Let's go to the Economic Videotape and look back to 1936 (and compare it today):
The country is in the grips of the Great Depression, but has begun to recover under Roosevelt's New Deal "pump priming" stimulus plan. But Roosevelt is in a re-election fight and the Republicans have been screaming about deficit spending.
So Roosevelt agrees to an austerity package to enhance his re-election chances. (Sound familiar?)
The country's economic recovery reverses and we go into the '37 recession.
So e go back to the New Deal's deficit spending to stimulate the economy and the recovery recommences.
Then 1941. Something really big happens and the government has to spend vastly higher amounts of money in the economy and borrow to do so.
Look at the economic events - vastly increased government spending and borrowing.
The economy bounds back with the massive government spending program put into place. Yeah, it was done to fight WWII. But if you describe that period from an economic point of view - it was huge stimulus package built on deficit spending.
Are we going to have to have another World War to convince ourselves that the solution is government spending?
I reviewed the Stockman quotes that you suggested. What’s interesting is that he rejects economic management because it’s “Keynesian”, meaning, in this context, “government spending.” Which means that the guy you quoted as a defender of your “Stimulus Works” argument actually rejects stimulus.
ReplyDeleteFurther. I still maintain that your 1936-37 example is ridiculous. It similar to me hawking growth hormone and using Herve Villachez as my proof that the formula works. Why don't you sell us "smart pills"--that way you can use Corky from " life goes on" as your example.
ReplyDelete>> What’s interesting is that he rejects economic management because it’s “Keynesian”, meaning, in this context, “government spending.” Which means that the guy you quoted as a defender of your “Stimulus Works” argument actually rejects stimulus.
ReplyDeleteThe point is, Stockman is a conservative Republican; he was Reagan's Director of Management and Budget when Reagan introduced "Supply Side Trickle Down Economics" and Stockman has rejected trickle down day economics, the very heart and soul of modern day Republican thinking.
That he rejects Keynesian economics is assumed - dog bites man - but that he rejects trickle down economics as a Republican - man bites dog - should give Republicans some pause.
>> I still maintain that your 1936-37 example is ridiculous. It similar to me hawking growth hormone and using Herve Villachez as my proof that the formula works.
ReplyDeleteI don't understand your analogy at all - at least to the extent that you think it disproves the effects of FDR's "pump priming" stimulus program.
FDR's new Deal was based on Keynesian economics and the idea that government stimulating the economic with spending and borrowing to do so would lead to the demand for products which leads to economic growth.
As the New Deal was being implemented, the economy was slowly growing, but conservatives were raising a ruckus about deficits and the "need" for fiscal austerity.
So, going into the 36 elections, FDR adopted the GOP's demand for an austerity program, and we immediately went into a recession.
In other words, in a weak but growing economy, if you cut back on economic activity by cutting back on government spending, the recovery will be reversed and the economy will go back into recession.
As to your Herve Villachez analogy, the only way I can see it fitting is if you are equating growth hormone to the New Deal stimulus
For the analogy to work, though, you have to say that he had been given growth hormones for several years and he grew, and then he stopped taking the growth hormones and he actually shrank some, and he started taking them again and he started to grow again.
And then he started taking mega-doses of government spending, i.e., starting buying huge amounts of munitions and war material, and he soared in growth.
BTW, the GOP is trying to describe the economic effects of WWII as "industry being turned loose" when what it was, from an economic point of view, was the government spending huge amounts of money to buy a huge amount of stuff (and borrowing to do it) - and the economy soared!
Let me try to explain so you will understand.
ReplyDeleteIf stimulus works, then we ought to see it in the great economies, such as 1983-2000.
Stimulus produced the economy of 1935, while anti-stimulus produced the economy of 1983.
The economy of 1935 may have “slowly growing” (your words), but that economy is very, very weak when compared to the economy of 1983.
Stimulus created the weak economy of 1935, while anti-stimulus produced the very strong economy of 1983.
But you expect us to believe stimulus is superior to anti-stimulus. That’s ridiculous.
Further the 1935 economy took 5 years to reach the “slowly growing” status, while the 1983 economy took only 3 years to reach astonishing growth status. “Astonishing” is based on nearly 15% GDP growth in the first 6 months of the year.
And yet still you claim stimulus works better than anti-stimulus. Why do you reach so hard to prove your points, when the obvious answer is right in front of you?
>>Let me try to explain so you will understand.
ReplyDelete>>If stimulus works, then we ought to see it in the great economies, such as 1983-2000.
I'm guessing you are the same "Anonymous" who posted in another blog thread.
First, we _did_ see a lot of stimulus in the form of government spending in the period of 83-2000.
If you look at my next blog post, http://rjw-progressive.blogspot.com/2011/08/whose-debt-is-it.html, you'll see that Reagan and Bush I accounted for a little less than 1/4 of our current debt through increased government spending.
And in this post, you'll see that Reagan had, by far, the highest percent rise of debt per year of all presidents, with Bush I not far behind: http://rjw-progressive.blogspot.com/2011/07/who-increased-how-much-debt.html
COnservatives love to say the Reagan tax cuts moved the economy, but they completely ignore the fact that those tax cuts were accompanied by major increases in spending.
No one disputes that increased spending in an economy grows that economy. Just look at any pro sports team's proposal for a public bond to finance a new stadium.
No one has ever been able to point to a example of where tax cuts alone can be seen to boost economic activity.
>>Stimulus produced the economy of 1935, while anti-stimulus produced the economy of 1983.
ReplyDeleteThat is incorrect: Reagan's admin did a lot of stimulus increased federal spending (see, e,g,the sites linked below.)
>>Further the 1935 economy took 5 years to reach the “slowly growing” status, while the 1983 economy took only 3 years to reach astonishing growth status. “Astonishing” is based on nearly 15% GDP growth in the first 6 months of the year.
You do recognize that the Great Depression was immensely larger than the recession which was ending when Reagan took office, don't you? That there are different degrees of recession?
"Let me try to explain so you will understand."
The Great Depression was a huge motherwhumping economic disaster, far greater than the 1980-82 recession.
Of course it took longer to get through it.
>>And yet still you claim stimulus works better than anti-stimulus. Why do you reach so hard to prove your points, when the obvious answer is right in front of you?
The obvious answer? What is obvious is that you don't know all of the facts. You parrot talking points based on cherry picked and flat out wrong "facts."
For example:
>>“Astonishing” is based on nearly 15% GDP growth in the first 6 months of the year.
According to a Reagan supporter's website, http://www.presidentreagan.info/gdp.cfm, the highest quarterly GDP growth was the 2nd quarter of n'83, at 10.9%, and the GDP for the year was 4.3%
And don't forget, as the ultra-conservative Mises Institute http://mises.org/freemarket_detail.aspx?control=488, tells us, before 1983 rolled around, Reagan gave us the largest tax increase in history: "the Tax Equity and Fiscal Responsibility Act of 1982. TEFRA—the largest tax increase in American history—was designed to raise $214.1 billion over five years, and took back many of the business tax savings enacted the year before."
Yes, I am the anonymous poster—and you are still RJW. If you want, my initials are SLC.
ReplyDeleteI want to look at the sites you mention: "That is incorrect: Reagan's admin did a lot of stimulus increased federal spending (see, e,g, the sites linked below.)" But I don't see any sites related to Reagan's stimulus spending. Did you forget to post them, or I am not seeing them? I see the one for the GDP growth, and the one for the largest tax increase. If you can’t post the site, please describe the nature of the Reagan stimulus.
Further, your citation for the GDP growth is incorrect. According to the US Government Bureau of Economic Analysis at http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1, the GDP growth for the four quarters of 1983 were: 5.1%, 9.3%, 8.1%, and 8.5%. And these are cumulative, meaning that the growth for the year was 34.73%. My source is the US Government, so I think that trumps your source.
--SLC
In addition, if Reagan really did use stimulus, why didn't you use that as your example of how powerful stimulus is? That certainly would have blunted my Herve Villachez comment.
ReplyDelete>>In addition, if Reagan really did use stimulus, why didn't you use that as your example of how powerful stimulus is?
ReplyDeleteI have found that conservatives tend to be so sure that all Reagan did was cut taxes that I tend to stay away from mentioning the full set of facts about Reagan.
>>That certainly would have blunted my Herve Villachez comment.
LOL, that comment was blunt on arrival....
The link you gave for your claimed GDP data didn't go to a GDP data table.
My link was to a Reagan supporter site, so I figure they must be giving as high as they can get.
But heres another, annual GDP source: http://www.usgovernmentspending.com/us_gdp_history
We find the historic annual data at that site, calculating percentage changes for 1977 - 1992, I get the following annual rates of GDP increase:
1977 11.26%
1978 12.99%
1979 11.70%
1980 8.82%
1981 12.15%
1982 4.04%
1983 8.65%
1984 11.21%
1985 7.29%
1986 5.75%
1987 6.19%
1988 7.69%
1989 7.48%
1990 5.81%
1991 3.30%
1992 5.84%
So '84 was Reagan's best year, (about what we had during Carter - although thoise were still high inflation days - going back to Nixon/Ford) not '83, but the GDP growth dropped after that.
And here's spending from '77-92 --- you seemed surprised to learn that Reagan had increased spending.
ReplyDelete(Look at the jumps in 81 and 82 - good old stimulus spending, aka "pump priming" from Ronald "Tax Cuts" Reagan)
Year Fed Spending (Billions)
1977 409.2
1978 458.7
1979 504
1980 590.9
1981 678.2
1982 745.7
1983 808.4
1984 851.9
1985 946.4
1986 990.4
1987 1,004.1
1988 1,064.5
1989 1,143.8
1990 1,253.1
1991 1,324.3
1992 1,381.7
(These spending figures come from http://www.usgovernmentspending.com/spend.php?span=usgs302&year=1992&view=1&expand=&expandC=&units=b&fy=fy12&local=s&state=US&pie=#usgs302)
My site still trumps yours, as it's a dot gov site. For all I know, you set up the site you cite. Figures from the government are necessarily more accurate. Meanwhile you're back to not answering my questions. What is the name of your blog again--maybe you are the one who needs to open your mind.
ReplyDeleteAnd just for posterity, the question was, if Reagan used stimulus, why didnt you cite his economy as proof of the wonder that is stimulus? SLC
>>My site still trumps yours, as it's a dot gov site.... Figures from the government are necessarily more accurate.
ReplyDeleteExcept your link doesn't lead to any data.
>>For all I know, you set up the site you cite.
That's you last bite at the apple of arrogance and disrespect.
Meanwhile you're back to not answering my questions.... And just for posterity, the question was, if Reagan used stimulus, why didnt you cite his economy as proof of the wonder that is stimulus?
Just for prosperity, the answer I already gave remains the same: "I have found that conservatives tend to be so sure that all Reagan did was cut taxes that I tend to stay away from mentioning the full set of facts about Reagan."
Uh, yeah it does lead to data. It takes a little doing to get the data but it's there. When I have time I'll write a detailed list of instructions for you. And your answer regarding Reagan -- you avoid a stronger example so that you don't have get into the real truth about Reagan? Really? That makes no sense. How would using a great example of the benefits of stimulus get you into the real truth about Reagan? Wouldn't you want to use that example precisely because it pops the balloon of myth about Reagan? I mean if the great economy of 1983-2000 was because of stimulus, don't you want to use that example to expose Reagan as a fraud? SLC
ReplyDelete>>Uh, yeah it does lead to data. It takes a little doing to get the data but it's there. When I have time I'll write a detailed list of instructions for you.
ReplyDeleteLOL. IOW, "my link leads to data but it doesn't, you need a treasure map."
Apparently you are unfamiliar with the concepts underlying citation of sources and linking on the web.
>>I mean if the great economy of 1983-2000 was because of stimulus, don't you want to use that example to expose Reagan as a fraud?
A fraud? No. A proponent of a mistaken idea? Yes.
Conservatives have ignored the stimulative actions of Reagan and mistakenly focused exclusively on his tax cuts (also ignoring his many tax increases) for going on 30 years - despite attention being regularly called to those factors.
That is why I didn't mention it - why repeat an argument which has encountered psychological denial for decades?
Just as you now refuse to accept the position of Reagan's own director of Management and Budget.
1. Go to the site: http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1,
ReplyDelete2. Click on the tab for Section 1: Domestic Product and Income
3. Go to Table 1.1.1
4. Click on Options—next to the little gear in the upper right hand quadrant.
5. Choose Annual or Quarterly
6. Select the First Year
7. Select the Last Year
8. Click Update
9. Voilà! Data!
Why they do it this way, I have no idea. I think the explanation is that it’s a government site. But there is data. Either you’re going to look at it or not. Either you’re going to have an open mind or you’re not.
And as far as your explanation about not using the “stimulus” of 1980-83 to explain the great economy of 1983, I find it ridiculous. Let’s summarize: you didn’t want to use an example that I wouldn’t believe (because I’m misinformed about Reagan, even though you and I have NEVER discussed it before), so you decided to use another example that I also didn’t believe. Is that about right? Frankly, this sounds very similar to your “the economy is better, but it sucks for people” comment.
But let’s accept that stimulus was used in 1980 – 83. That gives us: Stimulus, 1936, economy is better but still weak, Stimulus 2009, economy better but still weak, Stimulus 1982, economy absolutely zooms up 34% in 1983. That creates the question: why did stimulus work in 1982 so well, when it worked not very well in 1936 and 2009?
Let me offer a different explanation: You didn’t use the 1983 economy as an example of the power of stimulus because Reagan really didn’t use stimulus. And you know it.
So I’ll give you another chance here: Tell me exactly what Reagan’s stimulus was. Don’t just say he increased the deficit or had government spending—but specifically what spending did Reagan designate as “stimulus”?
Yeah, that's what I figured.
ReplyDelete