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Fiscal Policy
A Category Archive (175 entries)
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November 20, 2009
Upcoming Events
David Henderson
I just completed an interview with Moe Ansari of Market Wrap. We talked about the current recession, the health care bill, and various other things. If you want to listen (I think you'll hear an edited version but they might... MORE
November 13, 2009
Fiscal Policy
Arnold Kling
A reader recommends a paper by Laurence J. Kotlikoff and David Rapson. The reader views this paper as contradicting the article I linked to earlier. Kotlikoff and Rapson report marginal tax rates of closer to 40 percent than 100 percent... MORE
November 11, 2009
Fiscal Policy
Arnold Kling
A Wall Street Journal blog writes State and local governments in the U.S. may be forced to cut 900,000 jobs next year without additional help from the federal government, according to a report released by a prominent liberal think tank... MORE
November 4, 2009
Finance: stocks, options, etc.
Arnold Kling
Meaning Ken Rogoff and Carmen Reinhart, of course, both of whom appeared on the PBS New Hour November 2 (fast forward to about minute 27), talking about our financial crisis in the context of historical crises. Rogoff's first sentence is... MORE
November 2, 2009
Fiscal Policy
Arnold Kling
Megan McArdle does not approve of California's revenue-raising tactic. No, the government didn't actually increase taxes; it just raised the withholding. They'll give any extra funds back to taxpayers in April, and presumably fewer people will have to write checks... MORE
October 29, 2009
Fiscal Policy
Arnold Kling
Alberto Alesina and Silvia Ardagna write, Our results suggest that tax cuts are more expansionary than spending increases in the cases of a fiscal stimulus. Based upon these correlations we would argue that the current stimulus package in the US... MORE
October 24, 2009
Fiscal Policy
Arnold Kling
John Taylor cuts through the BS. the latest Department of Commerce estimates of ... the improvement in GDP growth from the first to second quarter. Growth improved by 5.7 percent (from -6.4 percent to -0.7 percent). Private investment was by... MORE
October 9, 2009
Fiscal Policy
Arnold Kling
Greg Mankiw recommends reading Emil M. Sunley on the Carter era job creation tax credit. Sunley wrote, No student of public fınance, if left alone, would design a tax incentive as complicated as the jobs credit. Surely the arbitrary distortions... MORE
October 7, 2009
Finance: stocks, options, etc.
Arnold Kling
1.Paul Krugman ask another question. why does it have to be a return to shadow banking? The banks don't need to sell securitized debt to make loans -- they could start lending out of all those excess reserves they currently... MORE
October 5, 2009
Fiscal Policy
David Henderson
Multiply Scott Sumner It seems to me that there are two ways of thinking about how monetary policy would react to fiscal stimulus. One approach would be to ask: "What is the optimal Fed response to fiscal stimulus?" And the... MORE
October 4, 2009
Fiscal Policy
Arnold Kling
Tyler Cowen finds and responds to some criticisms of the Recalculation story. Avent and Yglesias suggest that Kling is making up his own macro but the innovation is simply to call the adjustment process "recalculation," to give it a more... MORE
October 2, 2009
Fiscal Policy
Arnold Kling
Mark Thoma is raising the issue that it is too soon to back away from economic stimulus. See, for example, Paul Krugman, Robert Reich, Tim Duy, and other recent posts. All of these appeared before this morning's employment release, which... MORE
October 1, 2009
Fiscal Policy
Arnold Kling
Most of these are links in posts by Mark Thoma. Richard Robb says that letting Lehman fail really did cause big problems. However, he concedes, There is plenty of room to debate the larger counterfactual: if the government had never... MORE
September 28, 2009
Fiscal Policy
David Henderson
Read the following from Paul Krugman in 2003 when the irresponsible people increasing the federal debt (he and I agree here) were Bush and the Republican Congress. Two highlights: That may sound alarmist: right now the deficit, while huge in... MORE
September 22, 2009
Fiscal Policy
Bryan Caplan
Two years ago, my co-author Ed Stringham and I won a First Prize in the Templeton Enterprise awards, all thanks to Ed's initiative. Now another lucky co-author has Stringham to thank for a big prize:Trinity College Associate Professor of American... MORE
September 19, 2009
Economics of Health Care
David Henderson
In the spring of this year, President Obama argued that one reason for health care reform was to get long-term spending on government health care under control. As he recognized and as every scholar and analyst who has studied future... MORE
September 8, 2009
Political Economy
Arnold Kling
Who wrote this? Answer below the fold. The mystery author writes, The finance sector's increasing concentration and growing political muscle have undermined the traditional American understanding of the difference between free markets and big business. This means not only that... MORE
August 28, 2009
Finance: stocks, options, etc.
Arnold Kling
Many of these links come from the indispensable Mark Thoma. First, we have Gender and banking: Are women better loan officers? by Thorsten Beck and others. And yes, it does strengthen my priors. The Fed's profits are turning higher. Perhaps... MORE
August 26, 2009
Economics of Health Care
Arnold Kling
Jeff Miron explains, Medicare should be reduced or eliminated. Opposing government health insurance by defending government health insurance is disingenuous, at best, and utlimately counterproductive. Read the whole thing. Meanwhile, Nick Gillespie writes about the late Massachusetts Senator, In an... MORE
August 23, 2009
Fiscal Policy
Arnold Kling
"Winterspeak" wonders if I would bet on the U.S. defaulting. Here are the alternatives that I can think of, and the odds I would give to them: 1. Muddle through. No major change in policy, and no major change in... MORE
August 22, 2009
Fiscal Policy
Arnold Kling
Someone asked for my comments on the Jeffrey Rogers Hummel piece. I think that the U.S. government would enact a wealth tax rather than default on its debt. Other countries that have defaulted have not had the option of enacting... MORE
August 19, 2009
Fiscal Policy
David Henderson
San Jose State University economist Jeff Hummel, in Econlib's feature article, predicts that the U.S. government will default on its debt. The other option he considers is that the federal government will monetize its debt. The problem with this second... MORE
July 21, 2009
Fiscal Policy
Arnold Kling
Apparently, humans cannot hear what the TARP whistleblower is saying, which is that the government bailouts could wind up costing taxpayers $23.7 trillion. Barofsky's estimates include $2.3 trillion in programs offered by the Federal Deposit Insurance Corp., $7.4 trillion in... MORE
July 15, 2009
Fiscal Policy
David Henderson
After reading news stories today about the House Democrats' plan for levying higher taxes on higher-income people, I found myself confused. It took some digging to end the confusion. No, I'm not talking about almost all reporters' insistence on confusing... MORE
June 4, 2009
Fiscal Policy
Arnold Kling
Keith Hennessey has another must-read post. I believe the Administration made an enormous mistake in its legislative implementation of the stimulus. As a result, the boost to GDP will come six to nine months later than it needed to (maybe... MORE
May 28, 2009
Fiscal Policy
Arnold Kling
Greg Mankiw reports that the yield curve is steep, meaning that long-term interest rates have risen. In my view, this is perfectly rational, and it shows that the short-run effect of the fiscal stimulus is negative, as Jeff Sachs predicted.... MORE
May 5, 2009
Fiscal Policy
Arnold Kling
USA Today reports, In a historic first, Uncle Sam has supplanted sales, property and income taxes as the biggest source of revenue for state and local governments. Thanks to Nick Schulz for the pointer. The gist of the story is... MORE
May 2, 2009
Fiscal Policy
David Henderson
I held off posting on this because I thought the press and the bloggers would be all over it. But one of the most shocking things is how little attention has been devoted to the huge increase in the federal... MORE
April 13, 2009
Fiscal Policy
David Henderson
I've decided not to go to any of the tea parties this Wednesday. My reason is that some of the people who have been advertising them don't agree with me on everything. And some of the people who will be... MORE
April 6, 2009
Fiscal Policy
David Henderson
Bob Lucas's talk at the Council on Foreign Relations is well worth reading. Here are some of the nuggets. After pointing out that the forecasted rate of growth of nominal GDP for 2009 is zero percent, he states: So if... MORE
March 22, 2009
Fiscal Policy
David Henderson
Last Wednesday, I did a 23:00 minute interview on MCAM TV23 in New Hampshire. I can't tell the ideology of these two interviewers, which I find refreshing because at the same time they do have strong views. We talked about... MORE
March 9, 2009
Fiscal Policy
David Henderson
In today's Wall Street Journal, Laura D'Andrea Tyson has a defense of "Obamanomics." At least that's the title the Journal gave it. The article is worth looking at for a number of reasons: 1. In discussing President Obama's spending plans,... MORE
March 8, 2009
Fiscal Policy
Arnold Kling
Ken Rogoff writes, As debt mounts and the recession lingers, we are surely going to see a number of governments trying to lighten their load through financial repression, higher inflation, partial default, or a combination of all three. Read the... MORE
March 6, 2009
Fiscal Policy
Arnold Kling
Gregory Clark moderates. There is almost no enlightenment, but plenty of rhetorical metaphors. For example, about 38 minutes in, Boldrin says, "If the guy has a broken nose, you don't put a band-aid on his butt." I stopped listening shortly... MORE
March 4, 2009
Austrian Economics
Arnold Kling
My take is this: there was some productivity growth but much of it fell outside of the usual cash and revenue-generating nexus. Maybe you will live until 83 rather than 81.5 and your pain reliever will work better. In... MORE
Fiscal Policy
Arnold Kling
First, from columnist Steven Pearlstein Two trillion dollars sounds like a lot of money, but in a pinch we could pay it all back in just one year if we were willing to reduce household and government spending by about... MORE
March 2, 2009
Labor Market
David Henderson
Just up on Forbes.com is an article by me on tomorrow's meeting between President Obama and Prime Minister Brown. It's titled, "Will Obama and Gordon Brown Cook Up a Tax Cartel?" In it, I talk about what they, as good... MORE
February 27, 2009
Central Planning vs. Local Knowledge
David Henderson
Lew Rockwell has an interesting article today on Adolf Hitler's economic policies. His bottom line: Adolf Hitler was a Keynesian. Two highlights: What were those economic policies? He suspended the gold standard, embarked on huge public works programs like Autobahns,... MORE
February 26, 2009
Fiscal Policy
David Henderson
Consider the chronology. . In January 2009, the Congressional Budget Office projects that the fiscal year 2009 budget deficit will be over one trillion dollars, or, specifically, $1,186 billion. It also predicts a deficit in FY2013 of $257 billion. .... MORE
February 24, 2009
Fiscal Policy
Arnold Kling
From Brad DeLong, Michele Boldrin, Clive Crook, and David Brooks. Thanks to Greg Mankiw for the first two pointers. Comments below.... MORE
Fiscal Policy
David Henderson
In a recent NBER working paper, "How Globalization Affects Tax Design," (WP # 14664), James R. Hines, Jr. and Lawrence H. Summers point out that the increasing mobility of capital makes economic activity more sensitive to tax rates, thus increasing... MORE
February 23, 2009
Fiscal Policy
Arnold Kling
I write, If you follow the news media, you may think that the economics profession is divided into two camps: the majority, who favor the stimulus bill; and a minority, who are against any stimulus. In fact, there are many... MORE
February 20, 2009
Fiscal Policy
Arnold Kling
Rasmussen reports, Forty-five percent (45%) of Americans oppose the federal government subsidizing mortgage payments for financially troubled homeowners, according to a new Rasmussen Reports national telephone survey. Thirty-eight percent (38%) think government subsidies are a good idea, and 18% are... MORE
February 18, 2009
Finance: stocks, options, etc.
Arnold Kling
Consider the following list of candidates for government assistance, via financial bailout or stimulus: a) banks and other financial institutions b) the nonfinancial business sector c) underwater homebuyers d) other consumers e) state and local governments In my view, (b)... MORE
February 17, 2009
Supply-side Economics
David Henderson
As I have been saying for the last month or so, when I saw the details of the tax rebate (and I'm sure other marginalists have been saying so too), under the "stimulus" bill that President Obama will sign today,... MORE
Growth: Causal Factors
Arnold Kling
In the Wall Street Journal, he writes, The depressions and panics of the 19th century ended without any fiscal stimulus to speak of, as did the gloom that followed the stock-market crash of 1987. Countercyclical fiscal policy may or may... MORE
February 14, 2009
Fiscal Policy
Arnold Kling
Tyler Cowen writes, In my opinion the sophisticated Keynesian view is still that the stimulus won't work. Great, great sentence. Has Jeff Frankel joined the ranks of the deranged? What he writes strikes me as not terribly different from what... MORE
February 13, 2009
Fiscal Policy
Arnold Kling
[UPDATE Feb. 13 2:40 PM eastern time: Andrew Sullivan of The Atlantic has done the gentlemanly thing and withdrawn the racism charge. Adam Serwer of The American Prospect has apologized for not taking into account the full context. ] I... MORE
February 11, 2009
Fiscal Policy
David Henderson
During President Obama's press conference on Monday, the first question was: Can you talk about what you know or what you're hearing that would lead you to say that our recession might be permanent when others in our history have... MORE
February 9, 2009
Fiscal Policy
David Henderson
In a recent post I wrote about Larry Summers: I doubt that he likes the awful [stimulus] bill, but what I'm pretty sure of is that he likes being on the inside. One commenter, Charlie, wrote: it's amazing how both... MORE
Fiscal Policy
Arnold Kling
I wrote this for Cato. The present scenario analysis highlights two black swans. The first one is Depression Averted, under which a stimulus keeps the economy from falling in a downward spiral of layoffs and shutdowns. The other black swan... MORE
February 8, 2009
Economic History
David Henderson
Yes, you read that correctly. Frank Rich, the partisan New York Times columnist, has a good column today. In it, he delves into what he calls "[T]he tsunami of populist rage coursing through America." Here's one of the best sections:... MORE
Fiscal Policy
Arnold Kling
I think that President Obama set the bar ridiculously low when he said that 75 percent of the stimulus should kick in within by the end of 2010, but the House bill did not even get over that bar. Why... MORE
February 6, 2009
Fiscal Policy
Arnold Kling
John Maynard Keynes writes, So far as employees are concerned, reductions in contributions are more likely to lead to increased expenditure as compared with saving than a reduction in income tax would, and are free from the objection to a... MORE
Fiscal Policy
Arnold Kling
Greg Mankiw writes I would institute an immediate and permanent reduction in the payroll tax, financed by a gradual, permanent, and substantial increase in the gasoline tax. I think if you put leading economists into a room to negotiate on... MORE
Fiscal Policy
David Henderson
Check out the interview with Harvard economist Robert Barro. He makes some excellent points, one of the main ones being the important difference between a tax rebate and a cut in tax rates. I made this point in my Forbes.com... MORE
February 5, 2009
Finance: stocks, options, etc.
Arnold Kling
Ed Glaeser does not like the Republican mortgage plan any more than I do. I am not sure that plan is still alive. It may have been superceded by another ill-conceived idea, a tax break for home buyers. See Tyler... MORE
February 4, 2009
Fiscal Policy
Arnold Kling
Doug Elmendorf writes CBO estimates that the Senate legislation would raise output by between 1.4 percent and 4.1 percent by the fourth quarter of 2009; by between 1.2 percent and 3.6 percent by the fourth quarter of 2010; and by... MORE
February 3, 2009
Fiscal Policy
David Henderson
In yesterday's Boston Globe, GMU economist Russ Roberts has an excellent piece on the proposed "stimulus" package. The article is directed against the huge spending and tax rebate bill working its way through Congress. Roberts recognizes upfront that even Nobel... MORE
February 2, 2009
Fiscal Policy
Arnold Kling
Tyler Cowen weighs in on an issue that has been bouncing around the blogosphere. Overall the Keynesian effects can mean either the permanent or the temporary spending boost has a bigger effect and there are also a number of ways... MORE
February 1, 2009
Fiscal Policy
Arnold Kling
For my talk at the anti-stimulus conference. Still a work in progress.... MORE
Fiscal Policy
Arnold Kling
Hall and Woodward write, One problem with the employment stimulus is that the funds go in the first instance to the owners of businesses and not to consumers generally. This criticism applies to my preferred stimulus, which is to take... MORE
January 30, 2009
Fiscal Policy
David Henderson
I was interviewed this afternoon by ABC-TV for Good Morning America. It will play tomorrow (Saturday) morning. Check your local listings. The issue was the "stimulus" package. I found the questions unusually good. We'll see what gets used.... MORE
Fiscal Policy
Arnold Kling
Ever wondered what Russ Roberts would do as President? He writes, I am recommending the elimination of the payroll tax... --Eliminating all corporate welfare. Corporate welfare rewards those corporations that excel at lobbying rather than serving their customers. Eliminating it... MORE
Macroeconomics
Arnold Kling
He writes a long post that agrees with some of what I write and disagrees with some of my views.... MORE
January 29, 2009
Upcoming Events
Arnold Kling
See the invitation below. My theme will be "what certified macroeconomists think about the stimulus bill."... MORE
Fiscal Policy
Arnold Kling
Justin Wolfers writes, there are about three papers written on monetary policy for each paper mentioning fiscal policy. And there are only a few dozen papers written on the multiplier each year. He has more data. Jerry Muller writes, a... MORE
Fiscal Policy
Arnold Kling
I make the case at Forbes online. I first found out about it when Cato posted a copy of the essay on their web site. I wonder how many people actually will click on the "opinions" section of Forbes on... MORE
Macroeconomics
David Henderson
Floccina writes: David Henderson, Arnold Kling & Bryan Caplan, I would love to read your take on Jim Powell's article about the 1920-1921 depression. Is Jim Powell showing huge bias? Can we learn anything that would be helpful in the... MORE
January 28, 2009
Fiscal Policy
Arnold Kling
Cato's Caleb Brown recently recorded me in two podcasts. My thoughts on multipliers and stimulus are here (this link may be more reliable). You will also find a link to my recent podcast on co-ordinated health care (I linked to... MORE
Fiscal Policy
David Henderson
Posted from San Francisco airport while I'm en route to San Antonio. Today's New York Times carries a full page ad, paid for by the Cato Institute, with a strong statement against President Obama's stimulus package. It quotes his statement:... MORE
Macroeconomics
Arnold Kling
as explained by yours truly.... MORE
Fiscal Policy
Arnold Kling
From The New York Times: The economic stimulus plan that Congress has scheduled for a vote on Wednesday would shower the nation's school districts, child care centers and university campuses with $150 billion in new federal spending, a vast two-year... MORE
January 26, 2009
Fiscal Policy
Arnold Kling
Douglas Elmendorf, the head of the Congressional Budget Office, writes, CBO estimates that enacting the bill would increase federal budget deficits by $169 billion over the remaining months of fiscal year 2009, by $356 billion in 2010, by $174 billion... MORE
Fiscal Policy
Arnold Kling
$100 of Government SpendingMurphy's EstimatesDeLong's EstimatesKeynes Effect$50$150Housework Effect-$25-$30Galbraith Effect-$25$0Feldstein Effect-$80-$33The Bottom Line-$80$87 I explain here. [UPDATE: I made two errors in the initial numbers. I believe it is correct as of Jan. 27, 1:40 PM EST]... MORE
Macroeconomics
Arnold Kling
John Cochrane has posted an essay on his take on the economy, stimulus, and so on. I think he gets muddled in several places.... MORE
Upcoming Events
David Henderson
Here's an announcement from the Naval Postgraduate School, where I teach. Bottom line: it live streams this afternoon. The times are PDT. It will go in the order below; I will be last. Each of us will present for 15... MORE
Fiscal Policy
Arnold Kling
has a new blog. From his first post: If you are not accountable for promises, if you try to do everything and focus on nothing, and if you obsess about aid money raised rather than results achieved, haven't you already... MORE
January 24, 2009
Fiscal Policy
Arnold Kling
Will Wilkinson writes When I see Delong more or less indiscriminately trashing everyone at Chicago, or Krugman trashing Barro, etc., what doesn't arise in my mind is a sense that some of these guys really know what they're talking about... MORE
January 23, 2009
Fiscal Policy
Arnold Kling
Tyler Cowen does not like the tone of the stimulus debate. A highly respected anti-stimulus economist puts up some anti-stimulus evidence in a highly imperfect test (in Barro's defense, he did cover more than just WWII). The anti-stimulus economist is... MORE
January 22, 2009
Fiscal Policy
David Henderson
Ever since September, I've been wishing that Milton Friedman were still alive, not just because he was such a good, warm, friendly guy, but also because he would have brought a lot of clarity to the credit crisis, the bailout,... MORE
Fiscal Policy
Arnold Kling
1. A panel at The University of Chicago, featuring John Huizinga (my former classmate at MIT), Kevin Murphy, and Robert Lucas. Huizinga makes three points. First, we are hearing a lot of Keynesian macro being tossed around now, and it's... MORE
Finance: stocks, options, etc.
Arnold Kling
The Wall Street Journal reports on how TARP funds went to politically-connected banks. Barney Frank does a cameo. Andy Harless might agree with what I wrote here (but he might not). Pointer from Mark Thoma. Robert Barro draws an apt... MORE
January 21, 2009
Fiscal Policy
Arnold Kling
For Seattle public radio, 10:20 AM Pacific Time today. I will add a link to a recording, probably within the next 24 hours. My main theme is that we should have a small, temporary stimulus, not a permanent shift of... MORE
Fiscal Policy
Arnold Kling
I am going to endorse the idea that Bryan Caplan called smart stimulus. if you cut employers' share of the payroll tax, this puts money in employers' hands, not workers'. But the indirect effect is to reduce the labor surplus;... MORE
January 18, 2009
Political Economy
Arnold Kling
Radley Balko writes, After the 2000 Census, the richest county in America was Douglas County, Colorado. By 2007, Douglas County had fallen to sixth. The new top three are now Loudon County, Virginia; Fairfax County, Virginia; and Howard County, Maryland.... MORE
January 15, 2009
Fiscal Policy
Bryan Caplan
I disagree with both Fama and Arnold's critique of Fama. Fama's strangely trying to use an accounting identity to make inferences about causation. No can do. But Arnold seems to say that fiscal policy matters as long as there are... MORE
Macroeconomics
Arnold Kling
Readers of this blog know that I am against the Paulson/TARP bailout thingy and against a big stimulus. Some of you may also have read that distinguished (some would say Nobel caliber) financial economist Eugene Fama has a new blog,... MORE
January 14, 2009
Fiscal Policy
David Henderson
On Saturday, January 12, the Obama Presidency-Elect (I can't think of a less clunky term) sent out, "The Job Impact of the American Recovery and Reinvestment Plan," by Christina Romer and Jared Bernstein. It would qualify for Arnold Harberger's term... MORE
Finance: stocks, options, etc.
Arnold Kling
ActorThe PromiseThe Reality Financial ExecutivesBrilliant Risk ManagementCatastrophic Losses Eliot SpitzerMr. Clean, Financial ReformerCelebrity Prosecutions, Real Abuses Untouched, and Not So Clean Sarbanes-OxleyFinancial ResponsibilityLarge Costs, No Apparent Benefits Basel Capital StandardsInternational Coordination, Sound BanksWorldwide Banking Collapse Fannie, FreddieStable Mortgage CreditFed the... MORE
January 13, 2009
Macroeconomics
David Henderson
At a Carnegie-Rochester conference I attended over 30 years ago, when I was an assistant professor at the University of Rochester B-school, Arnold Harberger criticized a pile of economists' papers on Latin American development. One of his criticisms still stands... MORE
Fiscal Policy
Arnold Kling
Brad Setser writes, Facts are facts. The US has already proved it can raise over $1.5 trillion in a single year [in Treasury borrowing] That is a the sort of statement that could come back and haunt someone. It is... MORE
January 12, 2009
Fiscal Policy
Bryan Caplan
From War Resisters.com: U.S. military spending - Dept. of Defense plus nuclear weapons (in $billions) - is equal to the military spending of the next 15 countries combined... [O]f the top 15 countries shown, at least 12 are considered allies... MORE
Fiscal Policy
Arnold Kling
The Washington Post reports The number of jobs in the nation increased by about 2 percent during Bush's tenure, the most tepid growth over any eight-year span since data collection began seven decades ago. Gross domestic product, a broad measure... MORE
January 11, 2009
Fiscal Policy
Arnold Kling
Tyler Cowen gives eight reasons, and then concludes First, a large fiscal stimulus addresses factor #8 but fares poorly in alleviating the other problems. Of course it may give a band-aid for #5 or #6 and you can tell other... MORE
January 9, 2009
Fiscal Policy
Arnold Kling
Nick Schulz emailed me this paragraph from the Bureau of Labor Statistics: Eleven of the most populous metropolitan areas are composed of 34 metropolitan divisions, which are essentially separately identifiable employment centers. In November, Detroit-Livonia-Dearborn, Mich., again registered the highest... MORE
January 8, 2009
Fiscal Policy
Arnold Kling
Mark Thoma gives us Joseph Stiglitz and Martin Feldstein being interviewed by Charlie Rose. I listened to it last night, and I found it so chilling that it adversely affected my sleep. Two issues stand out. 1. Both of them... MORE
January 7, 2009
Fiscal Policy
David Henderson
Forbes.com just published my article, "Will the Real Christina Romer Please Stand Up?" I'm not thrilled with the title because it seems to hint that Professor Romer has been hypocritical and, as far as I know, she hasn't been. But... MORE
January 6, 2009
Fiscal Policy
Arnold Kling
Having reached the unlucky number of 13, it is fitting to talk about multipliers and model estimates.... MORE
January 5, 2009
Fiscal Policy
Arnold Kling
After reading Willem Buiter's long piece (pointer from Mark Thoma), I decided that it is time to come out firmly against a large fiscal stimulus. Instead, I would prefer a small stimulus. The case for a large stimulus appears to... MORE
December 28, 2008
Fiscal Policy
Arnold Kling
He sets out criteria for a stimulus package. Investments in an array of areas -- including energy, education, infrastructure and health care -- offer the potential of extraordinarily high social returns while allowing our country to address some long-standing national... MORE
December 26, 2008
Economic History
David Henderson
In his column in today's New York Times, Paul Krugman claims that Franklin D. Roosevelt's New Deal was "clean" and avoided corruption. So clean was FDR's Works Progress Administration, writes Krugman, that "when a Congressional subcommittee investigated the W.P.A., it... MORE
Behavioral Economics and Rationality
Arnold Kling
Stephen Greenspan, a psychiatrist who lost money in the Bernard Madoff scam, writes, Gullibility is a sub-type of foolish action, which might be termed "induced-social." It is induced because it always occurs in the presence of pressure or deception by... MORE
December 23, 2008
Finance: stocks, options, etc.
Arnold Kling
Carmen Reinhart and Ken Rogoff write, We find that banking crises almost invariably lead to sharp declines in tax revenues as well significant increases in government spending (a share of which is presumably dissipative). On average, government debt rises by... MORE
Supply-side Economics
David Henderson
From today's Wall Street Journal, an article titled, "IRS Audits of Large Companies Decline for 3rd Year in Row." The article goes on to say: According to 2008 IRS enforcement data released Monday, the IRS audited 15.3% of returns of... MORE
December 19, 2008
Fiscal Policy
Arnold Kling
Paul Krugman writes, How different, really, is Mr. Madoff's tale from the story of the investment industry as a whole? Meanwhile, I've been thinking that Madoff is a perfect analogy for the public sector. The government gives people money, which... MORE
December 16, 2008
Economic History
David Henderson
I heartily second Bryan Caplan's endorsement of the Canadian TV show on the New Deal. Bryan focused on the economic content and I want to add my own thoughts to that, but beyond that is the amazing tone of the... MORE
December 2, 2008
Fiscal Policy
Arnold Kling
Robert Novy-Marx and Joshua D. Rauh write, The true extent of public pension underfunding has been obscured by governmental accounting rules, which allow pension liabilities to be discounted at expected rates of return on pension assets. This paper takes stock... MORE
November 26, 2008
Fiscal Policy
Arnold Kling
Mike Shedlock writes, New Jersey is $60 billion in the hole on pension funding and the Governor is planning on skipping payments in a "pension payment holiday" until 2012 so as to not increase property taxes. Considering that the pension... MORE
November 8, 2008
Fiscal Policy
Arnold Kling
Tyler Cowen writes, If our next president seems flip or overconfident, observers will be skeptical above all else. Tyler mostly talks about idea traps, a notion that I think of as Bryan's. Let me make some remarks that are sufficiently... MORE
Fiscal Policy
Arnold Kling
President-elect Obama held a press conference yesterday. He said, in part, The auto industry is the backbone of American manufacturing and a critical part of our attempt to reduce our dependence on foreign oil. I would like to see the... MORE
November 5, 2008
Fiscal Policy
Arnold Kling
Sovereign debt crises happen suddenly. One day, a country is paying normal interest rates and has full control over its fiscal and monetary policy. Then, investors lose confidence. Within days, the country has collapsed, and within weeks the savings of... MORE
Finance: stocks, options, etc.
Arnold Kling
A banana republic is a country where government obligations swamp total wealth. In a typical banana republic, wealthy individuals race to move their savings overseas to safe havens. Those who fail to do so will suffer from taxation, inflation, and... MORE
November 1, 2008
Fiscal Policy
David Henderson
One factor in the poor reporting of economics is the innumeracy of many reporters. Most people have trouble getting big numbers straight--distinguishing millions from billions, for example. Unfortunately, so do many reporters, even those who report economic news. Today's New... MORE
October 29, 2008
Fiscal Policy
Arnold Kling
John Baden writes, there is diminishing support for institutions that generate wealth rather than redistribute it...both positive and negative values increasingly converge and agglutinate. This promotes substantial class differences. If one is blessed with responsible parents, intelligence, favorable genetics, health,... MORE
October 28, 2008
Fiscal Policy
David Henderson
Forbes.com published an article by me today comparing some of the economic policies of McCain and Obama. Note my criticism of both of them for voting to move toward central government planning of financial markets.... MORE
July 3, 2008
Fiscal Policy
Arnold Kling
From the Congressional Budget Office: How would the economy be affected if the projected rise in primary spending under CBO’s alternative fiscal scenario (from about 18 percent of GDP in 2007 to about 35 percent in 2082) was financed entirely... MORE
June 20, 2008
Fiscal Policy
Bryan Caplan
Despite some skeptical colleagues (not mentioning any names, Alex!), I've never doubted the wisdom of "starving the beast" - opportunistically cutting taxes whenever possible in order to reduce spending eventually. Now Mankiw presents some new evidence in favor of the... MORE
May 29, 2008
Fiscal Policy
Arnold Kling
From a web site put together by Congressman Paul Ryan, It is a real plan, with real proposals, real numbers to back them, and real legislation to implement it. Based on the analysis of government actuaries, this plan is projected... MORE
May 22, 2008
Fiscal Policy
Arnold Kling
USA Today reports, Taxpayers are on the hook for a record $57.3 trillion in federal liabilities to cover the lifetime benefits of everyone eligible for Medicare, Social Security and other government programs, a USA TODAY analysis found. That's nearly $500,000... MORE
May 21, 2008
Economics of Health Care
Arnold Kling
Congressman Paul Ryan is the first politician I have seen with a plan that makes Medicare sustainable. The bill secures the existing Medicare program for those over 55 - so Americans can receive the benefits they planned for throughout most... MORE
May 19, 2008
Fiscal Policy
Arnold Kling
Peter Orszag writes, tax rates would have to be raised by substantial amounts to finance the level of spending projected for 2082 under CBO’s alternative fiscal scenario. Before any economic feedbacks are taken into account, and assuming that raising marginal... MORE
February 15, 2008
Fiscal Policy
Arnold Kling
Megan McArdle notices a story that Virginia has a voluntary taxation program with little uptake. She writes, This is what economists call "revealed preference". What most of us are really in favor of is higher taxes on other people. If... MORE
October 1, 2007
Fiscal Policy
Arnold Kling
According to the Washington Post (editorial page), this is future President Hillary Clinton on Social Security: "I'm not putting anything on the proverbial table until we move toward fiscal responsibility," she said during Wednesday's debate I really have not been... MORE
July 15, 2007
Fiscal Policy
Arnold Kling
An Editorial in the Washington Post tells the story. Gov. Martin O'Malley (D) has begun chipping away at the problem, starting with the outlays. Predictably, he is under attack -- from liberals and unions who say the cuts are pitiless... MORE
February 24, 2007
Fiscal Policy
Bryan Caplan
Don Boudreaux's latest observations on "spending addiction" remind me of a line from Phil Gramm that I annually present to my IO class: [I]n the darkest hour of the health care debate, when it looked like Bill Clinton was about... MORE
December 25, 2006
Fiscal Policy
Bryan Caplan
Krugman no longer seems very worried about the deficit, but why? Inquiring minds want to know...... MORE
September 18, 2006
Fiscal Policy
Arnold Kling
According to the General Accounting Office, the category “all other spending” includes much of what many think of as “government”—“discretionary” spending on such activities as national defense, homeland security, veterans health benefits, our national parks, highways and mass transit, foreign... MORE
July 26, 2006
Fiscal Policy
Arnold Kling
Robert Carroll and Greg Mankiw discuss the Treasury department's analysis of the long-run (supply-side) effects of the Bush tax cuts. The Treasury's main analysis assumes that lower tax revenue will over time be accompanied by reduced spending on government consumption.... MORE
July 15, 2006
Fiscal Policy
Arnold Kling
Laurence J. Kotlikoff writes, the U.S. government is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who, in this context, are current and future generations to whom it has explicitly or implicitly promised future net payments... MORE
June 13, 2006
Fiscal Policy
Arnold Kling
Jeff Miron proposes spending cuts, The grand total from this list is $300 billion annually, roughly the deficit projected for 2006. Normal economic growth would therefore mean surpluses in the near future, should these cuts occur. To deal fully with... MORE
April 17, 2006
Fiscal Policy
Arnold Kling
Greg Mankiw writes, Economist Glenn Hubbard...reminds us that unless we see significant entitlement reform, taxes are heading higher... There is nothing very new here, but it is good to have Glenn saying it anyway. The history here is that Democrats... MORE
November 11, 2005
Fiscal Policy
Arnold Kling
Steve ("the skeptical optimist") Conover writes The two trend lines, receipts and outlays, confirm what I thought I had seen two months ago. Federal tax receipts are growing much faster than federal spending outlays: 15.2% versus 8.5%, respectively. As a... MORE
October 25, 2005
Fiscal Policy
Arnold Kling
From my latest essay: The two viewpoints might be summarized as follows: --Conservatives: Cutting taxes will help reduce the size of government. --Liberals: Big government is not really so bad. In the face of overwhelming evidence over the past five... MORE
October 22, 2005
Fiscal Policy
Arnold Kling
I attended an economics conference held in honor of Bernard Saffran, the Swarthmore economics professor who died last November. I took away observations in three categories: 1. current research: although Steve Levitt was not there, his style of economics permeated... MORE
September 28, 2005
Fiscal Policy
Arnold Kling
Why does National Review Online embarrass itself with this sort of economic commentary? Budget deficits are only too large if they usurp the private economy’s need for physical capital and labor, thereby precipitating an inflationary surge. So, as long as... MORE
September 25, 2005
Fiscal Policy
Arnold Kling
I'll bet Ken at ChicagoBoyz had fun putting this together: As one who thinks that taxes are plenty high enough, on the rich as well as on everyone else, and that budgetary problems should be solved by budget cutting, it's... MORE
September 14, 2005
Fiscal Policy
Arnold Kling
From the Washington Times: House Majority Leader Tom DeLay said yesterday that Republicans have done so well in cutting spending that he declared an "ongoing victory," and said there is simply no fat left to cut in the federal budget.... MORE
June 6, 2005
Fiscal Policy
Bryan Caplan
Americans have severe misconceptions about what the welfare state does. They believe that it cares for the poor. But in fact, it primarily cares for the old. I shared this misconception before I studied economics. My undergraduates have it before... MORE
March 16, 2005
Fiscal Policy
Arnold Kling
In the latest WSJ blogger celebrity death match, Max Sawicki says Social Security and Medicare spending will increase faster than GDP, requiring increases in taxes, and there is not a damn thing anyone can do about it Tyler Cowen responds,... MORE
February 9, 2005
Fiscal Policy
Arnold Kling
David Corn writes, What I wonder about is the absence of conservative outrage over Bush's budget numbers. Alex Tabarrok wrote, My prediction is that it will be easier to add $540 billion in Medicare spending than it will be to... MORE
November 10, 2004
Fiscal Policy
Arnold Kling
Laurence J. Kotlikoff proposes to replace the payroll tax with a sales tax. replacing the payroll tax with a sales tax is the same as (a) eliminating the payroll tax ceiling, (b) taxing wealth at the payroll tax rate, and... MORE
October 27, 2004
Fiscal Policy
Arnold Kling
The second issue of The Economist's Voice has appeared, and it looks more interesting than the first. Several articles discuss fiscal policy. William G. Gale and Peter R. Orszag write, Looking beyond the next decade, the budget outlook grows steadily... MORE
August 25, 2004
Fiscal Policy
Arnold Kling
How does John Kerry reconcile his spending and tax proposals with his promise to balance the Budget? The Washington Post reports, Kerry says he would offset the cost of those programs with cuts in federal contracting, some agriculture subsidies and... MORE
August 16, 2004
Growth: Causal Factors
Arnold Kling
Whoever is writing the lead editorials for the Washington Post (I suspect Sebastian Mallaby) on economic policy issues in this year's election is providing pieces that are highly educational. Today's editorial is called The Growth Mystery. we don't know how... MORE
June 9, 2004
Supply-side Economics
Arnold Kling
I decided to put my thoughts into a longer essay. When Ronald Reagan defeated Carter's re-election bid, "incomes policies" were a proven failure. Notwithstanding Milton Friedman's comments quoted above, by 1980 it took a lot less courage to stand by... MORE
June 7, 2004
Supply-side Economics
Arnold Kling
Jane Galt writes, High inflation was the result of a dozen years of bad fiscal and monetary policy under two Republicans -- Nixon and Ford -- and two Democrats -- Johnson and Carter -- that was brought under control only... MORE
May 21, 2004
Fiscal Policy
Arnold Kling
Jeff Frankel speaks for the prosecution. they will do anything for a few votes, even if their behavior is against the national economic and security interests and blatantly inconsistent with things they claim to stand for: small government, free trade,... MORE
April 19, 2004
Fiscal Policy
Arnold Kling
In his New York Times column last week, Jeffrey Madrick referred to the work of Peter Lindert on the ability of countries to grow in spite of welfare state distortions. Lindert's argument can be found in Why the Welfare State... MORE
March 25, 2004
Fiscal Policy
Arnold Kling
Wayne Angell argues that the Clinton Administration paid down the Federal debt too quickly. The recent peak in federal debt as a percentage of GDP averaging 49% from 1993 to 1996, compared with the all-time peak in 1946 of 109%,... MORE
March 11, 2004
Fiscal Policy
Arnold Kling
In the essay I referred to in my previous post, I also write A President who has only added to future entitlement obligations ought to be judged as having acted to increase taxes. To call this Administration a tax cutter... MORE
March 7, 2004
Fiscal Policy
Arnold Kling
Noam Scheiber argues that the Bush tax cuts in fact were stimulative. Liberals in Congress and at places like the Economic Policy Institute complain that the Bushies should have targeted the bulk of their tax cuts toward the working poor... MORE
February 27, 2004
Fiscal Policy
Arnold Kling
Niall Ferguson and Laurence Kotlikoff paint a dire picture of the fiscal outlook in the U.S. Much of the material is a recital of the prospects for Social Security and Medicare, with which readers of this blog are familiar. One... MORE
February 13, 2004
Fiscal Policy
Arnold Kling
Jeff Faux and Brad DeLong revisit fiscal history. In particular, they ask whether Democratic President Clinton sold his soul for deficit reduction. Faux writes, Hopes that the peace dividend from the end of the Cold War would finance major new... MORE
February 9, 2004
Fiscal Policy
Arnold Kling
The 2004 Economic Report of the President contains a chapter on tax incidence. the person who is legally responsible for paying the tax may not be the one who actually bears the burden of the tax...the incidence of a tax... MORE
January 17, 2004
Finance: stocks, options, etc.
Arnold Kling
Brad DeLong wonders why the bond market isn't punishing the Bush Administration harder for its fiscal sins. He lists a number of possible explanations, including 1. The people who matter in financial markets are expecting either (a) that there will... MORE
January 8, 2004
Fiscal Policy
Arnold Kling
Robert E. Rubin, Peter R. Orszag, and Allen Sinai make a case that our Budget deficits are not sustainable. If one includes the cost of the recently enacted prescription drug benefit, assumes that discretionary spending keeps pace with inflation and... MORE
November 18, 2003
International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
I argue that our trade deficit is really a savings deficit. Increasing exports relative to imports is not a matter of beating up on China to live up to its commitments in the World Trade Organization. It is not a... MORE
September 25, 2003
Energy, Environment, Resources
Arnold Kling
As a dean at Berkeley, Hal Varian has a personal interest in California. In his column today, he offers some plain-spoken economics lessons. Most California voters think the electricity crisis contributed to the state budget deficit. If only things were... MORE
September 13, 2003
Social Security
Arnold Kling
The Congressional Budget Office provides an analysis of the long-term Budget outlook. The projections also assume for analytical purposes that aggregate federal revenues will level out at 19 percent of GDP in 2020, reflecting the higher end of the range... MORE
September 7, 2003
Growth: Causal Factors
Arnold Kling
On one of the comment threads, a reader asked me if I disagreed with the economics of Lawrence Kudlow. "Honestly, I never thought he had any to disagree with," was how I began my reply. Let me revise and extend... MORE
August 29, 2003
Fiscal Policy
Arnold Kling
The Washington Post lead editorial for August 29 adjusts the baseline budget forecast for several factors. The largest is discretionary spending, which they argue will grow at the rate of the economy rather than at the rate of inflation. The... MORE
August 27, 2003
Macroeconomics
Arnold Kling
This group of economists with strong Democratic Party ties says that we needed fiscal policy that provided more stimulus in the short run and a lower deficit in the long run. Robert Solow says, There are three characteristics you want... MORE
August 25, 2003
Macroeconomics
Arnold Kling
Cato's Jim Powell makes the case against the New Deal. Among the material Powell cites: Richard K. Vedder and Lowell E. Gallaway, in their 1997 study Out of Work, estimated that by 1940 unemployment was eight points higher than it... MORE
June 4, 2003
Fiscal Policy
Arnold Kling
Recently, Kevin Drum issued this challenge to those who claim to prefer lower government spending. Let's hear what you want to cut. And remember, for bonus points you have to include some programs that you yourself benefit from. I was... MORE
June 2, 2003
Fiscal Policy
Arnold Kling
In this essay, I argue that the importance attached to the President or the Fed Chairman in determining economic outcomes may be an instance of what psychologists call the fundamental attribution error. During the Clinton administration, the projected Budget surplus... MORE
May 16, 2003
Fiscal Policy
Arnold Kling
Jacob Levy criticizes the Senate's proposed temporary tax cut on dividends. The arguments in favor of repealing the dividend tax have to do with removing distortions from the capital markets and from the incentives faced by corporations, and with improving... MORE
May 6, 2003
Macroeconomics
Arnold Kling
In Would Keynes Change His Mind?, I suggest that some key elasticities in the economy have changed since Keynes wrote. Today, the economy is more elastic than it was in the 1930's. Today's recession is a far cry from the... MORE
May 5, 2003
Fiscal Policy
Arnold Kling
A proposal from former Labor Secretary Robert Reich: The best and the fastest way to get more money into the pockets of people who are likely to spend it quickly is to cut the taxes of average working people. Most... MORE
April 30, 2003
Fiscal Policy
Arnold Kling
On the subject of job-creation arithmetic, Paul Zrimsek writes, It's a pity that the great divide-by-ten controversy has diverted everyone's attention from what ought to be the main point: that the comparison Krugman drew between tax losses to the government... MORE
April 29, 2003
Fiscal Policy
Arnold Kling
Jonathan Rauch has a nice summary of the issues in the Budget debate. The economists note that if tax cuts are paid for through higher deficits instead of lower spending, the government borrows back from the economy the capital that... MORE
Productivity, Baumol's cost disease
Arnold Kling
Sometimes, an economist argues against conventional wisdom, as in this essay, where I question the view that the government needs to increase its spending on education. If we combine the limited extent to which education is a public good with... MORE
April 28, 2003
Fiscal Policy
Arnold Kling
On his web site, Paul Krugman has posted the textbook macroeconomics of fiscal policy for stimulating employment. In a related post, Krugman explains how this basic macroeconomic model explains what some people (like me, for instance) found puzzling about a... MORE
April 22, 2003
Fiscal Policy
Arnold Kling
Paul Krugman writes, The average American worker earns only about $40,000 per year; why does the administration, even on its own estimates, need to offer $500,000 in tax cuts for each job created? Krugman's arithmetic is to take the ten-year... MORE
March 27, 2003
Fiscal Policy
Arnold Kling
We are starting to see articles on the economics of the Iraq war. Some are described in this article by Virginia Postrel and others are described in this post by 'Jane Galt.' Postrel correctly points out that old-fashioned Keynesian theory... MORE
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