My guess is that Bernanke is applying to replace Greenspan at the Fed. He had to leave the Fed and take the current political hack job in order to show his credentials of loyalty to the Bush administration. What he will do if he gets the job is probably another story. Which is probably why Bush will not appoint him, and he is doing this hack work for nothing.
To blame Bush for the job losses in the first years of his presidency, one must necessarily argue that the historical low uemployment rates during the 2nd Clinton term were sustainable in the long-run. Bush deserves credit for his tax cuts, which stimulated the economy and prevented the downcycle from being much much worse. "Net" job growth over his presidency does not fairly reflect the economic turnaround his policies engendered.
Steve, I think Bernanke would do a decent job as FED chairman. I assumed he was going to have to make a fool of himself to get the job; he is. I hope you are wrong ... I hope Bush appoints him FED chairman ... Still I intend to make fun of everything he says (as long as it warrants ridicule!).
Jason, if you read my previous post on jobs (linked in post) I cut the Bush Administration slack for some of the reasons you give. But "slack" does not equal "credit". No one can crow about 161K jobs in 4 1/2 years.
"Bush deserves credit for his tax cuts, which stimulated the economy and prevented the downcycle from being much much worse."
The tax cuts were minimally geared to current economic conditions, and only because Democrats forced the additions. The main effects have taken place much after the recession ended in November 2001. The Fed did what it should have done and limited the recession and built employment. The Administration could not have used fiscal policy much more poorly.
I almost always ignore the WSJ commentary page. It's about as shamelessly one-sided as you can get. I glanced quickly today and read Bernarke. Who's this guy kidding? He's lining himself up to be the next political hack ready to do his master's bidding.
Today it's seems everyone in the Fed and Govt is on the take. How did it get so bad?
I'm not a big fan of W or of tax cuts in general, but when a nation seems to be on a collision course with a liquidity trap (as in early 2003), any fiscal stimulus is a good thing. It makes no sense today to make the cuts permanent without an offset, but Republicans will be Republicans. If ongoing deficits are the price we have to pay for having avoided another Great Depression, it's still worth it. Bad as things are, I give the Bush administration some credit for not letting them get worse.
If ongoing deficits are the price we have to pay for having avoided another Great Depression, it's still worth it. Bad as things are, I give the Bush administration some credit for not letting them get worse.
One of my buddies favorite sayings is "If debt feels this good, we should all have a whole lot more of it." He was being sarcastic... and was very drunk when he said it... but you get the point.
It is the thinking that by putting off sacrifice by piling up ever increasing debt loads, that somehow we are avoiding the consequences... that is the path to a future Great Depression.
Bush's policies were the worst of all possible for the time. Temporary fiscal stimulus tailered to middle class (consumers) to maintain aggregate demand... maybe justified... Long term tax cuts targeted to the wealthy & ultra-wealthy... and not even 'pro-growth' targeted tax cuts but 'wealth preservation' tax cuts at that... very bad. And then to do it at a time of war? Disaster.
With 3% projected growth and 2% real long-term interest rates (30-year TIPS yielding 1.93%, to be exact, as of my latest Bloomberg quote), we can afford the debt. It is not the path to a future Great Depression; it just means living standards won't rise much.
Bush's policies are not the option I would have chosen, but they were far from the worst. For a more recent contrast than the Depression, consider Japan: their fiscal debt is huge, but their fear of additional debt has helped keep them in deflation for over a decade. With Japan's experience in the rear-view mirror and the US budget a good deal closer to balance than Japan's, it would have been unreasonable to reject Bush's tax cut if the alternative was no action.
As for the war, I don't see the issue: if the war was a genuine fiscal stimulus, then it helped to halt the slide; if, on the other hand, its effect on business confidence outweighed the direct expenditure effect, that's all the more reason that we needed the tax cut.
With 3% projected growth and 2% real long-term interest rates (30-year TIPS yielding 1.93%, to be exact, as of my latest Bloomberg quote), we can afford the debt.
Rates change, forecasts uncertain.
Do you know how much of our current soveriegn paper is out longer than 5 years? I don't but it isn't much. My understanding is something like 80% of our gov't debt is due in less than 5 years... as long bonds come due we keep laddering it into short term debt and adding on more each year to boot and so far they keep buying it and nobody sweats. It is revolving credit with a teaser rate.
They should be sweating and a lot. We should all be sweating.
Bush had other options... short tem stimulus to the middle & working class... a temporary 'war' tax surcharge to the wealthy. Reasonable reforms to inheritance but nix the billionaire give away... Accelerate & expand depreciation allowances but leave cap gains same as 'labor income'...
All would have been pro-growth w/out the the long term budget wreckage. Bush chose the worst of the possible paths. We'll pay for it someday maybe soon.
My guess is that Bernanke is applying to replace Greenspan at the Fed. He had to leave the Fed and take the current political hack job in order to show his credentials of loyalty to the Bush administration. What he will do if he gets the job is probably another story. Which is probably why Bush will not appoint him, and he is doing this hack work for nothing.
To blame Bush for the job losses in the first years of his presidency, one must necessarily argue that the historical low uemployment rates during the 2nd Clinton term were sustainable in the long-run. Bush deserves credit for his tax cuts, which stimulated the economy and prevented the downcycle from being much much worse. "Net" job growth over his presidency does not fairly reflect the economic turnaround his policies engendered.
Steve, I think Bernanke would do a decent job as FED chairman. I assumed he was going to have to make a fool of himself to get the job; he is. I hope you are wrong ... I hope Bush appoints him FED chairman ... Still I intend to make fun of everything he says (as long as it warrants ridicule!).
Best Regards.
Jason, if you read my previous post on jobs (linked in post) I cut the Bush Administration slack for some of the reasons you give. But "slack" does not equal "credit". No one can crow about 161K jobs in 4 1/2 years.
Best Wishes.
"Bush deserves credit for his tax cuts, which stimulated the economy and prevented the downcycle from being much much worse."
The tax cuts were minimally geared to current economic conditions, and only because Democrats forced the additions. The main effects have taken place much after the recession ended in November 2001. The Fed did what it should have done and limited the recession and built employment. The Administration could not have used fiscal policy much more poorly.
The Clinton Administration had superb fiscal policy, and I only wish the policy had been continued.
Off-topic, but I didn't know if you had seen this:
From Dean Baker at the Center for Economic and Policy Research: "Housing Bubble Fact Sheet" (summary and the full report in pdf)
Ficus - Thanks!
Baker was early, but he is a sharp guy.
Best Regards!
I almost always ignore the WSJ commentary page. It's about as shamelessly one-sided as you can get. I glanced quickly today and read Bernarke. Who's this guy kidding? He's lining himself up to be the next political hack ready to do his master's bidding.
Today it's seems everyone in the Fed and Govt is on the take. How did it get so bad?
I say that job creation has been a poor return on the debt increase.
Agree CR & others.
CR, great juxtaposition with Coolidge's remarks.
Blah blah blah Bush Blah blah blah Bush Blah blah blah Bush Blah blah blah Bush Blah blah blah Bush Blah blah blah Bush
Got it.
I'm not a big fan of W or of tax cuts in general, but when a nation seems to be on a collision course with a liquidity trap (as in early 2003), any fiscal stimulus is a good thing. It makes no sense today to make the cuts permanent without an offset, but Republicans will be Republicans. If ongoing deficits are the price we have to pay for having avoided another Great Depression, it's still worth it. Bad as things are, I give the Bush administration some credit for not letting them get worse.
If ongoing deficits are the price we have to pay for having avoided another Great Depression, it's still worth it. Bad as things are, I give the Bush administration some credit for not letting them get worse.
One of my buddies favorite sayings is "If debt feels this good, we should all have a whole lot more of it." He was being sarcastic... and was very drunk when he said it... but you get the point.
It is the thinking that by putting off sacrifice by piling up ever increasing debt loads, that somehow we are avoiding the consequences... that is the path to a future Great Depression.
Bush's policies were the worst of all possible for the time. Temporary fiscal stimulus tailered to middle class (consumers) to maintain aggregate demand... maybe justified... Long term tax cuts targeted to the wealthy & ultra-wealthy... and not even 'pro-growth' targeted tax cuts but 'wealth preservation' tax cuts at that... very bad. And then to do it at a time of war? Disaster.
dry fly:
With 3% projected growth and 2% real long-term interest rates (30-year TIPS yielding 1.93%, to be exact, as of my latest Bloomberg quote), we can afford the debt. It is not the path to a future Great Depression; it just means living standards won't rise much.
Bush's policies are not the option I would have chosen, but they were far from the worst. For a more recent contrast than the Depression, consider Japan: their fiscal debt is huge, but their fear of additional debt has helped keep them in deflation for over a decade. With Japan's experience in the rear-view mirror and the US budget a good deal closer to balance than Japan's, it would have been unreasonable to reject Bush's tax cut if the alternative was no action.
As for the war, I don't see the issue: if the war was a genuine fiscal stimulus, then it helped to halt the slide; if, on the other hand, its effect on business confidence outweighed the direct expenditure effect, that's all the more reason that we needed the tax cut.
With 3% projected growth and 2% real long-term interest rates (30-year TIPS yielding 1.93%, to be exact, as of my latest Bloomberg quote), we can afford the debt.
Rates change, forecasts uncertain.
Do you know how much of our current soveriegn paper is out longer than 5 years? I don't but it isn't much. My understanding is something like 80% of our gov't debt is due in less than 5 years... as long bonds come due we keep laddering it into short term debt and adding on more each year to boot and so far they keep buying it and nobody sweats. It is revolving credit with a teaser rate.
They should be sweating and a lot. We should all be sweating.
Bush had other options... short tem stimulus to the middle & working class... a temporary 'war' tax surcharge to the wealthy. Reasonable reforms to inheritance but nix the billionaire give away... Accelerate & expand depreciation allowances but leave cap gains same as 'labor income'...
All would have been pro-growth w/out the the long term budget wreckage. Bush chose the worst of the possible paths. We'll pay for it someday maybe soon.
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