Wednesday, June 8, 2011

Pawlenty’s Economic Goal is Almost Right

Benjy Sarlin notes that one GOP Presidential hopeful is being criticized by GOP economists:

Tim Pawlenty drew widespread ridicule from experts across the political spectrum on Wednesday for his wildly optimistic economic plan. Pawlenty unveiled his platform at a speech in Chicago, a combination of tax reforms and budget cuts that he said would yield an explosive economic recovery. The centerpiece of his proposal was setting a goal of 5% economic growth per year for a decade. "Growing at 5% a year, rather than the current level of 1.8%, would net us millions of new jobs," he said. "Trillions of dollars in new wealth. Put us on a path to saving our entitlement programs. And balance the federal budget."But a group of former CBO directors, who are chosen by Congress to analyze the budget from a nonpartisan perspective, are lambasting the number, saying it's completely out of line with any mainstream assessment of the American economy."The trend growth rate is not going to be 5% in the United States," Douglas Holtz-Eakin, director of the CBO under President Bush and a top GOP advisor, told TPM. "The market just doesn't support that. It just doesn't."

Five percent growth for an entire decade may be “out of line with any mainstream assessment of the American economy” but with a GDP gap near 10 percent and potential GDP growing at about 3 percent per year, 5 percent growth for the next five years strikes me as a very laudable goal.

My problem with Tim Pawlentry is not his policy but with his proposed policies. The GDP gap is due to a lack of aggregate demand. Budget cuts will only serve to further depress aggregate demand.


The Arthurian said...

Pawlenty's plan is that we should grow fast instead of slow? Remarkable!! It's a wonder nobody thought of that solution before...

wellbasically said...

Art, many elite commentators and policy-makers oppose growth.

The eco-people hate it. Obama wants us to get used to "the new normal" of European-style high unemployment and low growth. Krugman tempermentally connects every bad thing that happens in the economy to some previous period of growth. This is a guy who has blamed Bill Clinton for having high growth rates during his presidency. The IMF routinely chided the USA during those years for having high growth. College professors don't think much of growth.

The Republicans have their own growth-haters too. They get more pleasure out of throwing Granny out in the street even if they have to hurt the growth of their own personal income to do it. The Republican establishment doesn't like growth much because it develops social competition from the nouveau.

Pawlenty could win on this if he takes on the Ryan wing. My guess is from his personal style he will have to come out with some support for the deficit hawks and that will blunt his new message. But we'll see.

TheTrucker said...

What a marvelous lie to claim that "Krugman tempermentally connects every bad thing that happens in the economy to some previous period of growth". This, of course, is a confusion of "growth" with bubbles and borrowed, yet uninvested, money. And most well educated people (like professors) do not like bubbles and recessions that make the financial sector more powerful at the expense of the productive people.

"wellbasically" doth get one thing right: Republicans would rather have 3 apples as opposed to ten if having ten would mean that the producing majority would have 5 apples instead of just 2. That is the Republican anti growth crowd.

There is no problem with Pawlenty's messaging or with Ryan's. But it remains to be seen whether, with the help of the media, these lying sacks of Republican pig crap can convince people that shit + 2 = 8.

Every 4 years the Republicans have a convention to determine who can lie the best. The winner gets the Republican nomination for president. So far Pawlwenty is way up there in the rankings.

Sandwichman said...

The Sandwichman's got nothing against growth... and no presumption in favor of it either. Being pro-growth is like being in favor of words.

"Which words? In what order?" H.L. Mencken is reputed to have said when a young reporter asked him how much he would pay for 10,000 words on the 1906 San Francisco earthquake.

wellbasically said...

In life, you get what you want. What do you want more, growth, debt reduction, social spending?

Nobody who actually makes spending policy believes in Keynesian stimulus.

Lord said...

Perhaps his solution is WWIII since that was the last time we saw as much and after all that is defense and doesn't count against the deficit in his eyes.

TheTrucker said...

wellbasically said "Nobody who actually makes spending policy believes in Keynesian stimulus". That may or may not be true. But "Keynesian spending policy" seems to work now as it has in the past.

There is a definite truth in claiming that the economy will "right" itself. It just depends on your definition of "right". And that is where "belief" comes in. If you believe that it is "right" that the wealthy and the powerful and the people that gambled correctly on the past bubble are to lead the rest of humanity down the path of righteousness then Keynesianism is most certainly out of place.

While econometrics may be strictly accounting, economics and political economy are normative. All definitions of "good" are religious. Show me someone who can prove there is such a thing as "good" without some sort of non-falsafiable religious basis. Keynesians "believe" that a bubble free normative economy is better than a roller coaster and that the roller coaster causes much unnecessary poverty. The fascists believe that God made the roller coaster (and war and global warming) to "refine" his creation.

wellbasically said...

Keynesian spending in the age of The Third Way is just throwing a lot of money at existing interests, like the wind arm of an oil company. You want to give the people in the revolving door of government/high finance a blank check to pay off their golf buddies.

TheTrucker said...

So let us stop throwing rocks and get to the heart of the matter. The heart of a representative republic is an educated and enlightened citizenry and their control over their government. Such a system will result in a very utilitarian society and that system is not what we have. We probably never had it. But we came a lot closer in the past; especially 1900 - 1920 era. Things started down the current path to ruin in 1921 when the newly elected Republicans refused to reapportion the House of Representatives based on the 1920 census. That census showed proper redistricting using precedent reapportionment law in light urbanization and immigration would cast them out of power in the House in the next election cycle. With their unconstitutional retention of power they were then able to solidify their gains with The Reapportionment Act of 1929. The Republican financial bubble of the 20's then burst and the Democrats inherited fortress created by the Republicans in the wave elections of 1930 and 1932.

Neither of the two primary political parties would be served by reinstatement of representative government. The parties have a stranglehold on power that they will not relinquish willingly. And unless the K12 educational system can be repaired to teach history and basic classical econ there is no way out. Until then the media can be used to mis-educate and lie. It may well be that the Citizen's United ruling will be a "wake up" for a true yet slumbering Democratic party. The Democrats will cease to exist as an opposition party unless they can repair the educational and representational faults. And it appears that they are happy with their role as a "fake" opposition in the "good cop, bad cop" act. There is _NO_ gain for the Republicans over what we currently have. Their continued efforts to destroy free education and popular representation have paid large dividends. And the beat goes on.

wellbasically said...


Keynes' economic philosophy if anything is based on influencing "animal spirits" through fine control by someone in government, often against some expressed wishes from the people.

Do you think an educated citizenry would be more likely to accept that the government can pull the levers and make things better? It seems like you are looking for people to be educated into giving up their choices.

media said...

lets see---5 or 10% growth in the prison industrial complex, weapons for war and cartels, junk food and obesity clinics, cigarettes and NIH cancer research...

i guess i'm a pro growth liberal too.

order in what words is whats in order is what is ordered in words, with fries on the side.