I may be tired this morning, but this Post by Brad DeLong seems like Junk. Brad discusses the Spread, which is only one of the factors necessary in study of the national debt. One important element in the formulation consists of the magnitude of loanable funds. It sort of mirrors the Consumption function–there must be existent funds, and agreeable Lenders holding those funds. Americans have been buying less foreign Goods, and paying less Cash for those Goods; it leaving a hole in the formula unless central foreign banks continue to purchase US Treasuries. India is buying Gold, and China is emitting noises of transfer of capital elsewhere. The one thing which is known is that the US Government has not slowed its Expenditure pattern, increasing the national debt about One Year’s worth of total revenue within the last say 18 months.
Brad talks about raising Taxes in 2013, but that We need Tax Cuts now. Remember the Republican clarion call that the Bush Tax Cuts would Sunset? Well—the United States is getting a like reputation to the British Empire, what with the Sun never setting. Try telling Businessmen that they should pay less Tax–what a chorus of approval! Now attempt to tell that same group that they should pay more Taxes–I have even been called a Racist as well as Communist. Reality should ultimately force Us to admit that Tax Cuts will not generate Jobs without increased Consumption, a woebegone desire without getting direct funds into the hands of Consumers. Tax Cuts, on the other hand, are almost impossible to rid oneself of, no matter what is the economic environment. Economists should stop proposing Solutions that can only make the situation worse–Now and in the future.
One will naturally ask what I would propose to alter the dismal economic fortunes of the time. No one will like the basics of my point. Congress should immediately declare a 4-day Workweek for all federal employees. The same legislation should also dictate that all Government contracts must be filled utilizing the same 4-day Workweek. All labor will be paid One-Fifth less under the new program, even such minor entities as Congress and Judges who often work Bankers’ hours now. Further legislation would detail all federal agencies and departments to train the first 10 most successful Applicants to any position at Minimum Wage, under the ideation that the Training of Four Weeks would be beneficial to all Applicants, even if only the best Applicant will be hired. Legislation should be passed allowing Business to hire Unemployed Personnel at 80% of the stated Salary for the first Six months, with federal aid to pay an additional 40% for the same Period, up to a limit of $25k per year in Wages or Salary. Businesses which Fire said Help within the following 12-month Period must repay the federal program the full value Wages extended to the Employee. All Bush Tax Cuts should be allowed to Sunset, because there is nothing in the increased taxation which indicates a further Drop in economic activity. Ain’t I sweet! lgl