Re: Galbraith on the payroll tax holiday

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(email exchange)


>   On Sun, Nov 23, 2008 at 11:03 PM, Russell wrote:


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15 Responses to Re: Galbraith on the payroll tax holiday

  1. Scott Fullwiler says:

    Let’s hope so . . . but if at some point they worry about the “long run fiscal sustainability” and reverse course, then a Japan-like (or US in 1937-8) yo-yo economy will be the result. EVERYONE (save for Geithner, whose true views aren’t completely known, though he’s often called a protege of Rubin) on Obama’s team is on record as being on board with the “long-run fiscal sustainability” approach (Orszag in particular, but the others have published research making similar arguments). To have a large stimulus in the near term but to not then “deal with” the supposed “long-term unsustainability of fiscal policy” would go against the core intellectual values held by the entire economics team–could happen, of course, but it would require each of them to disavow decades worth of their own published research.


  2. RSG says:

    I agree with Mickslam, the message i’m hearing is that they’re not concerned with deficits in ’09, or ’10 for that matter. If 7% to 10% of GDP is what is needed, that’s what will happen.


  3. mickslam says:

    Hi Mike Norman,

    I agree that you can classify the appointees as deficit hawks, I think a better and more accurate classification would be “Keynesians”. They were deficit hawks during the good times, but isn’t one of the premises of Keynes to run surpluses in good times, deficits in bad times?

    They are going to shock you and me with how much they spend. They are going to shock everyone.


  4. warren mosler says:

    i’m a bit worried about next week

    credit markets have lagged stocks which is troubling as it’s all pretty much the same thing.


  5. Rich W says:

    Hey, if the dems can create a stock market bubble, count me in! I’ve got some losses I’d like to recoup.

    Sadly, I think our bubble blowing machine is broken for a while. Wonder what the next one will be?


  6. Scott Fullwiler says:

    Right Jim . . . stock market bubble coinciding with tight fiscal policy was the worse thing that ever could have happened in terms of the Dems understanding deficits and the debt.

    Interesting how Dems and Repubs have both done 180-degree turns on deficits since the 1950s-1960s, and now each holds a position more reminiscent of the opposite party’s position then.


  7. Jim Baird says:

    The problem is the Dems still look to the Clinton years as their halcyon days, and the story they see is one of “fiscal responsibilty” leading to surpluses and an economic boom. You can try to explin to them that it was the Bush deficits that led to the boom, and the surpluses that ended it (not to mention getting the credit bubble started by forcing households to borrow to maintain consumption…) till your blue in the face, but they won’t hear it. I;ve come to realize that the stories we tell ourselves are far more powerful than the reality in front of eyes.

    Oh, for the days when JFK’s economic advisors pushed for a tax cut because in order to reduce the budget’s tendency toward surplus! What a sad profession modern economics is: it’s like the every physicist in the world suddenly deciding that Einstein didn’t know what he was talking about, and dubbing relativity and quantum menchanics “old fashioned”…


  8. Mike Norman says:

    Of course…blame the messenger!

    Eat and enjoy. Remember, red wine is good for the heart so drink a lot of it. I certainly will be.


  9. Vipul says:

    But most of the deficit hawks he’s appointed, are also calling for a large stimulus.


  10. warren mosler says:


    hope you are happy you ruined my thanksgiving holiday…



  11. Mike Norman says:

    4. I don’t know how you can see it any other way. Obama has been totally consistent in who he has appointed: deficit hawks. Now he is speaking about being fiscally responsible and “scouring the budget” for money to fund these new investments. It’s so clear.

    From the day he chose Biden–a consumate Washington insider–as a running mate, people should have been wary about the change message.

    He was elected because he was a celebrity. He won’t bring sufficient stimulus or change.


  12. warren mosler says:

    right, Mike, the guys who applauded the budget surplus as the reason for the success of the late 90’s when in fact it caused the subsequent collapse are back.

    hopefully it’s not because Obama wants to show he’s ‘fiscally responsible’


  13. mike norman says:

    Galbraith is great. He’s been on my show several times. However, he’s nowhere to be seen on Obama’s team and likely won’t be. It’s Clinton Redux, completely!


  14. Jim Baird says:

    And if even a Republican troglodyte like “Neutron” Jack Welch likes it, maybe it has half a chance of passing!


  15. Roger says:

    I like Jack Welch’s comment–“very intriguing idea”. Galbraith said have the govt pay half of FICA for 5 years, as one variation of your proposal. From Welch’s reaction, he hadn’t heard that suggestion before, and he seemed to really like it.


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