I am shocked, shocked, to find out Krugman was wrong...

[Raoul_Luke]

And I (of course) was right:

The argument that austerity could be expansionary—that government spending cuts could be followed by increased GDP growth—was pilloried by Krugman. “[E]xpansionary austerity was highly implausible in general, and especially given the state of the world as it was in 2010 and remains two years later,” he wrote. The belief that spending cuts would signal to individuals and businesses that better, more fiscally prudent times lay ahead was, Krugman claimed, like believing in “the confidence fairy.”

But as Austerity’s authors show, in some cases austerity was expansionary. And, in large part, it happened for exactly the reason Krugman denigrated. Where austerity is based on spending cuts rather than tax increases, “private investment rises within 2 years,” and by the third year is above the previous level. Contra Krugman, Alesina, Favero, and Giavazzi attribute this to increased business confidence.

So, if spending is less effective and deficits and debts more onerous than Krugman argued and austerity can, in some circumstances, be expansionary, should it be based on tax increases or spending cuts?

The authors of Austerity are clear on this point.

Tax-based plans lead to deep and prolonged recessions, lasting several years. Expenditure-based plans on average exhaust their very mild recessionary effect within two years after a plan is introduced…

The component of aggregate demand that mostly drives the heterogeneity between tax-based and expenditure-based austerity is private investment

That “confidence fairy,” in other words. Investment responds positively to spending cuts and wilts in the face of tax hikes.

https://fee.org/articles/paul-krugman-s-predictions-about-austerity-aren-t-aging-well/?utm_campaign=FEE Daily&utm_source=hs_email&utm_medium=email&utm_content=73471163&_hsenc=p2ANqtz-_biHRln3qX1F7faMAocuVWn_Mc3IH80Ktf4IMX4Tqtr6lHfmPf_Jss5z9vM2FYEkl

As I have repeatedly pointed out - Spending = Taxes (current + deferred), so cutting taxes (without also cutting spending) is not expansionary, because a rational market sees it for what it is, a deferred tax hike. Cutting spending, even while keeping tax rates the same, will act precisely like a tax cut, because that is precisely what it is. See Bill Clinton for reference.

Not rocket science.

 

[Nostra]

If that moron is writing or talking, he is wrong.

Complete idiot.

 

[Colorforms]

If that moron is writing or talking, he is wrong.

Complete idiot.

I'm still waiting for those "millions of Americans" to die from the Trump tax cuts.

 

[Spamature]

And I (of course) was right:


Not rocket science.

Austerity in Britain was basically let the poor become poorer and take the brunt of recession. It's like piling human bodies into a muddy thoroughfare so the lords and ladies don't have to step in the muck.

Welfare Reform Act 2012 the number of children in "relative poverty" increased, with the total by 2019 around 600,000 higher than it had been in 2012. During those seven years the number of children obtaining food from the food banks of The Trussell Trust more than tripled.

Research published in 2017 by the Joseph Rowntree Foundation identified an increase in child poverty and pensioner poverty compared to the previous year, following significant overall decreases during the previous 20 years. Reductions in benefit support and a shortage of affordable housing were considered to be contributing factors

Researchers have linked budget cuts and sanctions against benefit claimants to increasing use of food banks. In a twelve-month period from 2014 to 2015, over one million people in the United Kingdom had used a food bank, representing a "19% year-on-year increase in food bank use".[43] The use of food banks almost doubled between 2013 and 2017.[5] A study published in the British Medical Journal in 2015 found that each one percentage point increase in the rate of Jobseeker's Allowance claimants sanctioned was associated with a 0.09 percentage point rise in food bank use.[44] Research by The Trussell Trust found that the use of food banks increased more in areas where Universal Credit was introduced.[5]

However, the Organisation for Economic Co-operation and Development found that the number of people answering yes to the question "Have there been times in the past 12 months when you did not have enough money to buy food that you or your family needed?" decreased from 9.8% in 2007 to 8.1% in 2012,[45] leading some to say that the rise was due to both more awareness of food banks, and the government allowing Jobcentres to refer people to food banks when they were hungry, in contrast to previous governments.[46]

When the coalition government came to power in 2010, capital investment in new affordable homes was cut by 60%, while government-imposed caps on local authority borrowing continued to restrict their ability to raise money to build new homes.[47] Writing in Inside Housing, former housing minister John Healey observed that rate of starting social rented schemes had declined from 40,000 in 2009/10 to less than 1,000 in 2015/16.[48] The number of people sleeping rough on any one night across England had more than doubled between 2010 and 2016 to an estimated 4,134, according to a government street count.

In 2017, the Royal Society of Medicine said that government austerity decisions in health and social care were likely to have resulted in 30,000 deaths in England and Wales in 2015.[72][73] Research by University College London published in BMJ Open in 2017 compared the figures for health and social care funding during the 2000s with that during the period 2010–2014. It found that annual growth in health funding during the 2000s was 3.8%, but after 2010 this dropped to 0.41%. Annual growth in social care funding of 2.2% during the 2000s became an annual decrease of 1.57% after 2010. This coincided with mortality rates decreasing by 0.77% annually during the 2000s but rising by 0.87% annually after 2010.[74]

The rate of increase in life expectancy in England nearly halved between 2010 and 2017, according to research by epidemiology professor Michael Marmot. He commented that it was "entirely possible" that austerity was the cause[75] and said: "If we don't spend appropriately on social care, if we don't spend appropriately on health care, the quality of life will get worse for older people and maybe the length of life, too."[76]

A paper released by the British Medical Journal in November 2017 estimated that the government austerity programme caused around 120,000 excess deaths since 2010.[77][78] By 2018 figures from the Office for National Statistics (ONS) were showing a fall in life expectancy for those in poorer socioeconomic groups and those living in deprived areas,[79] while average UK life expectancy had stopped improving. Public Health England was asked to carry out a review of life expectancy trends but government ministers said that the arguments put forward by some academics, that austerity had contributed to the change, could not be proved.[80] ONS figures published in 2018 indicated that the slowdown in general life expectancy increase was one of the highest among a group of 20 of the world's leading economies.[81]
https://en.wikipedia.org/wiki/United_Kingdom_government_austerity_programme

 

[ObamacareForever]

If that moron is writing or talking, he is wrong.

Complete idiot.

You did understand the implication from the Op that the Trump "tax cuts" are actually a deferred tax hike?

 

[Raoul_Luke]

Austerity in Britain was basically let the poor become poorer and take the brunt of recession. It's like piling human bodies into a muddy thoroughfare so the lords and ladies don't have to step in the muck.

Welfare Reform Act 2012 the number of children in "relative poverty" increased, with the total by 2019 around 600,000 higher than it had been in 2012. During those seven years the number of children obtaining food from the food banks of The Trussell Trust more than tripled.

Research published in 2017 by the Joseph Rowntree Foundation identified an increase in child poverty and pensioner poverty compared to the previous year, following significant overall decreases during the previous 20 years. Reductions in benefit support and a shortage of affordable housing were considered to be contributing factors

Researchers have linked budget cuts and sanctions against benefit claimants to increasing use of food banks. In a twelve-month period from 2014 to 2015, over one million people in the United Kingdom had used a food bank, representing a "19% year-on-year increase in food bank use".[43] The use of food banks almost doubled between 2013 and 2017.[5] A study published in the British Medical Journal in 2015 found that each one percentage point increase in the rate of Jobseeker's Allowance claimants sanctioned was associated with a 0.09 percentage point rise in food bank use.[44] Research by The Trussell Trust found that the use of food banks increased more in areas where Universal Credit was introduced.[5]

However, the Organisation for Economic Co-operation and Development found that the number of people answering yes to the question "Have there been times in the past 12 months when you did not have enough money to buy food that you or your family needed?" decreased from 9.8% in 2007 to 8.1% in 2012,[45] leading some to say that the rise was due to both more awareness of food banks, and the government allowing Jobcentres to refer people to food banks when they were hungry, in contrast to previous governments.[46]

When the coalition government came to power in 2010, capital investment in new affordable homes was cut by 60%, while government-imposed caps on local authority borrowing continued to restrict their ability to raise money to build new homes.[47] Writing in Inside Housing, former housing minister John Healey observed that rate of starting social rented schemes had declined from 40,000 in 2009/10 to less than 1,000 in 2015/16.[48] The number of people sleeping rough on any one night across England had more than doubled between 2010 and 2016 to an estimated 4,134, according to a government street count.

In 2017, the Royal Society of Medicine said that government austerity decisions in health and social care were likely to have resulted in 30,000 deaths in England and Wales in 2015.[72][73] Research by University College London published in BMJ Open in 2017 compared the figures for health and social care funding during the 2000s with that during the period 2010–2014. It found that annual growth in health funding during the 2000s was 3.8%, but after 2010 this dropped to 0.41%. Annual growth in social care funding of 2.2% during the 2000s became an annual decrease of 1.57% after 2010. This coincided with mortality rates decreasing by 0.77% annually during the 2000s but rising by 0.87% annually after 2010.[74]

The rate of increase in life expectancy in England nearly halved between 2010 and 2017, according to research by epidemiology professor Michael Marmot. He commented that it was "entirely possible" that austerity was the cause[75] and said: "If we don't spend appropriately on social care, if we don't spend appropriately on health care, the quality of life will get worse for older people and maybe the length of life, too."[76]

A paper released by the British Medical Journal in November 2017 estimated that the government austerity programme caused around 120,000 excess deaths since 2010.[77][78] By 2018 figures from the Office for National Statistics (ONS) were showing a fall in life expectancy for those in poorer socioeconomic groups and those living in deprived areas,[79] while average UK life expectancy had stopped improving. Public Health England was asked to carry out a review of life expectancy trends but government ministers said that the arguments put forward by some academics, that austerity had contributed to the change, could not be proved.[80] ONS figures published in 2018 indicated that the slowdown in general life expectancy increase was one of the highest among a group of 20 of the world's leading economies.[81]
https://en.wikipedia.org/wiki/United_Kingdom_government_austerity_programme

https://www.telegraph.co.uk/news/2017/06/24/no-thing-austerity-britain-still-isnt-living-within-means/

 

[Nostra]

You did understand the implication from the Op that the Trump "tax cuts" are actually a deferred tax hike?

I don't waste time reading what the blithering idiot Krugman thinks.

 

[ObamacareForever]

I don't waste time reading what the blithering idiot Krugman thinks.

It wasn't Krugman making the implication.

 

[EatTheRich]

And I (of course) was right:

The argument that austerity could be expansionary—that government spending cuts could be followed by increased GDP growth—was pilloried by Krugman. “[E]xpansionary austerity was highly implausible in general, and especially given the state of the world as it was in 2010 and remains two years later,” he wrote. The belief that spending cuts would signal to individuals and businesses that better, more fiscally prudent times lay ahead was, Krugman claimed, like believing in “the confidence fairy.”

But as Austerity’s authors show, in some cases austerity was expansionary. And, in large part, it happened for exactly the reason Krugman denigrated. Where austerity is based on spending cuts rather than tax increases, “private investment rises within 2 years,” and by the third year is above the previous level. Contra Krugman, Alesina, Favero, and Giavazzi attribute this to increased business confidence.

So, if spending is less effective and deficits and debts more onerous than Krugman argued and austerity can, in some circumstances, be expansionary, should it be based on tax increases or spending cuts?

The authors of Austerity are clear on this point.

Tax-based plans lead to deep and prolonged recessions, lasting several years. Expenditure-based plans on average exhaust their very mild recessionary effect within two years after a plan is introduced…

The component of aggregate demand that mostly drives the heterogeneity between tax-based and expenditure-based austerity is private investment

That “confidence fairy,” in other words. Investment responds positively to spending cuts and wilts in the face of tax hikes.

https://fee.org/articles/paul-krugman-s-predictions-about-austerity-aren-t-aging-well/?utm_campaign=FEE Daily&utm_source=hs_email&utm_medium=email&utm_content=73471163&_hsenc=p2ANqtz-_biHRln3qX1F7faMAocuVWn_Mc3IH80Ktf4IMX4Tqtr6lHfmPf_Jss5z9vM2FYEkl

As I have repeatedly pointed out - Spending = Taxes (current + deferred), so cutting taxes (without also cutting spending) is not expansionary, because a rational market sees it for what it is, a deferred tax hike. Cutting spending, even while keeping tax rates the same, will act precisely like a tax cut, because that is precisely what it is. See Bill Clinton for reference.

Not rocket science.

Yet somehow the American economy under “tax and spend” Obama ran laps around all the European countries who adopted your preferred policies.

 

[Raoul_Luke]

Yet somehow the American economy under “tax and spend” Obama ran laps around all the European countries who adopted your preferred policies.

Wait, what? European countries AREN'T "tax and spend" nations? That is absurd!

 

[Deleted member 21794]

You did understand the implication from the Op that the Trump "tax cuts" are actually a deferred tax hike?

But only Trump tax cuts, right? Or more accurately, only Republcan tax cuts are deferred tax hikes. The only true tax cuts those signed into law by DemocRATS.

 

[Raoul_Luke]

But only Trump tax cuts, right? Or more accurately, only Republcan tax cuts are deferred tax hikes. The only true tax cuts those signed into law by DemocRATS.

Cutting tax rates without cutting spending is textbook "Keynesian stimulus." Which is why it doesn't work. The only true tax cut is a cut (or simply restraint) in spending. Which is why Bill Clinton is the only modern era President who presided over a legitimate "booming" economy.

 

[EatTheRich]

Wait, what? European countries AREN'T "tax and spend" nations? That is absurd!

Well, you got me there. It has always been the most powerful country in the world ... Spain, then France, then Britain, then the United States ... pushing “free trade” most consistently, because free trade only really works well for the richest (protectionism and Keynesianism only work for speculators, paupers, and warmongers, on the other hand).

P.S. Obama was either Kim Il-Sung reincarnated or a fiscal conservative compared with David Cameron. Not both.

 

[EatTheRich]

Cutting tax rates without cutting spending is textbook "Keynesian stimulus." Which is why it doesn't work. The only true tax cut is a cut (or simply restraint) in spending. Which is why Bill Clinton is the only modern era President who presided over a legitimate "booming" economy.

Obama restrained spending more than any other president (in terms of annual percentage growth over the baseline). Then again, he presided over a booming economy too.

Debt-to-GDP ratio in the U.S. is lower than most other imperialist countries, though, only China which has the more flexible economy provided by more central planning has a big competitive advantage that it can leverage into more than a small bargaining chip.

 

[Raoul_Luke]

Obama restrained spending more than any other president (in terms of annual percentage growth over the baseline). Then again, he presided over a booming economy too.

Debt-to-GDP ratio in the U.S. is lower than most other imperialist countries, though, only China which has the more flexible economy provided by more central planning has a big competitive advantage that it can leverage into more than a small bargaining chip.

After Bush (and he) ran it up by about 33%.



Does that look like "spending restraint" to you? Because it sure doesn't to those of us who don't have shit for brains.

"Booming economy?" That's the biggest bag of horseshit propaganda. Does this:



Look like a "booming economy" to you? Because it sure doesn't to those of us who don't have shit for brains.

 

[Bugsy McGurk]

And I (of course) was right:

The argument that austerity could be expansionary—that government spending cuts could be followed by increased GDP growth—was pilloried by Krugman. “[E]xpansionary austerity was highly implausible in general, and especially given the state of the world as it was in 2010 and remains two years later,” he wrote. The belief that spending cuts would signal to individuals and businesses that better, more fiscally prudent times lay ahead was, Krugman claimed, like believing in “the confidence fairy.”

But as Austerity’s authors show, in some cases austerity was expansionary. And, in large part, it happened for exactly the reason Krugman denigrated. Where austerity is based on spending cuts rather than tax increases, “private investment rises within 2 years,” and by the third year is above the previous level. Contra Krugman, Alesina, Favero, and Giavazzi attribute this to increased business confidence.

So, if spending is less effective and deficits and debts more onerous than Krugman argued and austerity can, in some circumstances, be expansionary, should it be based on tax increases or spending cuts?

The authors of Austerity are clear on this point.

Tax-based plans lead to deep and prolonged recessions, lasting several years. Expenditure-based plans on average exhaust their very mild recessionary effect within two years after a plan is introduced…

The component of aggregate demand that mostly drives the heterogeneity between tax-based and expenditure-based austerity is private investment

That “confidence fairy,” in other words. Investment responds positively to spending cuts and wilts in the face of tax hikes.

https://fee.org/articles/paul-krugman-s-predictions-about-austerity-aren-t-aging-well/?utm_campaign=FEE Daily&utm_source=hs_email&utm_medium=email&utm_content=73471163&_hsenc=p2ANqtz-_biHRln3qX1F7faMAocuVWn_Mc3IH80Ktf4IMX4Tqtr6lHfmPf_Jss5z9vM2FYEkl

As I have repeatedly pointed out - Spending = Taxes (current + deferred), so cutting taxes (without also cutting spending) is not expansionary, because a rational market sees it for what it is, a deferred tax hike. Cutting spending, even while keeping tax rates the same, will act precisely like a tax cut, because that is precisely what it is. See Bill Clinton for reference.

Not rocket science.

Krugman is wrong because someone disagrees with him?

What a strange post.

 

[Bugsy McGurk]

Obama restrained spending more than any other president (in terms of annual percentage growth over the baseline). Then again, he presided over a booming economy too.

Debt-to-GDP ratio in the U.S. is lower than most other imperialist countries, though, only China which has the more flexible economy provided by more central planning has a big competitive advantage that it can leverage into more than a small bargaining chip.

Word of Obama’s dramatic reductions in the rate of federal spending growth has still not filtered through to Trumplandia. They think he increased it.

 

[Nutty Cortez]

Obama restrained spending more than any other president (in terms of annual percentage growth over the baseline). Then again, he presided over a booming economy too.

Debt-to-GDP ratio in the U.S. is lower than most other imperialist countries, though, only China which has the more flexible economy provided by more central planning has a big competitive advantage that it can leverage into more than a small bargaining chip.

 

[Nutty Cortez]

I don't waste time reading what the blithering idiot Krugman thinks.

This Guy ?

In 1999 Paul Krugman was paid $50,000 by Enron as a consultant on its “advisory board,” and that same year he wrote a glowing article about Enron for Fortune magazine. But he would change his tune. After Enron collapsed in 2001, Krugman wrote several columns excoriating the company. (One featured what may be the most absurd howler in the history of op-ed journalism: “I predict that in the years ahead Enron, not Sept. 11, will come to be seen as the greater turning point in U.S. society.”) In most of these columns Krugman worked hard to link Enron to the Bush administration, and in one he actually blamed Enron’s consultants for the company’s collapse — while neglecting to mention that he, too, had been an Enron consultant.

 

[Raoul_Luke]

Word of Obama’s dramatic reductions in the rate of federal spending growth has still not filtered through to Trumplandia. They think he increased it.

Baghdad Bugsy strikes again. First off, Obama increased and SIGNED the 2009 budget that is incorrectly attributed to Bush (although he certainly doesn't deserve defending on the matter of spending, but, unlike you, I am bound by the truth regardless of the party affiliations of those involved) that stands as the single biggest increase in spending in American history. Secondly, when you take that fact into consideration, every single year of spending under Obama was well above the worst of the Bushian levels of ridiculous overspending: