost Americans trillions. A recent business poll reflects only one American in four can lay their hands on 2 grand in 30 days. Check it.
    Millions more will be lining up for assistance before all this blows over. The fiscal burden will be astronomical.

  17. I wonder if the GOP is figuring out - the people who SPEND money are the poor and the middle class. The reason it is true stimulation when you give money to us - we have things we really need and want. Billionaires only need so many cars, houses, and food. Once they get them, they stop spending and hoard wealth.

    For awhile there, the Vegas economy was being kept afloat by unemployment and food stamps. If you want people to spend some money, give it to someone who really NEEDS something. We are waiting for that money because they are just trying to survive.

    Giving money to poor people is even in the best interest of the GOP Billionaires. But they probably don't care because they are off floating on their own private island somewhere with America's wealth.

  18. Mr. Coolican,

    Ok, you don't favor Romney's economic plan. Do you favor Obama's? If so, why? What about a total re-write of the income tax code. I have heard several economists say that has the potential to raise revenue to the government. That could provide more money to reduce the deficit and for the government to spend trying to get the economy moving. Would you favor that?

    Michael

  19. This endless obsession with the deficit during a worldwide economic slowdown is like worrying about your hair before your put in front of a firing squad. As economies slow governments will see less revenues and an increase in various entitlement costs.

    You deal with deficits and fiscal crises at a time when the economy is strong, unemployment is low and there is ample funds to deal with the issue. This is not true today.

    You're going to see deficits rise until the unemployment rate is down to a historical norm of about 5%. This will take years.

    We have had deficits since the Revolutionary war and for the most part no one has given a damn. Now, because of Fox news, deficit talk has become the national pastime even though most people don't have a clue as to what they're talking about. The dramatic spending cuts that Republican politicians are talking about will prolong the economic slowdown and increased unemployment for years.

    The government has the ability to generate the funds it needs to cover all of it's liabilities through a variety of methods including printing money. A country that can print its own money can't go broke. Every day on Fox news some buffoon says the United States is broke. Because of this Americans are picking up on the America is broke mantra.

    Bill Gross is the founder of PIMCO. PIMCO is the world's largest holder of various debt instruments. Bill Gross is also one of the world's wealthiest men. He discusses these issues monthly. Log onto PIMCO and read his posts going back a year or so.

  20. Hi Mark,

    Dead economists with the nobel prize who would disagree: Milton Friedman and FA Hayek for certain.

    Alive ones: James Bucannon, Edward Prescott, Vernon L. Smith, Gary Becker at least.

    in addition to a few hundred influential academic economists also opposed or were skeptical about the stimulus plans and bailouts.

  21. Read my above post. Economists disagree on nearly everything. If you look at the worlds 9 million millionaires very few are economists. That should tell you something.
    You are better advised to listen to the worlds self made billionaires. At least they have a track record of wealth and job creation. Economists don't.

  22. When I started in the economics program at UCLA in the 1970s outsourcing was just beginning. The prevailing view of my professors at the time was that outsourcing was good and that Americans would benefit from the cheaper goods that were produced in Third World countries.

    In addition I was taught that America's displaced workers would return to school, get re-educated and return to the workforce with more modern job skills. This would result in higher wages and better benefits for the workers on down the line.

    Instead those displaced workers have lined up for massive welfare benefits. The high-paying jobs that they had before were replaced with lower paying jobs and no benefits. In addition America has lost some great industries and the low-paying service sector has emerged as one of the nation's largest employers with the average worker making about 11 bucks an hour.

    Read the following statistic to get an idea of the end result of not protecting America's major industries. Most Americans don't have a pot to piss in.

  23. Comparing the 1980s to the current environment is absolute nonsense. In 1980 we had a young vibrant workforce. Today we have 78 million people retiring and very few young people to cover the cost of the elderly. In 1980 healthcare costs were a pittance. Currently medical costs run nearly $20,000 a year per family and are responsible for millions of bankruptcies.

    I paid $600 a quarter to go to UCLA in the 1980 time frame and graduated March 31, 1981. Today kids pay as much is $40,000 a year. Student loans currently exceed total aggregate credit card debt and are approaching $1 trillion. This is going to burden young people for years to come.

    I won't even get in to all the wars going on. That has been discussed enough.

    The above factors combined with many others make drawing direct comparisons between 1980 and today impossible.

  24. Instead of obsessing over Fannie research Countrywide Credit and Angelo Mozillo. History will show that the massive loan origination that came from this firm was the main factor that brought the country to it's knees. Bank of America took over the Countrywiide portfolio after the firm blew up. Currently Bof A iis near total collapse because of so many non performing mortgages. They announced last week they may have to close half their branches and lay off 140,000 workers.
    Mozillio got a small piece of the origination pie. His cut over $600 million. Thousands of mortgages to ideots with no jobs and countless others with no credit checks.
    Fannie and Freddie bought mortgages which reduces loan risk, allows for more origination and expanded ownership. In this sense risk distortion occurs.
    Pimco has studied and written extensively about the issue. The are the worlds largest private holder of debt.
    You can currently get a mortgage for about 4% even though defaults ore extremely high. Pimco estimates rates would be 14% to 16% without subsidization. The housing inventory is high with 4% paper. The entire sector would blow with 14% mortgages.
    Fraudulent loan origination caused the crises. Fannie and Freddie caused housing expansion buy buying mortgage paper and having rate distortion.
    The mortgage paper that was packaged bought and sold world wide with bizarre names. Swaps, mortgage backed securities etc. was rated AAA by the rating agencies and caused investors to lose their shirts AIG, Iceland, Ireland, Lehman etc. This contributed to the world wide contraction.

  25. Patty,
    Please don't even try to speak for the dead as it makes you appear even more slow witted than usual.

    Now, name the specific statements of your live economists and why they are correct...or not.

  26. Patty,
    By the way, nice try at pulling some names off the Nobel site without actually knowing their position.

  27. MONEY... Employees of Countrywide said they did it for the commissions. Loan origination is a commission business. Nearly everything in the financial industry operates on commissions and incentives. If you don't sell you don't make any cash.

    Why do you think loan originators made millions of lousy loans. The glory! It was all done for the money.

    The government never in any of its programs encouraged loans to be made to people that didn't have jobs or the resources to pay those loans back. This is a total myth. All the government wanted to do was expand homeownership.

  28. If you look at the analysis of Countrywide's subprime loan documents as well as all of the nonconforming loans you will find that they were involved in some of the most corrupt practices in the history of US business. Angelo Mozilo has been voted the worst CEO in history.

    Low-level employees were encouraged to provide loans to people that had no jobs and almost no money. They encourage the employees to provide high risk loans loans to minorities so they could increase commission rates. In many instances when people were finished signing their life away they didn't even have enough money for food. This was a scheme on a massive scale to generate enormous commissions without due diligence or any respect for the customers whatsoever. I don't think that Fannie Mae and Freddie Mac could even buy nonconforming paper. Much of the nonconforming paper was packaged and sold to Wall Street. Wall Street then turned around and sold the crap all over the world causing worldwide dislocations. Every step of the way commissions were generated. All this was done for money and nothing else.

  29. Mark,

    Having read both Hayek and Friedman, its pretty clear their "no corporate bailout" position means no corporate bailout. If you knew who they were, I probably wouldn't have to remind you.

    As for the others, 3 of them signed the Cato Institute position against the bailout, the other was interviewed about it as a skeptic because Biden's statement that every economist agrees with the stimulus plan....which is not true.

  30. If three emeritus (this means in their dotage) economics profs signed anything by CATO that proves they are losing their mental faculties...just like you have. Now give the EXACT Biden quote and stop ducking any detailed explanation because you have the intellectual ability of an insect.

  31. Mr. Coolican is right -- we need a major overhaul of the tax code. There are massive loopholes and inequity in the system. Is is also a validated fact that about 45% of all American households pay zero income tax, other than the pay-check witholding for Social Security. So the inequity goes from the bottom to the very top of the economic pyrammid of American society.

    The problem with Mr. Coolican (and Paul Krugman's) view of the world is it doesn't work.

    Structures in our government -- which Mr. Obama expanded -- have increased spending and contributed to a $1.5 trillion operating loss in each of the last two years. We could obviously accept Patrick's argument -- that if we only collected more taxes, the operating loss would be smaller. Meanwhile, let's keep on spending and borrowing to do it! Those GOPers and TEA Partiers are pesky impediments to our spending enough!

    But surely Mr. Coolican is smart enough to know that he could tax the top 5% of American households at an 80% marginal tax rate and it still wouldn't make a DENT in the deficit that Obama's vision of government has created.

    I think we should try to get Pat a special slot with Rachel and Ed and the whole crowd of big thinkers on MSNBC who spin their arguments so they can try to avoid admitting a basic premise of their thinking about market stimulus, which is really this:

    The government must spend when the people don't. If only the government spendt more, put money into the pockets of people, then the economy would revive itself. In the end, that's sort of what Paul Krugman wrote at Princeton and still believes.

    The problem is when the 99th week of unemployment payments ends, that person is still not spending, consuming or buying. The only way that ever really happens is when a person feels stable in their earnings and productive capacity to take care of themselves and their families.

    And no amount of market "stimulus" creates that fact pattern. No amount of government programs can create sustainable employment. That happens when people are employed in the private sector, which is terrified of this behavior in Washington.

    Under Patrick's view of the world, we should just have the Feds keep hiring and hiring and creating government make-work jobs until everyone gets up and goes somewhere each day so we can justify the wealth transfer and pretend they're actually producing something.

    Pat and Paul would have our friend Ben keep the printing presses on so the government can print plenty of money to pump through the system to pay all of these new "employees".

    Been to Cuba lately?

    While Pat is right about the desparate need for tax reform, for my nickel, he's wrong about just about everything else.