Because Dems support it too, and those dems are deamed as lesser evils, even though they don’t give a shit about us anymore than the republicans do. So we much never ever consider voting Green Party!

I have trouble attributing Obama’s looming recession on military spending cuts because there weren’t any. The Great Recession started when military funding was near its peak. The recovery actually was coincident with the first drop in military spending in years.

I believe the cumulative effect of austerity inspired cuts of public employees and our tax incentives for companies to hire abroad are the real culprits.

This suggest to me that this is the best time to be investing in public infrastructure projects, especially with interest rates being so low. But, the regressives of the world will probably use this information to advocate for an even larger military-industrial complex.

In the fourth quarter, federal expenditures decreased at an annual rate of 15 percent, with defense spending decreasing at a rate of 22.2 percent (nondefense expenditures actually rose slightly).

Trillion dollar deficits year after year, endless ZIRP and record low interest rates, over 2 trillion dollars printed by the Fed. And the economy contracts.

But Krugman will still tell us the problem is not enough stimulus in 10…9…8…7…6…..

You could argue – I would – that defense spending is stimulative but not very stimulative due to the low/non-existent multiplier effect.

Making a bomb and dropping it is a one shot – money spent on roads or even stimulus checks gets spent more than once in the private economy or is invested in an asset that creates value over and over again (roads, bridges, schools, hospitals)

So it would have been better to have spent the Iraq War money on infrastructure or poverty assistance but they still spent funds that stimulated increased production in goods and services.

A better solution would have been/still is to wipe out the debts.

ZIRP, bailout guarantees, QE 1,2,3 is just subsidizing Wall Street. Socialism For The Rich

Yes, we should be building instead of destroying. But the framing is that spending to destroy is freedom, while spending to build is tyranny.

Yes he will, because the (non-defense)spending and the monetary policies we’ve done were not stimulative. We get out of the hole by working, we put ourselves into a hole by starving.

Whatever the reason, it’s good news for the planet.

There’s another approach to this, and another explanation. I know it’s customary on the liberal left these days to think that the boundaries of macroeconomics extend from Paul Krugman to Milton Friedman/John Taylor/Raghuram Rajan. But there actually is a left critique of Keynesianism out there, pioneered by Paul Sweezy and the Monthly Review school, which takes issue with both the right wing’s fantasies and models like military Keynesianism. Too complicated to lay out here, but the bottom line is capitalism has a long term stagnation problem that neither Taylor’s or Krugman’s suggestions will solve. It’s also quite different from the left libertarian approaches of Yves Smith. It’s laid out in Bob McChesney and John Bellamy Foster’s book. See this too. Time we had a real left political economy again.

I not a damn bit sorry for the decrease in defense spending. It’s way past time this country stopped thinking the MIC is the best way to grow the economy. It’s probably the worst for our future, actually. We need to cut and reroute this money into public work projects. There is a long list of backlogged roads, bridges, hospitals, schools and railroads that are failing the taxpaying citizens who depend on them. They should not be held hostage to reargue empty political rhetoric and theories of trickle down hogwash and tax cuts as stimulus. Change the incentives at home and we prosper. Keep the status quo and we’ll not become Greece, but Egypt.

I know you were using an intentionally simplistic model, but maybe too simple.

First there should probably be a differentiation between defense spending and war spending.

Dropping a bomb (war spending) may be a one shot, but defense spending (R&D, design, construction, etc.) is spending on people and products just like any other spending which gets spent more than once in the private economy.

Cutting defense spending costs a lot of engineering and manufacturing jobs.

Quick, someone start another war. Bombs r us. We make ‘em, you drop ‘em. Full employment on the way.

There is not enough fiscal policy stimulus.

Perpetual ZIRP is a tool (or abuse) of monetary policy, not fiscal stimulus of the kind Krugman has advocated since Obama’s first day in office. Even before the GFC occured, Fed monetary policy was already being abused. The free money from perpetually low interest rates just went to fuel speculative asset bubbles and make the idle super rich even richer relative to the rest of the population. That’s what it has been doing since the mid-late nineties at least and that’s what it continues to do. It’s an central bank funded orgy for the .01% – with a feeble explanation that eventually the other classes of society will derive some indirect benefit from it. Perhaps they will be employed to mop up all the vomit. The central bank also points to the total inability of the federal government to engage in fiscal stimulus (because of the bassackwards ideology of the Republicans of both parties who won’t let the government stimulate) as its warrant to pursue QE monetary policy to the limit of its own abilities. Absent fiscal stimulus, the Fed is pushing on a string at best, as I’m sure they know.

Fiscal stimulus by contrast, distributes money to wage earners at the base of the economic pyramid. Normal spending by the base transfers those wages upwards, but the money circulates through all strata of society along the way, sparking expansion and new hiring.

“ZIRP” pursued without fiscal stimulus, in an epoch of already pathological speculation, just fattens a parasitic financial class at the expense of savers, and of all the workers who are left unemployed, or with not enough work, because activity in the real economy of making stuff and providing services stays slack.

Krugman may not be right, but the predictable failure of ZIRP to do anything besides perpuating the poisonous speculative activities of the financial elite, does not prove him wrong.

If you live in a Democracy and you are trying to provide the greatest good for the greatest number of people GDP is just one factor to look at and should be discounted or ignored entirely no matter which direction it is going if average wages are stagnant or decreasing and real poverty rates are increasing. Austerity is still the prime directive of the ruling class and everyone knows it won’t work but for the short term because we are running out of assets to raid. Peasants are not big spenders.

So you ask why are we letting Wall Street run the country into the ground again? Well, umm, I would just suppose we havn’t got much say in the matter. Them Bosses prolly figured out how to make even more money from another recession. Wars is profitable business I guess so long as none of them gets hurt.

Replacing defense spending with infrastructure spending would create a lot of engineering and manufacturing jobs, with a higher economic multiplier than defense spending.

“Robert Barro and Charles Redlick released a paper in 2009 calculating the “economic multiplier”— that is, the GDP bang per spending buck — of defense spending, using data from 1914 to 2006. They found that during normal economic times, the multiplier is about 0.67, and is higher when the economy’s weak…Given last month’s unemployment rate of 9.1 percent, the multiplier would be about 0.845. That is, each dollar of defense spending currently grows the economy by about 85 cents.
….
It’s worth noting, though, that while certainly stimulative, military spending isn’t the most stimulative thing the government spends money on. Mark Zandi of Moody’s estimates that the multiplier is 1.74 for food stamps, 1.61 for unemployment benefits, and 1.57 for infrastructure spending. The trigger’s cuts to those sorts of programs, thus, would cause much more economic damage relative to the size of the cuts than the defense cuts would.”

LINK October 2011

Thank you. There are reams of studies dating back decades that prove this. But I guess us old farts who got are edumacation before computerization should remind ourselves that history is to be forgotten so that we can make the same stupid mistakes over and over again, without the benefit of memory. Thanks, again.

I don’t think zero interest policy has much to do with it. Low interest rates are thought to spur investment. High rates just put more money in the top one per centers pockets. QE is also pretty much a non event as well.

Debt forgiveness would have been a wise move, but who said we have wise men running this place?

Memory? Remind me again.

Yes, with an important exception IMO. Defense spending tends to be cronyism and it often starts inflation, since the resources in the industry are more limited than the economy as a whole. Those are also why infrastructure is a better investment.

I would agree for slightly different reasons. Those multipliers can be wildly inaccurate.

I see it a bit differently. This is the first quake, or tectonic shift, in Federal appropriations away from wars that needs to happen. And it should be a tectonic shift, huge and overwhelming, as to how we decide where we spend tax dollars.

We have built a system based on war. Hell, my dad was part of it as chemical engineer after WW2. There were many reasons why it was built, the huge mobilization of WW2 and the subsequent demobilization, the Cold War, the construction of the interstates, the power grids and atomic programs, and the employment guarantees and job security for nearly every congressional district. But then Kennedy got shot, and Vietnam became a vast horrifying carnage for some opaque and shadowy global maneuvering, and MLK, RFK, and so on. People started to figure out that the promise was turning to rot.

The GOP attacks on democracy, and the reframing of anger, in the 80s led to our most inglorious wars, even more than SE Asia. Ones that we are still involved in today.

And then the recent depression hit, with a number of causes and reason. Funding priorities must be shifted, both of the ruling parties now unequivocally claim. While one party wants to prop up the monster of American militarism, and the infrastructure which employs many and destabilizes the planet for transnational corporations profits, a bit more than the other and that other party gives some lip service, at the least, to other issues such as health care, infrastructure repair, and climate change catastrophe arcs, both of the parties are unwilling to claim in the open the needed tectonic shifts. They’re both scared of the MIC, even if it is clear that the system founders on the inherent violence of a war economy.

How this will all play out in the American home theater is being produced today. The grassroots that organize for a shift to a non-war economy are listless, unorganized, and a bit ragged. It’s tough taking on American militarism in a time of nativist rage, economic scurvy, and with the halo’s that form around the head of the generals and the lower ranked bullet catchers ate every sporting event and on every television in the land. The youth are now told to turn away from humanities and to learn to build robots for peace and protection, ignoring the fatal flaw in the package design.

Still, the shift needs to happen. As painful as it might be to our neighbors who work for the anti-personnel weapons company on the edge of town, the money must move from the building and design of wars to the strengthening of services and infrastructure repair, if nothing else for all those shattered kids, jobless and homeless, with no savings and becoming more ratlike with each passing year of untreated PTSD, who listened to the recruiters and went off to fight the wars with our weapons for the oil companies.

I see your point.

The “economic multiplier”— that is, the GDP bang per spending buck — of defense spending is about 0.67.

It’s worth noting, though, that while certainly stimulative, military spending isn’t the most stimulative thing the government spends money on. Mark Zandi of Moody’s estimates that the multiplier is 1.74 for food stamps, and 1.61 for unemployment benefits.

Using this logic, it stands to reason that we should fire all the government workers and defense contractors and put them all on UI and food stamps. GDP would go through the roof and everyone would be better off.

Ha, but it is prolly true that defense spending is not as good as some others.

I see you left out the multiplier for infrastructure spending, which would result in the opposite of firing people and putting them on food stamps, and would have the added benefit of producing things that most of us want and need, and that would make our lives better.

What TEEVEE show were we talking about? Anywhooey, just keep doin’ what the winos on Skid Row do every night and then wake up, amazed, that your drawers are soaked and full of crap the next day.

You are obviously ignoring the fact that if we build one less aircraft carrier or 20 fewer fighter planes we are likely risking invasion and war from Bolivia or maybe even Chad.

Well, umm, I would just suppose we havn’t got much say in the matter.

Well put. We just be along for the ride.

I suppose some reasonable defense spending is good for the economy. The problem is the military eventually wants to go out and test their new toys which eventually means we have to replace the expendable ones. MI gets more business and that leads to more toys to test. It’s neverending.

With Afghanistan winding down now throu 2014, we’re gonna need a new war soon. Luckily we’ve got Syria and Egypt.

Doesn’t it just piss a fella’ off when he gets his ass handed to him by them darned ol’ statistical thingies about war and peace, no less. Who really cares about life and death when we can talk about THE EMPIRE.

We’re presently holding off an invasion by ChinaRussiaGreatBritianJapanSaudiFranceIndiaBrazilGermanyistan which is why we have to spend more money on defense than all of these countries combined.

If the US were a person they’d be calling our military spending a symptom of paranoid behavior. It’s positively insane that we spend over 5 times more than China on “defending” ourselves.

The PTB are insane, really!!

A big part of the deficit is endogenous–that is, it’s due to the economy operating below capacity (which means among other things, lower tax revenue and higher deficit. The fiscal situation therefore has to be calibrated to full employment. At the present time more government spending is needed, it’s opportunity cost is close to zero.

You areconfusing supply and demand here. The low interest rates are essentially a reflection of the fact that net investment demand (for capital goods) is close to zero. Nobody wants to borrow to do that. The Fed is hoping people will debt finance increased consumption, but the public got really burned on that play in 2008 and are not going there for the foreseeable future.

I don’t know about that.

http://money.cnn.com/2011/09/21/pf/credit_card_debt/index.htm

It appears we’re a nation of slow learners.

I’m saving and using that ” opportunity cost is close to zero ” remark. It beats the hell out of saying it’s never been or going to be cheaper to borrow and stimulate, than right now. Materials, labor and need are in place for smart, forward looking, gov’t stimulus. That’s why it’s probably not going to happen on the scale necessary to make much of a difference. The banksters would rather gouge the poor and under-employed with card fees and monthly processing gimmicks, eh?

Which is why the fed is keeping interest at zero.

Sorry, numbers are just numbers.

The Fable of Moral Arithmetic

It would work for defense contractors, because you’re driving DEMAND. How much they purchased from U.S. sources would determine the impact on domestic DEMAND.

Capitalism is the laws of Supply and DEMAND.

When the 1% own 1/2 of the net worth of the country, when you offshore most of that wealth, when you IMPORT more than you EXPORT, when you let monopolies and oligoplies destroy competition and innovation than demand goes SLACK.

Thank you for mentioning “multipliers.” They are a key component in the economic discussion that’s too frequently left out.

Among a lot of other benefits, Solar roadways would pay for themselves over time. Unlike asphalt and concrete, they can generate revenue.

Once working prototypes are judged acceptable, LED’s (light-emitting-diode) could compete with billboards for advertising. That signage, built right into the road, is also a huge safety improvement. Drivers could “read” on the road what’s ahead. When roads get washed out at night, that saves fatalities. Savings on plowing and salt up north would be another savings.

The monopolies and oligopolies that currently control the supply chain of road construction don’t want to innovate. Because there’s no real competition, there’s no innovation.

But it is a global economy now, which confuses the very notion of ‘defense’. What happens to Pemex, Gazprom, and even the debilitated OPEC defines the US military’s mission.

And what ExxonMobil and Sinopec want, especially in a 50 year plan cycle, drives the war engine of the US economy.

Painful as it may be, we need to throw a monkey wrench into the global energy military dictatorship unless we are willing to let the transnationals define ‘defense’ for us to mean perpetual war and a blighted environment.

First there should probably be a differentiation between defense spending and war spending.

But “defense” spending (besides being make-work & unproductive) LEADS TO war spending. Madeleine Albright:

What’s the point of having this superb military that you’re always talking about if we can’t use it?

Sure, but can’t we just stipulate that if you give a stimulus to the rich they will buy a new handbag and save the rest, if you pay an engineer he will pay some tax, buy something more and if you give the stimulus to the service worker he will spend nearly all.of his after tax income. So of,those three which one gets the bigger bang for the buck?

Wait! Are you picking on the johb creaters? They need more more money so they can create jobs in India and China. ,not like that deadbeat slob working at Burger King that would just waste it on needless things like rent or heaven forfend cable TV and besides he doesn’t pay taxes because other taxes like property and state taxes only count when you’re a rich guy opining about how tough YOU have it barely scraping by on 21 million a year.

Ok, take econ theory one more step. Give all the stimulus to 15 year old girls and set them loose in the mall. BANG! Meet buck. What could go wrong?

You should inform your rich handbag owners that they could do more good saving their excess money in investments (which can be used by companies for capitol improvements or expansion) rather than stuffing it in their handbags.

Lets inform the companies sitting on trillions of dollars currently to invest today. Oh I forgot times are too uncertain for Multi-National Corporations to commit that money to investing in growth.

today’s dreadful GDP numbers. . . a stunning drop of 0.1 percent in the fourth quarter

Why is it dreadful? Where is the evidence of any direct correlation between national GDP and personal well-being?

For example, another FDL thread today deals with the high price of health care, as a problem, but hey, high health prices push the GDP up considerably, so that’s good? Wars the same way.

Now you’re down to 15 year olds? Because it hurts to be a budget balancer in this Deep Recession, and; have to deal with the fact that more military stimulus is as insane as the invasion of Iraq was. And, generally draws the same kind of shout downs from politicians who are on the payroll of crooked, war profiteers. Selling out your country is so much easier now. Ah, progress. It’s our most important product.

Thanks for a voice of sanity in the midst of babble.

global elites hell-bent on preserving their own privileged class positions. And as for that world they purportedly seek to improve, all Davos ever has to offer those beyond its pearly gates is the mysticism of invisible hands.

I especially like the delusion of the ex-Reaganite who ceaselessly reminds that there’s no morality in numbers.

Could his complicity be any better trumpeted?

An endless crisis that is immensely profitable for capitalists? Now isn’t that the epitome of capitalist stability?

This book constitutes a polemic not only with neo-liberal theory but with those who believe that tinkering with the worst aspects of capitalism will resolve the crisis. Foster and McChesney take the reader into the world of the global monopolies and the plutocracies that they have spawned. When you finish this book you cannot but ask the question: ‘When do we get serious about a strategy for the Left to respond to the system of modern day robber-barons that Foster and McChesney so well analyze?’

I am surprised that JB Foster does not see that we have instead a predatory management of capitalist decline.

A perfect example of conservative idiocy. “Stimulus is just a giveaway, so give it to the spendthrift 15-year-olds.” No conception of earned income for infrastructure improvement being spent on housing or other big-ticket items by responsible household for economic stimulus. Investments by the wealthy just go into unemployed capital. This level of ignorance is disgusting, but from you it’s not surprising.

Oh they’ve done that . They spent the money on jobs alright. In China and everywhere else they could get away with exploiting people and resources. Not here, so remind me again why I should want any money to go to them?

As far as I’m concerned they had their chance and the 15 year old girls couldn’t do much worse then they have.

Obama’s looming recession isn’t from a lack of defense spending which is what this propaganda is catapulting. It is from his fucking caving in to the banksters and implementing austerity over the people’s better judgement.

Here’s a link that might be of interest to you. It makes your point much better than you do. And I agree with it. Odd.

http://www.cato.org/sites/cato.org/files/pubs/pdf/PA706.pdf