Obamanomics

[TH3]

No. The advanced countries are all struggling because they have relied on the belief that monetary policy could kick start a post debt-deflation world,while at the same time pursuing fiscal austerity. Meanwhile inequality continues to worsen--yes, even under Obama-- which means more money chasing risky assets when yields are near zero and going negative. You can't fix this economy with the failed policies of supply-side--cutting regulations and taxes on the top won't generate more business sales. This country needs some dramatic policy changes focused on stimulating consumption, and nothing will generate solid growth until that happens.

Bear in mind PPP is its own separate reality.....when people post with a straight face "growth is not governed by consumption"....

[4merper4mer]

Let me guess, you don't know the difference between discretionary and non-discretionary spending?

If you didn't know, there's this demographic bubble called the baby-boom generation....

 

Nobody forced you to use the word "total" in your post. But now you meant discretionary?

[TH3]

Let me guess, you're excluding entitlements out of that number

Why don't you get off your ass and check....you might learn something

[Magox]

Bear in mind PPP is its own separate reality.....when people post with a straight face "growth is not governed by consumption"....

 

No you little twit, what people such as myself are saying is that pumping money into the economy via Government measured stimulus does not solve the structural issues we are facing. Don't you have somewhere else to be pretending to be something that you aren't?

[GG]

Why don't you get off your ass and check....you might learn something

I did you idiot

 

Why do you think I asked the follow up question, which was ignored?

 

Oh that's right, because government expenditures as percent of GDP have not declined.

[keepthefaith]

Why don't you get off your ass and check....you might learn something

I'm quite sure without looking at the numbers that total U. S. government spending is rising yearly at a higher rate than GDP. Even going back a few decades and looking at it yearly I doubt there will be many single year exceptions to this but I am going to look. Since when is the spending to GDP ratio terribly important? More fiscally conservative folks are concerned with the mounting debt caused by the expansion of government because the interest on the debt is a rising expense and the debt itself a ticking time bomb should interest rates in the future rise to more historical norms. People spend little time thinking about that as the sun rises and sets every day and we pay the interest with more debt. I doubt any economist can make a good argument that this isn't a significant future risk. We need policies that promote private sector economic growth which in turn should increase tax receipts to the government while growing government spending at a slower rate.

[GG]

I'm quite sure without looking at the numbers that total U. S. government spending is rising yearly at a higher rate than GDP. Even going back a few decades and looking at it yearly I doubt there will be many single year exceptions to this but I am going to look. Since when is the spending to GDP ratio terribly important? More fiscally conservative folks are concerned with the mounting debt caused by the expansion of government because the interest on the debt is a rising expense and the debt itself a ticking time bomb should interest rates in the future rise to more historical norms. People spend little time thinking about that as the sun rises and sets every day and we pay the interest with more debt. I doubt any economist can make a good argument that this isn't a significant future risk. We need policies that promote private sector economic growth which in turn should increase tax receipts to the government while growing government spending at a slower rate.

 

The ratio is vitally important if you think that monopolist spending with no accountability is a bad thing.

[TPS]

 

I wonder who said that in the long run we're all dead.

 

Funny how you like to mix on-budget & off-budget receipts when they suit your argument, but suddenly want to parse out discretionary & non-discretionary spending. In the long run, the difference doesn't matter, because the government is taking over an increasingly larger share of output and is squeezing out private enterprise.

 

It's a bit naive to ignore entitlements from the discussion, particularly because there's a demographic time bomb that's ticking down.

That's the economist in me, since discretionary spending is directly counted in GDP stats (the 'G' part) and non-discretionary is counted as a transfer to households, so it shows up in the consumption category. I focused on discretionary because neither party has been very willing to touch non-disc, and non-discretionary is influenced by the baby-boom bubble and rising healthcare costs. You can't blame a president or Congress for people getting older.

 

Yes, SS and Medicare are the most important issues going forward, because of the two factors cited above. However, when you look at federal discretionary spending, it's currently at the low end historically.

 

The original point, Keynesian stimulus (measured in discretionary spending) was implemented from 2009-2011; discretionary spending peaked at 9.1% in 2010, and is now down to 6.6% of GDP. Non-discretionary was steadily rising throughout the 2000s (10.2% in 2000 to 11.4% in 2007), then unemployment payments, as a result of the crisis, caused a dramatic increase to 15.9% in 2009, falling to 13.8% in 2014, and has ticked back up to 14.3% in 2015.

 

The TOTAL impact (Disc + Non-Disc) from government declined from a peak of 24.4% in 2009 to 20.4% in 2014 (it increased to 20.7% in 2015). Essentially, the overall impact of the federal government has been declining since 2009. State and local spending has declined (as a share of GDP) since 2010 as well.

 

I'm all for a discussion on the total, but the drivers of non-discretionary spending are structural, not some form of Keynesian stimulus policy.

[TPS]

Nobody forced you to use the word "total" in your post. But now you meant discretionary?

I'm a creature of my discipline. Total government spending in the GDP accounts is made of federal discretionary spending combined with state and local spending. Non-discretionary is considered a "transfer payment" which raises disposable income and consumption. E.g. Social Security is income transferred to seniors, who then decide how much to consume and save out of that transfer.

[TPS]

Bear in mind PPP is its own separate reality.....when people post with a straight face "growth is not governed by consumption"....

I've been here since its inception, and we are all good friends here....

Alaska Darin has a crush on me.

[TPS]

I did you idiot

 

Why do you think I asked the follow up question, which was ignored?

 

Oh that's right, because government expenditures as percent of GDP have not declined.

No, I just can't get here as often as you private sector workers...

[GG]

That's the economist in me, since discretionary spending is directly counted in GDP stats (the 'G' part) and non-discretionary is counted as a transfer to households, so it shows up in the consumption category. I focused on discretionary because neither party has been very willing to touch non-disc, and non-discretionary is influenced by the baby-boom bubble and rising healthcare costs. You can't blame a president or Congress for people getting older.

 

Yes, SS and Medicare are the most important issues going forward, because of the two factors cited above. However, when you look at federal discretionary spending, it's currently at the low end historically.

 

The original point, Keynesian stimulus (measured in discretionary spending) was implemented from 2009-2011; discretionary spending peaked at 9.1% in 2010, and is now down to 6.6% of GDP. Non-discretionary was steadily rising throughout the 2000s (10.2% in 2000 to 11.4% in 2007), then unemployment payments, as a result of the crisis, caused a dramatic increase to 15.9% in 2009, falling to 13.8% in 2014, and has ticked back up to 14.3% in 2015.

 

The TOTAL impact (Disc + Non-Disc) from government declined from a peak of 24.4% in 2009 to 20.4% in 2014 (it increased to 20.7% in 2015). Essentially, the overall impact of the federal government has been declining since 2009. State and local spending has declined (as a share of GDP) since 2010 as well.

 

I'm all for a discussion on the total, but the drivers of non-discretionary spending are structural, not some form of Keynesian stimulus policy.

 

The economists also always miss what drives the economy and aren't really good in their predictive skills. Because so much time is spent on analyzing history they always miss what's affecting current growth.

 

Up above you were very dismissive of what a CFO told me, even though he has the actual authority to hire more people if he needed to, which he absolutely did not want to do in the 2009 environment. But to you, because he's an anonymous source, his words should be discredited and we should focus on economic gobbledygook that somehow treats government spending as the end all for economic growth and job creation.

 

Using gov't spending as percent of GDP in your examples is wholly misleading because you ignore the massive spending build up during the crisis, compared to a drop in GDP. Of course the percent will peak in 2009. But the actual spending amounts have not declined, which is something that real people care about, because again, as government takes up a larger share of the economy, it crowds out private enterprise. And that is always, always a bad thing for economic growth, real job growth & wealth creation.

Edited August 31, 2016 by GG

[TPS]

 

The economists also always miss what drives the economy and aren't really good in their predictive skills. Because so much time is spent on analyzing history they always miss what's affecting current growth.

 

Up above you were very dismissive of what a CFO told me, even though he has the actual authority to hire more people if he needed to, which he absolutely did not want to do in the 2009 environment. But to you, because he's an anonymous source, his words should be discredited and we should focus on economic gobbledygook that somehow treats government spending as the end all for economic growth and job creation.

 

Using gov't spending as percent of GDP in your examples is wholly misleading because you ignore the massive spending build up during the crisis, compared to a drop in GDP. Of course the percent will peak in 2009. But the actual spending amounts have not declined, which is something that real people care about, because again, as government takes up a larger share of the economy, it crowds out private enterprise. And that is always, always a bad thing for economic growth, real job growth & wealth creation.

No one wanted to hire in the middle of the crisis while the unemployment rate was moving up to 10%; is that a surprise?

So you want a measure that meets your bias? From the BEA site, real government discretionary spending peaked in 2010, and has declined since. Even nominal federal spending has declined since 2010. Keynesian stimulus ended in 2010. Non-discretionary "entitlements" are increasing because of the baby-boom and spiraling healthcare costs.

 

Finally, please explain to me in what way government has crowded out private enterprise. I sure hope you're not going to argue deficits caused higher interest rates.....

[/dev/null]

Keynesian stimulus ended in 2010.

 

 

 

[GG]

 

 

Finally, please explain to me in what way government has crowded out private enterprise.

 

I haven't read the news lately, but I understand there was some kind of change in the healthcare laws in 2010 and how it's being funded. Maybe that has something to do with crowding out private enterprise.

 

And the CFO who was talking about not hiring people, generally employs people at the upper end of the pay scale. His reluctance to hire wasn't because he was worried about his future business prospects. But boy was he afraid of the unknown costs that were about to hit. That's why your profession nearly always gets things wrong.

 

The main reason the Obama recovery never took hold is because nobody had any confidence that there isn't a hammer coming around the corner. First it was ACA, then it was the thousands of pages of new regulations. And in the meantime, companies learned to get by with less employees.

 

But we're supposed to feel grateful that 7 years of zero interest rates are stoking a stock, bond and real estate bubble. And of course, the signature economic policy of this administration is inflating wealth inequality because only the wealthy are invested in stock, bonds and real estate.

 

Is there any wonder he's considered a joke?

[TPS]

 

I haven't read the news lately, but I understand there was some kind of change in the healthcare laws in 2010 and how it's being funded. Maybe that has something to do with crowding out private enterprise.

 

And the CFO who was talking about not hiring people, generally employs people at the upper end of the pay scale. His reluctance to hire wasn't because he was worried about his future business prospects. But boy was he afraid of the unknown costs that were about to hit. That's why your profession nearly always gets things wrong.

 

The main reason the Obama recovery never took hold is because nobody had any confidence that there isn't a hammer coming around the corner. First it was ACA, then it was the thousands of pages of new regulations. And in the meantime, companies learned to get by with less employees.

 

But we're supposed to feel grateful that 7 years of zero interest rates are stoking a stock, bond and real estate bubble. And of course, the signature economic policy of this administration is inflating wealth inequality because only the wealthy are invested in stock, bonds and real estate.

 

Is there any wonder he's considered a joke?

I agree with the inability of monetary policy to stimulate the economy, and the poor job he's done--I was never a fan despite generalizations made. I think you place too much emphasis on the regulatory issues, though they are valid concerns. I probably don't give them enough credence. The truth is somewhere between....

[keepthefaith]

 

Finally, please explain to me in what way government has crowded out private enterprise. I sure hope you're not going to argue deficits caused higher interest rates.....

 

 

I'll weigh in on that. Down here on the ground running a business, we've had little wage growth for our employees over the past 5 years or so. However, my cost of doing business has risen substantially during this time. Health insurance and in great part due to Obamacare has risen more than 60% during this period. Property taxes have risen probably 20% during the same period. Liability insurance, workmans comp and unemployment ins have risen a lot and we've had zero claims. State income tax here rose 60% a few years ago and then settled back to a lesser increase but we are left with a state corporate tax in Illinois that many states don't have. Regulations on fire extinguishers and fire alarm systems have changed resulting in higher annual costs. Shipping, packaging and other costs have risen much faster than inflation. Now I know that the Federal gubmint doesn't directly control many of the items I've mentioned, but collectively the various taxing bodies have substantially raised our cost of doing business and shippers like fedex and ups have cited increased employee costs and other rising expenses as their reasons for significant price increases. All while this has happened our revenues and margins have been mostly flat. I doubt I'm the only business owner that can tell this story. Point is that the federal government and other municipal bodies are tone deaf on the real world of running a business

 

Those that study or are educated in economics can look at lots of numbers from 50,000 feet but I believe that our experience of the last several years is typical or many businesses and that any increased dollars that have to be directed toward taxes and other regulatory expenses have to be taken from profits and what is available for payroll, inventory and expansion. All of this would be easy to solve if we could simply "pass this on to the consumer" but we're in a highly price sensitive business where that is simply not possible. We've been able to tweak some gross margin improvement but that has more than been consumed by increases in the cost of other items.

 

So we're a microcosm of the greater economy of 1% growth, stagnant wages and low confidence while we spend more on anything that touches government or insurance. That is how government(s) have crowded this private enterprise.

Edited September 1, 2016 by keepthefaith

[Greg F]

Some people really need to start with the basics.

Say's Law and Economic Growth

[Azalin]

Some people really need to start with the basics.

 

Say's Law and Economic Growth

 

Is this directed at anyone in particular?

 

 

I'll weigh in on that. Down here on the ground running a business, we've had little wage growth for our employees over the past 5 years or so. However, my cost of doing business has risen substantially during this time. Health insurance and in great part due to Obamacare has risen more than 60% during this period. Property taxes have risen probably 20% during the same period. Liability insurance, workmans comp and unemployment ins have risen a lot and we've had zero claims. State income tax here rose 60% a few years ago and then settled back to a lesser increase but we are left with a state corporate tax in Illinois that many states don't have. Regulations on fire extinguishers and fire alarm systems have changed resulting in higher annual costs. Shipping, packaging and other costs have risen much faster than inflation. Now I know that the Federal gubmint doesn't directly control many of the items I've mentioned, but collectively the various taxing bodies have substantially raised our cost of doing business and shippers like fedex and ups have cited increased employee costs and other rising expenses as their reasons for significant price increases. All while this has happened our revenues and margins have been mostly flat. I doubt I'm the only business owner that can tell this story. Point is that the federal government and other municipal bodies are tone deaf on the real world of running a business

 

Those that study or are educated in economics can look at lots of numbers from 50,000 feet but I believe that our experience of the last several years is typical or many businesses and that any increased dollars that have to be directed toward taxes and other regulatory expenses have to be taken from profits and what is available for payroll, inventory and expansion. All of this would be easy to solve if we could simply "pass this on to the consumer" but we're in a highly price sensitive business where that is simply not possible. We've been able to tweak some gross margin improvement but that has more than been consumed by increases in the cost of other items.

 

So we're a microcosm of the greater economy of 1% growth, stagnant wages and low confidence while we spend more on anything that touches government or insurance. That is how government(s) have crowded this private enterprise.

 

Well said.

[OCinBuffalo]

Oh look, a bunch of shitheels talking macroeconomics.

 

Hey clowns: what would an immediate reduction in the capital gains tax to 15% from 35% do to any 1st world economy?

F, I might as well ask: what did the introduction of the credit card do to the 1st world economies?

 

Those of us who actually went to school for this, know the answer.

Those of us who who don't know F all about macroeconomics, because we never took the classes, have no idea.

 

These aren't opinion questions. These are textbook questions. In my case, these are test questions.

 

Donald Trump will cut the tax to 15%, and, drop the small business tax to 10%. Now, CFO nerds, don't lie: I know what that does, and so do you. The only question that remains is: are you going to lie to yourself, and not vote for Trump, when he is proposing the very thing you've been wanting, most of your adult lives...because your panties get bunched over...how he speaks?

 

WTF is wrong with you? The only thing you should be worried about is the Fed, and whether they are going to adjust correctly to the immediate and massive availability of capital, NOT DEBT, that is the inevitable response to such cuts.

 

But, by all means: keep telling us why we shouldn't vote for Trump, you unmitigated morons.

Edited September 1, 2016 by OCinBuffalo