Two Florida school officials won't go to jail for praying

[Jester]

Right. But you ignored my source, which said 60%.

You'll definitely have to be more specific, then. I didn't see anything in any of them that said anything even resembling 60%. Your first link said "Tax receipts are on pace to drop 18 percent this year", which is far short of 60%. Your excel spreadsheet numbers are where I got the 15% from, and don't show a drop anywhere near 60%. The video mentions the deficit, but not revenues. Where's the evidence that I "ignored"?

2008 revenues were last year, and the 15% number was the drop in individual income tax revenues because layoffs didn't begin in earnest until the last half of 2008.

15% is the drop between the 2008 numbers and the forecasted 2009 numbers - total tax revenues, all sources.

Unemployment benefits are taxed, and most people get some amount of severance. Lack of employment (% employed) continues to be a growing problem. We need to look at % employment because the government no longer measures people who fall out of the system when their benefits run out.

What % of total taxes do you think come from recouped unemployment benefits? If it was as much as a single percent, I'd be pretty amazed.

Then you skipped the number on corporate tax revenue which was down 58% in 2008, and down more in 2009 when you look at quarterly returns.

No, I didn't. I just looked at total revenues - which is what we were talking about, right?

For what it's worth, the 58% number is the closest I saw to 60% - but only applies to corporate taxes. Other forms of tax revenue have fallen much less.

This is what forced the CBO and the White house to revise their forecast at midyear, in essence telling us they under-predicted the severity of everything.

Yes. This crisis was larger and more painful than initially imagined - hence why many economists are calling for a larger stimulus, 'cause this one isn't going to be large enough. However, just because things are worse than they once thought doesn't mean you can just make up whatever number you like about how bad they are. A 60% drop in revenue would be absolutely devastating - thankfully, it's not true.

Well Friedman took Keynes one better. Keynes had the idea of printing large sums of money and burying it in mine shafts to stabilize the economy, and Friedman had the notion to give it away.

I believe the idea was that people would dig it out, thereby stimulating the economy. Conceptually identical to the "pay people to dig holes and then fill them in again." All part of the big Keynesian idea - when deflation is looming, you want to crank the economy up at all costs - even if it means spending money in absurd ways. Of course, spending money in smart ways is much better, which is the idea of the stimulus. But anything that staves off deflation and gets money moving again is a good thing, in Keynes' view.

Friedman, good monetarist that he was, suggested a plan that involved nothing except manipulating the money supply - that is, printing money until inflation returns, then going back to the usual methods of controlling the economy through interest rates. I'm pretty sure that's not working right now, so we're back to Keynes.

Value is someone elses idea of what things are worth. I was saying government spending is a large portion of GDP. Borrow more, spend more, bigger government, bigger GDP.

Why, yes. That's the idea.

What does you gut tell you?

Since when is my gut an economic indicator? Or yours, for that matter?

Mine is telling me things are worse, and probably much worse than we know. I think next year there are literally thousands of bomb shells that are going to rock the economy, from unfunded pensions, to major corporate bankruptcy, to more states like California becoming insolvent.

The cash infusion is running out, and growth is still stagnant.

Aren't you the one always complaining that the Stimulus hasn't even gone out the door yet? The majority of the spending is still slated for the next year. Quite likely, another few hundred billion will be necessary, or at least desirable. But the impact of the currently approved spending is still mostly in the future.

Meanwhile, one in five, to one in ten workers are unemployed or underemployed who are continue to become insolvent. Credit markets will begin to collapse, and the insurance companies who write off that debt, and the banks who run things.

We'll see. The second round of housing defaults might well be quite ugly. However, that's not going to be solved by anything except more government spending. If people start saving, they'll stop spending, and that means more layoffs. More layoffs means more defaults. Gains from increased savings will be overwhelmed by paralyzed consumer demand, and the great depression will start all over again. What's the solution? A set of trillion-dollar jumper cables, apparently.

Borrowing cannot fix things, it can only delay when the piper actually get paid.

Yes. Specifically, it can delay it until a time when incomes are back up and unemployment is back down. Paying the piper now would be economic suicide.

-Jester

Afterthought: I don't know why this didn't occur to me before, but a large part of the stimulus, especially the part that went through already, was in the form of tax breaks - which, definitionally, are going to show up as a drop in tax revenue. So, there you go.