He is the 1st - sm

Yep, thats correct. Its the only reason to vote FOR - him. -to not be called racist.nm

Obama - SM

"Learning how the play the game". OMG. That is - truly frightenting...and sadly true.nm

It's a metaphor. I know. - They are

they are - icedT

Obama - Life-time Nader voter from PA

Why? Even he would be better than Obama. Of course, - that would not be difficult.nm

Take a look at where we were, where we are and - where we could have been

Where we were - see message

When you asked for input from those who support Obama - sm

support - indmt

it would be nice to be able to say that.. - sm

The plan for getting the economy - back on track

Apparently - sm

Zandi - sm

The fact is that your all-knowing Zandi is not the only person with views on the economy. There are many who disagree with him. It's certainly not a carefully crafted negative percention that the stimulus failed. It's a fact that it failed. Zandi wants more stimulus. More failure.

http://www.cbsnews.com/8301-503544_162-20037435-503544.html+mark+zandi&cd=4&hl=en&ct=clnk&gl=us&source=www.google.com

The House Republican plan to cut about $61 billion from the federal budget in the next seven months could cost about 700,000 jobs through 2012, according to a new report from Moody's Analytics chief economist Mark Zandi.

Republicans are hitting back at the report, arguing that Zandi -- an advocate of the Democrats' 2009 economic stimulus package -- cannot be trusted as an objective economist. Zandi has advised both Democrats and Republicans, including Republican Sen. John McCain during his 2008 presidential bid.

"The fact that a relentless cheerleader for the failed 'stimulus' - which the Democrats who run Washington claimed would keep unemployment below eight percent - refuses to understand that ending the spending binge will help the private sector create jobs is sad, but not surprising," said Michael Steel, a spokesman for House Speaker John Boehner.

House Majority Leader Eric Cantor also pointed to Zandi's affiliation with the stimulus package, noting that the stimulus failed to keep unemployment levels as low as promised. (The stimulus did manage to save or create millions of jobs.)

Zandi's analysis, first reported by the Washington Post, predicts that the GOP budget plan would reduce economic growth by .5 percent this year and by .2 percent in 2012.

"Significant government spending restraint is vital, but given the still halting economic recovery, it would be counterproductive for that restraint to begin until the economy is creating enough jobs to bring down the still very high unemployment rate," Zandi writes in his report.

Similarly, Goldman Sachs released a report last week predicting the Republican plan would lower economic growth by up to 2 percentage points this year.

Democrats have seized on the fact that Republican leaders have acknowledged that their plan to cut spending -- by its very definition -- will at least cut some federal jobs. "So be it," Boehner said earlier this month when asked about federal jobs that would have to be eliminated under their proposal.

Boehner later toned down his remarks. "Listen, I don't want anyone to lose their job, whether they're a federal employee or not," he said. The speaker added, however, that Congress has to make "tough choices" given the current state of the economy.

Not all economists agree with the reports from Zandi or Goldman Sachs. Stanford University economist John Taylor today published a rebuttal to their analyses.

"[T]here is no convincing evidence that H.R. 1 will reduce economic growth or total employment," he wrote. "To the contrary, there is more reason to expect that it will increase economic growth and employment as the federal government begins to put its fiscal house in order and encourage job-producing private sector investment."

Reducing government spending will encourage private investment, he argues. Furthermore, Taylor argues that the Zandi report confuses budget authority with budget outlays -- in other words, the cuts won't be immediate.

Democrats have refused to accept the Republican plan for dramatic cuts, leaving Congress deadlocked over federal spending for the rest of the fiscal year. If Congress does not agree on a plan by March 4, the federal government would shut down. For now, Democrats and Republicans appear to be nearing a deal for a short-term funding measure that would keep federal operations running for an additional two weeks.

And there's more:

http://johnbtaylorsblog.blogspot.com/2011/02/goldman-sachs-wrong-about-impact-of.html

Monday, February 28, 2011

Goldman Sachs Wrong About Impact of House Budget Proposal

Some claim that House budget proposal H.R. 1 to reduce the growth of federal government spending will cause a slowdown in the economy and even increase unemployment. Consider, for example, a recent report by Alec Phillips of Goldman Sachs which claims that the House proposal would reduce economic growth in the second and third quarters of this year by 1.5 to 2 percent if enacted into law next month. Nothing could be more contrary to basic economics, experience and facts. Unfortunately, the report has been widely cited by those wanting to hold back on this first step to restore sound fiscal policy. And the Washington Post reports this morning that Mark Zandi of Moody’s is starting to make similar claims, which should be questioned for the same reasons.

There are several things wrong with the analysis used in Goldman Sachs report. First, it does not take account of the beneficial effects of starting now on a credible plan to reduce the deficit. Basic economic models in which incentives and expectations of future policy matter show that a credible plan to reduce gradually the deficit will increase economic growth and reduce unemployment by removing uncertainty and lowering the chances of large tax increases in the future. The high unemployment we are experiencing now is due to low private investment rather than low government spending. By reducing some uncertainty and the threats of exploding debt, the House spending proposal will encourage private investment.

The analysis in this Goldman-Sachs report is based on the same type of “large multiplier” theory that predicted that the stimulus package of 2009 would stimulate economic growth. Research by me and my colleague John Cogan finds that more up-to-date theories, which bring important incentive and expectations effects into account, show far smaller multipliers. In these models a reduction in the growth of spending will immediately crowd in private investment. Moreover, by following the stimulus money, we found that in actuality the stimulus package of 2009 had no material positive effect on economic growth or employment. The same economic theory which said the stimulus would increase economic growth in the past two years, says that reversing that spending will reduce growth now. It was wrong in the past and it is highly likely to be wrong again.

The report also confuses budget authority, which is what H.R. 1 is proposing, with budget outlays, which is what is actually spent. Changes in budget authority do not immediately translate into spending; rather such changes gradually impact spending over time. Last Friday the CBO released its analysis of H.R.1 and found that discretionary outlays for 2011 would be $1,356 billion, which is only $19 billion below the CBO baseline of $1,375 billion published on January 26 (Table 3-1). This is less than 1/3 of the $60 billion cut which the Goldman Sachs report assumes in evaluating H.R. 1. Thus the cut in budget authority does not reduce spending “abruptly,” as the report assumes. Rather it is a quite gradual effect. Even if one used the flawed Keynesian multipliers implied by the report, the impact would be less than one-third what the report claims.

In fact, under H.R. 1, total 2011 discretionary outlays would be above 2010 discretionary outlays, which totaled $1,349 billion. And, of course, discretionary outlays are only part of the budget. Total budget outlays will increase by 6.7 percent from 2010 to 2011 under H.R. 1. This is less than the 7.3 percent increase in government spending under the CBO baseline, but it strains credibility to say that the large increase in government spending which still takes place under H.R 1 is too draconian for the economy. Indeed, doing anything less than H.R. 1 should be viewed as a completely non-serious step toward dealing with the debt problem and restoring sound fiscal policy.

As I have written before, the old-style Keynesian approach used by Zandi has many of the same flaws that are found in the Goldman Sachs approach: excessively large multipliers, inaccurate predictions of the effect of the 2009 stimulus, failure to recognize that reducing uncertainty about the debt can have positive effects, especially if it is done in a credible way by reducing spending growth now, not postponing it to a date uncertain in the future. After stating that “too much cutting too soon would be counterproductive,” Zandi claims that this is what the "House Republicans want" and what their budget does. But it's simply not credible to say that a budget that has government spending increasing at 6.7 percent per year cuts spending too much too soon.

In sum, there is no convincing evidence that H.R. 1 will reduce economic growth or total employment. To the contrary, there is more reason to expect that it will increase economic growth and employment as the federal government begins to put its fiscal house in order and encourage job-producing private sector investment.

The study is not an opinion piece. - sm

oh well - Zandi

Apples and oranges once again. - Not quite.