Serious lack of aggregate demand.
Full FICA suspension still makes sense:
Labor force participation rate:
A little disconcerting that this is about the only fiscal relief both parties seem willing to let expire. :(
Art Patten Reply:September 9th, 2012 at 12:43 pm
MMT needs to infiltrate AARP. Any plans, besides aging?
“Joining Republicans in opposing the break is AARP, the advocacy group for people over 50, two groups that rarely find themselves in agreement. A. Barry Rand, the group’s chief executive, told members of Congress in a letter that an extension would ‘put at risk Social Security’s dedicated funding stream and the hard-earned benefits of millions of Americans and their families.'”
roger erickson Reply:September 9th, 2012 at 11:12 pm
Get Barry Rand to respond to this link?
“We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics.” FDR
FDR’s Cabinet realized early on that FICA taxes had been a mistake, and in any event discussed removing them in the case of another depression. Then admitted they were all politics, not for any real economic reason.
Ferruccio Reply:January 1st, 2013 at 7:18 pm
@roger erickson, I don’t see how FDR’s quote can explain why the employers are also made to pay social security taxes for their employees, not just the employees themselves. What “straight politics” goals could this serve, except discouraging some employment at the margin by making it costlier?
The weirdest thing about the drop in employment both in the US and the EU is the reaction (or lack of ) by the the expanding number of unemployed .
This interview DESTROYS Obama, he has been the greatest tool of the republican right agenda ever to be dreamed up. The greatest trick the devil ever pulled was convincing the world he didn’t exist, WE ARE FREAKING DOOMED! Romney or Obama, the sheeple will be sheered.
Security Guard Class 4 Reply:September 9th, 2012 at 8:02 am
@Security Guard Class 4, http://blackagendareport.com/content/what-obama-has-wrought
Obama was the greatest trojan horse ever inflicted on this nation, the blacks and the left laid down all resistance to his austerity gambit, he was one of them after all, a gift, manna from heaven, we are FREAKING DOOMED! Romeny or Obama, the government has failed the rest of us, but people like warren mosler who pay 3% tax rates are flying high, pathetic.
Ed Rombach Reply:September 9th, 2012 at 10:15 am
@Security Guard Class 4,
“the sheeple will be sheered.”
That’s rather good! On a scale of 1 to 10 I give it an 11!
The latest evasive maneuver coming from my Democrat friends is to try to explain this all away as a not very bad trend that is due more to early retirement than people who want to work not finding work. Krugman has already more or less refuted this debate tactic, but it’s depressing to see how easily people fall into intellectual dishonesty during a campaign.
chewitup Reply:September 9th, 2012 at 7:21 am
I think the only positive spin that is at all plausible is the increase in stay-at home moms (or dads as the case may be). Lower paying jobs make hiring child care or day care cost prohibitive.
Whether that’s positive or not is a matter of opinion. One earner per family will certainly keep demand at bay. The trend in all out consumerism is past us if this is the case. And it will take longer to deleverage with only one income.
Dan Kervick Reply:September 9th, 2012 at 11:05 am
@chewitup, If moms who want to work are only staying home because the family has few options, then I would say that is not a positive development.
Security Guard Class 4 Reply:September 9th, 2012 at 12:51 pm
@Dan Kervick, Dan, warren has said children are an investment with positive returns, not an expense without utility. Somewhere along the line someone thought it was smarter to pay stay at home child raising parents to leave that job and go do something else that was more profitable to short term corporate numbers. The kids then all grew up in broken families and now OCTOmom and her peers are unleashing thier fury on the planet today. I am sure since warren thinks children are an investment with positive returns, he could help draft policy where we should pay 100K a year to a stay at home parent to raise children rather than go work as nail technician.
I just watched Obama 2012, and like our Esteemed Mormon Romney’s grandpa, Obamas grandpa (and pa) was a polygamist too, many many kids under both presidential candidates polygamist forefathers. I can’t wait to be paid 100K a year and have 10 wives who put out 10 kids each and every year for the rest of my life Thats a million dollars a year! Why stop at 10, why not 100 wives, 10 million a year!
That’s pretty horrific.
roger erickson Reply:September 8th, 2012 at 11:09 pm
Whatever we were doing in 1979, we should have kept doing? Or was in in78?
Louis Albano Reply:September 9th, 2012 at 5:49 pm
@roger erickson, Not an unnatural consequence as baby boomers net* leave the workforce and increase in student loans implies post-grad/career change driven departure for participation numbers of younger age groups.
* considering older ages re-entering work force due to postponed retirement/insufficient retirement.
Consider these along with the volatility generated by the process of redefining labor sources between human and non-human due to changes in technololgy.
Warren, looking at the entire series from 1948 is also very instructive
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Warren B. Mosler