Greenspan: Sequester cuts will not be horrendous for the economy

[Torie]

Just a negative influence, but the stock market is relatively cheap now, and thus should be resilient, and Greenspan pays a lot of attention to stock prices from a macro-economic perspective. He also notes the obvious - the only way to get substantial spending cuts is through entitlement rule changes. Getting 1.1 trillion in cuts without doing that is close to impossible.

[Snowstalker Mk. II]

I'd rather have no deal than a bad deal, though I presume Mr. Greenspan and I have very different visions of a "bad deal".

[Frodo]

Wasn't Greenspan part of the reason we got into the Great Recession in the first place?  And didn't he endorse the Bush tax cuts that pushed us into endless deficits?  

Surely you can find more credible economists.  He's the last economist anyone should listen to......  

[LastVoter]

Yea, who the f[inks[ is Greenspan to talk about the economy.

[Beet]

Mr. Andrea Mitchell was a bad Fed Chair, but he's probably right about this one.

[Maxwell]

Mr. Andrea Mitchell was a bad Fed Chair, but he's probably right about this one.

[opebo]

Greenspan's a proven fool.

[politicallefty]

Getting 1.1 trillion in cuts without doing that is close to impossible.

I wouldn't say it's quite that impossible. Assuming that is $1.1 trillion over ten years, I think those cuts can easily be extracted from the defense budget without compromising national security. (That's not to say I don't think Medicare needs some modifications to ensure solvency, but Social Security does not have the same problems.)

And, as I said before, I can live with the sequester considering the alternatives.

[Politico]

The piggy public sector could be gutted and most of the productive private sector would not even notice if nobody told them about it. If anything, confidence would soar if the gutting resulted in a balanced budget coupled with the potential for lowered taxation in the long-run (e.g., late 1990s).

[TNF]

>taking Allen Greenspan seriously
>2013

[King]

Alan Greenspan knows a horrendous economy when he creates sees one.

[bedstuy]

The piggy public sector could be gutted and most of the productive private sector would not even notice if nobody told them about it. If anything, confidence would soar if the gutting resulted in a balanced budget coupled with the potential for lowered taxation in the long-run (e.g., late 1990s).

No private company would want the government to immediately balance the federal budget because we would immediately go into a recession.  That's blatantly silly.

[King]

If we want to get out of the economic hole, we're going to want to to grow about about 4% this year; to avoid a recession, we'd just have to stay above 0%.

The government will shrink about 4% because of the sequester (-4%).  Europe is still a mess, so net exports will be pretty flat (assume 0%).  This means the private sector has to grow at least 2% (since it's larger) over to avoid a recession and 5% to bring serious growth.  I'm pretty confident they can do both.

Republicans when challenging the President has always attacked him for creating uncertainty in the private sector.  Assume that they are correct--uncertainty is over.  Tax rates are permanent and the healthcare law is permanent.  The private sector and consumer confidence does not care about the sequester.  The economy shrank at the end of the 2012 over the tax part of the fiscal cliff.  That's over.  The economy is going to grow and it's time for the government to shrink.

We're not ready to balance the budget as it would require the private sector to grow by nearly 10% in 2013 to avoid a recession.  But we're definitely in position to absorb the sequester.

[Politico]

Assume that they are correct--uncertainty is over.

Uncertainty is not over until Obamacare starts (or ends if it proves to be a disaster) and fiscal responsibility is restored to Washington. Truth be told, uncertainty will not be over until Obama is out of the White House.

[opebo]

...the private sector has to grow at least 2% (since it's larger) over to avoid a recession and 5% to bring serious growth.  I'm pretty confident they can do both.

Why on earth would you be confident of that?

[King]

Assume that they are correct--uncertainty is over.

Uncertainty is not over until Obamacare starts (or ends if it proves to be a disaster) and fiscal responsibility is restored to Washington. Truth be told, uncertainty will not be over until Obama is out of the White House.

There is no uncertainty about Obamacare.  Businesses know what they have to do to comply with the law and most have already made the necessary changes.

Whether you think it works or not is one thing, but the uncertainty had nothing to do with the success of the program.  Only about what businesses would have to do to get in the guidelines.

As for your second comment, private sector does not care about the deficits.  They only care about taxes.  Taxes have been resolved.

...the private sector has to grow at least 2% (since it's larger) over to avoid a recession and 5% to bring serious growth.  I'm pretty confident they can do both.

Why on earth would you be confident of that?

Because the private sector is clearly in expansion and consumer confidence is back up with the election behind us.

[Politico]

Assume that they are correct--uncertainty is over.

Uncertainty is not over until Obamacare starts (or ends if it proves to be a disaster) and fiscal responsibility is restored to Washington. Truth be told, uncertainty will not be over until Obama is out of the White House.

There is no uncertainty about Obamacare.  Businesses know what they have to do to comply with the law and most have already made the necessary changes.

Whether you think it works or not is one thing, but the uncertainty had nothing to do with the success of the program.  Only about what businesses would have to do to get in the guidelines.

As for your second comment, private sector does not care about the deficits.  They only care about taxes.  Taxes have been resolved.

On the contrary, taxes are far from resolved. They are resolved for 2013, but they are far from resolved beyond that. The reason: Our culture of debt and deficit-spending.

You must be logged in to read this quote.

Dream on.

[Torie]

How much Obamacare will actually cost is far from resolved isn't it?

[Sbane]

How much Obamacare will actually cost is far from resolved isn't it?

I don't look at it as all bad like you do, but there is a lot about Obamacare we don't know. For example, the no co-pay oral contraceptives, turns out only some generics are covered. It is actually a mechanism to guide women towards lower utilization of health care dollars. I don't think that is a bad thing, but barely anyone knew about it. Or the closing of the donut hole, which doesn't happen immediately but over several years. No one knew that either.

[Politico]

How much Obamacare will actually cost is far from resolved isn't it?

Absolutely. For example, while some large firms may have somewhat of a grip on what is going to happen thanks to extensive research, small businesses are nowhere near certain of the implicit and explicit costs involved (they are becoming aware of expected explicit costs, as projected by Washington Piggies, but those are not guarantees of course). Truth be told, this information will not become communicated to all economic players until once the program actually starts. In that sense, the sooner the program can start, the better. That said, if it proves to be disastrous and associated with a subsequent recession, Obama and Democrats are going to be ostracized the way George W. Bush and Republicans were in 2008. From a purely political standpoint, it may be in the interests of Republicans to push back the start date to the middle of 2015 as a calculated gamble. Democrats ought to be holding steadfast on the current start date, of course.

[Sbane]

Obamacare is going to cause a recession? LOL!

Let's worry more about Medicare cuts, which you Republican piggies went populist on in 2010 and killed the possibility of that for the forseeable future.

[Torie]

Obamacare is going to cause a recession? LOL!

Let's worry more about Medicare cuts, which you Republican piggies went populist on in 2010 and killed the possibility of that for the forseeable future.

Moving right along, do we both agree that that sequester should just happen (sure some of the line item money amounts should be moved around a bit within the 50-50 bifurcation between military and other cuts, rather than a meat ax approach, but that no doubt will eventually happen)?

[Sbane]

Yes, the sequester should happen, with hopefully some thought put into where to cut. That goes for the military as well as discretionary spending.

[Torie]

Obamacare is going to cause a recession? LOL!

Let's worry more about Medicare cuts, which you Republican piggies went populist on in 2010 and killed the possibility of that for the forseeable future.

You looked at Torie the death panels advocate's avatar color lately buddy? 

[Sbane]

Obamacare is going to cause a recession? LOL!

Let's worry more about Medicare cuts, which you Republican piggies went populist on in 2010 and killed the possibility of that for the forseeable future.

You looked at Torie the death panels advocate's avatar color lately buddy? 

You aren't a Republican. You just don't realize it yet.