President Barack Obama on Monday called for freezing the pay of 2 million federal employees, saying the move is the first of many difficult decisions that must be made to slash the nation’s mounting deficits.
Kudos to President Obama for taking it on the lip. He took a shot to the mouth for 12 stitches and now he will be taking many shots from union officials for his proposed freezing of any pay raises. Now the reaction from some make it sound like these workers are getting a pay cut.
I think we are all going to have to take a hit and thanks to the President for starting at home. Let’s keep the spending reduction ball rolling and then we can talk revenue increases.
I know it’s only $5 Billion but a billion here, another billion there… and pretty soon you’re talking real money.
warrior02131 says
Now if only we could do the same here in Massachusetts, and include the legislature in the pay freeze. Then we would be talking about some serious money as legislators now get an automatic cost of living raise every year.
<
p>Respectfully Submitted,
Sincerely,
Wayne J. Wilson, Jr.
Roslindale
christopher says
We constitutionalized pay raises (AND reductions for that matter) so as to remove that from politics.
peter-porcupine says
In fact, Rep-elect Dan Winslow has taken that refusal one step further, and has notified the state that he won’t be taking a stipend for communing either.
david says
LOL typos are funny. đŸ˜€
christopher says
Only then can we stop the politics. I for one would not refuse it, not because I would necessarily need or feel I deserve the raise, but just on principle.
christopher says
I can see why it’s a nice gesture, but frankly I’m not sure why he’s going with the rein in the deficit narrative. That really shouldn’t be a priority right now.
masslib says
You think a good policy during a sluggish economy is to freeze pay, and concede the totally invalid point to the Republicans that federal governments should act like households in economic hard times? Kudos my fanny. This is politics and it isn’t even good politics, on top of that it’s totally bad policy but par for the course for President Hoover.
johnd says
<
p>I would gladly freeze people’s pay and use that money to get other unemployed people back to work. Wouldn’t you?
peter-porcupine says
A group of state workers were discussing furloughs, and how they would fight them. A co-worker asked if they wouldn’t be willing to take a pay freeze, or days off with no pay, if it would keep others from being laid off.
<
p>The consensus was absolutely not.
<
p>The others didn’t see any linkage, and even those who did said it was a scam and there was plenty of money. Now, historically, they may have been right – but now that there really IS no money, they cannot seem to adjust.
masslib says
Surely you know this.
dhammer says
Which was pointed out to you in March.
peter-porcupine says
THEN they realized it wasn’t an empty threat.
<
p>Hammer – in this thread and others, it’s pointed out tht there are good state workers, and I absolutely concur. But an acceptance of the state’s genuinely reduced financial circumstances doesn’t necessarily dovetail with good job performance – if anything, it may hinder it a little.
<
p>Read what I wrote – I never said that furloughs didn’t happen, I said that people discussing it both didn’t believe it and didn’t think their efforts would help. Given the state’s track record on the issue, the scepticism is understandable and made things more difficult.
<
p>I didn’t need anything pointed out, but thank you so much for you polite link.
stomv says
or not cut taxes or close loopholes or cease giveaways, the link is a loose one. The employees know this. The lege can’t legitimately claim “no money” — they can only legitimately claim “we’re not willing to find more money.”
<
p>I’m not arguing that the lege should always go find state employees more money. I’m simply pointing out that your claim that “there really IS no money” is only true because the lege makes it true.
centralmassdad says
That certainly is one perspective, I suppose.
<
p>I guess the auto manufacturers, when dealing with the UAW, couldn’t say there wasn’t money either. They could simply raise the price of all of their products to cover whatever expenses needed covering.
christopher says
…then people won’t buy cars and revenue will down, and no that does not work for government no matter how often supply-siders say it.
centralmassdad says
Could it be that there is less income upon which to pay income taxes, or is it all directly caused by a Bush tax cut?
christopher says
It’s been a long time since I’ve taken the Laffer Curve remotely seriously. If cuts raised revenues we’d have more money.
centralmassdad says
I asked a simple question. An expanded version of that question is:
<
p>Tax revenues dipped sharply in 2008 and 2009, and have not yet recovered. The question is whether you attribute this decline entirely to Bush’s tax cuts, or did the recession (and the resulting sharp decline in income to be taxed) have anything to do with it?
<
p>This, in response to a discussion above in which it was posited that the federal budget is essentially unconstrained because there is, by definition, sufficient funds to pay; it is simply a matter of raising taxes to wherever they need to be.
<
p>And that from someone who claims to reside in the reality based community.
centralmassdad says
Which I thought I revised. Everything else stands
christopher says
My philosophy is that cetain government activities should not feel the same squeeze as the private sector when the economy goes bad. I feel we should try to raise needed revenue if possible but don’t object to deficit spending where necessary. If I saw any evidence that tax cuts actually increased receipts I’d be open to it, but experience appears to contradict that theory. Raising the marginal rates on the top two percent just to Clinton levels will not hurt job creation. The ones who are supposed to create jobs with the tax savings have this nasty habit of not doing that.
centralmassdad says
I didn’t say that tax cuts increase receipts. (They may, in some circumstances, but it is unlikely we are in such circumstances).
<
p>I am saying simply that economic contraction has decreased revenues. Which means that, as Porcupine pointed out above, the money isn’t there.
masslib says
I would increase spending on jobs to get people back to work. And, by the way, what fantasy world are you living in that a spending freeze is going to lead to a jobs stimulus? Not gonna happen.
sabutai says
Deficit my a–. If Obama were half the man he pretended to be on the campaign trail, we’d save much more than this by pulling out of the Iraq quagmire relatively soon. Or by asking the rich to pay their share of taxes. Or by closing corporate tax loopholes. Or killing dinosaur defense spending. Or means-testing our more generous entitlement programs.
<
p>But no, that would be hard. Better to take a cheap shot at the few people in DC who still work in policy, not politics, so that David Broder and JohnD approve. If this were anytime up until the 1980s, Obama’s policies would be the Republican mainstream.
johnd says
Obviously this solo act will do very little, but maybe it will set the tone that cuts have to be made no matter how unpopular. I could support some of your suggestions too (bolded).
<
p>
kbusch says
Unemployment is too low?
johnd says
if we could have more people working in the private sector. I don’t want bureaucrats if I can have construction workers “building something”.
<
p>The “cuts” I was referring to include Social Security, Defense, Medicare/Medicaid, Department of “fill-in-the -department”…
kbusch says
The first goal of this Administration’s economic should be creating jobs by increasing demand. Cutting the salaries of those making five digits is antithetical to that goal.
<
p>The first goal of this Administration’s political agenda should be explaining how running the country really isn’t like running a household, how now is the wrong time for parsimony.
johnd says
Of course we all know about the “getting reelected part” but secondarily there is winning the hearts and support of the people. Maybe he is calculating that he needs to get the public behind him so they will be behind his “bigger plans” and to do that he needs to relate to them by using their language.
<
p>Just a thought…
kbusch says
I certainly think there’s both a policy and a politics part of governing and that they’re best considered somewhat separately.
<
p>In the political arena, the key thing is narrative. This recent move undercuts any possibility of a coherent narrative.
masslib says
His “bigger plans”. What would those be? You don’t have to over think this one. It’s bad politics and bad policy.
edgarthearmenian says
not 5. Have you been down there lately and seen the thousands of mcmansions being built in Virginia and Maryland? It is the only area of the country which has escaped the recession.
kbusch says
masslib says
not the federal employees for goodness sake.
edgarthearmenian says
masslib says
Less than 4% of the federal civilian workforce make over 150k a year. Do the math.
goldsteingonewild says
he said 6-figure salaries. you cited the 150k statistic.
<
p>but the 100k statistic – 6-figures – is 19% of the federal workforce.
mr-lynne says
… yeah, I believe him.
edgarthearmenian says
somervilletom says
I’m sure that each of you lived there, I grew up there. I’m equally sure that each of you got different impressions based on where you lived and what social circles you traveled in. It isn’t hard to find “evidence” to support whatever bias you may start with. I’m confident that for each McMansion enclave we identify, we can also identify a slum if we look hard enough. I know, for a fact, that there are enormous areas (by Massachusetts standards) of three and four bedroom ticky-tacky houses built during the 50s and 60s — and I mean ENORMOUS areas — that fall into neither category. I can still begin a path at, say, Wheaton Plaza and meander for DAYS through neighborhoods between Wheaton Plaza and, say, Rockville — bounded by Viers Mill Road, Georgia Ave, and Aspen Hill Road — and drive you past thousands of such squarely middle-class homes, never passing the same one more than once. You can do it yourself with Google — I think you’ll have a hard time finding many McMansions in these working-class neighborhoods.
<
p>With all due respect, I prefer to rely on more objective statistical measures.
edgarthearmenian says
the way out to the Herndon/Dulles area every year the number of fancy condos and mcmansions grows and grows. I see this every year when I stay with relatives there. I’m less familiar with Maryland.
kbusch says
Personal observation just doesn’t cut it when we can measure temperatures all over the globe measure incomes directly.
<
p>Do you likewise not believe in protons, viruses, and magnetism because you can’t see them?
edgarthearmenian says
spending money in Keynesian fashion to “create” jobs. How about taking your own advice and citing some economic facts when promoting your liberal ideas. I have seen you and your colleagues here use this argument against those who disagree, while conveniently generalizing about economics and/or politics yourselves. My good friend, protons, viruses and magnetism have nothing to do with it. I will admit that I don’t believe in printing money to supposedly create jobs. The tooth fairy is more plausible to me than that folly. đŸ™‚
christopher says
Manny Goldstein cited some figures downthread.
somervilletom says
The neighborhoods were built in the 50s and 60s, true. The Google satellite link shows those neighborhoods today. They aren’t McMansions. Not then, not now.
<
p>A more constructive direction for our discussion might be to ask if you can identify measurable statistical criteria that demonstrate the phenomenon you describe if is present.
<
p>I invite you to offer the criteria; I’m sure that it won’t take long to track down reliable sources to support or reject your hypothesis.
edgarthearmenian says
The three richest counties in the US are tony suburbs of Washington, D.C., two in Virginia and one in Maryland. Fairfax county alone has over 1 million inhabitants and the average household income is over $106,500. That’s like multiplying Newton times 10. Now please don’t try to tell me that all of these well-to-do people are lobbyists.(or that the jazzy condos and mcmansions sprouting up all over the place there are just figments of my imagination)
somervilletom says
It’s not hard to find data on those income sources, by industry.
<
p>I’m not trying to tell you anything, you’re trying tell us it’s overpaid government bureaucrats. If your claim is accurate, then it won’t be hard to substantiate.
edgarthearmenian says
were government workers. However, the opposite cannot be true; these places are not being filled by lobbyists and tech gurus. The Bureau of Labor Statistics says that approximately 15% of government workers live in the DC area. The average pay is just over $70,000. and goes up to $150,000. or so for many. Now I think that it is safe to assume that a good number of government employees are quite well off and living the good life down there. You can also check the archives of the Washington Post, as they did a survey similar to the one a few weeks ago in USAToday.
somervilletom says
So what are you asserting then?
<
p>The data seems to suggest that Maryland/Virginia/DC area is prosperous. Do you have a problem with that?
edgarthearmenian says
people who may or may not get raises for two years. By the way, I have never seen you confused about any topic, so please spare me the pretenses. You know exactly what I am asserting.
somervilletom says
I’m really not trying to be argumentative.
<
p>I thought you were claiming that these were government bureaucrats. I thought you were claiming that these McMansions were evidence of government overspending.
<
p>You wrote:
<
p>Masslib wrote:
<
p>to which you responded:
<
p>You followed up by saying:
<
p>I’m confused because you seem to be arguing on one hand that Keynesian spending doesn’t work — presumably that it does not create jobs — while on the other hand complaining that the areas surrounding the seat of national government are, in fact, the most prosperous region of the nation.
<
p>This prosperity would seem to support the Keynesian approach, yet you describe it as “folly”.
<
p>I am sincerely suggesting that I don’t understand what hypothesis you offer for objective testing. If your hypothesis is that Keynesian spending does not create jobs/prosperity, then the regional data seems to falsify that hypothesis.
<
p>Since you remain engaged in the discussion (which I appreciate), I am therefore asking you to specifically state the hypothesis that, in your view, explains the region’s prosperity.
edgarthearmenian says
children will be paying for this largesse via taxation for many, many years. (just as the Greeks and Irish will now be paying for government handouts there). Of course, Keynesian spending can make some people prosperous at the expense of the rest of society. If you fail to see the relationship between spending and debt, then there is nothing more I can say. Now, obviously the prosperity created by the government around the DC area is but a small percentage of the entire public debt, but to pretend that a two-year freeze on federal wages is somehow catastrophic is absurd.
roarkarchitect says
Lobbyists get worth much more as government takes control of more of our economic life. I think a lot of the McMansions are owned by ex-government workers turned lobbyists.
<
p>As a business why should you make capital investments in a business, when for much less of an investment you can curry favor in some legislative bill at either the state of the federal level.
<
p>Microsoft tried to be lobbyist free until they got hit with the anti-trust suit, they then realized their error and starting hiring them.
somervilletom says
It seems to me that a more relevant question is to compare the increase in regional prosperity to the total amount of public spending that landed in the same area.
<
p>If your assertion that Keynesian economic policy is “folly”, then the ratio (increased prosperity to public spending) should be less than or equal to one. If the ratio is more than one, then the local government spending did, in fact, stimulate additional growth in the private sector.
<
p>Those McMansions were built by contractors, who in turn presumably paid their workers who presumably bought more goods and services. Local restaurants sold more meals. Let’s not forget that that increased prosperity also implies increased local tax collections, which you don’t seem to have reflected in your harsh comments.
<
p>I’m sorry, Edgar, but I think you’re math is simply incorrect. After we get past your loaded vocabulary — “ilk”, “largesse”, “folly”, etc. — it really is a matter of math.
<
p>By the way, I did not say that “a two-year freeze on federal wages is … catastrophic”. I suggest, instead, that public spending does spur increased prosperity, and by more than the amount of public spending.
<
p>In my view, the only (and therefore best) way to eliminate the deficit — and eventually reduce the national debt — is to grow the economy. I think the debate should therefore be around the question of whether or not a specific proposal grows the economy. In my view, the two-year freeze on federal wages does not grow the economy and I therefore do not support it.
edgarthearmenian says
(2nd poorest country in the world) with a printing machine in my backpack. Then I am going to start printing French West African francs to distribute by the millions. That is sure to make Niger a very wealthy country! This action will surely be “more than one.” Obviously there is already an existing economic base in the DC area, and it will always be worth more than one because of the vast government presence there. There are more economists who scoff at your keynesian beliefs than there are who support them, especially after the influence and work of the University of Chicago Nobel winners during the past thirty years. Let’s leave it at that for we will not convince each other of what we do not believe. A logical consequence of your ideas is that all the socialist countries which have spent so much on “growing” their economies should be far ahead of us capitalist slobs. In reality, just the opposite is true.
And, by the way, such words as “ilk,largesse and folly” are part of the English language, no? Remind me to watch for “loaded” words here on this blog–especially those adjectives used to describe Senator Brown and others by you and your comrades here.
roarkarchitect says
The countries in the Western Europe that are doing the best are the ones who have adopted US style employment practices. Germany has become more free market, created strong incentives for exporting and has seen much more of a recovery than us.
<
p>From the NY Times
<
p>Growth: The U.S. vs. Europe
<
p>The following chart shows growth of real gross domestic product since 1995 for France, Germany, the United Kingdom and the United States. The source is Haver Analytics:
<
p>
somervilletom says
America is the wealthiest country in the world. Niger is the second-poorest country in the world, by your own statement.
<
p>It seems that, in spite of your protestations to the contrary, we agree that government spending in the MD/VA/DC region creates local prosperity in excess of the amount spent. Like it or not, that demonstrates the validity of the Keynesian approach.
<
p>Regarding vocabulary, we are not talking about Senator Brown in this discussion. Instead, we are talking about matters of mathematics and macro-economics. In my view, inflammatory language makes such discussions less, rather than more, constructive.
edgarthearmenian says
Gee whiz, I wonder how that happened?
somervilletom says
America has the economic, geographic, and military resources to ensure that “full faith and credit” means something. Niger does not.
<
p>Perhaps, instead of wondering, you might instead examine US monetary policy since the turn of the twentieth century. The Keynesian approach has worked; the alternatives have not.
edgarthearmenian says
to give me during the 80’s. My enduring answer was always to compare the agricultural production from the flatlands of Texas to the minimal production from the collective farms of the black earth (extraordinary rich soil belt)of southern Russia. Did it ever occur to you that maybe American exceptionalism, independence of spirit, freedom from government interference–all of these and more might be just as important as your Keynesian approach to economics?
christopher says
…but we’re talking about countless clerical employees etc. caught up in this freeze.
edgarthearmenian says
there. They can’t all be lobbyists or political hacks.
masslib says
down there.
christopher says
Like every part of the country there is the gamut of living arrangements. Plenty of federal workers also live in apartments. There are federal employees all over the country many paid by the hour. Check out http://www.usajobs.gov where you’ll find the whole range of salaries and wages.
edgarthearmenian says
overpaid bureaucrats in 6 figures?
christopher says
I’ve clicked through some of those job postings out of curiousity and the higher paying ones generally require advanced degrees and/or years of experience. Personally, I want the best and brightest serving the public so Uncle Sam is justified in paying top dollar to avoid losing them to the private sector.
somervilletom says
I think you’ll find that there are about as many overpaid bureaucrats in 6 figures as underpaid bureaucrats in 5 figures, about as many overpaid hour workers as underpaid hourly workers, across the board, as in any other region of similar population density.
<
p>I’ll say that, based on my own anecdotal evidence, there are a great many more “overpaid bureaucrats” in the Metro West and South Shore neighborhoods of Eastern Massachusetts than anywhere in the DC area. Do you have any idea of what “middle management” in companies like Oracle, SAP, Raytheon, etc., etc., etc., is like?
dcsohl says
Only 38% of DC residents work for the government (and I’d expect that number to trail off in the ‘burbs). There’s lots of other jobs in DC that pay well.
<
p>For starters, the DC area (suburbs, mostly) is a hot area for tech. Not as hot as Boston or the Bay Area, but certainly on par with Austin and Research Triangle. Right there you got lots of McMansion fodder, and when you add in private government contractors (who will not be bound by this hiring freeze), you got more than enough.
centralmassdad says
I have explained before why I don’t think that stimulus will be an effective solution to this economy (because the recession was precipitated by a financial crisis); it is, at best, palliative, and comes at the cost of a major government debt hangover with significant costs of its own.
<
p>Also, a “freeze” is not a “cut.” The entire private sector is on Year 3 without a raise, and many with actual cuts. On those lines, I wouldn’t be opposed to actual pay cuts to federal employees (rather than elimination of an increase) if that money was used to have more federal employees, and if those additional employees could be usefully employed.
<
p>Japan tried to solve a recession caused by a financial crisis with government spending for 15 years without success. It won’t work. What’s more, we are now attempting to deal with the fallout of the bursting bubble by creating another bubble, this time in government debt (T-Bills have had negative interest rates at times over the last 2 years!). A primary lesson of 2008 is that “curing” the aftermath of a burst bubble by creation of a new bubble eventually makes for a more difficult aftermath.
<
p>In any event, I am glad to see Obama out in front on this. This is a small measure, yes, but shows that the administration may be looking to pull the sting out of this potent GOP issue even before the new crazies arrive in Washington.
christopher says
…that jobs are good, except government jobs? Those people are performing a necessary public service and also need to feed their families, etc. It reminds me of Charlie Baker’s complaint about unemployment in this state and then say his plan was to cut 5000 state jobs. Sounds like a contradiction to me.
sabutai says
What about returning revenue to the level it was during Herbert Hoover, Richard Nixon, Ronald Reagan, George HW Bush, etc., etc., etc.? Let’s cut the Wall Street Self-Indulgence Fund.
<
p>The poor and middle class are sacrificing these days. Why not share the burden among all Americans?
kbusch says
The economic policy news coming out of the Administration is not positive.
masslib says
You essentially take the legs out of public support for the programs by turning them into welfare programs. Further, we don’t have “generous” entitlements.
edgarthearmenian says
there is now a means test of sorts for this program: recipients over a certain income level pay a monthly surcharge.
masslib says
There is no market for insuring the health of the elderly. And, you keep means testing Medicare, you see how long the public supports it.
edgarthearmenian says
personal experience. Universal Medicare could work, with fair means testing. Most of the public will not pay the extra premiums, therefore they should (hopefully) support the program for all citizens.
masslib says
without means testing.
edgarthearmenian says
kbusch says
centralmassdad says
Medicaid is a generous entitlement.
somervilletom says
President Clinton, in his autobiography, writes about how much further right the country was during his administration than, for example, during the Nixon era. Richard Nixon, who won election twice as a conservative Republican, was far to the left of Bill Clinton, never mind Barrack Obama.
bradmarston says
Qualifying federal employees will still receive bonuses and pay increases when they get bumped up in the Fed. employment classification system.
<
p>http://hotair.com/archives/201…
<
p>Of course a pay freeze for federal employees was a horrible idea when Republicans suggested it.
<
p>http://tpmdc.talkingpointsmemo…
<
p>Just sayin…
kbusch says
It’s still a horrible idea, and the Republicans making these suggestions have no explanation as to why there’s any need for fiscal belt tightening currently. Inflation is falling and interest on government bonds is not rising.
edgarthearmenian says
so as to “put money in the hands of consumers.” According to that liberal theory every country could become prosperous by printing lots of money which would “stimulate” economies. What total foolishness- which we are seeing now play out in such utopias as Greece, Portugal and Ireland.
kbusch says
edgarthearmenian says
at the altar of Keynes/Galbreath.
kbusch says
Your liberals worship craven images and misspell Galbraith. How interesting.
edgarthearmenian says
Sorry about that but these liberal ideas keep popping up from some source; please enlighten me.:)
christopher says
He advocated deficit spending and the success of the New Deal would seem to prove him right.
edgarthearmenian says
is just one well-known example. An interesting book which I highly recommend. Chris, correct me if I am wrong but I think that one has to print or oertify the existence of money before one can spend it, much as Benanke did by “purchasing” 600 billion in bonds via electronic transfer of non-existent dollars two weeks ago.
mannygoldstein says
And unemployment halved.
<
p>I’d call that a success. You wouldn’t?
roarkarchitect says
Amazon Link The Forgotten Man: A New History of the Great Depression
<
p>I particularly find the story of the prosecution of the chicken butchers a classic example of government gone wild.
<
p>From the New Yorker
<
p>”Another chapter, “The Chicken Versus the Eagle,” takes us through the legal case of a Brooklyn band of brothers, the Schechters, whose name means “ritual butcher” in Yiddish, and whose business was the marketing of kosher chickens. In 1934, Roosevelt’s Justice Department prosecuted them under the National Recovery Administration’s Code of Fair Competition for the Live Poultry Industry of the Metropolitan Area in and About the City of New York, “a lengthy and forbidding document.” The code forbade, among other deleterious practices, so-called “straight killing,” which meant that “customers might select a coop or a half coop of chickens for purchase, but they did not ‘have the right to make any selection of particular birds.’ ” Not only did the code unleash upon their business a plague of ignorant and imperious government inspectors, the Schechters argued, but “they were busting in on an intimate private relationship: that of the small businessman with his customer.” In their first trial, the chicken venders were found guilty, fined, and sentenced to jail, and the circuit court rejected their appeal; but the Supreme Court, handing down judgment in 1935 in Schechter Poultry Corp. v. United States, unanimously ruled that “the NRA had abused the Schechters, and other businesses, through unconstitutional ‘coercive exercise of the law-making powers.’ ” The London Express ran the headline “AMERICA STUNNED! ROOSEVELT’S WORK KILLED IN 20 MINUTES.” In response, Roosevelt gave an uncharacteristically intemperate press conference, accusing the Supreme Court of wanting to revert to “the horse and buggy age.” http://www.newyorker.com/arts/…
mannygoldstein says
I appreciate your (one-sided) anecdote from the Schecter family, but I’m not sure of what it tells us about the staggering economic success of FDR’s first years in office.
nickp says
So GDP grew at a high rate from 1933 to 1937, and also BTW from 1981 to 1984. Do we i) credit FDR, ii) credit Reagan iii) or (most likely) recognize that from many recessary periods often there is unusually high growth. (Except this one, in which case we should blame this jobless recovery on Obama?)
<
p>Change the “1933 to 1937” instead to “1933 to 1938”, and the growth reverts to the mean. Clever and partisan and dishonest use of statistics you have there: isolate a segment of time and attribute good numbers during that discreet segnment to FDR’s policy.
mannygoldstein says
Here’s what I see:
<
p>1981: 2.5%
1982: -1.9%
1983: 4.6%
1984: 7.2%
1985: 4.1%
1986: 3.5%
1987: 3.2%
1988: 4.1%
<
p>Not even in any single year did GDP growth reach 9%. Average looks to be 4%. Meh.
<
p>Can we credit Reagan for OK growth? OK, but it’s important to note that government spending also leaped under Reagan, although not to the levels seen under FDR’s first term.
<
p>In 1933, FDR set upon a very specific economic policy, and the economy changed substantially. In 1937, FDR dramatically changed economic policy, and the economy again changed substantially. Coincidence? I suppose it could be. But at least it disproves the abysmal radical-right meme that government spending always kills GDP growth: both under FDR and Reagan government spending went up quite a bit, and in both cases there was an increase in GDP growth proportional to the spending increase.
edgarthearmenian says
you that the we didn’t come out of the depression until 1939. According to historians, Roosevelt himself began to have serious doubts about the print and spend, makework theories during the middle 30’s.
christopher says
…start the climb out of depths a few years earlier. 1939 was the year war started in Europe and we began to subtlely ramp up our efforts. To those who argue that WWII pushed us over the top I would remind them that it’s not because people were killing each other; it was because war is great excuse to spend a lot of money.
mannygoldstein says
and unemployment halved from 1933-1937? If we agree, are you thinking that this progress was crappy?
<
p>FDR did have serious doubts about his actions, so he turned around in 1937 and tried to balance the budget – way too quickly. The economy thereupon stagnated.
kbusch says
EdgarTheArmenian’s schtick is that liberals are group think victims. This is validated by our agreeing with one another’s comments.
<
p>Therefore, we must be wrong. He just needs to find out how.
<
p>That accounts for our refuting him point-by-point while he remains unconvinced.
edgarthearmenian says
you have made or things that you might have done differently. :):)
mannygoldstein says
I’m curious, thanks.
edgarthearmenian says
The only president that I deify, however, is Harry S. Truman. (though Reagan is a close second)
mannygoldstein says
Thanks.
edgarthearmenian says
johnk says
edgarthearmenian says
in workcamps like Magadan.
mannygoldstein says
They were all pretty tough, if my understanding is correct. Carter was foolish for a short while, but then he wised up too.
edgarthearmenian says
Russian host and friends to “President Reagan who tells the world the truth about our Evil Empire.” Of course, Gorbachyov deserves credit, too; after the summer of 1988 he stopped the process of sending dissidents and religious people to the workcamps. People were no longer afraid to speak out and use their new freedom of speech.
christopher says
I get awfully tired of the conservative narrative that Reagan said “Tear down this wall” and so it was written and so it was done.
mannygoldstein says
But would you agree that Reagan’s Afghanistan policy was, fundamentally, a continuation of the Carter/Brzezinski policy?
roarkarchitect says
With different leaders, the world would be a much worse place.
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p>Interesting book about the end of the cold war. Dead Hand Even with the Soviet Union was shutting down their Nuclear program they were still building Chemical and Biological weapons. Even Gorbachev didn’t know about it.
bob-neer says
And therefore instructive, for better and for worse.
edgarthearmenian says
Thanks, K.Busch–I could not have said it better myself.
somervilletom says
FDR was elected to an unprecedented four terms. FDR’s New Deal was the campaign issue of the 1936 campaign against Alf Landon, and FDR won in a landslide. He was re-elected in 1940 and again in 1944.
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p>FDR was among the most popular presidents of all time. You, again, seem to be cherry-picking your data sources — if you’ll agree that most people don’t have mature first-hand opinion of economic matters until they are over 21, you are limiting your sample to Americans over 90. Are you seriously arguing that this sample is somehow representative of anything?
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p>You really do seem to be repeating conservative talking-points rather than anything substantive. The right wing has always despised FDR. What you don’t seem to realize is that that right wing was a tiny part of the electorate until the Reagan era.
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p>A far more substantive measure of the perceived effectiveness of FDR’s economic policies is the election of 1936, when Americans who were living with them every day voted on them.
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p>FDR won in a landslide.
roarkarchitect says
In the Mid 30’s he really did see threat that both Japan and Germany posed and he at least somewhat prepared us.
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p>The economy was a different story, but all economists were baffled by the depression and I think still are.
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p>He was wrong to run for his 4th term, he was not in the best of health and a lot of historians think he was too frail to stand up to Stalin at Yalta and this resulted in the enslavement of all of eastern Europe.
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p>
mannygoldstein says
Thanks.
roarkarchitect says
Sending a business person to jail because they sold a chicken at the wrong price, talk about creating business uncertainty.
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p>Or the accumulated profit tax, companies got scared of the economy, held onto their profits (wish GM had done a little of this) they got double taxed if held them longer than a year.
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p>From what I read about him he had a screwy management style, the white house didn’t seem to be a healthy organization.
mannygoldstein says
Seems to me that FDR got money into the hands of working Americans, and the economy grew 9% per year for four years until FDR pulled the plug on pump priming. There was a short recession in 1938, but GDP grew more than 8% in each of 1939 and 1940, and of course increased after that as the war started.
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p>http://www.bea.gov/national/xl…
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p>So, if businesses were so harmed by FDR, how come they were able to keep growing rapidly even as the New Deal ramped down? Seems like it worked wonders, but perhaps you can supply data (rather than anecdotes) that refute.
nickp says
You keep repeating 9% like you discovered long division. Let’s look at year 1933 and forget the averaging of three years. Were it so simple.
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p>-FDR didn’t take office until March and 1933’s GDP was up 17% in 1933. Probably, whatever was in at work in the economy was underway already, irrespective of FDR policy. I say probably, because the policies he initiated take time to implement; take time to effect and in the case of the ’33 initiatives, weren’t fiscally stimulative.
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p>-FDR policies were ‘contractive’ in nature during 1933: fiscal deficits were very small; M1 & 2 didn’t expand much; the two New Deal policies changes in 1933 were the National Industrial Recovery Act and the Agricultural Adjustment Act. In fact NIRA created price controls structures while the AAA aimed to reduce agricultural acreage. Neither program stimulative at all.
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p>- then you say, because FDR cut back on the stimulus, the country fell into recession in 1938. Perhaps, or perhaps it was because the Fed dramactically increased bank margin requirements and significantly reduced money supply. Perhaps it was the result of the strong 2.5 years of growth simply building excess inventory.
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p>- Perhaps, in 1933, FDR was simply lucky, taking office at the bottom of a deep recession where the economy’s only direction was up, much the same as Reagan’s luck following Volcker’s recession of the late 70s; much the same as Obama’s bad luck taking charge during the current jobless recovery.
mannygoldstein says
First off, you should use the “constant” dollars, in this case the second column based on 1995 dollars – this adjusts for inflation.
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p>Other answers:
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p>
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p>I suggest that you read a history of FDR’s first 100 days: for example, I enjoyed Nothing to Fear: FDR’s Inner Circle and the Hundred Days That Created Modern America. IIRC, 12 major pieces of legislation in about three months. Literally on the day FDR took office the US economy was in total, utter freefall. 100 days later, the US was a much, much different place. This was change of a magnitude and speed that you and I have never (unfortunately) witnessed firsthand.
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p>
<
p>There were a dozen or more major policy changes just in FDR’s first hundred days: here’s more info – are you suggesting that there were only two?
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p>
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p>No way to know for sure, but I sounds like you and I agree that it was generally due to “fiscally responsible” steps taken by FDR’s administration. In any case, it was brief and 8%+ growth returned the next year, and continued forward.
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p>
<
p>I’ll bet you never heard this before: on the eve of FDR’s inauguration, FDR hired all of Hoover’s Treasury people. Before you gloat )”Hah! I knew FDR inherited policies that were improving things already!”), here’s what happened: Hoover had good people in Treasury, but refused to follow their advice. FDR’s “brain trust” realized that they were good, FDR held them over, and the first thing FDR did upon inauguration was to implement that advice that Hoover had shunned. And the rest is history.
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p>Seriously, read up on what was going on right at the time of FDR’s inauguration – we were on the verge of utter catastrophe. It’s an amazing, amazing story.
peter-porcupine says
If you had been working on fixing the economy then, would you be looking for guidance from the Fillmore Adminsitration?
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p>Roosevelt had no outsourcing, no global trade treaties, no internationl debt and linked currency issues, and on and on.
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p>I would repectfully suggest that the economic solutions now may be as different as the 1930’s were from the 1850’s.
christopher says
…but I don’t think anyone is suggesting an exact carbon copy of every policy and program.
roarkarchitect says
until congress screwed it up. The Smoot Hawley of 1930 made a mess of free trade. There is a lot to learn from this, and I think we are going down the same path. We are messing with NAFT, haven’t signed CAFTA and didn’t sign KORUS FT (South Korea Trade ACT).
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p>My company has just started exporting to Canada after 70+ years. Canadian companies after the 1930’s found it cheaper to purchase from the UK and it’s taken 70 years for to regain market share. The Tariff were huge like 100%.
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p>Way overused but
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p>”Those who don’t know history are destined to repeat it.”
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p>BTW, technical economics are an entirely other issue. During the great depression they didn’t know what the hell they were doing.
centralmassdad says
He advocated deficit spending during recession, and debt reduction during good times. You guys just like the first part.
christopher says
President Clinton during good times was able to propose the first balanced budget in a generation and left us with a surplus.
edgarthearmenian says
believe that Obama will head in the same direction (the middle) so as to be reelected in 2012, much as Clinton did
in ’96. What is so bad about that?
christopher says
Plus I’m not sure how much more middle Obama can get, unless of course you mean he needs to move left to get there:) Clinton got a lot of good results which is why I’m more likely to defend his record than some here seem to, but even during his term the wealth gap grew and we basically accepted some GOP narratives that might not be appropriate.
mannygoldstein says
A fantastic way to pander to the far-right. Yeah! Bash those federal employees on the dole! Up next: let’s nail those Cadillac-driving Welfare Queens!!!
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p>From his perch in the afterlife, Ronald Reagan is either beaming with pride or green with envy. Less uncertain is the disposition of the Clintons – definitely green with envy.
farnkoff says
which Obama is making- in order to pave the way for more concessions!!! Ho, ho, ho! Heeheehee. Hahaha.
johnd says
kbusch says
Have you met any liberals alive during the Carter or Clinton Administrations? Any?
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p>Any one of them would have told you they expected disappointment. In that, they have not been disappointed.
mannygoldstein says
However, you have to admit that Obama has not yet started any ruinous wars simply to boost his approval ratings. He simply continues radical-right policies, but doesn’t break new ground.
mark-bail says
Obama and having regrests. But you guys admit that your VP nominee was Sarah Palin and you’ll have to deal with her again.
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p>Elections are about choice. None of the above isn’t a serious option. So in contest between John “I’ll
Say Whatever, Just Elect Me” McCain, and Sarah “Kim John Il Is My Ally” Palin, I’m glad I voted for Obama.
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p>
roarkarchitect says
The majority of the private sector hasn’t had raises for years and their taxes most likely will go up. But the Fed’s keep on giving raises like there is no tomorrow.
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p>”The number of federal workers earning $150,000 or more a year has soared tenfold in the past five years and doubled since President Obama took office, a USA TODAY analysis finds”
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p>or how about Federal workers earning double their private counterparts USTA Today story
kbusch says
Listen to resentment! We can pout our way to prosperity.
masslib says
Since private sector workers have been screwed by flat wages for decades, let’s screw federal workers as well? Federal employees who make 150k a year still make up less than 4% of the federal work force.
roarkarchitect says
Excluding the monster corporations favored by our current corporatist administration, most businesses are having a very hard time – and they sure aren’t going to give raises. Where the hell would the money come from to fund them, they can’t raise prices, their clients will go elsewhere, unemployment insurance rates in Massachusetts are skyrocketing, it’s not a pretty picture.
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p>If the Bush tax cuts expire the private sector is going to have negative raises and this is across the board not just people making over 250K
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p>But up until the current election both Federal and State workers have been getting raises. Some shared sacrifice, sacrifice for the private sector raises for the public sector.
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p>
masslib says
First, corporate profits are at record highs, so “most” is misleading. Second, why on earth would you want wage earners in any industry to “sacrifice” right now? How does the federal government taking money out of the economy right now boost the economy? Pray tell. Finally, the answer to flat wages in the private sector is NOT flat wages in the public sector.
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p>Also, state budgets are constrained in ways the federal government is not. Never smart to confuse them.
farnkoff says
which has doubtless risen at a much faster rate than the salaries of the average private sector worker or the salaries of federal employees (including the President).
roarkarchitect says
As they will keep money in the economy. Or is it only when the public sector employees have the money that it’s alright?
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p>If the Bush tax cuts expire we will have a double dip recession. The private economy is way too fragile. An interesting link on small businesses. Basically sales are down. The only companies I see doing well are the really big guys.
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p>I understand State Budgets are different, the state budget is required to be balanced but from my understanding the State has had neither an employee hiring nor a wage freeze.
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p>Is it fair to the 1,400 employees who will lose their jobs at state street to hear about the latest Federal or State wage increase or the 5th Bulger cousin at the the Probation Department. I think not.
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p>
masslib says
The ones exclusively for the wealthy will not be injected into the economy. They are non-stimulative. They will be saved, or so says virtually every report to look at the performance of those particular cuts.
howland-lew-natick says
The name of the game in civil service is to increase your power and budget. This is done by increasing the number of your employees since government is generally labor intensive.
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p>Pay grades are dished out by complexity of what you do and the number of employees you have. The more complex the jobs, the higher the grade. The higher the workers grades, the higher the managers’ grades. What every bureaucrat strives for.
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p>Then, you have to give the employees things to do as complaints come in from watchdogs when you are considered overstaffed. I think of this when I see the FBI announcing another Whitey tracking or entrapping some nitwit to be a terrorist. With all the problems around this is the best they can do? (They’re overstaffed.)
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p>The administrative parts of bureaucracies are loaded with people. Procurement, HR, facilities. All with complex rules that require no end of labor to comply. Directors, chiefs, workers, clerks, and, of course, assistants to all. Kingdoms in themselves.
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p>Change only comes from outside the bureaucracy. Without the will of the governing bodies, the high cost will continue.
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p>“Every revolution evaporates and leaves behind only the slime of a new bureaucracy.” –Franz Kafka
seascraper says
Missing your raise? Here’s a couple suggestions:
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p>1. Stop supporting policies which kill private sector raises. Remember, your pay comes from tax collections on private businesses.
<
p>2. Stop supporting monetary policies which raise prices while not raising wages. Then this pay freeze won’t feel so bad.
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p>Alternatively, keep complaining that you didn’t get a raise. You never looked more like people living in a bubble.
dcsohl says
And how do you know the federal workers support those policies? What if a particular federal worker agrees with you 100%? Should they get a raise? Should we restrict raises to the ideologically pure?
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p>Seriously, though, I have no idea what you’re getting at or suggesting here. Sounds to me like you’re just taking a swipe at people who work just as hard as you or I and provide services to the citizenry instead of only to paying customers.
mark-bail says
Taxes and stuff.