it is simply bizarre that the president is proposing more tax cuts.

we have gutted our infratstructure and the president is bargaining from a position of weakness, he needs to simply say;

“the reagan bush re-distribution of middle class wealth has harmed the infrastructure, our national security and the prospects for progress

those were clearly and demonstratably bad investments, they do not work and we are not going to stick with clearly bad investments

we are returning the tax structure to what worked and we are abandoning what didn’t”

bing, shove it down their throats

What did Rachels pie chart say?

33 percent tax cuts

18 percent infrastructure

As Nobel Prize-winning economist Paul Krugman says in this clip:

The good thing about federal spending is that it is actually spent. It actually does boost the economy and, if it’s infrastructure, it actually leaves you with something of value afterwards. Whereas if you do it the way the Republicans want to, which is always tax breaks, first of all it might not be spent, so it might not help the economy at all! And then you’ve got nothing to show for it when the thing is over.

Why is the technically powerless GOP being allowed to dictate the landscape of the stimulus, when their policy prescriptions are also exactly wrong? As Rachel says, can’t we just say that the people with the bad ideas don’t get their way anymore?

Congressman Peter DeFazio of Oregon reminds us that the BEST budget of the Clinton years was the FIRST budget, which passed without a single Republican vote. Bipartisanship is swell, except when the Republicans are wrong.

Which they are.

i wonder who he is hearing flack from – and on what side of the aisle.

I’m going to give a generous interpretation of Summers’ position. It is that the tax cuts are immediate, whereas the other spending takes more time to get into the economy. Not to mention the potential for graft if things are done too fast. The administration is rightfully worried that the economy is imploding faster than they can act. The fastest measure is putting money directly into the hands of people.

There are many ways of doing this. Extending and ameliorating unemployment insurance is one of them, though there are some risks (overstated in my view) that it would reduce people’s incentive to find work. The best way is a tax credit. This can be used to direct funds to the lower income brackets, where they are likely to be almost all spent. Big bang for the buck giving money to the working and lower middle classes. Less to the middle classes. Giving a fixed amount — i.e. a check — independent of income amounts to a progressive negative income tax. It’s fast and reasonably efficient. It doesn’t build bridges and infra structure. The case for that spending is strong, and can be argued on its own merits.

hi firepups!

Moyers had Sirota and Tom Frank on and they too were decrying tax cuts and talking about the need for Obama to be more progressive. Sirota pointed out that if Obama is centrist he should be aware that the center of the country wants universal healthcare, infrastructure spending, and good jobs. So our message is getting out there.

And I like DeFazio. Good for him.

Blue Dogs.

Of course, it depends where and how tax cuts are directed. A lot of them are going to go to pay bills or pay down debt. This is different than gong out and buying food or clothes or electronics. And if the tax cuts go to businesses or the rich they are mostly wasted since they won’t create production or consumption.

‘xactly – the d’s are their own worst enemy.

glad to see a congresscritter from my new state is taking the lead on getting the truth out to the people

Tweety made the excellent point today to the awful Brian Bilbray, who was opposed to both the short-range (unemployment, foodstamps, and immediate tax rebates) and long-range (job credits, infrastructure, state construction spending) parts of the stimulus bill, that you get about 18 months with the short term, which is just when the long term starts to kick in.

If they’d design it with unemployment insurance extensions and food stamp expansions along with immediate block grants for state spending (all short term) as well as infrastructure planning and spending like SUPERTRAINS, mass transit in-city rail, bus-buys, and repair of bridges and roads (long term) they’d have a rational stimulus.

Tweety proved that the GOPs are dealing bad faith out of both sides of the deck — opposing the short term because it doesn’t yield long term benefits and opposing the long term because it doesn’t yield benefits soon enough!! — and we need more of that kind of talk on television.

We simply can’t rely on MSNBC to counter the Villager wisdom that “entitlements” are the reason we’re in a recession. Democrats have to start speaking clearly about what they were elected to do — I liked hearing Nancy Pelosi say today that repealing the Bush tax cuts is very high on her list.

That’s what Democrats were elected to do: rein in the entitlements for Richistan. They’d better get on it.

Hi Mr Teddy!

I think they need to fix the roads and old bridges and get better trains. And build bigger schools so we don’t have portables.

More.Like.This
Dugg.

If they’d design it with unemployment insurance extensions and food stamp expansions along with immediate block grants for state spending (all short term) as well as infrastructure planning and spending like SUPERTRAINS, mass transit in-city rail, bus-buys, and repair of bridges and roads (long term) they’d have a rational stimulus.

I would add making the electric grid workable for wind and solar. And deployment of a high speed (designed to be fast and large enough for the next 50 years) fiber internet into every home in America.

I think Summers has a very traditional aggregrate macro Washington Consensus view of macroeconomic policy right now, and is only slowly able to depart from that vision. He signaled his view long ago, he had some four principles or something along the lines of
“stimulus should be big, quick, temprorary and leave no trace” (that is a very rough paraphrase).

That is precisely why I was not enthusiastic about his nomination for whatever the heck he is now, I keep getting all those executive branch econ advisory councils mixed up in my head.

I believe the thinking behind this is that that the dysfunctional capital markets of the last ten years have had no adverse impact on the structure of the real economy. Now, how a good neoclassical economist could belive that and simultaneously believe that a well functioning financial market is required for efficient allocation of real capital is an interesting issue.

Summers seems to be behind the curve compared to other moderate and liberal macroeconomists. Economists such as Stiglitz, James K Galbraith, Roubini, Krugman, have all started talking about a big problem: the U.S. economy has been organized around selling each other stuff that has been paid for by borrowing from overseas. That is Krugman’s great phrase. He predicted in 2005 and 2006 that it was not a viable business model. That seems not to have been true.

So, the question is, will traditional aggregatge macroeconomic calculations about bang for the buck $ ooomph needed to restart economy work in this case?

It is problem of whether we are in something like a normal post-WWII recession, or there there is a need for a big structural adjustment in the economy. And, if the latter, can private investment be sufficient and arrive on schedule?

Thanks egregious, great interview. We need more reps like DeFazio. I hope his opinions start to gain some traction.

No kidding! I’ll bet plenty is coming from our own beloved Blue Mutts.

Larry Summers is a former advisor to Ronbo Reagan. I am quite ready to methaphorically dump on this DeeCee weenie. I will be nice for the moment. But Obama has made some good decsions, but some terrible appointments, Sunstein, and Geithner. Summers only helps rich people as far as I can determine.
http://www.washingtonpost.com/…..02232.html

First, note that there is a major difference between a $700 billion program to support the financial sector and $700 billion in new outlays.

i got the zed upstairs!!!!!!

julia is upstairs

I just don’t agree with Defazio:The economy is loosing at least 200,000-300,00 jobs every momnth at this point.The way you stem that is for tax breaks to the people(more money to spend next week) with the infrastructure,those projects don’t come on line immediately ,thus I see why Summers & the Admin are touting tax breaks as much as they do.I think KNUT makes the same point @ 6.This is going to be a long 4yrs as soon as some Dems don’t get their way ,look for ‘em on the TV complaining.

Yes. I think school construction is probably long-term (in that it won’t hit the economy until 18 months or so) but hiring teachers immediately in order to reduce class size would be a short term stim.

Thank you Frank33, and also thanks to egregious for posting this.

The Maddow clip may have been mistaken in blaming this all on Summers, though as my previous comment indicated, what was in that clip is consistent with Summers’ statements. And note that the ‘big, quick and temporary” criteria appear in the excerpt from the link provided by Frank33.

“short-run investments that will pay back to the government over time or those that are packaged with longer-term actions to improve the budget”

So, the quote above would seem to go against using fiscal stimulus to start long term, big infrastructure projects, such as SUPERTRAINS, water and sewer infractructure, etc.

But seems like Summers’ ideas would fit perfectly with investments in energy efficiency and water efficiency, which do not play abig role in the stimulus compared to what they could.

And note what Summers said about another part of the current plan that seems way too small: “steps to enable states and localities to accelerate, or at least not slow, their investments.”

So, the ‘Summers’ effect does not explain all of the pathetic inadequacies and huge gaps in the current plan, by any means.

Need to keep the a big hot flame of heat on these people to do the right thing.

Whole last paragraph from Summers’ piece below:

” From this perspective the worst possible actions would be steps that have relatively modest budget impacts in the short run but that cut taxes or increase spending by growing amounts over time. Examples would include new entitlement programs or exploding tax measures. The best measures would be short-run investments that will pay back to the government over time or those that are packaged with longer-term actions to improve the budget, such as investments in health-care restructuring or steps to enable states and localities to accelerate, or at least not slow, their investments. “

I would say that capital markets started going off track about 30 years ago about the time that wages went flat. This was when the paper economy began to form as something not directly related to the real economy.

Both Geithner and Summers felt that dislocations in the real economy could always be salvaged and mitigated by the real economy. Geithner continued to believe this even as the housing bubble prepared to burst. THe truth was that the paper economy had achieved a dominant position already under Clinton and definitely under Bush and created distortions in the real economy from the dot com bubble to outsourcing of the industrial base abroad.

The result is we are in need of a new economy. Stiglitz has talked about this. The paper economy has collapsed. The real economy has been shipped overseas. We need to build a new industrial base for the country. So I agree a big structural adjustment is necessary. That Summers and Geithner seem a year or two behind the curve I find very troubling. They need to either get or get gone.

I have no problem with some tax cuts going to lower and middle classes but it is important to realize that you don’t get much bang for the buck with them because as I pointed out above a lot of them will be used to pay bills or pay down debt not buy stuff. And even the stuff they do buy is likely to have been made in China so the bang is even further diluted.

I can appreciate the views of economists as varied as they may be. But if you want to know when things will begin to change just talk to the home builders. As you know, plenty of very highly paid Street economists at many a major brokerage or banking firm got it dead wrong over the last few years. Not just a little bit off, but dead wrong! “No one ever could have seen this coming.” How many times have you heard that one over the last few months? C’mon, anyone who is even a semi-serious student of credit and economic cycles saw “this coming” a mile away. In fact, personally over the last few years I have been relying in part on the home builders of this world to tell me exactly what was to come ahead, and they have obliged significantly. Thanks guys (and gals). And sure enough they have been dead right. Not close, but dead right. When the home builders can turn a profit, you’ll know the recession is over.

My hope is that Obama will give them one shot to get some quick results. He needs them or else. If they don’t produce they will be fired and then the new economists get their chance. The old dogs are getting their last shots to rejuvenate the old economy. It won’t work.

But it’s too radical to just do a 180 so he needs to let these guys fail a bit and then show them the door.

This is in fact the only hope. When we are taken so low, that we are forced to stop the nonsense and build a sustainable green economy with asset bubbles, paper “assets” and driven by debt and credit.

Assets create these nonsense bubbles were wealth is “created” one day only to “evaporate” the next.

Enough of that rubbish. Your house is not an asset. It is a place you live. Get used to this idea.

Why must there be profits? Why can’t people just earn what they need to live and play with reasonably?

An aspect of this is class conflict over who gets the money and the benefit. Buses for Chicago would benefit poor people and workers who build the buses.
Tax cuts and tax credits benefit the people out in exurbia who would never be caught dead on a bus and who will hoard the money just as the bankers are doing with the bailout money. It’s at least partly a classic Democratic constituency vs Republican constituency conflict.

Hugh: And even the stuff they do buy is likely to have been made in China so the bang is even further diluted.

*****It’s where we seemed to have screwed oursleves with regards to manufacturing as most of ‘em companies are in China.Why this policy where most of the manufacturing is done overseas or in China is not a national security issue seems puzzling to me.

It is a National Security Issue! They have sold us down the river. There are rare earth magnets used in components of cruise missile guidance systems that are now only made in-you guessed it-China. We were only too happy to let them literally pack up that assembly line, lock, stock and barrel and ship off.

There have to be hundreds of Microcircuits (IC Chips)that fit the same bill. In their obscene rush to maximize profits, the welfare of the United States was tossed into the back seat and taken advantage of in a big way.

Oh, don’t be so naive people – part of DeFazio’s fervor comes from the fact that his committee and subcommittee have jurisdiction over the appropriations for transportation et al – there’s NOTHING Congressmen like better than handing out money.

And I can’t believe the people in the progressive blogosphere jumping on the tax provisions without knowing what the hell they are about. Want to know? Most of it is tax credits for low income people, the people are are hurting right now, the people Obama promised to help.

I posted part of this at Daily Kos also –

First, there’s the non-tax stuff over which Ways and Means has jurisdiction – a $ 28 billion health program for the unemployed – the Health Insurance Assistance for the Unemployed Act of 2009 – it gives eligible workers a 65 percent subsidy for health insurance premiums for COBRA continuing benefits. The subsidy would be excluded from employees’ income and treated as an employee contribution to a group health plan for the sake of determining employers’ income, which is why it costs that much. This should help a lot of people losing their jobs.

Next there’s $275 billion of tax measures, most of which – $145 billion – goes to a refundable tax credit – the “Making Work Pay” refundable tax credit, which was proposed by President Obama and would be equal to 6.2 percent of a taxpayer’s adjusted gross income up to a maximum credit of $ 500 ($ 1,000 for joint filers). The credit would phase out at a rate equal to 2 percent of the taxpayer’s AGI greater than $ 75,000 ($ 150,000 for joint filers). So this provision is a TAX CREDIT – meaning it’s a direct payment, not a reduction in tax rates, AND it would go to taxpayers who may not have any tax liability. That’s why the Republicans hate it.

Yes, it may take a while to get the money out – the credit may not begin reaching taxpayers until June 2009, because the mechanics of changing payroll withholding, which employers have to implement, can’t be accomplished instantaneously.

Other tax provisions in the bill for individual taxpayers would:

waive the repayment requirement of the first-time home buyer tax credit;
increase the earned income tax credit for 2009 and 2010;
modify the HOPE scholarship credit to create a new American Opportunity tax credit;
extend through 2009 increased small-business expensing under section 179;
provide relief to state and local governments through the issuance of tax-preferred bonds; and
provide several energy-related tax incentives.

All of these are targeted to low and middle income people, whether they currently owe taxes or not.

There are also some business tax cuts – costing $15billion over 10 years – here it is for those of you who want to know about loss carryovers – a substitute amendment at the committee markup actually reduced the size of a controversial business loss carryback provision, and now allows companies to deduct only 90 percent of losses incurred in 2008 and 2009 from income reported no earlier than 2004. Companies receiving assistance through the Treasury Department’s Troubled Asset Relief Program would be ineligible for any loss carryback beyond the two years allowed under current law. The carryback extension would cost $15 billion over 10 years, according to the Joint Committee on Taxation.

Obama PROMISED to give tax cuts to most middle and low income Americans – why do we jump on him for doing what he said he’d do? And a tax credit is very different from a tax cut – it’s BETTER for low income people. This is a way to increase income assistance for a lot of people at a time when they are losing their jobs – I frankly don’t see what’s wrong with that. DeFazio doesn’t like it at least in part because it’s not in his committee’s jurisdiction – and I worked on the Hill for years, so I know what the jealousy is like between the Appropriations and the Ways and Means Committees, and I think this is another manifestation of it.

I do believe we need to invest in infrastructure – we need more money in that. But to equate these particular tax provisions with ones the Republicans would want is simply ignorant. No Republican on Ways and Means voted for this bill yesterday – that should tell you something.

Infrastructure spending has a guaranteed Rate of Return. Good roads give everyone better gas Mileage. Bridges that don’t fall down don’t kill people and don’t get you lawsuits.
Sewage treatment means clean drinking water and less sickness Its hard to put a price on these things.
But the longer you put it off the higher the price gets.
Tax cuts have no guaranteed rate of return look at Enron, the Tech Bubble, the housing bubble, the bank bailout.
The rich being rich are not wiser than us about money. Very few of them earned their cash instead they got people, who if they were really successful would not be working for rich people.
Rich people the Bush years have shown will pursue any bubble it seems and if they lose enough money they scream for the little people to pay the bill.

Hey, geordie, what about all the “business” tax cuts? I’ve been scratching my own non-economist head wondering what all the anger about Obama’s tax cut plan is about, since I remembered “middle class tax cut” being pounded over and over again for two years — but this seemed to be forgotten and tax cuts for business seemed to dominate the conversation.

Was that a trial balloon, or is it part of the current package as it stands, or what?

The stuff Geordie describes in 33 sounds nice, but it looks like it will come down to not much more than pocket change through tinkering with the existing system. And don’t we have to view that in the context of what has just taken place in the bailout, i.e. an enormous, immediate upward redistribution of wealth with no accountability or transparency whatsoever? Will any of this do much for the economy?

no one really gets it.

we must renounce amerikan imperialism.

there really is nothing short of that.

us troops need to be removed from korea, japan, germany, iraq, afghanistan.

that hemorrhaging needs to be arrested immediately. especially all the military’s sucking up of hydrocarbons.

barry obombya, a rockefeller sycophant, thinks that he can continue the empire. he can’t. and we don’t want to.

the time has come to give it up.

on the other hand, when barry uses old abe as his crutch, we should recognize that he is just another gangster – who intends to preserve the bushit looting [disguised as the gwot]. other than lbj, there was never any other amerikan president who so savored mass murder.

the time has come to suck it up, barry. become a man of honor. terminate amerikan imperialism. CHANGE the world. cease the proliferation of the illusions.

2005 stats Combined energy and health care represent 24.6 % of GDP? Reliable stats for 06 07 08 do not exist yet? Now ad that % of GDP for an oil war in Iraq?? No welfare for corporations here!!!

Lower energy and health care costs as a % of GDP will provide more liberty for Americans.

The liberties we American’s enjoy are all predicated on energy and health!

Powerful corporate interests enabled by well lubed politicians have been raping Americans for decades…… The extent of the “rape” as forewarned by Jefferson is now realized…

An example of what I speak!! Mandated health care in Massachusetts?

Using the department of revenue tax code to penalize people/citizens who cannot afford overpriced health care insurance premiums is the shit revolutions are made of!! How many corporations in the health services are tax exempt by virtue of IRS determination. Now using the color of law citizens are penalized for not paying premiums to: TAX EXEMPT NOT FOR PROFIT health care insurers like Blue Cross Blue Shield and the like.

This is fucking insane. You pay premiums and get ill. GO bankrupt trying to stay alive, even with insurance people lose homes, property and liberty.

So much for tax exempt health care corporations “”relieving the burdens of government.”" This is a bold face fucking lie!!

Energy and health care represent 24.6 % of GDP?????

http://goliath.ecnext.com/coms…..enied.html

Driving around streets and highways in Michigan one would think they were in a 3rd World country. It’s particularly bad in urban areas. They are absolutely abominabal! It started with Michigan’s last Republican governor who basically bankrupted the state.

Would feel better if Obama had Krugman and Ravi Batra advising him rather than the dismal crowd he currently has around him.

A tax credit to someone who files a 1040 is a non-existent tax break.

The average income in the US is about $40,000.00. With this economic downturn many Americans are finding themselves falling into poverty. Again how does a tax break help someone who has no disposable income?

Americans entered this downturn with the highest debt load in history, mortgages, credit cards, home equity loans. etc. Again how does a tax credit accelerate spending when most citizens have to reduce their debt load?

Summers has been wrong for long time on the economy, and the abilities of women.

It’s really only at best 7% of the package and some of that will not be released until 2010..

The real economic crisis is much worse than is really being fully realized at this point…and it’s gonna get worse so be prepared for it as much as you can be…

President Obama’s package falls far short of what is really required to lift our economy and the suffering working and middle class and poor..as many have already implied or noted..

The only real solution that will turn things around in America is if we support the underpinnings of our economy by returning to a system of government that exists To Serve The People…

By this what is needed is for our government to provide the means by which Americans can once again produce and function and prosper…

We have exported our very prosperity..!

To turn this around the only thing that will rejuvenate our nation and it’s economy is if we Nationalize certain major infrastructural essential assets so as to Promote Commerce..nationally for all!

Call it whatever you like I could care if you don’t agree or don’t like what I am saying but in this global economy if we do not Nationalize our Health Care costs and Energy those two at the very least then our days are numbered and the prosperity of the average American will be diminished by from 30-40% permanently and that is exactly what the bankers the Bilderbergers desire..

If we Nationalize all major energy we could cut the cost of it by 30% and have tens of billions annually still after the cost cut for the development of alternative energy and new technologies…and create an economic boom that would benefit every American and every American business be it large or small..!

The same holds true for our nations insane Health Care costs we must fortify our industries by creating a single payer Health Care system run as a not for profit this is no longer even debatable and even industry is now favoring this..sadly President Obama still just doesn’t get it or lacks the courage and stamina to go directly to the American people and push for this..openly..!

Peter Orszag can easily explain how it’s not the baby boomers but the inflationary unreasonable annual increases of Heath care that are pulling us under..!

I voted for Obama but failure by those who supported him to make these concerns known due to some form of being enamored will only worked against the best interests of our nation and all Americans as a people…

We will not see improvement that is lasting or substantive by following the directions of those who created this crisis and national emergency..!

It may even be best in the long run for us to see a collapse of the dollar or some other major shock yet further, as terrible as that really is for this administration to finally realize that Real Serious Major Reforms and reorganization of our system is the thing that will preserve us and move our nation and economy forward..!

We must adapt and we are not adapting we are not yet even restoring the regulations that prevented this sort of crisis for over 60 years, until these swindlers and thieves of Wall St. and Texas removed them so as to initiate their feeding frenzy of greed and larceny for which we all are paying in some manner..!

The secret is balance we can support our capitalist system with a little dash of yes Socialism…just the right amount so as to support those underpinnings of our economy that will make things function once again as they should have all along until Phil Gramm and Dick Armey and Ronald Reagan of course decided to destroy it due to their myopic hatred for the average American and belief that corporations are the people and corporate “personhood” the greatest perversion of our Founders intent and person ever codified since slavery..!

If he likes President Obama can declare this an emergency and invoke NSPD-51 and Nationalize for the sake of “continuity of government” and national security any industry or essential asset or even level of government unilaterally..!

I know this is extreme but even if Obama implies or reminds those of Congress of either party that this is a possibility we may finally see some of these so called Representatives snap out of their old corrupt ways and actually serve We The People..!

Either that or we must have ourselves declared corporations so that we can once again become “persons!”..

The Democratic power elite are going to go along with the Repubs in enacting tax cuts, and the economy is going to go completely to hell this year. And then the Repubs will blame the Dems for not being Republican enough.

The Dems are being set up to take a fall, and they haven’t a clue (as usual). And to make certain they are a complete failure, the Dem party elite are appointing more pro-tax-cut, anti-stimulus Blue Dogs into the senate (like Gillibrand in New York).

The Dem party elite – useful idiots to the GOP.