Tuesday, April 16, 2013

Catch of the Day

Well, some days, you don't have much of a choice, do you? The catch has to go to economists Thomas Herndon, Michael Ash, and Robert Pollin, who have a new paper out demolishing Carmen Reinhart and Kenneth Rogoff on the effect of high government debt on the economy -- with a big assist to Mike Konczal, who wrote a clear and readable blog post explaining the conflict nicely.

The headline here is that Reinhart and Rogoff apparently made a simple computation error, but the Herndon-Ash-Pollin critique goes well beyond that -- as do other critiques previously aired (disclaimer: I haven't read either paper; I'm just relying on what economists and economics-literate bloggers and reporters are saying).

While it's probably a good idea to be cautious of the critique (just as it would have been a good idea to be cautious about the original paper), it certainly isn't good news for preachers of austerity.

I've seen some snark on twitter suggesting that no one who has recommended austerity, including those who specifically cited Reinghart-Rogoff as their reason, will flip as a result of this. That's probably correct! But only because it's extremely unlikely that very many people really relied on economics in the first place.

So my guess is that this debunking will get exactly as much weight now for most people as the original paper had: very little.

A more complicated question is how much should economists count towards economic policy? After all, if the profession is capable of making a mistake this big (apparently), should they be trusted? The answer, I would argue, is that politicians should certainly make use of economists -- and other experts -- but be very wary about hearing only what they want to hear. That's a lot easier said than done, and it doesn't really give policymakers any clear, bright rules, and it doesn't even assure success if you're good at it. All it does is increase your chances of policy success. But that's still worthwhile!

That is, all of this does really point to a key governing skill: being good at sifting through expert advice. And perhaps the first thing about that is that a politician will only be good at it -- only get good at it -- if she realizes that it's important and really tries to do it. As opposed, say, to simply choosing policy and then seeking out supporting expert opinions. Because one can always find expert support, no matter how goofy the policy preference. Again, however, even if you go about it the right way -- even if you are looking for what the experts really do think, and you want to take that into account when choosing policy -- it's still going to be extremely difficult to be good at it. Especially when you realize that policy-makers in general,  and presidents in particular, must do it across an impossibly wide range of policy areas which involve all sorts of different disciplines. Each of which has its own internal debates. Many of which have entirely different forms of credentialing and peer review. Most of which ever have a definitive answer -- but all of which have people who promise that what they have found is the definitive answer.

Also: nice catch!


  1. Well, the Belgium omission is certainly funny, as among other things it triggers a nightmare shared by every veteran Excel user. Bring Belgium back into the mix, and obviously R-R were wrong!. And here's the 'right' results:

    Debt: GDP --> Growth

    "<30" --> 4.1% (17 data points)
    "30 - 60" --> 2.8% (20 data points)
    "60 - 90" --> 2.8% (18 data points)
    ">90" ---> 2.2% (8 data points)

    Now maybe you're scratching your head, thinking "Isn't the actual (corrected) result for high Debt:GDP worse than any of the other cases"? Obviously, you would be confused, as the thing you're supposed to note is that the real number (2.2%) is different than what was reported (-0.1%).

    But if you are confused, perhaps you noticed that 7 of the 8 "High debt:GDP results" are not even up to the average of the "sorta high Debt"GDP category", and the 8th only beats said average by 0.1%.

    Which, if you believe in the miraculosity of Keynesianism to kick-start an ailing economy, is pretty far from a compelling argument.

    But R-R goofed. That's the takeaway here.

    1. CSH, I'm no doubt out of my depth here, but I think you're suggesting a false converse. That is, R-R were arguing that debt beyond a certain point is necessarily damaging, to some quantifiable degree. But I don't think Keynesians argue (conversely) that debt, as such, is necessarily helpful. My understanding of their position is that monetary stimulus (= easing) is helpful, and when that's no longer possible because interest rates are zero, then fiscal stimulus is also helpful, enough so to justify incurring debt at those very low rates. But they distinguish among different types of stimulus, some of which are more helpful (= have higher "multipliers") than others, and they're not "for" debt -- they would be perfectly happy if, for instance, the stimulus came out of some kind of "rainy day fund" built up from previous surpluses. Politically, that's not what tends to happen, but that's not the Keyenesians' fault.

      At any rate, the argument for "miraculosity" doesn't arise from a refutation of R-R. What refuting R-R does is remove one objection lodged against fiscal stimulus when it happens to be debt-financed.

    2. But CSH, the question is not whether the growth rate is lower at high debt-to-GDP ratios, the question is (1) whether the debt led to slow growth or vice versa, and (2) what to do about it when you find yourself in this situation. If slow growth is what produced the debt, then shouldn't we focus on rekindling growth rather than reducing debt (through means that will undermine growth)? The UK has focused on cutting deficits, and the consequence is that their debt-to-GDP ratio has gotten worse (from 55% in 2010 to 69% in 2012, excluding financial assets held by the government).


    3. Thanks for the comments guys. We don't know - check that, I don't know - what lies behind the data points, in particular how many of the 8 "high debt" data points got that way because of monetary stimulus in response to one of the 18 "pretty high debt" data points. We don't know, but it kind of doesn't matter: none of the growth rates associated with the high debt data points are particularly impressive.

      They aren't as bad as R-R said. +2.2% is certainly better than -0.1%! But 2.2% is also worse than the results for each of the smaller debt cases, and none of the results for the 8 high debt cases is particularly impressive. The takeaway from the R-R "mistake" is that the "high debt" case went from being very inferior to being somewhat inferior. Is that an endorsement of debt-fueled growth? If debt fuels growth, shouldn't we be able to identify that somewhere in the data?

      I nod to David below that the weighting issue is a concern - but frankly I find the totality of those 8 "high debt" data points troubling. To wit: the US is currently limping along somewhere in the high 1s/low 2 percent growth rate, and the Krugman/Keynesian solution is to borrow another couple trillion to get growth roaring again.

      Did you see any data point on R-R's spreadsheet that could be taken as evidence for roaring growth resulting from high debt?

      I didn't either.

    4. Slightly more concisely -

      The best high-debt growth outcome in R-R's spreadsheet was 2.9%. Net of the obvious weighting concern, if R-R's spreadsheet is to be believed, the best we can hope for is 2.9% GDP growth with a ton more debt.

      The downside of adding a ton of new debt is that there must be some ceiling to the marketability of our Treasury paper; pass that point and you're printing money, and Milton Friedman, and hyperinflation, and post-war Eastern Europe.

      The upside - but only if you get really lucky! - is 2.9% growth.

      So austerity is obviously wrong because, again, why?

    5. CSH, again, I may be misstating the importance of this distinction, but it's not debt that's believed to fuel growth. It's spending. Debt is a by-product (assuming there's no surplus lying around waiting to be spent), and the question is just whether its costs outweigh the benefits of the added growth. There is some recent work from within the IMF and elsewhere (http://www.imf.org/external/pubs/cat/longres.aspx?sk=40200.0) that suggests that fiscal multipliers are higher than previously thought, certainly higher than the "austerians" claimed and more in line with Keynesian calculations. If so, then the harm from debt would need to be correspondingly higher in order to outweigh those benefits. If it's actually lower, which seems to be the upshot of the R-R correction, then the calculus shifts in the Keynesians' favor, no?

      Also, the "Krugman/Keynesian solution" was to borrow another trillion to begin with; their argument, and they were predicting this at the time, is that the "limping along" you mention is the result of debt hysteria getting in the way of adequate stimulus in 2009, when (see the IMF link) it was mostly likely to have to have helped (".....with the relation being particularly strong, both statistically and economically, early in the crisis"). And as Krugman tirelessly points out, the same people who were opposed to stimulus (or to more stimulus) in 2009-10 have made a bunch of predictions -- soaring interest rates, bursts of confidence from the UK program(me), etc. -- that have been persistently wrong. But regardless, I've always thought the Keynesian position was just common sense: If teachers and nurses and other public employees are getting laid off, furloughed, pay-freezed, etc., or are in danger of this, they're not going to spend as much patronizing their local businesses, right? Which hurts those businesses, causing them to do less hiring? Which means still more people who are cash-strapped and not spending, hurting still more businesses, etc. etc.? Right? What's wrong with that story? As far as I could tell, the only substantive objection to stimulus was that the public debt it entailed would have disastrous effects. Well, does it? Has that been shown? Because the bad effects of under- and unemployment are plain and easy to see.

    6. .....and I see we that just posed opposite questions. Austerity is obviously wrong if it creates or prolongs the vicious cycle I just described. People who said austerity would lead to slow growth and double- or triple-dip recessions are being proven right; people who said higher debt, quantitative easing ("printing money"), etc. would lead to spiking interest rates and so forth are being proven wrong. As the Krugmaneysians predicted, austerity as a means of reducing public debt doesn't even work on its own terms, because the slower growth reduces tax receipts, thus adding to the public debt. Hasn't George Osborne now shown exactly this to be the case?

    7. Jeff, I grant that there may be a lag effect from spending-fueled growth that leads to the observed R-R results. That is, spending a bunch of money in year 1 to kick start an economy only leads to results in year 2. That could be, I'm far from an expert.

      That caveat aside, there's no indication in R-R's data that any of those countries tended to see significant growth in years of high debt. Maybe the hypothesis that they avoided disaster is correct; no way to test that converse.

      In any event, if the Keynesian solution "works" for the high or mid-to-high debt economy, then the incremental spending will flow through (at least in year 1) to incremental debt, driving that country to the right on R-R's spreadsheet. The furthest right column (for our purposes), the "error" column, is L - and while the data isn't terrible, none of it looks like its worth risking hyperinflation. None of it is all that good.

      More to the point, none of the data points in column L looks like it would cover the cost of capital (historically - today's ~0 rates are a different beast). So I suppose if you can guarantee an endless market for free US debt, keep on issuing.

      But that's obvious, isn't it? And uncertain too, isn't it?

    8. My understanding is that there was already a critique out there of R-R, even before this new correction, and that it had to do with the causal direction: They had discovered only that troubled economies had high debt, not that high debt caused the troubles. Again, the Keyenesian argument isn't that debt is helpful, it's that stimulus is helpful: monetary first (this is Friedmanism), but fiscal if you're at the zero lower bound. How many of the countries on the R-R spreadsheet were pursuing stimulus, as opposed to borrowing in order to tread water? (Not a rhetorical question; in fact I don't know.)

      As to hyperinflation, nobody's for it. But how often does it have to be wrongly predicted before the hypothetical chance of it stops taking priority over the actual, non-hypothetical immiseration that people experience from persistent high unemployment? I believe that's a rough paraphrase of the question that Krugman keeps asking.

    9. But Jeff, our goal in stimulus is not to prevent immiseration per se. I mean, preventing immiseration is surely a good thing, but its a goal that is everywhere and always accessible to a government like ours. If the fully-loaded FTE cost of a civil servant is $100 K, there's nothing at all stopping Washington from printing $1 B and - voila! - creating 10,000 "new" jobs. Stimulus is designed to stimulate, that is, to goose economic growth.

      I made a mistake earlier. I'm as bad as Rogoff-Reinhart! I claimed that if you added the missing data point to the 90%+ case, the average jumps to 2.2%. That's obviously wrong; the average jumps from -0.1% to +0.3%, or from really really bad to just really bad.

      Now, its not clear what our GDP growth will be for FY 2013 when it ends in September. Depending on who you ask, somewhere between about 1.5% and 2.5%. With that as a baseline, which of the data points in R-R's dreaded column L makes it seem worthwhile to take on an additional $1-$2 T of debt on our already toppling pile?

      I mean, shouldn't you at least be able to say "Well, its worth it to drive our debt over 90% of GDP because we think we'll be like Liechtenstein, with their empirical 7% GDP growth with all that spending". Or maybe, "We'll follow Serbia's example, and spend our way to 6% growth". There's no Liechtenstein! There's no Serbia! There's no empirical example of a debt>90% GDP economy even hitting 3%!. So when your baseline forecast is in the mid-2s, how in the world does the risk of the additional debt seem worth such a paltry reward?

      Just to recap: this isn't about the prevention of immiseration; Washington can always and everywhere achieve that goal. Its about stimulating growth, and the marginal growth of a 90% debt/GDP economy is in no case substantially better than what is currently forecasted for the US, before the magic of a big pile of new stimulus is foisted upon us.

    10. Just to jump in here with a couple of quick points. First, let's not assume--if that's what's happening--that the current growth rate is the result of stimulus because we're in austerity. We used to be in stimulus, and we're not in austerity to the extent that the Europeans are, but we've been sliding into austerity for the past couple of years. (Kind of adds a tone of irony to Romney's comments that the growth rates had been slowing for the past two years--starting roughly when the stimulus ran out and the GOP took over the House.) Second, what alternative to stimulus is going to resolve the debt problem? As I noted before, and as Jeff alluded to, the British approach has only made the debt-to-GDP ratio worse by slowing the economy and reducing revenues. So there you have debt and no growth. Nobody is advocating deficits forever, but what we have now is shrinking deficits and no stimulus. Adding to debt is not an ideal, it's what we're left with. Third, it does matter what you spend the money on; infrastructure would be a useful idea because we need it anyhow. (If you want to see a modern port these days, you have to go to someplace like Singapore.)

    11. Scott, the following is straight out of the spreadsheet that is visible in Konczal's article. Click through and validate for yourself if you wish (I may have screwed something up). What the following shows is the number of countries that averaged overall GDP growth > 3% by various levels of debt:

      1) Less than 30% = 14/17 (82%)
      2) 30%-60% = 9/20 (45%)
      3) 60%-90% = 9/18 (50%)
      4) Greater than 90% = 0/8 (0%)

      Again, its in the spreadsheet toward the bottom of Konczal's piece, if you wish to validate yourself.

      From here, if we accept your premise that FY 2013 is an austerity year in the US, which will generate growth in the low-2% GDP range, based on the data above, what is your hope with stimulus? Mid-2%? That's noise. Mid-5%? That's unprecedented!

      You know what irritates me about the left on this topic? They treat the anti-stimulus crowd with no small amount of condescension (Krugman the king of same) while they patiently explain to us that if you give a fellow money, he'll go spend it. That's true, that's true when debt is at manageable levels.

      This last point is so obvious that its frustrating that the deficit dove/condescending left doesn't see it. Its so obvious that everyone should be able to see if easily for themselves! How does stimulus work in a capitalist economy? When it prompts small businesspeople to go out and spend and hire.

      Ok, put yourself in the shoes of a smallbusinessperson. Debt's bad, even Krugman says big structural changes will be needed soon. Debt *may* be tipping to the point of hyperinflation, if the market for our paper (already historically saturated) evaporates. Against that backdrop, a portion of $1 T of new borrowing is thrown your way - now you gonna hire?

      Of course you won't. Of course you won't! Whatever relief you gain from having more resources is more than offset by recognizing that the precarious national situation, which ultimately underpins your business, just got worse. You'll put that money in your pocket and wait.

      Everyone can see that. Everyone. That explains the data earlier in this post; obviously when debt/GDP is much lower, governments can use tools like fiscal/monetary policy to smooth demand; no one looks at the zeitgeist (when debt is low) and worries about what happens next.

      In an environment like this, everyone worries about what happens next. Everyone. You. Paul Krugman. Bigger doves, if they exist. So the thing that needs to be stimulated, can't be, which surely explains the comparative failure of the 90%+ Debt/GDP economy.

      A failure that's as plain as R-R's failure to calculate it :).

    12. (btw - minor apologies for the tone of that last post. I was pretty jacked up and veered too close to the dreaded bloggy ad hominem. Particularly dreaded in this case, as imo Scott your contribution is among the most valuable in this community).

    13. Thanks, CSH (I blush), but let me differ on a point. What will get the small businessman to hire is increased demand. When consumer demand and corporate demand plummeted, it became the government's task to compensate for that by buying--not necessarily just to hand money to small businessmen and hope they spend it wisely (in part, for the reasons that you cite), but to spend it directly. (I think you have a tendency to conflate fiscal and monetary policy. Fiscal policy is what's called for, as Bernanke keeps telling Congress.) Gradually, that need will ease, has probalby eased somewhat already, in part because folks in the private sector have been using their money to pay down (private) debt. As that debt is paid down, they'll return to spending, adding again to the accumulating demand and building a virtual cycle. The economy will pick up, and the government can do something about the debt.

      On the other hand, once you're at the higher end of the debt-to-GDP ratio, in a weak economy, you can't just wish it away. We needed you ten or twelve years ago, when George Bush was saying we have to eliminate the surplus because "it's the people's money" and it has to go back to the people.

    14. CSH, I'm not sure why you're relying so heavily on the R-R spreadsheet for baselines estimates of growth without austerity. That number is out there, calculated (IIRC) from various sources with specific reference to the US, and (also IIRC) it suggests that GDP is down significantly from what it would be without austerity, which in the US has been largely state and local cutbacks (and now federal, thanks to the sequester). Can't find the source on GDP at this moment, but here's an estimate from last year of the (pre-sequester) impact on unemployment and labor-force participation:


      The US did at least have some stimulus, briefly, and now has (slow) growth. Britain pursued austerity, under a more centralized government that can set a clear policy for the whole nation, and it's still in the sh*tter. You're not going to find a number on R-R's spreadsheet that convinces too many people that the obvious conclusion isn't the obvious conclusion.

      One P.S.: I think Scott meant "virtuous" cycle. (Although frankly, at this late date I'd even settle for a virtual cycle.)

    15. Scott, I do feel that I should apologize every so often for mistyping things cause my fingers move way faster than my feeble brain. I'm sure I've said fiscal when I meant monetary (and vice-versa) many times; er - apologies. To your point, the monetary policy options are limited now, though I'm intrigued by the idea that fiscal policy (from any central government carrying a high debt) can offset the problem that that government will soon be a faithless customer due to its unsustainable debt.

      Suppose you sell widgets. Demand has dried up due to a prolonged recession. You were going to expand, now you're going to lay off, until the government swoops in, and with borrowed money, replaces your lost demand.

      What you do next entirely depends on your perception of the government as buyer of last resort. If the government is carrying low total debt, they can subsidize your widget business for a while, possibly indefinitely if their overall debt burden is low enough. In that case, it may indeed seem like the government backstop is indefinite, and you will go ahead and not fire and possibly hire.

      By contrast, if the government is sitting on lots of commitments already made elsewhere (in the form of extant debt), your calculation will be different: yes they're buying your widgets today, but who knows what tomorrow brings?

      In my opinion (which is clearly worthless as I can't keep my monetaries and fiscals straight!), this explains the unusual Reinhart/Rogoff finding that 90%+ Debt/GDP economies are overall worse, and never in any case particularly good. This makes sense if you see government acting as a smoothing agent for fluctuations in demand, a role that is prohibitively more difficult to play with confidence when the debt burden is a problem.

    16. Jeff, I didn't see your comment when I posted my last, and not to belabor the point, but...well, I'm (obviously) the furthest thing from an expert on these matters, so my interpretations probably have no value whatsoever.

      Nevertheless, what the stimulus now! crowd would have us believe is that we can transition from our current "muddling along" status to "roaring growth" with a pile of well-placed new debt. This, in spite of the fact that, for whatever reason, no other high debt-GDP nation has experienced roaring growth.

      To your observation, we don't know why the other high-debt GDP nations *all* failed. Check that: I don't know. Did some of them try austerity? Too soon? Too late? Did any of them spend? I just don't know.

      What would be helpful for me is the following: rather than rolling their eyes at each other knowingly, having the stimulus now! crowd start sentences like this: "Its true that no other high debt/GDP country averaged decent growth, but in the US it will be different, and here's why..."

      Cause I'm not an insider, and I don't know.

    17. Yes, "virtuous." Sorry.

      CSH, what is it that you would propose?

    18. I don't know about "roaring" growth. Credbible expert estimates for the American Jobs Act, when it was proposed in 2011 -- the only stimulus plan that's actually been on the table lately -- pegged the benefits at 1-2 million jobs and 1-2% higher GDP:


      Those seem to me like worthwhile outcomes. Would spending $447 mil over a couple of years for this have ground the dollar into confetti? Would it even have raised inflation at all? I don't know either. The immediate, obvious need, though, is higher growth and lower unemployment.

    19. Scott, just taking a simple look at the R-R spreadsheet, it would seem "Debt <30% GDP" is the road to growth, and "Debt >90% GDP" is the road to perdition or, at best, muddling through. So I propose whatever gets us back to the "Debt <30% GDP" world, as that appears to be where the action is. We'd all agree on that, I think.

      It would appear that the US is "muddling through" right now, while we are also taking some baby steps toward deficit reduction. It would seem wise, therefore, to continue to move (in as painless a way as possible) to the left on the Debt % GDP worksheet.

      I could be wrong on this, as always. Again, I'm far from an expert. Just looking at that spreadsheet, its hard to imagine that happy outcomes will occur when you move rightward (i.e. toward higher debt % GDP). If such outcomes existed, you should see them on that spreadsheet - somewhere - and they're nowhere to be found among the high Debt % GDP data points.

      Or more succinctly - we're in something like austerity now, and our GDP growth is as good as it could possibly be given our unwanted residence in the high debt:GDP category. So I'd stay the course, more or less.

  2. As I understand it, "the profession" didn't make this mistake -- the authors of one paper did, but the profession has now corrected it, using the time-honored scientific method of trying (unsuccessfully) to replicate the results and, in the process, discovering the errors. As Krugman tirelessly points out, the modified Keynesian "IS-LM" model is based on lots of studies by lots of people and has been repeatedy re-tested and adjusted over a long period. An intellectually honest policymaker who wanted to know what "economists" believed would be looking for something of that kind, not seizing on one possibly spurious study.

    Of course, intellectual honesty is not the long suit of most politicians. They do want to look competent and successful, though. I think what we're seeing happen here, in the frustratingly slow way that these things happen, is an anti-austerity consensus developing, a situation in which future economists are not going to want to be the next Reinhart and Rogoff, and future economic policymakers are not going to want to be the next Paul Ryan, George Osborne or Jean-Claude Trichet. I'm betting that there are young economists looking around and thinking that they would maybe like to be the next Paul Krugman, though.

  3. I bet there are some highly respected non-hacks out there that will change their tune because of this. Mark Zandi is the perfect example -- he often cites this 90% figure in his speeches about deficit reduction. He's honest enough to reevaluate his positions, I think.

  4. The spreadsheet error is funny, but I find the omission of several key post-war economies and the weird weighting scheme far more troublesome. First, because these issues are not mentioned or explained at all in the original paper, and second because they clearly bias the results in the direction the authors prefer.

    On the weighting scheme, as Mike Konczal points out, the authors give exactly the same weight to 19 years of average growth in the UK and *one* year of poor growth in New Zealand. How does this make sense?

  5. "After all, if the profession is capable of making a mistake this big (apparently), should they be trusted? The answer, I would argue, is that politicians should certainly make use of economists -- and other experts -- but be very wary about hearing only what they want to hear."

    But you're not talking about Obama's house economists and their predictions for job growth under his stimulus act. There's just no way that a liberal could read your words and apply them that way.

  6. Ah...another thread that I really wish I had some time to participate in...

    Two quick things.

    To CSH: I don't find your story plausible. I think the guy deciding whether to hire is going to pay close to zero attention to the national debt. Probably even in the situation in which he has Beck on the radio constantly predicting doom. He's going to pay attention to how much product they're moving, combined with a general sense of how the economy seems to be breaking locally and nationally. Anything more abstract than that...I very, very, much doubt it.

    OTOH, and debt related: she damn well will pay attention to the cost of money she has to borrow to open another store or build another plant. And just about everyone agrees that under some conditions, high government borrowing will drive up the cost of money to everyone, and if that's the case she might not open the extra store and hire more people even if she otherwise believes she has the customers to profit from it.

    But under current conditions, more government borrowing won't make the cost of money more expensive, so that doesn't apply.

    As for byf --

    Of course I'm talking about Obama's economists. All politicians have the same challenges. As it turned out, his economists did an excellent job of projecting the effects of the stimulus -- but a rotten job of understanding where the economy was in winter 08-09.

  7. "As it turned out, his economists did an excellent job of projecting the effects of the stimulus -- but a rotten job of understanding where the economy was in winter 08-09."

    The CBO scored the effects of the stimulus by using the same basic model that Obama's economists used to predict the effects of the stimulus. There's no outside test to verify that the model has any connection to reality. A good test would have been for his economists to have drawn a timeline with predictions ... oops, they did that, but because their model doesn't reflect reality, they waved their hands around a bit by blaming the states, etc. as if the problems faced by states that can't print their own money are totally new. But your side still BELIEVES that you basically understand the economy well enough to fix it.

    1. That's just weird. They didn't "blame" the states, they recognized the problems faced by the states and tried to compensate for that with grants to the states as long as the Congress allowed it. If the predictions were off, it was because the Bureau of Economic Analysis underestimated the magnitude of the catastrophe and because they compromised the stimulus package to bet a couple of Republican votes.

  8. Scoot Monje,

    By "blame the states" I mean that one of the biggest arguments for the unexpected total failure of Obama's employment growth model was that government spending fell unpredictably at the state level. The inability of a state (that has no printing press of its own) to maintain pre-crash spending levels is NOT some new thing. If Obama's model can't see at all where the economy is going based on where it is now, it's not useful. If you need to hear this from a big-government liberal to believe it, I recommend reading someone like Jeffrey Sachs



Note: Only a member of this blog may post a comment.

Who links to my website?