Very well done by Mike Norman who’s on this email list.

This video makes it all the more obvious that Fox is on a propaganda mission, at best to support ratings, at worst to be subversive, rather than engaging with Mike on the facts.

You tube link:

Mike Norman on Fox

55 Responses

  1. I’m disappointed that you have that take Warren.

    First, Mike Norman came at the argument only from the spending side. He basically said that the only way for the government to boost aggregate demand and employment is to spend. This is simply not true, as you and everybody here knows. Your signature policy issue is a FICA tax cut after all.

    Second, Norman continues to claim that the stimulus was a success. That’s just complete garbage. The stimulus was way too small and spread out over too many years to have a significant impact. Plus, it was spent in such a way as to get the least amount of useful work done for the money, which not only was a waste of resources, but it made it politically difficult to add to government deficits (or at least spending).

    Finally, you’ve done a good job of promoting your ideas in a politically neutral way, and I’d like you to continue doing that which means snide remarks about conservatives or Fox News should probably be kept to a minimum. Fox does not push propaganda. It merely has a conservative slant, no worse than the liberal slant that the NY Times has. In this particular instance, the interviewer was not even harassing Norman because he is a liberal, but rather because the interviewer believes certain innocent frauds (presumably innocently).

    1. Fox does not push propaganda. It merely has a conservative slant, no worse than the liberal slant that the NY Times has.

      Really?

      1. Yes, really. I used to think that conservatives were guilty of hyperbole when they complained about the liberal bias at the NY Times. I started paying serious attention about 5 years ago, and it is astonishing. It mostly shows up in the stories that they choose to run versus the stories that they ignore, but it also comes across in the wording of the article text as well.

        Just this morning, there was a 6 page “expose” reporting on the rather obvious fact that there are tax-exempt charities in the US which send some of their funds to support Israeli settlements in the West Bank. $200MM over 10 years. Big whoop. I mean, they had to put 4 reporters on this to comb through tax records to figure this out? I thought it was pretty common knowledge that there are many tax-advantaged charities which fund unsavory activities, including anti-American terrorism.

        And yet this is a newspaper that has managed to ignore completely a shocking scandal at the Justice Department that is going to blow up into a constitutional crisis in a matter of months.

      2. ESM: Justin department scandal will go into memory hole. There will be no blows up.

      3. Zanon: Not if the Republicans take the House in November, which looks like a better than even chance.

      4. ESM: Please do not confuse me with Republican booster. Nothing positive will come out of them taking the House in November. In fact, it may make things worse as NYTimes can again have !democrat to blame.

    2. ESM

      I know this is not the place for political discussions but I must respond to this

      ” Fox does not push propaganda. It merely has a conservative slant, no worse than the liberal slant that the NY Times has. In this particular instance, the interviewer was not even harassing Norman because he is a liberal, but rather because the interviewer believes certain innocent frauds (presumably innocently)”

      Fox routinely LIES!! and lies to simply inflate certain politics they want pushed. They have been caught on numerous occasions by John Stewart most notably, doctoring crowd pictures of Tea Party rallies to give an impression of “HUGE CROWDS!!. O Reilly and Hannity have been caught numerous times making complete fabrications. There is a difference between being passionately partisan, believing in your cause enough to argue it vehemently and MAKING UP SHIT to give the impression that your point of view is supported by stuff which in no way shape or form supports it. Olbemann has been prone to ridiculous hyperbole (in his Scott Brown rant for example) but I will send you $100 if you can find ANY times where Keith Olbermann or Rachael Maddow completely lied to misrepresent a situation the way Hannity, Beck, Limbaugh and OReilly have done on NUMEROUS occasions. Just find me one!

      Again, being passionately for your cause is no sin or crime but being willing to do or say ANYTHING to advance your cause is sociopathic. You have always seemed a reasonable man in these comment sections but to try and equate what FOX has done (and been caught at!) and what happens on MSNBC is beyond absurd. I have no problem with Fox being conservative, but say what you are and live off facts. The fact they have to make shit up so often points to the weakness of their arguments.

      Now, lets get back to MMT talk!

    3. “Not if the Republicans take the House in November, which looks like a better than even chance”

      Reading those Fox polls again ehh?

      Tell me how many times a party with an approval rating blow 25% has ever made up a 19 seat deficit(Senate) in an election? The house is a much greater difference.

      Your delusional that the chances are over 50/50. Even Ms Coulter wants the GOP to stop pushing this ridiculous idea, seeing as setting this up as a possibility makes “a significant dent in the difference” look like failure.

      Modern American conservatives just cant stop acting like those assinine DBs that stand over a receiver and taunt in the 4th quarter down 30-0. “Mission accomplished”…. “Permanent republican majority”…. “They’ll greet us as liberators”

      Sorry, I thought my comment above would be the last on politics……….. but then I saw your November predicition.

      1. “Olbemann has been prone to ridiculous hyperbole (in his Scott Brown rant for example) but I will send you $100 if you can find ANY times where Keith Olbermann or Rachael Maddow completely lied to misrepresent a situation the way Hannity, Beck, Limbaugh and OReilly have done on NUMEROUS occasions. Just find me one!”

        First, I’m not sure that ridiculous hyperbole can be distinguished from a lie. Most lies we see in practice can be shown to have a kernel of truth, in which case they’re really just dishonest exaggerations.

        Second, are you serious? 100 tax credits for just one example? I mean the Scott Brown rant contained several lies alone by almost any reasonable definition (sexist? “because nine years ago he said that a female state senator had ‘alleged family responsibilities'”).

        Third, it is easy to cherry-pick mistakes and misrepresentations made by any news organization. My sister-in-law used to be a reporter, and from her I learned that it is an extremely high pressure job, and that the temptation to cut corners or not question your own story is very strong. The footage of the Tea Party crowds was not doctored. It was simply the wrong footage, and Fox News apologized for it. If it was an intentional misrepresentation, it was a pretty stupid one, since the probability of being called out on it was high. I’ve clicked on over to Media Matters and examined their Fox News lies compilation, by the way, and it’s pretty weak tea in my opinion.

        Look, I can understand the frustration liberals feel with Fox News. Fox clearly has a bias in the stories it chooses to cover and the stories it chooses to ignore. There is also a certain “rah-rah” patriotism in its war reporting of international news which is a little unseemly. And some of the opinion guys are obviously pushing a very anti-liberal line (Beck is interesting but guilty of the hyperbole that you seem to think is ok; Hannity is just an idiot, and I probably dislike him as much as you do because he’s so obviously partisan and his grasp of the issues is weak; and O’Reilly is pretty fair except when it comes to things that he finds morally repugnant but other reasonable may not). But if you were a fair-minded person (not saying you’re not), you would see why conservatives have a problem with MSNBC, or even the NY Times.

      2. These folks get paid millions of dollars and they have staffs that are supposed to be researching the stories that they report and comment on. Getting the facts wrong regularly indicates that the effort is not going into news reporting but infotainment — unless they people are just plain stupid. And I am not talking only about Fox. The level of factual coverage in the mainstream is abysmal. It’s simply entertainment and the US public, like the Romans of the Empire period, love celebrity and the sensational. The current “news” just shifts between orgies and gladiators because that is apparently what the US public desires.

      3. ESM

        “The footage of the Tea Party crowds was not doctored. It was simply the wrong footage, and Fox News apologized for it. If it was an intentional misrepresentation, it was a pretty stupid one, since the probability of being called out on it was high”

        Cmon now. The footage wasnt doctored the story was doctored by intentionally using the wrong crowd scenes (dont give me this “They apologized” crap). THey were trying to push a theme that the Tea Parties were more popular than they really were. They have a lot invested in them, literally. And you think they care about being called out?? You think any of their target audience changed their opinion of them? Please, you act like they have a conscience.

        “Beck is interesting but guilty of the hyperbole that you seem to think is ok”

        I never said hyperbole was ok just that it wasnt the same as a blatantly misstating facts.
        Browns actions dont prove he’s sexist but a sexist would certainly take the stance he did……… just sayin’. And Beck completely makes shit up. He is completely detached from reality with his conspiracies.

        I really dont see the problem conservatives have with the NY Times or MSNBC. Its not like there arent any conservatives at the Times or MSNBC. Bill Kristol is one of many while Joe Scarborough and Pat Buchanan get very significant face time. MSNBC is not the Anti Fox. Have you ever heard a vocal liberal with a show at Fox?? The only reason they dont lke NY Times and MSNBC is they actually give them real vocal criticism and they dont like answering to that. But they are not the 100% liberal rags they are made out to be, I see plenty of stuff at both places that could just as easily come out of Hannitys or O Reillys mouth. There is ZERO liberal voice a t Fox. Frankly I dont give a crap either because they dont HAVE TO!! But dont call your self fair and balanced. I’d actually respect them more if they just said look, we’re the right wing mouthpiece in the media so stuff it! They’re allowed to do that. Quit trying to pretend your something your not. Thats what irks me is the faux objectivity. MSNBC makes no claims about what they are or arent.

      4. “‘Not if the Republicans take the House in November, which looks like a better than even chance’

        Reading those Fox polls again ehh?”

        Nope, reading Intrade.

      5. Tom,
        Todays appointment of Lew at OMB doesnt bode well (formerly oversaw huge surpluses as OMB director in the latter Clinton Admin and is proud of it). This looks (to me) like a slap in the face to the true Progressives (ie the Galbraiths/Krugmans/Stiglitz, & others of the world) who have been as vocal as possible in their recommendations for further fiscal support lately. Obama is perhaps “taking the bait” from the fiscal conservatives here and accordingly will take a 10%+ unemployment rate into this falls election.

        I still like Warren’s “cut to the front with tax cuts” idea but with Lew, it doesnt look like they are going that way.

        Resp,

      6. “Right, but look at the graphs. Lots of swings. Too early to tell much from that.”

        Tom, the Intrade price represents a market-consensus probability for Republican control of the House. It is what it is. It doesn’t matter whether there is a lot of volatility in that probability/price or not. This is a common misconception about probabilities.

        If you’ve ever played backgammon with a doubling cube, you’ll probably have an intuitive feel for this because the distinction between “smooth” positions and volatile positions is very important.

        Of course, if you don’t think the Intrade market price is correct, that’s another issue. It is a thinly traded market after all. However, the volatility in the price is not an indication that the price isn’t an accurate assessment of current probabilities.

      7. Matt, apparently David Axelrod and the political team fell for the bait and are advising Obama that the polls indicate the public is worried about the deficit. In the link I posted above, “It’s the economy, stupid,” Erza Klein shows why it is a losing strategy. Statistical research suggest that elections are largely decided on the state of the economy. Looks like the Dems are shooting themselves in the head, unless they can turn things for the better by the time of the voting.

      8. ESM, Jus’ sayin’, ESM, look at the graphs of other things at Intrade. Many are up and down over time. No doubt the odds are against the Dems now. I would agree that the Intrade market is correct at the moment. No argument there. I still say it’s too early to tell. Lots of things can happen between now and November, and the campaign hasn’t even begun yet in earnest.

  2. ESM,
    have to agree with your points about Norman’s weaker-than-required approach, nevertheless, it was at least some voice of opposition, no matter how weak.

    Meanwhile, Warren is correct, the video was, as usual, very hard to watch –
    fair & balanced to Fox means bringing people on to shout at & talk over?
    It makes Fox look like as-yet-non-violent fascists

    Anyone sensible who is still willing to go on Fox must be really civic minded, and should have one, dead-on message that is worded as audaciously as possible.

    Even then, viewers may not be allowed to even hear their words;
    Unbelievably, there are millions of Americans who are religious adherents to Fox preaching!
    It’s really a sad state of affairs. Hopefully we’ve seen worse, even if not on this scale, and can recover.
    One has to fear for our country to see a foreign-born media owner like Murdoch who was run out of Australia as a fascist racist, yet found a gullible audience here

    1. “Meanwhile, Warren is correct, the video was, as usual, very hard to watch –
      fair & balanced to Fox means bringing people on to shout at & talk over?

      Shouting at guests and talking over them is hardly something Fox News invented or is even particularly good at. Have you ever watched anybody try to get a word in edgewise against Chris Matthews? And Keith Olbermann would be even worse if he actually had anybody on his show that disagreed with him on anything.

      For your viewing pleasure, I give you Dylan Ratigan, who used to be a financial journalist on Bloomberg and CNBC by the way.

      1. no argument there, they’re all worthless – just no point in defending Fox

        no one said they’re worst, just that they’re useless

      2. no one said they’re worst, just that they’re useless

        I’ll say it then. Roger Ailes is a pure propagandist, and he runs Fox with an iron hand.

      3. entire media system is one big inane propaganda machine. either prattle or the lies.

      4. “Roger Ailes is a pure propagandist, and he runs Fox with an iron hand.”

        What an amazing coincidence that Fox News actually makes money (iron) hand over fist, considering that it is a pure propaganda operation. Although I suppose it could actually be losing money and Ailes has managed to brainwash me into believing the opposite.

      5. why in gods name do you think propaganda organizations must be money losing? people will pay big bucks for prattle or lies.

      6. The primary goal of a pure propaganda operation is to use communications to promote a particular point of view or political agenda. As profit would be a secondary goal, or not a goal at all, it would be a heck of a coincidence for such an operation to be wildly profitable.

        Prattle and lies are not propaganda by the way. The National Enquirer is not a propaganda magazine for instance. It just deals in titillating stuff to make a buck. Usually you have to pay to feed people propaganda.

      7. ESM: It is not a coincidence at all. People will gladly pay membership dues to their church, and for pleasure of having their (constructed) world view affirmed. In fact, the more you give, the more you believe.

        National Enquirer is very honest and upfront about its business. It is not propaganda because there is no political element to its prattle and lies. NE is not power dealer.

        This is entirely unlike NYTimes or Fox News.

      8. Ailes is well known for two things. First, he has been a GOP political operative since working for Nixon in 1968. Secondly, his media M. O. is epitomized in this well-known statement, If two people are on a stage, and one says, ‘I have a solution for Middle East pit and the other falls into the orchestra pit, what do you think is going to get reported on the news?

        The icing on the cake is that during the G. W. Bush administration, Fox handed out the GOP talking points on a daily basis. Roger Ailes sets policy and does the hiring and firing. In the Obama Administration, Fox orchestrated and virtually sponsored Tea Party rallies and got a lot of flak for its blatant propagandizing.

        Ailes has created a profitable network by combining propaganda with sensationalism, a technique he developed along with Lee Atwater as a GOP operative. Then, he figured out how to cash in on it personally.

        My point here is not to argue politics but to say what needs to be done when appearing on one of these stations. You have to understand the every station and personality has an agenda they will push, and if it is not your agenda, you have to figure now to top them by being more outrageous. Today, rude rules. Otherwise, you will be treated as a wimp or a sucker.

      9. The only way to deal with these people is to shout back and refuse to be interrupted. That has to be the going in position. I thought Norman did a not bad job of that.

      10. One thing that Bill Clinton was great at was taking any question (no matter how far afield) and tying it back to the point she wanted to make anyway. Fox honcho Roger Ailes writes about handling interviewers in this way in his book “You Are The Message”.
        http://www.bookswiki.info/article17

        Warren had the right angle of attack the other day on Fox when he stressed “tax cuts”. On MSNBC I guess “more stimulus spending” would sell better with the audience and hosts (Joe Scarborough excepted) than tax cuts would. Like the geography teacher looking for work, you can teach it round or flat. :o)

    2. To put it into Ultimate Fighting terms, Mike came into the ring ready to box when he should have worked on his Brazilian Jiu-Jitsui skills. Fox has two basic moves, which they telegraph a mile away, they want to bash the big spending Democrats and boost the tax cutting Republicans, MSNBC hosts tend to have the opposite bias.

      So on Fox, go in making an analogy to Bush cutting taxes after the dotcom crash, Reagan cutting taxes in 1981, Kennedy cutting taxes in 1962. Paint the deficit hawks of wanting to raise taxes instead of putting money in the hands of the American people.

      John McCain (if I remember correctly) proposed a 50% payroll tax holiday last year instead of Obama’s stimulus package. We’d have been better off with that, in fact, we should have double downed and made it a 100% tax holiday.

      On MSNBC your examples could be on the pro-spending side– Reagan’s military Keynesiasm, Nixon’s Full Employment budget, Eisenhower’s Interstate and Defense Highway Act (the liberals will be amused by the big spending Republican examples).

      You want to persuade the audience at home–whose preconceptions probably match their favored news network– that you haven’t persuaded of them of anything… you’ve just confirmed their own deeply held beliefs. :o)

      Oh and Roger Ailes’s book (You Are The Message) is worth reading.
      http://www.bookswiki.info/article17

      1. Sorry for the double post, didn’t think the first response had gone through.

      2. “YOU ARE THE MESSAGE”
        “Research has shown that audience’s interpretation of messages are determined 55 percent by the speaker’s nonverbal communication (facial expression, body language), 38 percent by the speaker’s vocal quality (tone, pitch, volume, variation), and only 7 percent by the actual words.”

        That actually speaks volumes about homo sapiens biology. In a multivariate world, where every moment brings a new demand for an incalculable probability calculation – our biology has brought us to this reality, and that always happens for “natural selection” reasons.

        A guess: In VISIBLE exchanges, only those able to bring a visible history PLUS comfortably focus on their instantaneous context are very LIKELY to propagate lasting impact on unpredictable contexts to come.
        Note that all Ailes bets are off when it comes to printed data exchanges.

        Next question: can voters yet trust any person in a policy position – no matter what their powers of reason when alone – if we can’t trust their reliability under the spotlight?

        Performance in competitive contexts still rules electorate choices, since all primates – including humans – still exhibit primarily “visually” dominated behavior profiles.

        All this begs the question, which seems to go right over Ailes’ head, of how to surf & explore all aggregate options, AND consistently SELECT the best ones? That’s the ever present selection hurdle for any social species. In contrast, it’s obvious to any anthropologist that most media advice, including Ailes, is balanced too much towards personal vs aggregate benefit.

        No significant media, of any flavor, has much appetite for Jefferson-style situational analysis. It’s not even in their repertoire, and our electorate is simply not demanding it.

      3. Roger, you have hit the central point. If humanity does not bring its knowledge-resources to bear on its adaptive challenges, it is diminishing its odds of survival. Bucky Fuller distinguished between metaphysical resources (subjective) and material resources (objective). The latter is limited, while the former is unlimited. — mind’s only limitations are self-imposed. The solutions are there is we take off the blinders.

        The sad fact is that human knowledge and skill are far ahead of the apparatus of governance. The mechanism of choice results in people being put in charge that are actually not the brightest bulbs and not open to knowledge-based solutions that don’t advance their interests and the interests of their respective parties.

        The problem seems to lie in the conception of value as grounded in interest, and economics are inter-temporal personal utility maximization. The belief is that there is an “invisible hand” (the law of least action) that guides human behavior in the most efficiently and effectively toward the most coherent and coordinated result for society.

        That seem to many to be a philosophical presupposition with a flimsy foundation. (“Adam Smith said so,” although, in fact, Smith said no such thing — see Smith scholar Gavin Kennedy’s work.)

        The questions is whether we can do better in exploring species options, and if so, how? I have some concern with the tern “aggregate options” in that it implies the sum of personal options, and societies and species are more than aggregates.

        However, societies are systems that are greater than the sum of their elements because they are also composed of the complex relationships among these elements and various subsystems.

        Overlooking these relationships is at the heart of the problem, I suspect. That is a basis of the fallacy of composition from the logical point of view.

        The result is a disparate collection of simplistic policy “solutions,” many of which are politically compromised, that are not coordinated into an overall plan that produces a desirable outcome. The consequence is muddling though with periodic crises.

        Can we do better and how is that workable? This is the evolutionary question regarding politics and policy. Given the challenges that humanity faces in this century, the choice of options is crucial to progress and perhaps even survival.

  3. Here is how this looks to me,

    First stimulus spending is totally flawed because too much is hijacked in DC before it ever gets to somebody who needs it.

    Second this country is owned by the Oil and Bank interests and they own the media, so you will never get anywhere there, they know the public is soo dumbed down that they can connect you to something repulsive (SPERM) and sway the monkeys.

    Third Warren says operationally spending is correct but it will ultimately hurt the Power Owners because it will devalue there assets, maybe this is why they are looking at getting away from the dollar and talking world currency.

    Forth the world cannot support “same as it ever was” and needs to go on a diet our water, air and land is polluted with oil, plastic, and everything else we spew.

    Now the Crack House Rule fits here in many places “The human MONKEY will always take the shortest rout to the Crack House”

    Instead of saying we need to curb consumption and reproduction, they promote War, Lies, and deception.

    Although I have a hard time thinking that with all of the resources the rulers have nobody has said this too them and therefore NOT innocent.

    In some circles I have been in the king does not want to here anything bad even if it’s the truth and anybody who brings it up is GONE one way or another. Crack House Rule and always my fate……Bill Cooper said “ You always piss people off with the truth”

  4. I must agree with ESM. Well stated. When the GOP was in control the mainstream media would constantly cry about deficits. Think Reagan and Bush II. To make matters worse, they would do it during comparably good times. To single out FOX for complaining about deficits now seems pointless.

    Roger, all these stations are infotainment. Nothing annoys me more than harping on FOX as if it is different from the others and that there is some sort of purity about mainstream media. Would you suggest that MSNBC is better than FOX? Seriously? It is left of FOX and that is all.

    1. Matt

      First off, ALL media outlets are complaining about the deficits now not just Fox. Fox is disingenuous for NOT complaining about it during the Bush years, while like you noted, the rest of the MSM was complaining. The MSM has been consistent, their deficit hysteria has been continuous ever since Clinton ran surpluses, Fox was conveniently silent during the Bush years and SQUAWKING now!

      Secondly, if this isnt your fist visit to this site, you should understand the idea of cutting deficits when we are not in a deep recession vs cutting them when you ARE in a deep recession.

      1. Greg

        First, I agree media outlets are complaining about deficits now. That is why I think it pointless to single out FOX. IMHO, all media outlets, like most people, believe in the evil of deficits, etc. Warren’s innocent frauds. I do not agree that FOX was SILENT regarding deficits during the Bush II years. But let’s stipulate that as a fact. The deficits were nothing like what is going on now and out into the future. It is a central issue in most people’s minds now and is linked to the bailouts of auto, investment bankers (AIG, GS, CITI), etc. by most people emotionally. This is a different beast than any Bush II deficits throughout the majority of his tenure.

        Secondly, thank you for the MMT primer. You don’t understand the point of my comment. 99.9% of the population and media doesn’t know what MMT is and most certainly wouldn’t agree with it. Whether in the MMT world reducing deficits is good or bad has nothing to do with the media coverage. In the general view of the world, surpluses are good and deficits are bad. Most people associate huge deficits with the piss poor economy so complaining about them now is not really a bias. It is an innocent fraud. It may be wrong but that is not the point. When the economy is good it is a different story, regardless of whether the policy reaction is good or bad under MMT. Because then you are looking for things to harp on.

      2. Matt

        Its clearly NOT pointless to criticize Fox now because they were not criticizing the Bush economic policies (because the deficits were run when things were good) which were clearly procyclical. Any body who understands MMT should know that deficits should rise when the economy is bad and decrease when the economy is good, exactly counter to what Fox seems to believe, and heres the real funny part, Art Laffer (whom Neil Cavuto referred to as one of the great economists of our time) KNOWS MMT! He has worked with Warren before. So all the media should be criticized for their understanding of deficits but Fox should be criticized for being disingenuous because they have someone who knows better and still parrots the talking points……. PROPOGANDA!

  5. ESM,
    I think Mike knows what youre saying about tax cuts and basically would generally agree. Fox seems obsessed about Krugman right now (they had his name at the bottom of the crawler) . Varney brought him up in the interview with Warren also. The segment here was basically a debate for or against the Krugman op ed from a few weeks ago that we need more spending. They think this is good programming.

    Mike has more knowledge wrt the fiscal realities and what the US Treasury is really doing in his pinky finger than Charles Payne has in his entire body (or the entire Fox business organization). Instead of using this resource, Fox seems to have Mike on as some sort of token opposition to try to ridicule with no facts on their side.

    The FICA Tax cuts will no doubt help. I have that contributing about 60B/mo if enacted. Heres a link to Mikes blog where you can see how the household sector is still trying to build up NFA.

    http://mikenormaneconomics.blogspot.com/2010/06/household-financial-assets-vs-income.html

    Household is still way down from their recent highs and have a few T to go to get back to where they thought they were, and this does not include any fall in real assets that the household sector has experienced (think home equity).

    What Im afraid of is that any tax cut will be immediately saved by the household sector. (which just means any tax cut should just be that much bigger but thats not how it will be interpreted). So perhaps the Govt is actually going to have to spend (in addition to tax cuts) to get job growth quickly going again. As this malaise has gone on too long now, the tax cuts will go to replace NFA in the household sector, the spending will get employment going. You may need both now.
    Rsp,

    1. Over $600 billion a year is collected by Social Security payroll taxes (with another $200 billion collected by Medicare payroll taxes). The difference is that only the first $106,000 of wages are taxed at the 12.6% SS rate (employer and employee each paying half), there is no wage cap on the 2.9% Medicare tax and starting in 2013, both wage and capital income over $250,000 will be hit with a 3.8% Medicare rate ( at long last a flat tax, of sorts).

      Actually I wonder if Uncle Sam providing 100% reimbursement to states who declare a sales tax holiday would be even more stimulative. The rub is its a much smaller amount of tax revenue than the payroll tax ($250 billion annually in state and local sales tax revenue, 90% of that is at the state level). So declare tax holidays for both! :o)

    2. Matt: “What Im afraid of is that any tax cut will be immediately saved by the household sector. (which just means any tax cut should just be that much bigger but thats not how it will be interpreted). So perhaps the Govt is actually going to have to spend (in addition to tax cuts) to get job growth quickly going again.”

      Two things are happening both related to aggregate demand. First, households that are undercapitalized are rebuilding balance sheets through saving and delevering. This has to happen before those people will start spending. So their saving and delevering is necessary and good.

      Secondly, the households that are sufficiently capitalized to spend discretionary income are not spending either because of the depressed environment. This is not good and would not be necessary if the environment were brighter.

      The economic environment only looks good from the top and those people (the one who are sufficiently capitalized anyway) are spending. That’s not enough to sustain a recovery.

      Without the middle class participating, there will be no real recovery, and that is going to require a lot of people to delever and recapitalize, especially boomers nearing retirement. Add this to the zombie banks and the government needs to be creating the conditions in which this delevering and recapitalization can happen more or less seamlessly. That is going to require several trillion dollars, and it is not going to happen overnight. Even in the best case scenario, it will take some time to work itself out.

      Tax cuts alone won’t handle it. The government is already creating a good spread in rates to recapitalize the banks so they will start lending, since there will be no recovery without increased bank lending. But the bottom is being left to shift for itself. That’s not going to work.

  6. Direct govt spending will help the unemployed, but how does it help the 90% who are still employed? We still have an income distribution problem. Are employers going to give workers pay raises just because the govt is spending more money? Govt spending does little (if anything) to help working people pay down debt and save and spend. I agree the spending will help the employment situation and an ELR program is a good thing. But the real fix for the economy is eliminating the payroll tax. I do think a much higher energy tax will need to be phased in to control energy (oil) demand.

  7. $1.5 trillion in tax cuts (combination of payroll tax holiday, cap gains, dividends, fed funded sales tax holiday for states, student loan forgiveness, etc.) + $1.5 trillion in direct fed spending (rebuild hwys, expand ports, free tuition for engineering/sciences/technology students). keep up the spending at 1.5 + 1.5 = $3 trillion until whatever year househould leverage ratio (debt/income or debt/assets <—- ur choice) falls to early 80s level. then STOP fed defict spending and use 20% cap gains, 20% dividend, and 20% earned income tax to bring down fed gov debt/gdp ratio to reasonable level, ie. < 70%. <<< if tiny tim would announce this to any who would hear it at the top of his lungs, it would make for "well-anchored inflation expectations" and a holy mother of god monster of a new BULL market. 🙂

    1. Agreed it will likely take about 3 trillion to clear the decks based on the estimates I have heard that I think are about right. But I would also recommend reading Ed Harrison, Why Stimulus Is No Panacea. Without real reform, piling on the stim will lead to further problems and reward the bad behavior that resulted in the crisis.

      Also read the prolific work of William K. Black, Frank Partnoy, Janet Tavakoli, and Elliot Spitzer on the rot at the top and how to fix it. This was Enron writ large.

      At present, both party’s are in the oligarch’s picket and much of the funding will find its way into their pockets. From their perspective, it’s enough reason to keep the crises coming as long as they can get away with it. Looting the Treasury is very profitable for the crooks. And a slap on the wrist is not going to fix it, even though it may fool the public for a while.

      Ultimately, the only way to change the system is to get the money out of politics and shut the revolving door. This will likely take a constitutional amendment after Citizens United. (Beowulf may wish to comment on the legal prospects.)

      1. The rot is deeper than you think, Toms Hickey.

        Even if we get constitutional ammendment, it will not create responsible Government.

        The cure for that is even more dramatic

      2. Tom, the way to get the money out of politics is to make government less powerful and less intrusive. The larger a role government plays in our economy, the more incentive people and corporations have to tap into the levers of power with money and the more influence those people and corporations have over our lives. This is a core libertarian principle.

        As just one example, every time Obama proposes spending more money on alternative energy or proposes carbon cap and trade, I cringe because I know that big corporations will benefit at the expense of everybody else. There is no way around it. The only solution is not have government get involved in the first place. If there are externalities, enact a tax, but anything more elaborate inevitably ends up hurting those who don’t have the time or money to pay attention.

      3. ESM, you oppose big government, I oppose big business. I think that in the end it boils down to the same thing because, on one hand (now) big business owns government and gets its way, and without a strong government to harness big business (libertarian ideal) things would be even worse, since there would be less accountability then than now.

        But practically speaking, the role of government is always going to be significant because when there are problems, people look to government to solve them, e.g., high unemployment, fear of terrorism, etc.

        If the Dems fail, it will be because they didn’t do enough, not because they did too much. And the GOP knows this. That is why they have consistently been obstructionists. Sen. DeMint said as much.

      4. life is often one continuous cringe.

        influence peddling is human nature.

        must be an adaptive trait we’re fighting.

        but fighting it also must be an adaptive trait…

      5. And certainly any program that can be pushed to the state level (even if funded like the highway system is, by Uncle Sam). Sure it means that well run states like Minnesota will get above average delivery of services and poorly run states like South Carolina will get below average — but oddly the residents of both states will be happier doing it their own way.

      6. I heard a very interesting interview the other day of an expert on our energy grid and much of what he said totally dismisses what many say about business and govt relationship.

        This guy was saying that power companies want a lot more federal control and less state and municipality control. Power companies dont “see” state lines when planning their most efficient set up of their grids. They see where are the power generators and the distribution centers and then where are the users.

        He spoke of when one particular huge upgrade of the system was made a few years ago the power companies spent 18 months on the work but 16.5 yrs on the dealings with every state and county level bureacracy So a project took 18 yrs to complete that was a year and a half of work. If all they had to deal with was some federal level agency a lot of time and cost would have been saved. So maybe a good argument can be made that in many cases we’ve made it WORSE by giving states and municipalities more control because now instead of one big govt to deal with we have hundreds of smaller and way more irrational (at times) govts to deal with. A lot more pockets to line.

      7. Greg, this is a real problem for entrepreneurs, especially relatively small ones, when they try to enter a market with state regulations. It’s just too expensive to deal with all the necessary, and so they find their innovations shut out unless they can sell the idea to a company with a large legal department already in place.

      8. Greg, if the Tennessee Valley Authority and the Army Corps of Engineers built out new power plants,that would solve a lot of problems (federal agencies are exempt from local regulations), but I doubt that’s the answer the power exec you listened to has in mind.

        Any set of business regulation will tend to favor larger companies who have more capital (and lawyers) than small businesses do. What’s more, most businessmen are contingent federalists, they want more state oversight when the states will be a lighter touch and federal oversight where Uncle Sam is. Sometimes business lobbies have it worked out that they tell the Feds they don’t need to worry, the states regulate them and then turn around and tell the states that since they fall under federal law, the state’s oversight authority has been preempted by the Feds.

        Insurers (employee coverage/ERISA), credit card issuers (usury laws), cell phone industry (zoning issues) have all played this card pretty successfully.

      9. Thanks Tom and Beowulf

        I agree wholeheartedly with your responses and my post was only intended to try and poke holes in the “Big Govt bad for business” crowds arguments. In many cases its big govt that is NECESSARY for business! This truth can certainly lead to much of our govt capture by business interests. This is why putting the right people in power, people who know how to and will use their govt positions to be advocates for businesses to thrive and be freed of unnecessary state and local bureaucrats while still trying to make sure businesses have their responsibilities to the people they serve well delineated.

      10. It such a steep climb to get a constitutional amendment passed (two-thirds of House, Senate and state legislatures) that it makes getting 60 votes in in the Senate look easy.

        Check out Harvard Law Professor Larry Lessig’s Change Congress group.
        http://www.fixcongressfirst.org/

        Lessig is good guy. He spent years trying to reform our rent-seeking copyright system and one day he realized that the problem is much bigger than copyrights. Nothing gets reformed until after our political system is reformed.

  8. Greg

    First, I agree media outlets are complaining about deficits now. That is why I think it pointless to single out FOX. IMHO, all media outlets, like most people, believe in the evil of deficits, etc. Warren’s innocent frauds. I do not agree that FOX was SILENT regarding deficits during the Bush II years. But let’s stipulate that as a fact. The deficits were nothing like what is going on now and out into the future. It is a central issue in most people’s minds now and is linked to the bailouts of auto, investment bankers (AIG, GS, CITI), etc. by most people emotionally. This is a different beast than any Bush II deficits throughout the majority of his tenure.

    Secondly, thank you for the MMT primer. You don’t understand the point of my comment. 99.9% of the population and media doesn’t know what MMT is and most certainly wouldn’t agree with it. Whether in the MMT world reducing deficits is good or bad has nothing to do with the media coverage. In the general view of the world, surpluses are good and deficits are bad. Most people associate huge deficits with the piss poor economy so complaining about them now is not really a bias. It may be wrong but not is my point. When the economy is good it is a different story, regardless of whether the policy reaction is good or bad under MMT.

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