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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Steve Lokness who wrote (236070)	10/28/2013 5:19:54 PM
From: Alex MG	Respond to of 543313

Message 29188286

To: Steve Lokness who wrote (236070)	10/28/2013 5:50:25 PM
From: Alex MG	Respond to of 543313

Iraq War....... Things to Come By PAUL KRUGMAN Published: March 18, 2003 Of course we'll win on the battlefield, probably with ease. I'm not a military expert, but I can do the numbers: the most recent U.S. military budget was $400 billion, while Iraq spent only $1.4 billion. What frightens me is the aftermath -- and I'm not just talking about the problems of postwar occupation. I'm worried about what will happen beyond Iraq -- in the world at large, and here at home. The members of the Bush team don't seem bothered by the enormous ill will they have generated in the rest of the world. They seem to believe that other countries will change their minds once they see cheering Iraqis welcome our troops, or that our bombs will shock and awe the whole world (not just the Iraqis) or that what the world thinks doesn't matter. They're wrong on all counts. Victory in Iraq won't end the world's distrust of the United States because the Bush administration has made it clear, over and over again, that it doesn't play by the rules. Remember: this administration told Europe to take a hike on global warming, told Russia to take a hike on missile defense, told developing countries to take a hike on trade in lifesaving pharmaceuticals, told Mexico to take a hike on immigration, mortally insulted the Turks and pulled out of the International Criminal Court -- all in just two years. Nor, as we've just seen, is military power a substitute for trust. Apparently the Bush administration thought it could bully the U.N. Security Council into going along with its plans; it learned otherwise. 'What can the Americans do to us?' one African official asked. 'Are they going to bomb us? Invade us?' Meanwhile, consider this: we need $400 billion a year of foreign investment to cover our trade deficit, or the dollar will plunge and our surging budget deficit will become much harder to finance -- and there are already signs that the flow of foreign investment is drying up, just when it seems that America may be about to fight a whole series of wars. It's a matter of public record that this war with Iraq is largely the brainchild of a group of neoconservative intellectuals, who view it as a pilot project. In August a British official close to the Bush team told Newsweek: 'Everyone wants to go to Baghdad. Real men want to go to Tehran.' In February 2003, according to Ha'aretz, an Israeli newspaper, Under Secretary of State John Bolton told Israeli officials that after defeating Iraq the United States would 'deal with' Iran, Syria and North Korea. Will Iraq really be the first of many? It seems all too likely -- and not only because the 'Bush doctrine' seems to call for a series of wars. Regimes that have been targeted, or think they may have been targeted, aren't likely to sit quietly and wait their turn: they're going to arm themselves to the teeth, and perhaps strike first. People who really know what they are talking about have the heebie-jeebies over North Korea's nuclear program, and view war on the Korean peninsula as something that could happen at any moment. And at the rate things are going, it seems we will fight that war, or the war with Iran, or both at once, all by ourselves. What scares me most, however, is the home front. Look at how this war happened. There is a case for getting tough with Iraq; bear in mind that an exasperated Clinton administration considered a bombing campaign in 1998. But it's not a case that the Bush administration ever made. Instead we got assertions about a nuclear program that turned out to be based on flawed or faked evidence; we got assertions about a link to Al Qaeda that people inside the intelligence services regard as nonsense. Yet those serial embarrassments went almost unreported by our domestic news media. So most Americans have no idea why the rest of the world doesn't trust the Bush administration's motives. And once the shooting starts, the already loud chorus that denounces any criticism as unpatriotic will become deafening. So now the administration knows that it can make unsubstantiated claims, without paying a price when those claims prove false, and that saber rattling gains it votes and silences opposition. Maybe it will honorably refuse to act on this dangerous knowledge. But I can't help worrying that in domestic politics, as in foreign policy, this war will turn out to have been the shape of things to come. E-mail: krugman@nytimes.com

To: Steve Lokness who wrote (236070)	10/28/2013 5:50:35 PM
From: Alex MG	Read Replies (1) \| Respond to of 543313

Bush tax cuts....... Reckonings; Trillions and Trillions By PAUL KRUGMAN Published: February 02, 2000 An old classmate of mine, who went on to become a Latin American finance minister, once brought his technical experts to a meeting with a U.S. Treasury official. The official was furious. 'Get your [expletive] numbers guys out of here,' he yelled -- which was how the U.S.-educated technical team subsequently referred to themselves. All of which is by way of apology for today's column, in which I am going to be, at least a bit, a numbers guy. But then my subject is a numbers issue: how big a tax cut can a presidential candidate responsibly offer? Of course, it depends on what the candidate plans to do about spending. Big tax cuts won't break the budget if they go along with, say, significant reductions in Social Security and Medicare benefits. But the truth -- or at least the conventional wisdom -- is that post-Clintonian America has reached a sort of equilibrium, in which the median voter wants a government that is neither much bigger nor much smaller than it currently is. And assuming that it is a Bush-Gore election (despite last night's results), both candidates will at least pretend to respect that equilibrium. How much money does that leave on the table? If you have been reading the headlines, you probably think that the answer is, quite a lot. After all, didn't the Congressional Budget Office just estimate that thanks to our booming economy the federal government will run a surplus over the next decade of $1.9 trillion? And doesn't this mean that the budget can easily accommodate even the $1.3 trillion in tax cuts being proposed by George W. Bush? No. To see why, you have to look at the, um, numbers. The key question is, What would it mean to keep the size of government about the same as it currently is? A reasonable man -- and Mr. Bush's economists are, as I said last week, reasonable men -- might guess that it means keeping 'real discretionary spending per person' more or less constant. Note the modifiers. 'Discretionary,' meaning that nobody is proposing to scale back the big-ticket entitlement programs; 'real,' because if prices rise it costs more to provide the same services; 'per person,' because more people means more need for government services, which is why a populous state like -- to take a random example -- Texas has a bigger budget than its less populous neighbors. Alas, that $1.9 trillion estimate was not based on anything like this reasonable notion. It was based on the assumption that total spending on discretionary programs will remain constant -- in ordinary, non-inflation-adjusted dollars -- for the next 10 years. Since the projection also assumes roughly 2 percent inflation, this means a large reduction in real spending. And since the population is going to grow over time, it means an even bigger cut in real spending per person. In other words, that big surplus number is based on the assumption of a drastic, even draconian reduction in government services. As it happens, the C.B.O. also offered a more realistic projection based on the assumption that discretionary spending grows with inflation. That simple adjustment lops off more than a trillion dollars. But because the population is growing, that still means a substantial decline in per capita spending -- and since some programs cannot or will not be cut, it means deep cuts in what remains. How much is really on the table? I've done my own back-of-the-spreadsheet calculation of how the C.B.O.'s surplus projection would change if real spending grew with population; the adjustment brings the total down to around $400 billion. So how can those reasonable men advising George Bush think that he can offer $1.3 trillion in tax cuts? Assuming that they are neither planning to raid Social Security nor counting on favorable revenue surprises to save them (unfavorable surprises are, of course, out of the question), they must have in mind a sharp scaling back of government programs. But that, of course, is not at all what the candidate's rhetoric suggests. He seems to be saying that he only wants to stop those Washington politicians from initiating grandiose new spending schemes. There is little hint that his 'compassionate conservatism' can be financed only if the government sharply cuts back on what it is doing now. If you ask me, it's time he had a little chat with his numbers guys.

To: Steve Lokness who wrote (236070)	10/28/2013 5:50:43 PM
From: Alex MG	Read Replies (1) \| Respond to of 543313

Housing Bubble...... August 8, 2005 That Hissing Sound By PAUL KRUGMAN This is the way the bubble ends: not with a pop, but with a hiss. Housing prices move much more slowly than stock prices. There are no Black Mondays, when prices fall 23 percent in a day. In fact, prices often keep rising for a while even after a housing boom goes bust. So the news that the U.S. housing bubble is over won't come in the form of plunging prices; it will come in the form of falling sales and rising inventory, as sellers try to get prices that buyers are no longer willing to pay. And the process may already have started. Of course, some people still deny that there's a housing bubble. Let me explain how we know that they're wrong. One piece of evidence is the sense of frenzy about real estate, which irresistibly brings to mind the stock frenzy of 1999. Even some of the players are the same. The authors of the 1999 best seller 'Dow 36,000' are now among the most vocal proponents of the view that there is no housing bubble. Then there are the numbers. Many bubble deniers point to average prices for the country as a whole, which look worrisome but not totally crazy. When it comes to housing, however, the United States is really two countries, Flatland and the Zoned Zone. In Flatland, which occupies the middle of the country, it's easy to build houses. When the demand for houses rises, Flatland metropolitan areas, which don't really have traditional downtowns, just sprawl some more. As a result, housing prices are basically determined by the cost of construction. In Flatland, a housing bubble can't even get started. But in the Zoned Zone, which lies along the coasts, a combination of high population density and land-use restrictions -- hence 'zoned' -- makes it hard to build new houses. So when people become willing to spend more on houses, say because of a fall in mortgage rates, some houses get built, but the prices of existing houses also go up. And if people think that prices will continue to rise, they become willing to spend even more, driving prices still higher, and so on. In other words, the Zoned Zone is prone to housing bubbles. And Zoned Zone housing prices, which have risen much faster than the national average, clearly point to a bubble. In the nation as a whole, housing prices rose about 50 percent between the first quarter of 2000 and the first quarter of 2005. But that average blends results from Flatland metropolitan areas like Houston and Atlanta, where prices rose 26 and 29 percent respectively, with results from Zoned Zone areas like New York, Miami and San Diego, where prices rose 77, 96 and 118 percent. Nobody would pay San Diego prices without believing that prices will continue to rise. Rents rose much more slowly than prices: the Bureau of Labor Statistics index of 'owners' equivalent rent' rose only 27 percent from late 1999 to late 2004. Business Week reports that by 2004 the cost of renting a house in San Diego was only 40 percent of the cost of owning a similar house -- even taking into account low interest rates on mortgages. So it makes sense to buy in San Diego only if you believe that prices will keep rising rapidly, generating big capital gains. That's pretty much the definition of a bubble. Bubbles end when people stop believing that big capital gains are a sure thing. That's what happened in San Diego at the end of its last housing bubble: after a rapid rise, house prices peaked in 1990. Soon there was a glut of houses on the market, and prices began falling. By 1996, they had declined about 25 percent after adjusting for inflation. And that's what's happening in San Diego right now, after a rise in house prices that dwarfs the boom of the 1980's. The number of single-family houses and condos on the market has doubled over the past year. 'Homes that a year or two ago sold virtually overnight -- in many cases triggering bidding wars -- are on the market for weeks,' reports The Los Angeles Times. The same thing is happening in other formerly hot markets. Meanwhile, the U.S. economy has become deeply dependent on the housing bubble. The economic recovery since 2001 has been disappointing in many ways, but it wouldn't have happened at all without soaring spending on residential construction, plus a surge in consumer spending largely based on mortgage refinancing. Did I mention that the personal savings rate has fallen to zero? Now we're starting to hear a hissing sound, as the air begins to leak out of the bubble. And everyone -- not just those who own Zoned Zone real estate -- should be worried.

To: Steve Lokness who wrote (236070)	10/28/2013 5:50:50 PM
From: Alex MG	Read Replies (2) \| Respond to of 543313

Stimulus...... February 7, 2009, 5:36 pm What the centrists have wrought I’m still working on the numbers, but I’ve gotten a fair number of requests for comment on the Senate version of the stimulus. The short answer: to appease the centrists, a plan that was already too small and too focused on ineffective tax cuts has been made significantly smaller, and even more focused on tax cuts. According to the CBO’s estimates, we’re facing an output shortfall of almost 14% of GDP over the next two years, or around $2 trillion. Others, such as Goldman Sachs, are even more pessimistic. So the original $800 billion plan was too small, especially because a substantial share consisted of tax cuts that probably would have added little to demand. The plan should have been at least 50% larger. Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out. My first cut says that the changes to the Senate bill will ensure that we have at least 600,000 fewer Americans employed over the next two years. The real question now is whether Obama will be able to come back for more once it’s clear that the plan is way inadequate. My guess is no. This is really, really bad.