Posted on 05/27/2010 3:39:27 AM PDT by 2ndDivisionVet
DailyFinance is the media partner for Lawrence Summers' talk on the state of the American economy at the National Constitution Center on Thursday, May 27. DailyFinance readers can suggest questions for Mr. Summers before the talk in the comments section below, and see the event by live stream at 6:30 pm on Thursday.
Lawrence Summers, Director of the White House's National Economic Council, will bring his case for the "son of the stimulus" to the National Constitution Center in Philadelphia Thursday evening. The question is whether members of Congress worried about the critical midterm Congressional elections will have to stomach for the $200 billion spending plan Summers advocates.
Some economists argue that a new stimulus is needed because the impact of last year's $787 billion spending plan is starting to wear off. Unemployment remains near 10% though there are signs that the job market is starting to come around. Summers, a former Treasury Secretary, argues that the U.S. remains about 8 million jobs short of normal employment and that the gains recently seen in the economy may be undermined by weakness in Europe. He also remains concerned about cumulative federal deficits that are expected to average about $10 trillion over the next decade.
Old Debate, New Problems
Summers is advocating old-school Keynesian interventions, arguing that increases in short-term spending are necessary for long-term growth. The Atlantic put it this way: "deficits are good, for now, because heavy public spending in downturns is still required to juice long-term growth." Such sentiments are bound to make fiscal conservatives recoil in horror. The Heritage Foundation, for one, says the government needs to cut spending, not increase it, noting that deficits are surging at a rate not seen since World War II. In 2009, Washington spent about $33,932 per household, $8,000 more than 2008. A recent study by Harvard researchers cited by Heritage claims that more government spending leads to fewer jobs.
"A great follow up to this Harvard study would be to see if those businesses that cut investment and employment in their home state's productive economy, then reinvested those resources in Washington D.C.'s lawyers and lobbyists economy," the think tank notes, only half kidding.
The economy continues to face its share of challenges. According to the Tax Foundation, 45 states collected less in taxes in 2009 than 2008 even though many raised tax rates. Though economists say that the economy is recovering, experts continue to worry about a possible double-dip recession. And many believe that the Federal Reserve will have to raise interest rates at some point though it is not clear when that should happen.
President Obama, who in February created the National Commission on Fiscal Responsibility and Reform to come up with ways to reduce the deficit, is not letting Republicans keep the fiscal conservative claim for themselves. The president is pressing Congress for broad powers to trim pork from Congressional spending bills through the bluntly named "Reduce Unnecessary Spending Act of 2010." Though President George W. Bush sought similar power, some members of Congress such as Sen. Daniel Inouye (D-HI) and Senate Republican Leader Mitch McConnell (R-KY) do not appear to be too keen on the idea, as Reuters notes.
Summers will have to explain why the current administration thinks the U.S. can increase spending, cut government waste and grow the economy at the same time. It seems as though the government figures it can keep many plates spinning at once. Unfortunately, investors are not sure if one or all of them will come crashing down to the ground.
Barak has a stash.....
Why are you guys always asking these economic questions? It’s like the invisible bucket of money that dad always reaches into....to bail you out of trouble...save your sister from bankruptcy....and buy Mom that $15,000 kitchen when she starts crying about the condition of the house. Never mind that dad will be living with you or your sister when he’s 65 and broke....drinking your beer...and eating all your food in the house.
bump
Wow, you just descibed my life to a tee!.
I have an older friend who’s in a similar situation. His parents bailed him out of so many financial messes that he made Hussein look tame. Now at retirement age, broke, and practically homeless, his father is living “temporarily” (as he puts it) on the couch of his $500,000 house on the beach. Nevermind the fact that both his father’s economic house and his house are financed to the hilt, when everything starts to crumble, he’s going to be left with nothing and will likely turn to friends and family to help.
My brother’s in a similar situation. He’s been unemployed for 5 years; nothing wrong with him in the least except a little pain pill addiction (yes, that’s tongue in cheek); he’s leeching off of my mother in every way: car repairs, insurance, sleeping in his childhood bed. Meanwhile, he’s gallivanting around now, proud as a new parent that he’s on FOOD STAMPS! He can buy EVERYONE food now. Want to go to Starbucks for a mocha latte? My brother will rescue you with his FOOD STAMPS! Want to go to Outback and have a steak and lobster? My brother will rescue you with his FOOD STAMPS! Want to buy fill your pantry and fridge with junk food? My brother will rescue you with his FOOD STAMPS!
I’m simply boggled how he thinks he has some new power while the reality of the situation is much, much more pitiful. Not only is he turning around my tax dollars to pay for his and his friends’ eating binges, he’s bartering food for other goods and services like he’s some sort of Johnny GotRocks. Unfortunately, the 42% of the idiots in this country who still “Strongly Approve” of Baraq Hussein Obama have the same mentality: It’s Obama money! He savin’ me!
“Where’s that money supposed to come from?”
The money will come from us productive folks, known to the PC crowd as the “evil oppressors”.
The question is - where will the money go?
The VAT they are laying the groundwork for.
**ck all of you slush fund wh0res. NO MORE!
LLS
Please read "The Forgotten Man" by Amity Shlaes. If you're as smart as they say you are, you will understand that you are following the same path as FDR.
FDR's own Treasury Secretary called the New Deal a failure on 5/9/39, when he said "all we've done is expand the federal debt without reducing unemployment."
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