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10-08-2012, 11:47 AM   #1
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Going farther down the rabbit hole..

–The most hilarious concept in economics — or the most frightening
QuoteQuote:
The so-called “viable plan” is based on this: While deficit spending is necessary, announcing a plan to reduce the deficit will strengthen the economy. Think about that.
Amazed that any rational human being could believe such nonsense, I wrote back:

RMM: Thanks Todd, So, even though reducing deficits sends fewer dollars into the economy, the psychological effect (“announcement effect”) of reducing deficits will grow the economy?

Zubatkin: Rodger, The Announcement Effect Club’s idea is that there is an economic benefit in announcing a plan to fix our debt. Regards, Todd Zubatkin

Not being able to let go of this hilarious and frightening concept, I wrote back:

RMM: And does that economic benefit of the announcement overcome the actual loss of dollars?

So far, no response. Anyway, I can say nothing to improve upon the entertainment value of an idea that essentially tells you: “Deficits are necessary to grow the economy, but promising to cut deficits will grow the economy.”

Addendum: Here is the shameful list of people whom Zubatkin and the CRFB claim believe this utter rot:

Inductees into the Announcement Effect Club in chronological order. If you have a nominee for the club, let us know:
Members of the Committee for a Responsible Federal Budget* (Time to Develop a Fiscal Recovery Plan 7/9/09)
Ben Bernanke, Chairman, Federal Reserve Board (Congressional Testimony 7/21/09)
Washington Post Editorial Board (Washington Post 8/26/09)
Financial Times Editorial Board (Financial Times 9/28/09)
Marvin Phaup, Director, The Pew Charitable Trust’s Federal Budget Reform Initiative (Albany Times-Union 9/30/09)
Angel Gurria, Secretary-General, Organization for Economic Co-operation and Development (Statement before the International Monetary and Financial Committee 10/4/09)
Donald Marron, former acting CBO director (Blog 10/12/09)
C. Fred Bergsten, Director, Peter G. Peterson Institute for International Economics (Foreign Affairs Nov/Dec 2009)
Peterson-Pew Commission on Budget Reform (Red Ink Rising 12/14/09)
International Monetary Fund (Report 12/16/09)
John Podesta, Center for American Progress (Financial Times 1/4/10)
Michael Ettlinger, Center for American Progress (Financial Times 1/4/10)
Laura Tyson, Haas School of Business at UC Berkeley, former chair of the President’s Council of Economic Advisors (Bloomberg News, 1/8/10)
Bruce Bartlett, former Deputy Assistant Secretary for economic policy, U.S. Dept. of Treasury (Forbes.com 1/8/10)
Diane Lim Rogers, Concord Coalition, former House Budget Committee chief economist (EconomistMom.com 1/10/10)
Leonard Burman, Syracuse University (Paper 1/11/10)
Jeffrey Rohaly, Urban Institute (Paper 1/11/10)
Joseph Rosenberg, Urban Institute (Paper 1/11/10)
Katherine Lim (Paper 1/11/10)
James R. Horney, Center on Budget and Policy Priorities (CBPP Report 1/12/10)
Kathy Ruffing, Center on Budget and Policy Priorities (CBPP Report 1/12/10)
Kris Cox, Center on Budget and Policy Priorities (CBPP Report 1/12/10)
National Research Council and National Academy of Public Administration (Choosing the Nation’s Fiscal Future 1/13/10)
Nick Clegg, Leader, UK Liberal Democrats (Financial Times 1/14/10)
Timothy Geithner, Secretary, Department of the Treasury (Congressional Testimony 2/3/2010)
André Meier, International Monetary Fund (After the Stimulus, the Big Retrenchement 2/5/2010)
Giancarlo Corsetti, European University Institute (After the Stimulus, the Big Retrenchement 2/5/2010)
Gernot Müller, University of Bonn (After the Stimulus, the Big Retrenchement 2/5/2010)
Carmen Reinhart, University of Maryland (Senate Budget Committee testimony 2/9/10)
Thomas Hoenig, President, Federal Reserve Bank of Kansas City (Knocking on the Central Bank’s Door 2/16/2010)
Richard Berner, Co-Head of Global Economics and Chief U.S. Economist, Morgan Stanley (Peterson-Pew Event 2/16/2010)
Clive Crook, Senior Editor, The Atlantic Monthly (Peterson-Pew Event 2/16/2010)
Tim Besley, Professor of Economics and Political Science, London School of Economics (Blog 2/25/2010)
Andrew Scott, Professor and Joint Subject Area Chair of Economics, London Business School (Blog 2/25/2010)
Stephen Cecchetti, Bank for International Settlements (Report 3/2010)
M.S. Mohanty, Bank for International Settlements (Report 3/2010)
Fabrizio Zampolli, Bank for International Settlements (Report 3/2010)
Kent Conrad, U.S. Senator and Chairman of Senate Budget Committee (Chairman’s Mark of FY 2011 Senate Budget Resolution 4/21/2010)
Paul Ryan, U.S. Congressman (Peterson Foundation Fiscal Summit 4/28/2010)
Alan Blinder, Professor of Economics and Public Affairs at Princeton University and former Vice Chairman of the Federal Reserve (Op-Ed 5/20/2010)
Carlo Cottarelli, Director of Fiscal Affairs, IMF (Second Executive Fiscal Commission Meeting 5/26/2010)
Larry Summers, Director, National Economic Council (Washington Post 6/14/2010 and Speech 5/24/2010)
Edmund Andrews, Former New York Times Correspondent (Blog 6/20/2010)
European Central Bank (Monthly Bulletin 6/22/2010)
Erskine Bowles, Co-chairman, National Commission on Fiscal Responsibility and Reform (Commission Meeting 6/30/2010)
Robert Rubin, Former Treasury Secretary (CNN.com 8/8/2010)
David Chavern, Chief Operating Officer, Chamber of Commerce (ChamberPost 10/14/2010)
Christina Romer, Former Chair, Council of Economic Advisors (New York Times 10/24/2010)
The Economist (Article 11/18/2010)
Pete Davis, Capital Gains and Games (Blog 11/27/2010)
National Commission on Fiscal Responsibility and Reform (Fiscal Commission) (Final Proposal 12/1/2010)
Steven Pearlstein, Washington Post columnist (Op-Ed 12/3/2010)
Tom Coburn, Senator (R-OK) (Fox News Interview 12/26/10)
Ezra Klein, Washington Post Contributor (Bloomberg Op-Ed 6/8/11)
Joseph Lieberman, Senator (I-CT) (Washington Post Op-Ed 6/9/11)
Steny Hoyer, U.S Congressmen (D-MD) (CBS Interview 6/12/11)
President Barack Obama (Speech 6/13/11)
Glenn Hubbard, former Chair of the Council on Economic Advisors (Bloomberg Op-Ed 9/19/11)
Douglas Elmendorf, director of the Congressional Budget Office (Hearing, 10/26/2011)
Micheal Bloomberg, Mayor of New York City (I-NY) (Speech, 11/8/2011)
Mark Zandi, Moody’s Analytics (Op-Ed 11/15/2011)
Former President Bill Clinton (Fiscal Summit Interview 5/15/12)
Bill Bradley, Former Senator (D-NJ) (Interview 6/3/12)
* Members of the CRFB Board are: Bill Frenzel, Tim Penny, Charlie Stenholm, Maya MacGuineas, Barry Anderson, Roy Ash, Charles Bowsher, Steve Coll, Dan Crippen, Vic Fazio, Bill Gradison, Jr., William Gray, III, William Hoagland, Douglas Holtz-Eakin, James Jones, Lou Kerr, Jim Kolbe, James Lynn, James McIntyre, Jr., David Minge, Jim Nussle, June O’Neill, Marne Obernauer, Jr., Rudolph Penner, Peter G. Peterson, Robert Reischauer, Alice Rivlin, Martin Sabo, Eugene Steuerle, David Stockman, Paul Volcker, Carol Cox Wait, David Walker, and Joseph Wright, Jr.
Individual statements of CRFB members include:
Alice Rivlin, Brookings Institution and former CBO director (Bloomberg News 1/7/10)
Charlie Stenholm, former Member of Congress (Fort Worth Star-Telegram 12/28/09)
James R. Jones, former Member of Congress (Tulsa World 12/27/09)
Jim Kolbe, former Member of Congress (The Hill 12/18/09)
Tim Penny, former Member of Congress (St. Paul Pioneer-Press 12/14/09)
Bill Frenzel, former Member of Congress (Sphere.com 12/13/09)
Robert Reischauer, President of the Urban Institute and former CBO director (Urban.org 9/10/09)
Eugene Steuerle, Urban Institute Fellow (Urban.org 7/15/10)

Presumably, all of the above people believe a federal deficit is necessary to grow the economy, but announcing a future deficit reduction is necessary — to grow the economy.
You just can’t make this stuff up.


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