Dld April 23, 2012, 02:44:10

I wonder etwhher anyone read my comment on the previous post. I’ll try to keep my points more succinct and better organized this time. (lol)Itemized list of points:(1) Yes, McConnell is almost certainly lying. The only other plausible contingency is that he’s really so damn ignorant as to have never read anything about economics or ever even talked to an economist. In which case, there is no legitimate reason for him to be in the U.S. Senate.(2) What McConnell and friends are doing is playing the old voodoo economics game invented decades ago by Reagan and pals. Supply-side economics doesn’t work and we know so from experience. The economy won’t grow just by cutting taxes, especially not taxes on the rich. They save, they don’t spend. Why would they spend when investment will just make them even richer? Multi-millionaires often already have substantial assets, so there’s little they need to buy at any given time.(3) In his posts (and his TV appearances), Klein seems to be buying the same delusion as most everyone else. Government revenue doesn’t fund government spending. See my previous comment in the last post on this issue, or just read some publications by James K. Galbraith’s and/or Warren Mosler.(4) Since taxes don’t pay for federal spending, there’s no necessity of raising taxes to pay for new spending. Nor is there any necessary reason to cut spending to eliminate deficits.(5) The only reason for the government to do anything in the budget department is based on the actual economic conditions. If inflation were high, employment was excellent, and there were no pressing matters like wars or oil spills to deal with well, then that would be an excellent time to cut federal spending and/or raise taxes on the rich, or both. As we know, the current state is just the opposite. The correct behavior during a recession is for the government to spend on as many valuable projects as possible especially projects with long term value to the economy.(6) Infrastructure projects are generally the best investments in terms of spending. They create jobs for many years and usually, after ten to fifteen years, have more than repaid their initial cost in terms of economic benefits. Naturally, this means we should be encouraging such projects now, most especially in the areas the country has the greatest need. Right now, those seem to be clean energy, high-speed long-distance transit, and communications infrastructure.(7) We should avoid putting too many eggs in any particular basket with energy generation technology. Spread it around: photovoltaics, solar thermal, wind turbines, geothermal, and nuclear fission or nuclear research are very probably the best targets right now. Some things are almost completely useless forget ethanol or powering things using crops and crop-fuels. That will never be able to power an industrial economy without using a massive amount of land, limiting future population expansion and causing problems in the food supply down the road. Crops are just indirect solar energy, and we can do a lot better by harnessing it directly.(8) We’re way behind most of the rest of the industrial world on high-speed rail and internet bandwidth (especially out in suburbia, but even in the middle of the city). Japan and France really put our rail network to shame we used to be the best in the world before the government decided to subsidize the car industry. Likewise, we used to have the best internet connections in the world. Hell, we invented the damn thing, you’d expect it, right ? Not anymore.(9) Investments in these projects could easily bring unemployment down several points. Probably back in the neighborhood of five percent, maybe lower.(10) We’re not experiencing any notable inflation. There’s no need to worry about expanding the money supply until you actually have meaningful inflation. By all means, deficit spend. Just put the money into projects valuable to the American people.