I have just seen the very first campaign sign on the lawn of a house in my neighborhood. It’s right across the street from me on the lawn of a Chicago Irishman from a large family. They have always been dependable Democrats and in previous elections we could expect to see campaign signs for nearly every regular Democratic candidate.

The sign reads “Pollak for Congress”. No party affiliation is mentioned. A little digging showed me that Joel Pollak is the Republican candidate for the Illinois 9th Congressional District. If Mike Quigley, the Democratic incumbent, doesn’t get my neighbor’s support, Democrats are in real trouble in this election.

Christina Romer, newly liberated from the bonds of her service as President Obama’s Chairman of the Council of Economic Advisers, has an op-ed on the urgent need for and approaches reducing the federal government’s long-term fiscal deficit:

Make no mistake: persistent large budget deficits are a significant problem. Government borrowing in good times crowds out private investment and lowers long-run growth. It can also make policy makers unable or unwilling to use adequate fiscal stimulus in times of need: concerns about the deficit limited the size of the stimulus act in 2009 and are a main reason that Congress has refused to take additional measures to cut our painfully high rate of unemployment. And our projected long-run deficits are simply unsustainable.

So, the question is not whether we need to reduce our deficit. Of course we do. The question is when.

Her strategies for reducing the deficit: enact President Obama’s proposal for allowing the tax reductions for the highest income earners enacted nearly ten years ago during the prior economic downturn and known as the “Bush tax cuts” to expire. She couples this with a tentative toe in the water for raising the Social Security retirement age.

Since I opposed the tax cuts of the early Aughts (as the wrong tax cuts), it would be odd of me to oppose their elimination now. Why not be even more aggressive? Why not tie the proposed deficit reduction to specific economic milestones, e.g. the unemployment rate falling below 8%, rather than just the vague undefined future, when things are better?

Let’s put what we need to do in deficit reduction in proportion to the scope of the task. The following chart, from the CBO, is a projection of revenues, expenditures, and deficits:

You can click on the image for a larger version.

Note that over the next ten years the deficit, based on President Obama’s budget, is anticipated to be nearly $10 trillion. The stated 20 year increase in revenues that can be realized through eliminating the tax cuts for the highest income earners would amount to roughly 6% of that. Clearly the ten year revenues would be less than that. While raising taxes on the highest income earners may be a necessary drop, it’s only just a drop in a large bucket. Even if you go by the CBO’s more modest “baseline scenario” deficit of roughly $6 trillion over ten years, it’s a small proportion.

Defense spending is a favorite target for cuts, particularly by progressives. Annual defense spending is roughly $600 billion, including the appropriations for Iraq and Afghanistan. If we were to cut that in half, something that, essentially, nobody is suggesting, it would realize roughly $3 trillion over ten years or roughly a third of the deficit. Half, if you are more inclined to believe the CBO’s baseline scenario.

Non-defense discretionary spending, i.e. everything else other than Social Security, Medicare, interest on the debt, and a few other entitlement programs, amounts to about 18% of the budget. If we were to cut that in half, too, on top of cutting the defense budget in half and the tax increase it would close the deficit and a little bit over. Can you imagine that taking place? Me, neither.

I notice that Dr. Romer doesn’t mention cutting healthcare spending. Can we narrow the budget deficit without cutting healthcare spending? I don’t think so. Not to mention the disaster that healthcare spending is wreaking on state and local government budgets.

Rich Karlgaard opens his column at Forbes by pointing out something I posted about yesterday:

During the Great Recession and its aftermath, the U.S. economy has performed slightly better than flat. That’s hard to believe, isn’t it? But the numbers tell the story. In 2008, 2009 and (projected) 2010, the U.S. GDP was (and is), $14.3 trillion, $14.2 trillion and $14.6 trillion.

Yes, it’s hard to believe the economy was flattish – factually, ever-so-slightly growing – over the worst patch in our lifetimes. Why did the economy feel so much worse if it was merely flat? Good God, what would happen if the economy actually shrank over several years?

Answer: Americans are accustomed to growth. And with a growing population, we need growth.

and then turns to a prescription for growth that I wrote about a couple of weeks ago:

Carl Schramm, who heads America’s top entrepreneurial think tank, the Kauffman Foundation, has a stunningly good insight into what causes an economy to grow. Growth, he says, is directly correlated to startups that get big. I interviewed Schramm onstage last week at a Churchill Club event at Microsoft’s Silicon campus in Mountain View.

Schramm said:

“The single most important contributor to a nation’s economic growth is the number of startups that grow to a billion dollars in revenue within 20 years.”

Schramm says the U.S. economy, given its large size, needs to spawn something like 75 to 125 billion-dollar babies per year to feed the country’s post World War II rate of growth. Faster growth requires even more successful startups.

What are the factors that enable a new company to grow to that size? Obviously, you’ve got to have an idea. There’s got to be space in the market for you—the established guys will push you out any way they can and all of the advantages are theirs.

You’ve also got to want to run a business. That may seem obvious but in the U. S. in the technology sector getting just big enough that you become attractive to the Microsofts, Intels, and now Googles of the world is a proven business model. It’s a model that makes lots of money for its founders but it’s not a model that produces new $1 billion companies and the new jobs that go with them.

Disagreement is fine. Debate is fine. Strenuous disagreement and heated debate are both fine. Labelling your opponent a traitor when that manifestly isn’t the case isn’t fine:

Be unkind and blame desperation, or be kind and blame fatigue. Either way, Democrat Alexi Giannoulias’ juvenile pander to Big Labor — his charge that Republican Mark Kirk is guilty of “economic treason” — suggests that he’s too reckless and immature to fill a seat occupied by Everett McKinley Dirksen, Adlai Stevenson III and Barack Obama.

Giannoulias invoked treason, the only crime defined in the Constitution, ostensibly because, a day before a congressional vote on overseas business, Kirk conducted an Internet videoconference fundraiser from the U.S. with a dozen U.S. businesspeople working in Beijing. Note that these are American citizens, not foreign nationals. This is legal — as presidential candidate Obama’s campaign surely knew before it scheduled two 2008 fundraisers with Americans in China.

When I read this from David Brooks’s most recent column:

For most of television history, sitcoms have been about families. From “The Dick Van Dyke Show” to “All in the Family” to “The Cosby Show,” TV shows have generally featured husbands and wives, parents and kids.

my immediate reaction was “Huh?” Has David Brooks ever watched The Dick Van Dyke Show? Unlike its rough contemporaries, Leave It to Beaver or The Donna Reed Show, The Dick Van Dyke Show was the epitome of the “flock” motif of which Brooks takes note:

Today’s shows are often about groups of unrelated friends who have the time to lounge around apartments, coffee shops and workplaces exchanging witticisms about each other and the passing scene.

Laura Petrie, unlike June Cleaver or Donna Stone, was a former entertainer who fit right in with Rob’s work associates and an episode was just as likely to deal mostly with Rob, Buddy, Sally, Mel, and Alan as it was with Laura and Richie appeared in fewer than half of the 158 episodes of the program.

How does The Andy Griffith Show with its cast of Mayberry characters fit into Brooks’s paradigm? And I seem to recall that the earlier You’ll Never Get Rich AKA The Phil Silvers Show exclusively featured a cast of unrelated friends who exchanged witticisms.

I don’t find the current crop of sitcoms particularly appealing, gave up on Seinfeld after struggling through a half dozen episodes, have never watched an episode of Friends, and only watched one episode of How I Met Your Mother to keep my niece company. What strikes me about many of the programs of today is how idle so many of the sitcom characters seem to be. Maybe that’s the social change that David Brooks should have honed in on.

Sure, there are still workplace comedies, the most obvious being The Office, but work doesn’t seem nearly as central to the identity of today’s crop of sitcom characters as in those of days gone by. We still remember that Ralph Kramden was a bus driver and his pal Norton worked in the sewer, that Alex Stone was a physician, Andy the sheriff of Mayberry, Rob Petrie a comedy writer. Ward Cleaver, on the other hand, was always a mystery. He worked but we were never sure at just what. I always suspected he was a Soviet agent.

I don’t know if anyone else is getting this impression but I’m hearing a distinct sense of schadenfreude in the coverage of the foreclosure mess, particularly from lawyers.

If you’re not aware of it over the last fifty years or so there has been a steady erosion of tasks that used to be performed by attorneys and, indeed, used to constitute the bread and butter business for many, particularly solo practitioners. These chores include real estate closings, some aspects of the banking and insurance businesses, most recently ordinary wills, and foreclosures all of which used to require the attention of attorneys but are now often conducted without them and, in the case of non-judicial foreclosures, without even a review by a judge. I don’t hear as much resentment from lawyers over this state of affairs as I used to but I suspect it’s still there.

And when I hear a lawyer talk about the foreclosure mess on the radio or on television I have frequently detected an undertone of “Well, what do you expect from letting non-lawyers handle things that should be solely the province of the experts?”

Credit Suisse, via Business Insider, comes at the point I’ve been making around here for some time from another angle. The bottom line is kwitcherbellyachin:

Through all the speed up and slowdown scares and microscopic inspection of economic data in the last 18 months, the global economy seems to have regained the growth rates it enjoyed in the first half of the decade, before the financial crisis and the recession. We expect global GDP to expand by 4.7% in 2010 and 4.3% in 2011 (Exhibit 2). This compares well enough with 4.6% growth in the five pre-crisis years 2003-07. For reference, October consensus expectations for 2010 and 2011 global GDP growth were 4.6% and 4.1%, respectively. The corresponding IMF forecasts are 4.8% and 4.2%.

And it’s not just the global economy; the economies of developed countries are growing at a good rate, viz:

The developed economies, including that of the United States, are growing at the respectable rate of between 2 and 3%.

Why the anxiety? It is because that’s not a fast enough rate to put those who’ve lost their jobs during the downturn back to work and we’re not nearly as rich as we thought we were going to be at this juncture. Ultimately, expectations need to be adjusted to what can reasonably be achieved.

This post covers territory I’ve covered here before. It riffs to a certain extent on a theme I sounded in comments on a couple of posts by James Joyner over at OTB. The data in the graph above illustrates the real year-on-year growth in the U. S. GDP since World War II. The data are taken from the BEA.

I want to draw your attention to two important facts. First, the experience in growth over the last twenty years shows a markedly slower rate than prevailed over the previous twenty years or the previous forty years.

Second, the period since 1990 has included two bubbles: the dot-com bubble and the real estate bubble. Those bubbles are clearly evident in the peaks over the last twenty years.

In a comment at James’s post I suggested that in the coming years we were likely to experience growth more similar to that of Western Europe, where growth has typically hovered in the 2% range, than it did to levels of 4% or higher. A rather rude commenter there retorted that my claim was absurd. That the commenter apparently thinks that demographics and population size are synoymous is a subject for another time.

What forces could lead to growth at the 4% or higher level? Besides the unexpected which is just that, unexpected, I can only think of two. If you believe that we’re going to experience growth at a level higher than that of other developed countries you must either believe that we’re going to continue to experience a high level of immigration and/or that we’re going to continue to experience bubbles.

Immigration into the United States is overwhelmingly from Mexico. Many of those who adhere to the persistence theory believe we’ll see the high rate of immigration from Mexico we’ve seen over the last twenty-five years continue indefinitely into the future. That isn’t likely to happen due to Mexican demographics and economic growth in the United States and Mexico. For an illustration of why we’re less likely to see mass immigration from Latin America, generally, see here.

Will we have more bubbles? What’s the evidence for this?

Meanwhile, I’ll open the question up for comments. Do you think we’re going to see GDP growth in the U. S. at a rate of 4% a year or higher? Why?

It bears mentioning that many pension plans assume growth in their investment portfolios of 8% per year. If GDP growth is 2% a year, that would need a pretty darned good alpha.

Update

When I re-read this post a couple of things occurred to me. The first is that I probably haven’t explained my emphasis on immigration enough. One of the factors in economic growth in the United States is almost certainly the increasing population. Our population is growing faster than Japan’s (Japan’s is shrinking), for example, which explains some of our economic growth, too. The birth rate is higher among immigrant women than among native born women here. If you remove immigrants and the children of immigrants from the picture, population growth in the United States resembles that of Western European countries much more closely.

The also appears to me to be a built-in assumption in the argument that ongoing population will continue to produce more economic growth rather than less growth. Not only do I believe that we’re likely to see less immigration into the United States over the next twenty years than we have over the last twenty but I strongly suspect that the next wave of immigrants (if there is one) is likely to be poorer and less educated, particularly relative to the structure of the economy, than previous waves.

Given that world demographics tells us that the fastest growing populations are in Africa and Asia, that’s where the immigrants are likely to come from too. I suspect that France and Germany will be the preferred destinations for the new immigrants rather than the United States. The soul-searching that’s going on in Western Europe today on this subject will be very telling in this regard.

When I was listening to the radio program yesterday, I suddenly had a flash of insight: there’s a set of connections that runs right from Flo Ziegfeld right through to today’s television progams.

Eddie Cantor was a headliner for Flo Ziegfeld’s shows in the teens and 20s.

Phil Rapp wrote for Eddie Cantor’s movies and his radio show (he also wrote for Fannie Brice, another connection as you will see, and television).

Danny Thomas was a co-star of the radio program The Bickersons, which was created by Phil Rapp (who also created the Baby Snooks program that starred Fannie Brice;Thomas was a featured player on the program).

Aaron Spelling, along with Sheldon Leonard, was partners with Danny Thomas and that combine was responsible for many of the classic comedies of the 1960s including The Dick Van Dyke Show, The Andy Griffith Show, and others.

Darren Star, the creator of Sex and the City, was a protege of Aaron Spelling’s.

Show business really is a village.