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Bush recession different in size and substance

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This recession is not only more serious than others of recent memory, but it affects different parts of the economy than previous ones have.  A couple of graphs show the former, and a few sentences, the latter:
clipped from www.dailykos.com

For the first time ever, more private-sector services [industry] jobs have been lost than goods-producing [manufacturing] jobs have been lost.
Many of those lost jobs were in retailing, which has seen its largest job losses since the data collection began in 1939
Some economists say many of those jobs will never come back as Americans wean themselves from the easy credit that’s fueled their consumption for the past 25 years.
“A lot of them are gone for good,” said Nigel Gault, chief U.S. economist for IHS Global Insight, a major economic consulting firm. “The age of the U.S. and world economy being driven by the U.S. consumer may be in the past.”
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UPDATE:  This morning, GM announced layoffs of an additional 10,000 workers.

The President’s stimulus plan is, doubtless, far from perfect.  But it has the support of the most brilliant economists we have, including the Nobel laureate Robert Krugman (whose chief concern is that it is far too small).  Investing in the economy has the potential for paying the government back manyfold, even above the cost of borrowing.

And another ten thousand people will be bringing bad news home to their families.

Seems foolish to delay.


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Written by Monte

February 9, 2009 at 9:04 pm

Congressional Research Service: Tax cuts less stimulative than spending

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http://bayh.senate.gov/gallery_gov_01.

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Remember the Bush tax cut plan?

How’s that working out for us?

In case the last eight years haven’t left you skeptical about the effectiveness of  tax cutting as a business stimulus, the non-partisan Congressional Research Service provided its bosses (the Congress) with these sentences in its report of January 23 entitled Economic Stimulus: Issues and Policies (pdf):

clipped from www.motherjones.com

Seal of the United States Congressional Resear...
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“Economists generally agree that spending proposals are somewhat more stimulative than tax cuts since part of a tax cut may be saved by the recipients […] The primary way to achieve the most bang for the buck is by choosing policies that result in spending, not saving. Direct government spending on goods and services would therefore lead to the most bang for the buck since none of it would be saved.” […]

“The effectiveness of tax cuts also depends on their nature… tax cuts received by lower income individuals are more likely to be spent.” […]

Most evidence does not suggest that business tax cuts would provide significant short-term stimulus […]

This lack of effectiveness may occur because […] stimulus is generally provided during economic slowdowns when excess capacity may already exist. […]

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Hmm, interesting thought!

It’s a recession. Manufacturers aren’t selling much. Plants are running at partial-capacity. Employees are laid-off. Are they going to want a tax cut to help them expand capacity, when they can’t fully use what they have?

I’m no economist, but it sure seems like the tax cut approach is more doctrinaire than effective.


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Written by Monte

February 10, 2009 at 9:19 pm

Posted in Politics