Lawrence Summers does a pretty fair job of explaining why there isn’t much chance that, regardless of who is elected in November and regardless of intentions, we will shrink the size of the federal government appreciably. It boils down to:
- An aging population means we’ll spend more on Social Security retirement payments and Medicare.
- The cost of financing the debt is much more likely to rise than to fall.
- Plain old supply and demand and the deadweight loss of government spending.
or, shorter, unless things change they will stay the same, adjusted for demographics and increased cost of borrowing.
Right now there are something like 20 million people unemployed. What we’re doing now isn’t putting those people back to work. If we want to put those people back to work, we’re going to need to change some things. As Shakespeare put it, nothing will come of nothing. If we don’t change anything, those people won’t go back to work.
It is either stupidity or sophistry to claim that we can’t make substantial reductions in military spending without compromising national security. Can we do that without making any changes? No.
It is either stupidity or sophistry to claim that we can’t make substantial reductions in healthcare spending without compromising the American people’s health. Can we do that without making any changes? No.
I might add that Dr. Summers is ignoring something. Federal government is not the only government and, unless you can come up with a good reason that the deadweight loss of government spending only applies to the federal government, if it’s absolutely positively necessary for the federal government to grow, then maybe it’s also absolutely positively necessary for state and local government to shrink. Unless you don’t give a damn about all of those unemployed people.
Or, maybe, in less you don’t care how small the private sector becomes so long as there’s free healthcare. Then you’re Cuba.
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Seriously, can you see them running the Manhattan Project like what Andy describes?
Ice,
Well, that’s why I laugh whenever I hear about neo-WPA projects. Between the bureaucratic hiring process, union protections and davis-bacon, if we start now we might be able to start hiring 2-3 recessions from now.
And it’s not just hiring. In the DoD it takes 10-20 years to field a new weapon system and the cost is several times what was originally estimated. Oh, and that’s another thing the President can’t fix unilaterally.
@Icepick 08-22-2012 03:58 PM
… the RE bubble was freakin’ HUGE. …
The economy was running on debt created money, and until the debt is paid down or written down, things are not going to get much better.
I agree with @Drew about regulations, cheap energy, and employee costs. I disagree about taxes. The effects from raising or lowering them are not necessarily going to do anything. Going from 70% to 35% is vastly than going from 35% to 30% or 35% to 40%.
When the EU collapses, money will flow into the US. This will occur with any president.
This election is closer to the 1988 election. If you liked Bush I, you should be happy with Romney, and nobody should be surprised when Romney raises taxes.
Romney wins by default because he is “less crappy”. I will take “less crappy”, but I do not expect much.
I’m officially bored now.
Look, I try to talk sense. I’ve made a fantastic living by following the principles I cite here. Be as caustic and argumentative as you like. But so much of what I see hear is “poor me.”. And “there is no hope.”
“Nothing can be done.”
I look at it and say, “well, you made awful decisions.” and you have made a decision to lose. And if this guy were running things it would be better.
I just don’t understand the negative mindset. I just cannot come to grips with it. Maybe because I have engaged in competitive sports all my life. I remember making a miracle shot to win a basketball game some 35 years ago. I get down in a golf match by three with three to go….and I start thinking how am I going to play the next three so I can kick this SOBs ass and win the next three holes. It’s a mindset. Sometimes it works. Sometimes you die and just go congratulate your competitor. But you are not dead until you are dead.
I find the very same mentality in all the business owners I deal with.
Woudth that we had that here.
@Drew
You do not know anything about the tar pits at the bottom, but you do not advocate the policies that have created them. “Pull yourself up by your bootstraps” belongs in a Horatio Alger novel.
Life might be a little from the less affluent neighborhoods. What happens when decides that the basketball court belongs to them. You are terribly mistaken if you think that the basketball or golf clubs you bought are yours. Move into Section 8 housing, and pull yourself by your bootstraps. I would like to see it.
Your taxes will also be a lot higher than where you live, but it will not be government taxes. The local “community organization” (gang) will determine the rate. You will pay one way or the other, and I would suggest you not find out what “the other way” is. Also, you may not want to piss off anybody, and the police are probably worse than the criminals. It does not really matter. The criminals are around 24-7. The police go home.
I think Cabrini Green was torn down, but I am sure we can find you another place to start working your way up. I will be willing to help you pack. Remember to bring an extra set of drawers.
TB, he wouldn’t need to start as low as that. But let’s see him out hoofing for work after a couple of years off. He absolutely refuses to believe anything could possibly be as bad as I say, but I work/volunteer/network with out of work professionals. It IS this bad, especially for people over fifty. (Increasingly I’m hearing people talk about being over 40 and also feeling like they don’t get calls because of their age.) I’d love for him to meet Mr. Positive (to give him a nice, anonymous name) and explain to me the problem with THAT GUY’S attitude. The only reason I say almost indefatigable is that I happened to witness a moment when he was long in the face – I’d never seen it or heard about such from people much closer to him than I – and it was a bit startling.
LTUE can wear out anyone, and it has become its own sin in the minds of employers. Unless the economy starts booming like the Bubble Years again, we’re just not getting back in the workforce because no one will even give us a shot at an interview. Hell, there’s no reason to, there are plenty of warm bodies looking to fill the slot. That’s not just my experience, that’s the experience of hundreds of people I’ve met and dealt with. I guess we’re all just malcontents. But hey, what do I know – Drew once had a job he didn’t like. That’s never happened to anyone else, you know.
@Icepick
Where is that “get up and go” attitude for businessmen? Why is President Obama such a problem? Why is @Drew allowed to complain about business conditions being bad, but anybody else complaining is an asshole? Apparently Warren Buffet is doing OK. What is the problem with the other PE Investors? Why are they not required to stop complaining and go to work? Is it really too much to ask a shit hot PE Investor to do a little investing?
Is it really too much to ask a shit hot PE Investor to do a little investing?
It’s only a bad economy for rich people. The poor and the middle class are just being shiftless bloodsuckers.
@Icepick
I expect philosophical consistency and intellectual honesty, but I am not that smart.
This is the same problem I have with politicians. They do not play by the same rules as everybody else. @Drew has a proven formula for success, but it does not apply to him. Those with the formula seem to be whining more than those without a formula.
As a businessman, Mitt Romney knows how to get a deal done, and that means compromise. The only question is what principles he is going to compromise. When the Romney supports figure out how businessmen get things done, they will be ready to join the party. For them, it will be different this time.
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