Harsh words from Scott Sumner

And how about the…GOP decision not to negotiate seriously in 2011, figuring they could get a better result after the election that Karl Rove and Dick Morris assured them they would win?  How’s that decision looking right now?

In the spirit of Arnold Kling, I took out the two harsh words, but the link to Scott’s post is here.  Many people — dare I say exclusively from “the Right” — gave me a hard time over my “now we should cut a fiscal deal” stance in 2011, but I fully expect that today’s deal will be worse.

Here are some interesting remarks from Greg Mankiw.  And here Bruce Bartlett tells his story.


That Mankiw piece was surprisingly void of content.

"We’ve got leverage now. If the House doesn’t cave, we can threaten to go over the cliff. The economy would most likely head into another recession, but we could blame it on the Republicans. That prospect should scare them into line."

That strikes me as a very accurate summation of the left view. "Yeah, we think the Republicans are dirty for for pushing the country to the brink like with the debt-ceiling fight, but we need to play that game too. We only need to beat them at it once to banish the tactic."

Greg Mankiw spends half the column discussing why a straw man tax proposal Mankiw invents is worse (for Obama) than the proposal Obama already has on the table. He then spends the other half of the column discussing a straw man expansion of the welfare state to European levels. At least it was short.

He really should stick to economics; he is really not very good at irony. BTW, I'm still waiting for his apology (along with Glenn Hubbard and John Taylor) about how they so screwed things up when working for Bush-2 that we are in the state we are. I think I will be waiting a long time.

+ a few trillion or so (but Republicans can't count when they're in power, so who cares)

Taylor didn't screw up, he warned people about the interest rates. (his specialty)

Republicans are thinking about this all wrong, unless they are Republicans in blue states- bring on the fiscal cliff- much more of the new revenue comes out of the blue states, and proportionately more will end up being spent in the red ones.

Error in inference from looking at the wrong level of aggregation. The money will actually flow mostly from red people in blue states to blue people in red states.

Doesn't matter. Everyone in the red states is going to benefit in having net resources transferred to them- all that extra spending becomes income for the people in that state. And, even at that, your assumption is pretty wrong about the individuals in the blue states, and who they vote for. The people who vote Republican in the blue states are not who you seem to think they are in the income brackets. Just ask yourself this- where are the Republicans in California, or New York?

I'm pretty sure it goes: the richer the state, the more likely to vote D, but *within each state,* the richer the individual, the more likely to vote R.


Yes, you are correct. See "Republicans may be many things, but we are not moochers" (http://super-economy.blogspot.com/). Quote

"A bizarre meme is spreading among the left that Republican voters disproportionally life off welfare. I guess the psychological appeal of this myth is that it makes Republicans out to be both losers and hypocrites at the same time. As a bonus, the myth allows Democrats to demand more tax payers dollars for themselves without feeling guilty about it."

Read it all.

Another way of reading the "not moochers" article:

More than a third of all moochers who vote are Republicans.

In any case, most moochers don't vote at all.

A rich state? Like California? They are broke.

...and wouldn't be if they weren't a net loser w/r/t federal funds.

Political discourse in the U.S. would be much improved if everyone were to sit down and read Andrew Gelman's research on the subject. Short story: Republicans voters have higher incomes on average than Democrats do, after controlling for geography. The fact that the average Republican voter in Mississippi may have less income than the average Democratic voter in San Francisco is neither here nor there. Romney won a majority of votes in both the $50,000+ and $100,000+ income brackets. As for Republicans in New York, it is well-documented that many of the heavy-hitter contributors to both parties live in the Upper East Side of Manhattan.

Additionally, simple nationwide comparisons of the relationship between income and voting behavior is misleading since it doesn't account for massive variances in purchasing power across the country.* A person earning 80K in Tennessee probably votes Republican, a person earning 80K in the Bay Area probably Democrat. While they earn the same in dollar terms, their purchasing power is so different that it makes very little sense to consider themselves in the same economic stratum.
* Incidentally, this is also why I think comparing measures of income equality between the US and individual European countries is so misleading; a more sensible comparison would be to compare income distribution in the US versus income distribution across the entire EU (both Euro-zone and not), without adjusting for PPP. I have never seen such figures, and my suspicion is that such a measure would not show that the US is not very much more unequal (if at all) than Europe.

I don't think the GOP was assured that they would win the election in 2011. Even into the spring, early summer 2012 we were told that Obama was inevitable. It took a hurricane and a cover up to bring him over the finish line - including a number of apparently brain-dead voters. The ones that thought that Romney ate children to power his radioactive heart (I am speaking metaphorically, of course). The ones that thought there was a war on women. The ones that thought Romney was a felon. The ones that thought the economy was Bush's fault and that Obama was saving them. And let's not forget the endless promotion of those flea-bitten freedom fighters of OWS.

One of the first things the GOP has to learn is that you have to take the irrational into account and act to counter these ideas from taking hold.

Scott Sumner - not impressive. Greg Mankiw - liked that. This would be a nice video with the two Obamas arguing with each other, a la Animal House.

I can't tell if this guy is trolling

"I can’t tell if this guy is trolling"

He probably is but is personally oblivious to the fact of what he is doing. :-)

Either way, I'm happy if Rich Berger has to pay more taxes.

I like how the Moderate Obama is basically Mankiw. Such a reasonable guy.

My thoughts exactly.

Mankiw is in fact very moderate. I don't know why you are surprised.

Bob Woodward's book made it fairly clear that Boehner was ready to sign a deal with Obama in July 2011, and Obama backed away from it, demanding more tax hikes.

Your argument amounts to saying Boehner should have caved right away.

Also consider that the taxes themselves are just politics too. How does it work that raising taxes just on the rich folk makes it okay during a recession?

The Democrats could just as easily say "we'd be happy to not raise taxes on anyone because, you remember we were the guys saying the deficits are good."

But why would they do that when they can attempt to put Republicans in a political pickle?

Clearly Boehner is in a worse position today. And if he punts the fiscal cliff issues six months down the road, his party will be in an even worse position then.

It seems like Obama made a big bet on the election. He was willing to sabotage a deal then in exchange for a better deal (higher taxes, higher spending) now. I'm not sure it was that well thought out - Woodward made it sound like Obama screwed up and lost a deal he wanted to get. But it's worked out for the best for him.

It doesn't matter what Woodward's book says. What matter is what kind of deal he could've gotten then vs. now. Boehner needlessly created a crisis and could've saved face by doing the deal. Instead he walked away and he's in a worse position than before.

He of all people should've seen this coming because he was part of the leadership when Newt Gingrich made the same miscalculation in '95-96.

ALL the panelists on Meet the Press agreed Obama needs to play more golf (i.e. reach out more) TO HIS OWN PARTY, let alone the opposition.

Now they tell us.

You take a shot at getting out there that the guy who people think is a uniter really isn't. That the Democrats are just better and can spin demagoguery their way doesn't prove you just throw in the towel. You win some you lose some.

A peculiar argument to claim that the losers are responsible for the mess.

Are you surprised that they are still using it?

Mankiw's piece is stupid. The Liberal Obama would see this as a way to make the Republicans tear themselves apart in public and to force the Republicans to be the ones who demand death panels and cuts to medicare.

Obama was desperate to make a deal in 2011. Now, not so much. Obama offered a three for one deal last year. The Republicans will be lucky to get two for one this year.

Obama is willing to take the heat for raising taxes. If they want a deal (something between zero for one and two for one), the Republicans are going to have to take the heat for cutting entitlements. There is no real indication yet that the Republicans have moved beyond wishful thinking and magic ponies so for the time being there seems little prospect of a deal.

I know that this will come as a shock to you, but what you are saying is nonsense. The ratio of tax increases to spending cuts is more like 3 to 1:


If what you are saying is that it is not true that what Obama has in the past proposed as a structure for a deal is 1:3 tax increases to spending cuts, then I think that you are misunderstanding the difference between how the fiscal cliff will impact GDP (what is presented by the chart in your link), and what deal will be made to avoid/fix the fiscal cliff.

Some truths are so sublime and so profoundly important that they cannot be shaken by mere mathematics.

At the time you took criticism for believing, without evidence, that the President who failed to present his own plan but rejected and attacked all others actually wanted a deal. Nothing in the sequence of events that has occurred (especially with Woodward's book) should shake the views of those who started with the Bayesian prior that the President did not want a deal, but was the one who wanted to wait for the election that he expected to win. Even the debt ceiling, where Democrats were willing to default rather than have any cuts, and where Republicans eventually backed down and accepted a deal with, as Tyler said, had no real cuts, should reinforce this view.

Tyler said that the debt ceiling deal was closer to the Democrats' stated position. What should we conclude about willingness to deal at the time? It seems that Democrats were more willing to threaten default.

That said, I agreed at the time that the Republicans had no choice but to give in to the hostage taking of the Democrats, who would win any fight to portray the battle. Yet, as became clear, the Republicans tried to make a deal but President Obama kept altering the terms, in a successful attempt to scuttle it and keep the issue for the election.

The only alternative for the Republicans was to make the negotiations open. That would overcome the tendency of people to believe their team and narrative. The Republicans did produce a budget hitting deficit reduction targets, unacceptable as it was to the President. He never produced something of his own, preferring to say "You first!" and then attack it as a campaign issue rather than responding with a negotiating position.

That it was the President and liberal wonks like Ezra Klein insisting on the value of secret talks is, to me, evidence that they wanted the talks to fail.

I am not sure what the Republicans could have done against a political opponent so opposed to compromise and unwilling to propose or discuss in public specifics, but committed to sabotaging any private deal, despite his vague public comments lacking details.

pretty funny.

This is the best satire to hit comments section in a while.

This overlooks the fact that there was never any need for a deal in the first place. It was the Republicans' idea to turn a routine debt-ceiling vote into a crisis. Obama merely gave them enough rope to hang themselves.

Well, there was no deal to be made except deals on the 7 bills that fund the Federal government and a deal to extend the expiring tax cuts that would effect every single taxpayer and the expiring unemployment insurance and the expiring payroll cut. But other than those items and all the others, you're right, there was no deal that needed to be made.

Sigh. I regret the leftward trend of this blog.

Are you presenting a debt-ceiling vote as "routine?" As in, there is no reason other than partisan obstructionism to object to raising the debt ceiling yet again, after having our credit downgraded, with much of Europe (Europe!!) brushing us off with calls to get our own fiscal house in order first?

When your own view seems to think of unimpeded spending as an unalloyed good, I suppose it makes sense to regard Republican opposition to it as tendentious. But at least allow for a possibility that others might have fundamental disagreement on the issue without accusing them of trolling.

In a growing, and inflating, economy, a debt ceiling will have to rise even in conditions where debt as a % of gdp is staying constant, or even further, falling.

I understand that. I think the Republican leadership does, too, regardless of what they say in public. But you're disguising the issue with a trivial fact.

Of course my credit card limit is higher now than it was in 1980. Because of inflation, etc. But I'm not the one sending in the minimum payment and calling the credit card company to raise my limit every time I want a new big screen TV, either. To conflate the two is to reveal your underlying assumptions.

The debt-ceiling is a dumb tool and the Republicans are dumb tools.

However, they are attempting.

Is it not the case that:

a) The debt ceiling had been raised dozens of times over the last 15 or so years without fuss or fanfare? If yes, that seems to be "routine".

b) Our credit rating was downgraded after House Republicans threatened not to raise the debt ceiling? If yes, it appears that your causal arrow points the wrong way.

Bruce Bartlett writes an easy to read, easy to follow thematic piece. His "Road to Damascus" conversion from paleo-Republican is interesting but in my mind somewhat contrived and suspect (not that I side with Republicans). For example: "After careful research along these lines, I came to the annoying conclusion that Keynes had been 100 percent right in the 1930s.". Can anybody be 100% right in the 1930s, when in fact the jury is still out as to how the USA got out of the 1930s? (some say it was WWII, and Keynesian stimulus was too small to make a real difference).


All of the evidence points to an aggregate demand collapse as the proximate cause for the severity and duration of the Great Depression. There is no question that "Keynesian" make-work programs did not end the Depression; the Federal Reserve's refusal to expand the money supply would have rendered even larger programs useless (note that the 'recovery' within the Depression occurred immediately after Roosevelt devalued the dollar against gold, effectively increasing the money supply). There is nothing magic or coincidental about WWII and the end of the Depression, it was simply the only sustained boost to aggregate demand. There is no reason to believe a similarly large and open-ended program of Govt Spending or money supply expansion (without offseting decrease in velocity) wouldn't have the same effect.

Well, GDP was goosed by the war since it is an artificial statistic that only makes sense for measuring productivity during peacetime, but actually the real economy was quite miserable and did not recover until after the war.

in contrast to all those "natural" statistics...

Posted over on Bruce Bartlett's blog.

“epistemic closure” is a funny thing to mention in an article mentioning Bush and immigration reform. There isn’t a shred of evidence that Amnesty will shift Hispanics to the Republican party. Indeed, after Reagan passed the IRCA (the 1986 Amnesty), Hispanics shifted massively to the Democratic party in 1988 and 1992 (even more than whites did). Worse, the 1986 Amnesty massively expanded the Democratic electorate. It should be obvious to anyone in the “reality-based” community, but Republicans don’t win by importing Democrats.

The Bush Amnesty would have been even worse than Reagan’s. Reagan’s Amnesty legalized 3 million aliens. 1 million were expected. Via fraud and other mechanisms, the number tripled. They promptly imported / expanded their families greatly increasing the number of Democratic voters. Stated simply, the Reagan Amnesty permanently gave California to the Democrats .

Supposedly the Bush Amnesty would have legalized 12 million aliens. The actual number might have been far larger. Perhaps 20 million. Adding their imported families would make national elections as unwinnable as California is now.

Hispanics don’t vote Democratic because Republicans have alienated them by opposing Amnesty. The vote Democratic because they are natural Democrats with liberal / left views on everything including social issues. Of course, poverty, low wages, high crime rates, educational failure, family instability, majority (53%) illegitimacy, massive welfare dependency, irredentism, and linguistic isolation / alienation also firmly lock Hispanics into the Democratic party.

If any doubts this consider how Hispanics shifted to the Democratic party after the 1986 Amnesty and then read “Why Hispanics are Natural Democrats and what the GOP can do about it” (http://super-economy.blogspot.com/2012/11/why-hispanics-are-natural-democrats-and_12.html)

I think characterizing Barlett's intellectual journey as a "Road to Damascus conversion" is part of the problem, though. I didn't agree with everything in Bartlett's piece and I don't think he is trying to persuade anyone, but he is quite clear that his change of mind on Keynesian economics was the result of careful study of sources he had not read before. Right before the sentence you quoted, he says, "I hit upon the idea of ignoring the academic journals and looking instead at what economists like John Maynard Keynes, Irving Fisher, and others said in newspaper interviews and articles for popular publications. Recently computerized databases made such investigation far easier than it previously had been."

There are two ways one can respond to this. The first is with humility: "Hey, Bruce is a pretty smart guy and he comes from the same intellectual universe as many conservatives and libertarians do. If he was convinced by reading primary sources he had failed to consult in his earlier years, maybe a lot of these people opining on the Great Depression who claim Keynesian economics was a failure don't know very much about the history or are spending too much time reading biased secondary sources. I should set aside time to read some of the sources Bartlett consulted." The second way is, roughly, to use circular reasoning and disregard everything Barlett has to say on the subject because he has proven himself disloyal to the conservative cause by expressing such contrary views.

Of course, one need not study the 1930s to reach a pro-Keynesian point of view and, I think, many Keynesian economists are no longer that well-versed in the Great Depression. Instead, there are a lot of empirical papers out now measuring cross-country and inter-state within-the-U.S. differences from government spending differentials and they find a positive multiplier as does a recent IMF report on the subject. Similar cross-country research done on 1930s economies (remember, the U.S. was not the only country in world suffering from the Great Depression) by Eichengreen, O'Rourke and others shows similar results.

And lots of studies show opposite results...

And intelligent conversation usually starts when people produce citations and stick to the evidence. The point is that "lots of studies disagree with Bartlett so how can he be so sure of himself" isn't an argument against Barlett's position.

Bartlett didn't present his argument either. Maybe it's in his book, but he didn't even say that either.

And he can't find any economist other than Paul Krugman to say has been most right, who he happens to agree 100% with his analysis. He does say it is annoying. Maybe he could have found someone like, oh I don't know, Scott Sumner. Someone who incidentally doesn't believe in a 100% AD story for the 1930s nor agrees with Krugman much. But then I'm not a professional economist whose job it is to know 2nd and beyond most famous economists.

Your circular reasoning shows. For example, you consider "newspaper interviews and articles for popular publications" as 'primary sources'. That speaks volumes. It's as if I was to study whether the Bush Gulf wars made sense by what popular publications at the time stated (they were largely in favor of them, reflecting the majority of the population). And Keynes is a fraud, similar to Marx. And Bartlett is playing to his new audience. He also cites no primary sources or any other sources other than his ignorance for his Road to Damascus experience (which is a literary term of art, not a religious one, look it up).

He's getting annoying, and people will say "SEE!!!" But no, I have no bone to pick with Bartlett, in fact I welcomed him to the anti-Bush party (although he did show up a little late). Otherwise he still seems to think he's a lone voice (when EVERYONE hates on Bush), and he equates Bush with the party when I still think the correct diagnosis is that the party was hi-jacked by neo-cons.

Eichengreen mainly attributes going off the gold standard, right? My question is whether or not that is just a proxy for debt default.

And Krugman has recently adopted some form of debt-deflation, which seems to me very similar to Market Monetarist ideas. These are not strictly Keynesian canonical ideas...to me.

I thought Bartlett made some interesting points, particularly about the right-wing echo chamber and the right's willingness to overlook Bush's faults, but he lost me both with his praise of Keynesianism and -- in particular -- his claim that Obama is center-right. Such a description is ludicrous, and I'm sure one Obama himself would disagree with. Whenever Obama comes to a fork in the road he invariably goes left. Obamacare (expanded government intervention in the health care market), the stimulus (spare me about the tax cuts being a nod to the right, when they were mainly in the form of credits -- for lefty faves such as green energy -- and temporary), Dodd-Frank, Keystone XL, Cash for Clunkers, loans to green energy companies, etc. Even on free trade, Obama renegotiated the bilaterals with SK, Panama and Colombia to make them more protectionist and was goaded into it by House GOPers who kept asking what the hold-up was.

I have to say, it really undermines Bartlett's attempt to portray himself as a clear-eyed observer, simply calling them like he sees them. Between his description of Obama as a man on the right, praise for Keynes, and relentless bashing of both the GOP and conservative economics in his blogging for Economix, I see him less as a renegade right-winger than an active Democrat. Nothing wrong with that, but let's just acknowledge reality.

This takes Bartlett's remarks on Obama out of context. Bartlett says, "In fact, he’s barely a liberal—and only because the political spectrum has moved so far to the right that moderate Republicans from the past are now considered hardcore leftists by right-wing standards today. Viewed in historical context, I see Obama as actually being on the center-right."

What Bartlett is saying is that from the perspective of the 1960s or 1970s, Obama might fit in as center-right. He isn't saying that Obama is center-right or even center-center by today's standards, he is making a historical comparison. Obama supports environmentalism and the expansion of some federal social programs -- so did Nixon.

For many years, I clung to the idea that controlling the size of government was best achieved by 'starving the beast'.

This article helped ne get over it. I recommend it to all libertarians:


To the cliff!

Thanks, excellent, I will add Niskanen to my pantheon of libertarian greats. RIP. His most cogent observation is: "Niskanen’s explanation for the failure of STB was straightforward, a conjecture based on standard economics: When you cut the price of something, demand for it will increase. Lowering taxes without lowering benefits meant that tax- payers were getting the benefits at a discount. The government made up the true cost with borrowed dollars that future taxpayers would have to repay. " Question for the gallery: Ricardo Equivalence Theorem (debt = taxes): true or false? See the exceptions to the RET

On the other hand, this may be what starve the beast working looks like. The reason it doesn't work faster is the bastards keep spending. They even spent all the trust funds. They kept spending right past any hope of repaying. They'll keep spending up to the catastrophe point and here it is. Had we raised taxes before, they likely would have just raised them on the "rich" and the takers still wouldn't have been paying.

But if we drive off the cliff, middle class taxes will shoot up, and spending will be cut, and those clowns will spend January doing their best Chicken Little from the commanding heights.

Bush the right-winger was really Bush the co-opter of middle ground via somethng for nothing. I just want the narrative to reflect that.

Why doesn't the GOP cave on everything except raising the debt limit? Let the Dems spend what they want where they want and let them tax who they want as much as they want. Then when it all goes to Hell in a hand basket, and we all know it will, the GOP can stand there and say, "We gave you everything you wanted except borrowing more money we don't have and it clearly doesn't work. So sit down, shut up, while we fix your mess."

Or Boehner could tell Obama, "We'll get serious about budget negotiations when the Senate submits a budget. (something they've been legally obligated to do and haven't done for almost 5 years.)"

Whenever two disputants fail to reasonably resolve a conflict, I always blame the adult, because the adult has capacity to reason and guide to out maneuver the child's petulance and obstinacy. The inquiry then is, who is the adult? Which party claimed to be the reasonable, competent one that bridges divides?

Analogy fail. The 'child' runs the primary legislating body. In real life the child has no power.

You don't have kids, do you?

"In the spirit of Arnold Kling, I took out the two harsh words, "

Ha! My mind inserted two much harsher words. I suspect you foresaw that.

“now we should cut a fiscal deal”

Who exactly is 'we'? In case you missed it more people chose not to choose Obama or Romney than voted for either candidate. I do not see how either the right wing or the left wing in your country can claim any mandate. In fact, I would argue that the majority of voters want military spending to be cut as the troops are brought back home and some sort of end to the wasteful programs that are bringing the country towards ruin. It might help if you explained who you mean by "we" and what that has to do with the individual voter.

Power resides in those who bother to go vote. Those who stay home literally are (self-)disenfranchised and their preferences have no weight.

Witless and prejudiced ideologues, such as Sumner, use economical statistics like drunks use lampposts - for support not illumination.

I agree with Scott that the GOP has made a series of incoherent decisions and that they fully deserve the results of this month's elections. However, the quoted passage isn't a completely fair analysis. Let's think about the counterfactual. Republicans negotiate a better deal with Democrats in 2011, and the headlines hail Obama the great bipartisan compromiser. Republicans lose the 2012 presidential election, and nobody is sure whether this is due to the 2011 deal or not. Looks like a gamble of 4 more years of Democratic leadership, clearly a negative for Republicans, against a marginally better deal. Nobody complains about a low percentage 3-pointer when you hit it. Scott's remarks have a touch of Monday morning QB in them.

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