And, how many times have “markets” (manipulated by the rich) been wrong???

Figure this into your model!!! I’m NOT voting for ANYONE who wants to raise taxes on the lower and middle class or cut SS, Medicare, or Medicaid to make the interest payments.

I am also NOT voting for ANYONE who thinks china should be able to buy all or some of Boeing (or other similar companies) so they can “relocate” the jobs.

I am also NOT voting for ANYONE who thinks a currency crisis is the perfect excuse for an amero currency and a nafta (more like shafta) superhighway.

What exactly do they do with all that excess savings? Nothing productive except for themselves?

I was talking about going forward with an economic reorientation. I thought that would have been obvious.

The US needs a fundamental change from consumption to production, and very little has been done in that direction by the new administration.
He had a good chance to sharply reduce the influence of Wall St. looters during the financial crisis, and all he did was bail them out w/ taxpayer money.

A little stimulus spending toward fixing potholes is not what I was getting at.

We need a fundamental shift – he was sending signals in his campaign that that is what he wanted to do – he had a chance to start it w/ the financial crisis and healthcare reform – all we have gotten are meager measures. This healthcare reform may well backfire by requiring many people to have insurance, but without an authority to control costs.

http://baselinescenario.com/2009/09/02/healthcare-rationing-is-good/

In the abstract, I think the Obama administration agrees with you too. The Obama people certainly want to reform the healthcare system of the United States. It’s just that they don’t seem to be able to accomplish anything without huge handouts to existing stakeholders. This has been true in pretty much every area they’ve attempted reform, from the debate over military spending and the war in Afghanistan to reigning in the financial sector. Is this because of political realities or because the administration has been “captured,” by oligarchs? I don’t know. Probably a little of both.

But RA’s argument above was about “stimulus.” Looking through the previous stimulus package I just can’t seem to find anything really objectionable. Probably there should have been fewer tax-cuts, and the tax-cuts in the bill should have been targeted more at lower income groups. I work at a school where about half the student population receives free or subsidized lunch and breakfast. So when I hear stimulus measures are going to “fast food productivity,” I get a little annoyed. Looking at the portion of the stimulus package devoted to food production and consumption, I see that the overwhelming majority of funds are going toward food-stamp and other food security programs. When almost 50 million people are living in households that experienced food insecurity at some point during the last month I think that’s probably a pretty good thing:

http://www.frac.org/html/hunger_in_the_us/hunger_index.html

Debt is a reality in the United States. To the greatest extent possible debt should be used to finance productive investment. So far the Obama administration seems to be unable to do this. Mostly I blame that on their preoccupation with TBTF institutions’ balance sheets. The Obama administration needs to stop worrying about “credit blockages,” and start worrying about the real economy. In my opinion that’s going to require alleviating the worst aspects of employment. If you have to call that subsidizing consumption so be it. Since I work at a school I like to think of it as preserving human capital.

http://en.wikipedia.org/wiki/United_States_federal_budget (doesn’t include special appropriations for wars)

Only 17% is discretionary – and only a portion of that is real investment. 21% is military, and you can argue that some of that is investment. The vast majority of that it is consumption, regardless of the various “spinoff” arguments. 21% Social Security (and rising). 23% Medicare and Medicaid. 10% Other Mandatory. ALL of the latter three – that’s 54% of the current budget – are essentially entitlement programs. And that’s not even counting the part of the 17% that’s really entitlements (by which I include much of the subsidies for the overpopulated US prison system).

Currently, Social Security is generating a surplus but projected to start generating a shortfall for 50 years starting soon (the date gets sooner the longer the recession/sub-par recovery last). Medicare is just a disaster, which has been covered elsewhere. Sustaining that level of consumption comes at the expense of paying down that debt which swallows 8% of national income in interest (which is incredibly deceptively low… because the term-structure of US T-bill debt shortened under El Presidente Bush’s banana republic policies, and the low-low-low rates of today could significantly increase in 5 years; the current treasury is going to spend the next 5 years trying to lengthen that term-structure to be more resilient, which will increase debt servicing costs – and, of course, Obama will be blamed even though this is really because of Bush. Right about now, a quote about “Sins of the Parent” is appropriate).

In order to increase the measly 17% that is discretionary (which funds our real investments), we really ought to trim some of that 54% entitlement and the 21% (+special appropriations) for military. But Krugman doesn’t want to talk about that. Actual _cuts_ to transfer programs are non-starters, and unfortunately Social Security is indexed to inflation. (Economists like to talk about de-anchoring, which is the change in the structure of financial activities that indexes economic transfers to expectations of inflation – using that jargon, Social Security/Medicare is the most de-anchored part of our entire economy. In other words, when we use monetary policy to inflate the dollar, we devalue our debt, BUT we do not devalue our entitlement program obligations, which are actually worse than the debt. So we squeeze the productive part of our national expenditures – the puny 17% – and continue to bloat the unproductive part that goes to funding consumption-supporting transfer payments.)

Those economists and pundits who will say that America is wealthy and can easily afford all this are ignoring prime evidence to the contrary – our extreme trade deficit. Some point to our low t-bill rates as evidence we can continue debt-financed-consumption, but these are being artificially supported. The weak dollar is additional evidence of the threat (but don’t confuse causality – the dollar may need to drop more).

But as the dollar drops, inflation may go up due to our dependence on imports – which will force working families to cut expenses, BUT which will increase outlays to inflation-indexed transfer programs (and other transfer programs like Medicare that go up faster than inflation). This will create a deeper shift from producing families to consuming entitlement programs – and, wouldn’t you know it, that will happen _right_ when the Baby Boomers (who incurred a huge debt to fund their Bush tax cuts) all retire. What curious timing!

Is this an anti-Social Security rant? No. It’s an anti-index-to-inflation-for-entitlement-programs-when-there-is-a-demographic-age-bubble-that-left-a-huge-debt rant. Especially when the average MEDIAN wage for workers is flat to declining in real terms.

PS, don’t confuse median wage with median household income… the latter has increased slightly as we get more two-income households and primary earners working multiple jobs (but doesn’t account for things like increases in childcare expenses).

http://www.epi.org/page/-/old/images/JB_21st_century_workplace_testimony_Fig1A2.jpg (only extends to 2004)

http://static.seekingalpha.com/uploads/2009/9/13/saupload_us_census_burea_median_income.png

Also, if you blame Obama, then you are only about 5-10% right… It was Bush&Cheney.

http://www.econbrowser.com/archives/2009/08/lastingleg1.gif

The primary blame Obama owns is the failure to fully repudiate Bush’s consumption policies and create a more vigorous investment-focused economy.

http://www.washingtonpost.com/wp-dyn/content/graphic/2009/02/01/GR2009020100154.html

http://manyeyes.alphaworks.ibm.com/manyeyes/visualizations/obama-stimulus-bubble-chart

9% for infrastructure
9% for energy
3.5% for environment
3% for science/technology

I don’t know if you count education as money towards “re-industrialization,” I guess it depends how that money is spent.

$4,350: Grants to provide wireless and broadband infrastructure to communities, including public computer centers and sustainable adoption of broadband service

$3,000: National Science Foundation research, construction of new research equipment and facilities, and education activities.

$5,000: Home weatherization grants to low and middle-income families

$2,000: Advanced batteries manufacturing grants

$4,400: Modernization of the electric grid

…There’s lots more. Go to the website yourself and see. Is this enough? Not at all. Especially not when compared to the amount of money spent on bailouts for Wall Street firms. In fact, you could make a much stronger criticism of my previous post by claiming Obama’s real plan is just to save his banker friends. In that sense things might be going exactly according to plan. But that misses the point. The point of the stimulus was to stabilize aggregate demand. Like it or not, stabilizing aggregate demand is going to require subsidizing consumption. Over consumption is a problem, but unfortunately it’s a problem that’s going to have to be with us for a long time.

Ah, well you see I didn’t actually mean that “literally”. But why don’t you tell us what proportion of the stimulus money, including the bank bailout, has been directed toward re-industrialization, and in what sectors?

http://online.wsj.com/public/resources/documents/STIMULUS_FINAL_0217.html

I certainly don’t see any provisions for “fast food productivity, McMansion building, or Gucci bag buying.” Could the stimulus package have been more focused on long-term infrastructure, type investments? Absolutely. But the fact is Democrats took a lot of heat from Republicans for trying to include provisions that would not have immediate short-term effects. Some of that criticism was probably legitimate. Our economy certainly does have to shift away from being so dependent on consumption, but that’s going to be a very gradual process. In the mean time a certain amount of stimulus is going to be necessary to maintain consumption. Has the Obama administration struck the right balance? Probably not. But unlike us in the blogosphere President Obama and the Congressional Democrats live in the real world. In the real world things don’t always go according to plan.

Should we consider stimulaing a new round of adding more fast food productivty, McMansion building, gucci bag buying as what will pull us out of our problems?