Lost Output Over $3 Trillion And Rising
by Kenneth Thomas
Lost Output Over $3 Trillion And Rising
Still traveling, so just a quick post, but this really can’t be emphasized enough. Andrew Fieldhouse at the Economic Policy Institute reports that the Congressional Budget Office now has cumulatively reduced its estimate of 2017 gross domestic product by 6.6% since the beginning of the recession in December 2007. As Fieldhouse points out, that doesn’t sound like much, but when it’s 6.6% of a $15 trillion economy, we are looking at about $1 trillion (with a “T”) of lost income in 2017. To put it another way, that is well over $3000 of income per person that year. That is on top of $3 trillion in potential GDP already lost since the recession began, according to Fieldhouse.
The culprit, of course, is the lack of further stimulus to the economy. After the totally inadequate $800 billion stimulus package in 2009, we have had essentially nothing. At the end of 2011, Republicans had to be shamed into approving a payroll tax cut they previously favored. Indeed, as Thomas Mann of the Brookings Institute and the Norman Ornstein of the American Enterprise Institute have pointed out, it is not the case that both parties are getting more partisan. As they put it, “Let’s just say it. The Republicans are the problem.” It is the Republicans in Congress who are blocking further stimulus measures. Electing a new Congress that will not pass a stimulus bill will cost Americans thousands of dollars out of their pockets.
We are a long way away from George Wallace Will Roger’s famous claim that there was not “a dimes’ worth of difference” between the two parties.
crossposted with Middle Class Political Economist
We are a long way away from George Wallace’s famous claim that there was not “a dimes’ worth of difference” between the two parties.
I beleive that was Will Rogers.
Cheers!
JzB
I don’t think it’s fair to toss such figures about without also mentioning the vast uptick in virtue and probity that always accompanies hard times, now that the lower orders have less money to fritter away on cigarettes, malt liquor and lottery tickets.
Now if we could have a healthy dose of austerity on top of it all, the general improvement in moral tone, and increase in deference shown to one’s betters, would make it all more than worthwhile….
“…the vast uptick in virtue and probity that always accompanies hard times…” Is this your way of explaining the absence of virtue and probity in corporate boardrooms? Really, help us out here. I’m not sure if this is supposed to be satire or some kind of dickensian excerpt.
The firings will continue until we are all out of customers!
@Davis:
“the vast uptick in virtue and probity”
Tug McGraw:
“I spent 90% of the money I earned on women, Irish whiskey and fast cars…the other 10% I wasted.”
Austerity means double dip recession. It’s that simple. It isn’t a liberal or conservative view; it’s just the way depression economics works. It isn’t debatable and anyone who does will be proven wrong.
the totally inadequate $800 billion stimulus package in 2009,
“All indications are that the new administration will offer a major stimulus package. My own back-of-the-envelope calculations say that the package should be huge, on the order of $600 billion.” – http://www.nytimes.com/2008/11/14/opinion/14krugman.html
So even parsing your Krugman link, the $800 bn package was still $500 bn in his view after the fact. Is 20% smaller a package than the “huge” package he was calling for a material difference? Maybe; I don’t know. But Democrats subsequently had a fillibuster-proof majority that Obama could’ve gone back and asked for more.
Jed:
No, Obama did not have a filibuster proff majority. At best he had 51 Dems he could count on with the rest being blue dogs
Run,
Stop with that. The Rs have their Rinos and the Ds have their Dinos. There were 58 Ds plus Sanders and Lieberman. Leaders lead and Obama believed he had a mandate. There were 60 senators caucusing with the Dems.
Romer and her staff reportedly estimated that the stimulus should be about $1.8 billion, which was 2-4 times what other economists were estimating early 2009. In retrospect, a lot of economists seem to have concluded that Romer and her staff were correct, though they hate to point out that they were wrong. I’d hate to think that Romer and her staff did careful, detailed analysis to develop their estimates while others offered “back-of-the-envelope calculations” based on less information, and that Summers buried Romer’s results in favor of recommending less rigorous findings to the President, but I wonder if that’s not what happened.
run,
please, enough with that meme. Yes, the D’s have their DINOs, just as the R’s have their RINOs. But Obama was operating under the assumption that he had a mandate, the stimulus wasn’t anywhere near as politically unpopular as healthcare reform (which hadn’t even started yet) and frankly, leaders lead. Griping that he didn’t have enough “progressive” D’s or that the collective D’s in the Senate weren’t “progressive enough” is making excuses for a dismal leadership failure.
trillion?
PJR – trillion?
oops, trillion, thanks Anna Lee
Actually the remarkable leadership story was McConnell’s success in enforcing GOP party discipline in the Senate. The Dem caucus (including Independents and Blue Dogs) had 59 votes in that Congress excepting 14 weeks in-session in late 2009 and early 2010 (for much of 2009, Franken wasn’t there and then Kennedy was too sick to appear for votes; in early 2010, Brown was elected to Kennedy’s seat). That the Dems couldn’t muster 100 percent solidarity was nothing new–what was unusual was that the GOP stuck together so well and so long. Give credit to McConnell.
jed:
No, enough of your analysis of what should have happened which coveniently paints over the realities of the DEMS. Let us understand it for what it is, Obama never had a filibuster proof Senate. Lieberman sunk single payer and Medicare for others. Lets understand something else, amongst the DEM constituency, the ACA is popular, http://www.kff.org/kaiserpolls/upload/8285-F.pdf Obama never operated under the assumption he had a mandate which is why he went to CONGRESS to design a healthcare bill; which is something the Clintons did not do, and which is why the healthcare bill (which would have been 25% of today’s cost) Clinton proposed died with the help of Elmendorf then. Get your facts straight Jed and quit suggesting anedotal info should be taken as fact.
Why is the ACA unpopular in many households? The same Republicans who have locked-stepped in unison with their pledges to Norquist, ALEC, and the Koch Bros. have engaged in a broad pattern of deceit and self serving measures to defeat the ACA and to block Obama at whatever cost regardless of how it may help those in need of healthcare. What has been said about thge ACA crosses the line of partisanship to outright lies. http://www.factcheck.org/2012/02/gops-job-killing-whopper-again-2/ What was disproven in 2011 again raises it ugly head in 2012.
Jed, I assume you have something more than conjecture and supposition? Hmmm?
“Why isn’t Mr. Obama trying to do more? . . . .Or is the plan being limited by political caution? Press reports last month indicated that Obama aides were anxious to keep the final price tag on the plan below the politically sensitive trillion-dollar mark.” Paul Krugman, Jan 2009. No mention of Republican opposition, Democrat blue dogs, etc.
“By any normal political standards, this week’s Congressional agreement on an economic stimulus package was a great victory for President Obama. He got more or less what he asked for: almost $800 billion to rescue the economy, with most of the money allocated to spending rather than tax cuts.” – Paul Krugman, Feb 2009. In fairness to Krugman, he goes on to say the stimulus was too small with too many tax cuts and the politics demonstrated it will be difficult to go back for more (of course, that was before the Franken victory gave the Dems fillibuster-proof.
Obama went to Congress to design ACA because he is not a leader, and could hide behind their poorly designed plan and the games Congress played to get it passed for political cover. He made conservative Dems fall on the sword of getting ACA passed, hence the drubbing in 2010.
ACA is unpopular for a host of reasons. Regular commenter, Coberly, hates the bill and I don’t really consider him the Norquist, ALEC, Koch worshipper you broadly paint those who dislike the bill. It’s unpopular because they used financial gimmickry to score the bill with the CBO. It’s unpopular because they calimed it wasn’t a tax and are now arguing it is a tax. It’s unpopular because big business and unions received waivers because the bill is so bad, and small business won’t. It’s unpopular because it increases labor costs and the uncertainty of labor costs. Single payer was never an option because they couldn’t have bought off the support of the lobbying arms they needed – big pharma and managed care. So if Obama didn’t have the votes as you postulate with what he got, he certainly wouldn’t have had them for single payer.