This November 30 interview with Sarah Palin restores my hope that there is intelligence left within the Republican Party:
She's right that we're already over the fiscal cliff in that there's not going to be a painless way to bring down the budget deficits and prevent the collapse that will occur if they continue to grow, in proportion to GDP.
Meanwhile, the House Republicans are currently negotiating an agreement with President Obama that will substitute $200 to $250 billion in budget cuts for the $502 billion that would place if no agreement was reached.
By not dealing with the problem right after the election, they are insuring that trillion dollar deficits will continue to raise the U.S. debt-to-GDP ratio into the forseeable future.
As Palin points out, they are simply postponing the pain and making it much much worse when it does come in the future. This future is easily foreseen:
Five to 10 years from now, when interest rates climb and the U.S. government debt-to-GDP ratio is higher than today, perhaps 150% to 200%, a spike in interest rates will cause the budget deficits to spike upward. The Federal Reserve will try to keep interest rates low in order to prevent a U.S. government default, and in the process they will create high inflation. Then the dollar crashes and the American standard of living hits the ground with a splat.
And the House Republicans are agreeing to this, even though they have to sell out their fiscal conservative base to do so.
Sarah Palin has so much economic common sense. She's for:
eliminating the corporate income tax
balanced monetary growth
That's precisely the recipe for stable economic growth with low unemployment. Too bad the rest of the Republican Party hasn't figured it out.
Comment by Wild Warrior, 12/12/2012:
She's the 'Man!' SP2012 yah!
Comment by David Levesque, 12/12/2012:
Economics 101... She's about as bright as 1000 year old silver. Her economic policies would destroy our nation. Period.
Response to this comment by Founders1791, 12/12/2012: Hyperbole? Ignorant? You cite nothing but MoveOn drivel.....
Response to this comment by economics101, 12/12/2012: The original poster is referring to the fact that the basic principles of macroeconomics laid out in all introductory textbooks completely discredit the Sarah Palin style cures for economic growth. Th U.S. has wonderfully strong ingredients for long-run economic growth as is - the problems right now relate to dealing with the short-run instablity of the business cycle, and doing things like government purchases can actually be the way to right the ship, and prime the pump toget us back to potential GDP and out of lag. So can cutting taxes, but , you see, we've already tried that before and during the last recession and nothing much came of it. The tax multiplier is less than the spending multiplier, so cutting taxes may actually not work as well in the short-run.
Sure, the economy will naturally return to equillibrium on its own without any prodding in the long-run (the markets will correct themselves by the invisible hand, yadda yadda yadda), but that is true whether or not we try to alleviate short-run misery through government action. So I say, (and this, unlike the rest of what I said above, is my opinion as oppossed to purely positive analysis) why not try?
For more on this basic theory stuff, you can see Hubbard and O'brien's "Economics":
Response to this comment by Steve, 12/13/2012: We've also raised taxes and not much happened. It never works.
The only TRUE thing we have not tried are huge spending cuts. Nobody talks about the Great Depression and the huge spending cuts that occurred after the war. That is what spurred the economy.
No politician will tell the people the truth though.
Response to this comment by economics101, 12/13/2012: Huge spending cuts lead to muchbigger reductions in GDP (the spending multiplier works in reverse, too).
Huge spending cuts would greatly reduce aggregate demand (an extremely large factor in mainting short-run economic stability). The result could be another actual contraction of the economy (recession).
Again, its all in the basic econ books, guys.
Response to this comment by Howard Richman, 12/14/2012: Economics101 -- Your theory that huge spending cuts lead to huge cuts in GDP is indeed believed by those who learned all their economics in Economics 101. But as economist Valerie Ramey found, the spending multiplier in the U.S. is just 0.5. Furthermore Keynes recommended balancing budgets, not increasing spending, as the solution for depressions in trade deficit countries.
Response to this comment by Howard Richman, 12/14/2012: Whoops, I meant to say, Keynes recommended balancing trade.
Response to this comment by economics101, 12/14/2012: One outlier study does not a proof make.
While there are -- as you correctly indicated -- studies that say the multiplier is less than one, there are also studies that say it is as high as 5 to 10. Many more, however, put it somewhere between 1.5 and 2.5.
It is attractive to look towards results at the polar ends that best fit ones ideological position, but only in the rarest cases do those results follow form studies that base themselves on realistic and reliable enough assumptions to be trustworthy and useful. I tend to believe the more moderate results toward the low-center of the estimated range for exatly this reason. Since you haven't offered any considered or critical analysis of teh assumtions that underpin the study that you cite, I have no choice but to be unconvinced by your retort.
Comment by good_idea, 12/12/2012:
"precisely the recipe for stable economic growth with low unemployment" is pure mythology.
Corporate profits are record high (ever) while companies continue to offshore jobs.
Companies would have ZERO incentive to keep American jobs here. The job destruction of the middle-class would continue. Low unemployment comes from DEMAND from the middle-class, not eliminating the tax rate for the rich. It would be Gilded Age II. Sarah Palin is representing unbelievable Greed of the top 2%.
Response to this comment by Howard Richman, 12/12/2012: Good idea -- You failed to notice that Palin calls for balanced budgets. That means that the destruction of the middle-class would end.
Response to this comment by Founders1791, 12/12/2012: False!
Eighty Percent (80%) of all jobs come from Small Companies (4.5 million Sub-S, like mine)
--- these companies DON'T HAVE THE MONEY for anything but survival
Twenty Percent (20%) of jobs come from Large Companies (Fortune 2000)
--- these companies DO HAVE THE MONEY and can afford anything they want
Response to this comment by PhilipJames, 12/12/2012: And how do you think those large companies got all that money? Contribute millions to politician, politician makes sure legislation passed to generate billions in profit for large companies and protect them from smaller companies and then those large companies contribute even more to the politicians and on and on it goes... Sarah Palin called it crony capitalism... small companies can not play this game, so they suffer the consequences.
Response to this comment by , 12/12/2012: I wanted to send you this link with some information on our business opportunity and services to look at this week. We are the legal resource company for the well-known Careerbuilder job search website and also feature a top-rated identity theft product. We are currently rolling out a multi-million dollar North American advertising and branding campaign.
Response to this comment by good_idea, 12/13/2012: @Howard Richman
Politicians always have "balanced budget" rhetoric. Dubya did, and went on to exploding our deficit. Palin does not have a clue of how to implement "balanced budgets", since she advocates more tax cuts for the rich which has contributed $2.5 trillion to our deficit (during Dubya).
Response to this comment by good_idea, 12/13/2012: @Founders1791
Then how do you explain Dubya receiving a 4.1% unempl rate and running it up to 8.1% (jan 09 when he left office) with $2.5 trillion in tax cuts adding to the deficit.
I would understand if you just came out and said you were greedy for more tax cuts. Otherwise there is ZERO evidence of tax cuts helping anyone but the rich.
Comment by tom, 12/12/2012:
Eliminate corporate tax? Aren't they people, too? Since they are people they MUST pay taxes! At a higher marginal rate just like people. If you want balanced trade quit shopping at walmart. And what the heck is balanced monetary growth? that's a new one. never heard of balanced monetary growth. Was that just made up to sound smart. And balanced budget-raise taxes Ameerica's an expensive place, ever try to build a military for free. Please don't be a trax-protesting dissenter.
Response to this comment by Howard Richman, 12/12/2012: tom - The American manufacturing worker pays the corporate income tax on manufacturing companies. Currently, manufacturers avoid the tax by locating overseas. Then they out-compete those who locate in the US where they have to pay the world's highesst corporate income tax.
Response to this comment by Howard Richman, 12/12/2012: tom -- Balanced monetary growth is the idea that the money supply should grow at about the same rate that GDP grows. That way, the amount of available money keeps up with the need for money but is not inflationary.
Response to this comment by momofsons, 12/12/2012: The Corporate income tax is just another business expense rolled into the price of goods and services. The corporate income tax is also a subsidy for all corporate expenses. The higher the tax rate the higher the inefficinecy in allocation of resources. When a corporation calculates an expenditure they use marginal tax in all calculations. So if a business expense is 10,000 and the tax rate is 35% the actual cost is only 6,500. This basically builds in a 35% error in all risk vs. reward decisions made by the private sector.
Comment by David, 12/12/2012:
Draft Sarah 2016. Lib.s are now saying "corporations are people so tax these people"
Response to this comment by george, 8/15/2013: mmmmm the Republicans only care about the super rich, that's why no deal's been done.
Comment by jack mc bride, 12/12/2012:
Watch alaska state trooper show and that will tell you all you need to know about alaska and a dim wit like palin. Why she acts the way she does?? she is a product of the outback of alaska, chopping turkey heads, shooting wolves out of a helicopter,
Response to this comment by Founders1791, 12/12/2012: You 'are' a low information obama supporter! You betcha!
Comment by Tawny Jones, 12/12/2012:
Gorgeous, gracious, gifted Gov. Sarah Palin is perceptive & prophetic on economic, social, cultural, political, & strategic issues & concerns facing our country.
Comment by Founders1791, 12/12/2012:
For America the answer is simple
-- Repeal the 16th Amendment outright -- No capital of any kind should ever be taxed in a capitalist free society. Replace it with a "national consumption tax” of 15%, levied on 10,000,000 businesses versus 110,000,000 citizens at the point of sale only. No VAT. --- (a.The very poor and infirmed can receive “public assistance”) -- (b. This will END all outrageous tax code, tax attorneys, and accountants, billions saved) -- (c. This will END the chronic decay of our "moral bickering" grounded in Envy and Jealousy)
Comment by Katie, 12/12/2012:
How does her record of levying the highest tax ever on a private corporation solely to redistribute their wealth to ordinary people for no reason other than they live in the same state as the corporation figure into her economic common sense? If President Obama had done that or even proposed it, she would be screaming Socialism. She accepted 97% of the federal pork thrown at Alaska during her brief reign as governor - the US government respresents the #1 financial income of that state. Is that economic common sense? Shouldn't an entire state be so reliant on the US government for handouts? How are those two things "balanced"?
Response to this comment by TruthTeller, 12/12/2012: First, she cuts pork from the feds by a large margin compared to her predecessor.
Second. the tax on oil companies came from the Alaska Constitution which says Alaskans are beneficiaries of their own resources.
President Obama cannot do it because it's not in the U.S. Constitution.
Look at her record.
Comment by Denise, 12/12/2012:
Yes, it's sad the Republican party is caving in. Barry Goldwater would've never agreed to this.
Comment by David, 12/12/2012:
Howard great article here.One thing I think you could add is her call to end corporate welfare,subsidies,grants, tax loopholes,ect.Which when combined pretty well negate most of the federal income tax collected from corporations.I also hope she takes about the need for America to cut back on being the worlds policeman to some degree.Ron Paul in my opinion has it right in calling for base closures worldwide and if these nations want American protection to continue,they should pay for it.S.Korea is a prime example of a wealthy nation taking full advantage of the American taxpayers and Americas millitary might.Americas spent enough it's time rich nations like S.Korea,Germany and others look out for themselves,or start paying the full cost of living under Americas protection.
Comment by Brandt Hardin, 12/12/2012:
Why is Sarah Palin even involved? Since she quit her post in Alaska, she hasn’t run for public office but acts like a politician who calls her constituents “fans.” What exactly does she do other than essentially proposition her self and image to the highest bidder? Sounds like Sarah is America’s highest paid escort! See how down and dirty she’ll get for the money at http://dregstudiosart.blogspot.com/2011/06/ecstasy-of-sarah-palin_15.html
Response to this comment by Melvin L. Udall, 12/12/2012: To site admin: I cannot post a reply with the word the "d--n" in it but Brandt Hardin can post a link with pornagraphic drawings of Ms Palin on his Palin hate blog???
Anways, to Brandt:
last time I looked Palin is a private citizen who happens to be in the public eye. Therefore, she has every right as a private citizen to speak her mind on issues of the US. You ask why is she involved in the discussion and you brought up her resignation. What does her resignation have to do with the discussion of the economy? But since you brought it up I’ll go there. Plainly, who cares that she resigned? People in America do it all the time. I wish Obama would resign. It would do America some good. But Obama doesn’t care about America like Palin did Alaska so he will not. At least she didn't resign in disgrace. At least she didn't misuse campaign contributions like Jessie Jackson then hide in the Mayo Clinic citing “depression” before he resigned. Left wing crony congressman Barney Frank quit when his district --where he reigned for years as a king-- was redistricted.
Leave it to an Obamacrat to fault someone like Palin for leaving the government and then make money in the private sector—the honest way. By the way, she’s worth nowhere near the amount that criminals like Clinton are today. The Clintons won’t even speak or look at you if the cameras are not on and you don’t have money. That’s the elitist leftist do as I say not as I play mentality.
Most likely, you don’t know the reason why she left the Governorship of Alaska because you would rather remain in your din of left wing group think. I’ve got news for you, if you do not like seeing her on TV voicing her opinions and facts about the disaster that is Obama and his policies—it’s really too bad. Usually, such folks posting such nonsense are the same ones who harassed her while she was in office. Funny how you were miserable while she was office and harassed her until she left office. She resigned and you got what you wanted. Now you call her a quitter. Proving there is no more miserable creature on this earth than a progressive.
The awful truth is this: if leftist cyber terrors like you would have just left her alone up there in Alaska instead of taunting the crap out of her and filing bogus ethics complaints trying to get her to resign and break her bank, she would’ve probably stayed up in Alaska and laid low. You didn’t and so she’s staying around for awhile. Perhaps for a very long time. Sorry to break it to you but folks like you created that gorgeous monster.
Comment by save my marriage today, 11/25/2013:
Sure, the economy will naturally return to equillibrium on its own without any prodding in the long-run (the markets will correct themselves by the invisible hand, yadda yadda yadda), but that is true whether or not we try to alleviate short-run misery through government action. So I say, (and this, unlike the rest of what I said above, is my opinion as oppossed to purely positive analysis) why not try? For more on this basic theory stuff.
[An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]
Journal of Economic Literature:
[Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....
Atlantic Economic Journal:
In Trading Away Our Future Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]