What Would a Conservative Do?

[NCVol]

...to turn around this economy.

What is the first bill a republican Congress should pass to end this depression? 

[Jeremy Roenick]

It's real easy to identify what's wrong with the economy vs. what is appropriate to fix it.  I have many opinions about the economy, as you and I have discussed, but where to begin fixing it is a good question.  It's like asking the captain of the Titanic, 20 minutes after hitting the iceberg, "what are you going to do to prevent the sinking of this ship?".

One thing has to be identified and realized here, we are going through an UNPRECEDENTED contraction in our economy.  It really underlines how big the bubble was.  Everyone needs to realize that we are going to go through a cycle of savings and paying down debt (both personal and governmental) for years to come.  So expecting to turn around sales figures, stimulate growth in industry, swing GDP back to a stronger side, etc. won't happen for a number of years until this reset has completed.

So there is no "quick" solution to fixing the economy.  Anything quick is "stimulus" and thus more steroids to keep the high going in order to manipulate the numbers and to make seem that growth is happening when it is not.

[NCVol]

I understand there isn't a silver bullet - we've taken several decades to get to this point, and we won't be turning it around in the next six months.  At some point, though, we do have to identify the problem or problems, specifically, and at least talk about how to address it. 

IMO, the problem is demand has plummeted because we can no longer finance improvements in our lifestyle by going further into debt.  Wages have been flat for three decades.  And most families are two earners, so we can't make up for stagnant wages for the prime earner by adding a second earner to the household.  So what do we do? 

The problem I have with the "conservatives" and the WH is we can't even discuss this problem.  We continue to push for trade agreements that have the effect of pitting U.S. workers against the billions in the world who make a few pennies, or in the good economies, a couple dollars, an hour.  I don't see how that can possibly result in rising wages here.  So either we accept a race to the bottom, or a world where worldwide wages converge much lower than we are used to here, or we do something to change the equation of U.S. workers competing with those in China. 

How do we ask workers here to compete with a place where $3 an hour is great, engineers make what a person at Walmart makes, and they live in a cloud of smog every day from coal burning plants that spread the cost of pollution from polluters and energy users (aka U.S. based manufacturers supplying Walmart and all the big box stores with cheap, imported goods) to 1.4 billion individuals who are dying at the rate of several hundred thousand people a year of lung disease and related ailments. 

If that is what we compete against, we lose, and the American worker is f***ed.  At least that is the way I see it. 

[Flummoxed Lummox]

Give more tax cuts to multimillionaires. That is the ONLY economic solutions conservatives know.

[Sasquatch]

Give more tax cuts to multimillionaires. That is the ONLY economic solutions conservatives know.

Interesting: 

WH economist calls for more spending, less taxes

Departing White House economist Christina Romer says the government has the tools for bringing down unemployment, but policymakers need to find the will and wisdom to use them.

http://news.yahoo.com/s/ap/20100901/ap_on_bi_ge/us_obama_economist_1

Can we also get some research on the number of dems who DO NOT want the Bush tax cuts to expire?

[MRM]

Give more tax cuts to multimillionaires. That is the ONLY economic solutions conservatives know.

The biggest flaw for raising taxes on multimillionaires is most own large businesses or companies. All they'll do to make up for raised taxes is pass it on their company by trying to make it back through sale, which means the little man pays for it anyway.

I have to agree with NCVol that there is no quick fix. We as a county lack the discipline to make the necessary changes to properly do anything about it over a long period of time. The best plan would be appoint people in the business industry that have the experience of taking a business or themselves from financial ruin to great success to run the financial side of this country. That will never happen.

I personally think we'll continue down this same road until this house of cards crash in on our heads.

[NCVol]

Here's the problem with the "rich people and businesses don't pay taxes" - they can't pass it on with higher prices.  If they could raise prices in a deflationary environment, they'd do it with or without higher taxes on their income.  And the problem with the idea that if you raise taxes on the wealthy, they'll respond by not hiring, etc. is the evidence shows that the biggest tax cuts for the wealthy gave us a decade with virtually NO job growth, and a decline in wages.  The evidence, in other words, works against the whole "tax cuts for the rich" will solve any of our problems.

The best plan would be appoint people in the business industry that have the experience of taking a business or themselves from financial ruin to great success to run the financial side of this country. That will never happen.

I'm not sure why that will work.  What works for a business, say HP, is offshoring jobs to China.  Fiorina, the GOP candidate for Senate in California, offshored 10s of thousands of jobs as CEO.  What does that experience bring to the U.S. except she knows how to gut the U.S. economy and stimulate the Chinese economy, and apparently believes it's a good thing overall to do.  She did it as CEO, why or how could she object to that as Senator?  Their entire world view is maximizing share price - that's what they exist to do as CEOs.  That might or might not maximize the U.S. economy, but what we know, if it does, it's purely coincidental, a happy accident of fate.  As heads of industry, they're paid like kings NOT TO CARE about ANYTHING but profits. 

And we had Cheney (CEO) and Bush (CEO) and Rubin (CEO) and Paulson (CEO) and John Snow (CEO) .... and we've infiltrated the bureaucracy of every agency with private business employees on loan from industry to "smartly" regulate the industry they left and will soon rejoin.  The Senate is full of former businessmen who got bored with running companies and decided that running the country might be fun.  What possible perspective do we share with a CEO, whose entire social circle is void of working folks.  If they contemplate a problem, whose viewpoint do they come at that problem with?  Shareholders and Wall Street and their CEO buddies at the yacht club and the golf club?  Obama has continued this trend.  GS has all kinds of representatives buried in the bureaucracy.  What has it gotten us. What have these CEO's in government done to improve the U.S. economy? 

Businesses hire to meet demand, and THE problem right now is there is falling demand.  Wages are falling, people are paying off debt, leaving less money to buy stuff with.  Nobody hires to meet non-existent demand, but we have this belief that cutting wages, cutting jobs, increasing productivity but not spending power for the middle class magically creates some demand.  It doesn't.  Until we see rising employment and rising wages, this depression will simply get worse.  

Another point.  I get the idea that we can't "stimulus" our way out of this mess.  But what do we do with 15-25 MILLION under or unemployed while we're waiting for the reset.  You can't pretend that these folks just somehow get by.  They'll be out of their homes, unable to feed themselves, and unable to afford even basic medical care.  So what do we do while we wait for the five years for employment to turn around.

We could balance the Federal budget and remove 1.5 Trillion in spending out of a 14 trillion economy.  The states will reduce spending by another huge amount as they must balance their budgets.  So let's say we take demand down by $2.5 Trillion, roughly 20%.  We know that will increase the number of unemployed and reduce the profits of the businesses that manage to hold on.  

Just curious, how do we feed and house 20 million folks without a job for five years?  I'm not being combative, I just don't understand what the plan is for the inevitable consequences of fiscal austerity in a depression.  

[Jeremy Roenick]

Just curious, how do we feed and house 20 million folks without a job for five years?  I'm not being combative, I just don't understand what the plan is for the inevitable consequences of fiscal austerity in a depression. 

During the first Great Depression, it was programs like the C.C.C.  At least that put more people to work than the 2009 Stimulus bill.  You cannot create jobs out of thin air when the consumer support is not there for it.  That is correct.

Again, we're heading to the "support point" for this economy and population.  It's going to be a bumpy ride down before we can build our way back up, hopefully on fundamentals and not an artificial bubble.

[NCVol]

During the first Great Depression, it was programs like the C.C.C.  At least that put more people to work than the 2009 Stimulus bill.  You cannot create jobs out of thin air when the consumer support is not there for it.  That is correct.

Again, we're heading to the "support point" for this economy and population.  It's going to be a bumpy ride down before we can build our way back up, hopefully on fundamentals and not an artificial bubble.

I agree with that.  We gave out a lot of tax cuts, and cash for clunkers credits, and we're giving out a lot of unemployment benefits etc. so people can go out and buy something very cheap at Walmart made in China, made by a Chinese worker, and producing profits that will stay and be reinvested right there.  The New Deal programs paid out wages for infrastructure right here that still are a great benefit to this country. 

But you know what the GOP wants, more tax cuts, to stimulate that same spending on imported goods.  That's where, to me, the disconnect is for the right wing economic philosophy.

[Sasquatch]

But you know what the GOP wants, more tax cuts, to stimulate that same spending on imported goods.  That's where, to me, the disconnect is for the right wing economic philosophy.

I didn't realize that Obama's departing economist was "right-wing"?

Interesting: 

WH economist calls for more spending, less taxes

Departing White House economist Christina Romer says the government has the tools for bringing down unemployment, but policymakers need to find the will and wisdom to use them.

http://news.yahoo.com/s/ap/20100901/ap_on_bi_ge/us_obama_economist_1

Can we also get some research on the number of dems who DO NOT want the Bush tax cuts to expire?

[MRM]

Instead of putting band-aids on bullet wounds with these stimulous plans and crap like Cash for Clunkers, they should have taken that money and put it into programs to build or repair our roads, build low-cost housing, and other things to create jobs and fill needs. Instead, they created these programs that only did a small amount of good for a few months and then disappeared, but the existing problems still remained.

NCVol, I'm not talking about CEO's that have worked their way up various ladders and ran huge corporations. I'm talking about people that started with nothing and created their own, successful business from having nothing. Those types seem to understand how to operate and grow from having nothing or already being way deep in the hole.

[NCVol]

I didn't realize that Obama's departing economist was "right-wing"?

I think she advocated for 1) More spending, 2) less taxes (Obama cut taxes, wants further cuts in small business taxes that the GOP is blocking), 3) trade agreements and 4) spending on infrastructure.

I don't necessarily agree with her prescriptions, but the GOP agrees on ONE of four of those proposals.  Tax cuts.  It is all they have, all they know how to do. 

GOP answer:  Cut taxes!!!

Ask any question, that's your answer.  I must say, it makes studying up on issues pretty darn easy.  All you have to remember is to "cut taxes" and mention "jobs creators" and "small business" and characterize tax cuts on working people as "handouts" and "welfare." I'm not even a candidate and I got that figured out PDQ.