[jeffkrol]

"It’s easy to say that 'My plan is to eat ice cream sundaes and chocolate cake and hamburgers as much as I want, my plan is to lose 60 pounds, and my plan is to avoid painful exercise, and those are all my objectives and I'm committed to every one of them,'" the former top economic adviser to President Barack Obama said Thursday at the Center for American Progress, a left-leaning think tank. "You don't know quite where you're going to go if you've got all three of those objectives."

"This is the first time that the challenger's errors have, on my accounting, been measured in the trillions of dollars. This is daughter of voodoo economics," the Harvard economist said.

Romney plans to slash taxes in a way that would largely benefit the rich and deprive the government of hundreds of billions of dollars in revenue, while also claiming that his tax plan will not increase the deficit. Romney has promised to additionally reduce the deficit and slash government spending by 18 to 26 percent.

Though Romney has promised to slash both marginal tax rates and corporate tax rates, among other changes, he has been vague about which tax loopholes he would close to make up for revenue lost as a result. Lately, Romney has obscured the idea that he would cut taxes for the rich.

"I'm not going to reduce the share of taxes paid by high-income people," Romney said at the first presidential debate last week, a statement he echoed Tuesday on CNN.

Larry Summers: Romney Tax Plan The Equivalent Of A Hamburgers And Ice Cream Diet

As to Rosen.........

"I am saying that mathematically it can work," Rosen said. "It is mathematically possible."

Rosen's paper did find that families making more than $100,000 per year would have to pay $81 billion more in taxes under Romney's tax plan, a 12 percent increase. But his paper did not explicitly say whether these families, whose incomes he assumes would be rising, would actually pay a higher tax rate.

Rosen's conclusion that Romney's tax plan is mathematically possible rests on a questionable assumption: namely that Romney's tax cuts for the rich would lead to robust economic growth. In fact, economic growth sharply slowed during the Bush administration, when President George W. Bush cut taxes for the rich. Brad DeLong, economics professor at the University of California at Berkeley, also notes that President Ronald Reagan's tax cuts for the rich did not lead to much stronger economic growth either.

Same old "mathematically possible voodoo economics"......................

[lesmore49]

Unrelenting...

[jeffkrol]

Facts are facts...............Like this.. which could be put in any number of "relentless" threads...........

My Comments on Spiegel's Post on How Monetary Policy Threatens Savings | Credit Writedowns

The goal of policy, therefore, is not to prevent the deleveraging but rather to enact the right mix of policies in order to prevent economic collapse, social disorder, or impoverishment of the general population as the deleveraging occurs. If too much ‘austerity’ is applied, then you can get debt deflation. If too much money printing occurs, you can get currency debasement or inflation. And so on. For example, in Europe, we are seeing the effects of an ugly deleveraging that is heavy on austerity. The result is economic collapse, social disorder and poverty.

As I have noted in the past, how policy responds in terms of determining the mix is a political question about division of spoils between debtors and creditors/savers. My view is that both sides will lose some but savers will lose the most because of negative real rates which reduce real interest income that are combined with fiscal tightening which also reduces income. But, this is a fundamentally deflationary crisis because of the debt overhang. Inflation that isn’t matched by income gains when household debt is the problem leads to demand destruction and recession.

Thoughts on government debt

The biggest problem in defining the outcomes has to do with the sectoral balance that makes government deficits the flip side of trade/private surpluses. To the degree a private deleveraging occurs, some of it will cause a reduction in trade deficits or an increase in trade surpluses. But most of the private deleveraging will be felt as a public dissaving, increasing public deficits. More attention needs to be paid to this. Why can’t people understand national accounting?

It’s when I see this that I make a change to Dalio’s terminology. Austerity as it’s presently conceived is about reining in government deficits. The reality, of course, is that this essentially means reducing private surpluses and thus would be a de-facto reflationary policy if it succeeded. However, what really happens is that the public sector cut/tax increase is not met with private dissaving. Instead, it reduces private income and induces default or private cuts in order to meet the still burdensome private debt burden. What austerity really means in the context of deleveraging policy responses is private sector austerity i.e. increased private sector net saving, not public sector net saving. So, for the private deleveraging to occur via austerity, what you would need is a private saving that occurs as a result of either lower taxes or increased income, the exact opposite of public sector austerity.

The problem here is that in the euro zone, the public sector’s policy space has been significantly reduced by the artificial limitations placed on national sovereignty by the single currency. Wynne Godley has it right on this and his 1992 post predicting crisis is mandatory reading. In effect, what the single currency does is force a deflationary response to the crisis by accelerating the deleveraging to occur in much greater measure through private sector default.

Expansionary fiscal policy would alleviate some of this burden and cause inflation that reduced the real value of money. To the degree this policy response boosted real income without inducing capital misallocations, you would get sustainable real economic growth that would work in concert with inflation to reduce the real burden of debts without impoverishing people or inducing a debt deflation.

Creditors are resistant to this approach because it redistributes income from creditors to debtors due to the negative effect on the real value of money. And so, deficit spending is fought tooth and nail in order to allow creditors to extract as much wealth in real terms as their nominal credit contracts will allow. Deflation would be preferable to inflation for creditors. With governments in the thrall of banks, this policy response will maintain its primacy until and unless a debt deflation advances enough that it causes a massive social unrest.

Nonetheless, I believe the ‘inflationary’ route is inevitable because the impoverishment and crushing nature of the deflationary route cannot be tolerated in democratic societies. Likely, we will see mortgage cramdowns and debt foregiveness, government employment programs and reflationary fiscal policy at some point down the line. But this will happen only after the destructiveness of the present course is understood. As I like to say, first the deflation and then the inflation

.

[GeneV]

It is mathematically possible for me to win the lottery, too.

[Rondec]

Jeff, it sounds to me like Mitt is a lot closer to your way of thinking. In your opinion, we shouldn't even have income taxes, the government should just print extra money/borrow money to cover expenses. So, why rag on him for getting closer to your point of view?

[jeffkrol]

Jeff, it sounds to me like Mitt is a lot closer to your way of thinking. In your opinion, we shouldn't even have income taxes, the government should just print extra money/borrow money to cover expenses. So, why rag on him for getting closer to your point of view?

Like libertarians and Ron/Rand Paul.. ALL have a fatal flaw.. one that can't be covered over..

Technically Dems do as well BUT like most liberals I know (self included) they are more prone to facts and logical persuasion and not tied to ideology.. "liberal ideology" is a BROAD concept.. unlike mittens et. al..

print extra money/borrow money

THINK.. who needs to "borrow money" when you can print money.. Doesn't THAT SEEM STUPID?????? and name one (since "Reagan proved deficits don't matter" Cheney)

Republican who will cut all payroll taxes and create "Medicare for all" . They would have my vote for life...............

Democrat "tax increases on the wealthy" is NOT detrimental to the economy (this is NOT arguable by any sane study). cutting Fed spending IS (this is not arguable by any SANE study).........OR mis-allocation of such spending ( QE does belong in this) .. such as 15 ships/year instead of a "guaranteed job" or "healthcare for all..............

The reason we are so polarized is both sides are half right.. but the right is fiscally and societally more dangerous.. What... the 1% are going to "revolt"?????????
Build their Randian utopia somewhere????

[jeffkrol]

for fun:

Youtu.be

Youtu.be