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Obama blames economic contraction on ‘bad decisions in Washington’


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http://thehill.com/h...-in-washington-

President Obama blamed the recent contraction of the U.S. economy on “bad decisions in Washington” in his weekly address.

The national economy shrank by 0.1 percent in the fourth quarter of 2012, according to figures released this week by the Commerce Department. The contraction was an unexpected reversal of months of modest economic growth since the end of the recession in mid-2009.

Obama said in his address that the dip was the fault of “bad decisions” being made in Washington.

“We began this year with economists and business leaders saying that we are poised to grow in 2013,” he said. “But this week, we also received the first estimate of America’s economic growth over the last few months. And it reminded us that bad decisions in Washington can get in the way of our economic progress.”

Obama said there were “real signs of progress” in the 2013 economic outlook, citing increases in home prices and car sales.

But he said the unexpected economic contraction showed the wisdom of his “balanced” approached to budget negotiations with Congress.

“We all agree that it’s critical to cut unnecessary spending,” Obama said. “But we can’t just cut our way to prosperity. It hasn’t worked in the past, and it won’t work today. It could slow down our recovery. It could weaken our economy. And it could cost us jobs – now, and in the future."

Obama said if Congress follows his lead on the economic decisions, “2013 can be a year of solid growth, more jobs, and higher wages.

“But that will only happen if we put a stop to self-inflicted wounds in Washington,” he warned.

“Everyone in Washington needs to focus not on politics but on what’s right for the country; on what’s right for you and your families,” Obama continued. “That’s how we’ll get our economy growing faster. That’s how we’ll strengthen our middle class. And that’s how we’ll build a country that rewards the effort and determination of every single American.”

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"Unexpected" contraction? Why would it possibly be unexpected? The government tells everyone we are about to take more of your income; so economic activity slows down...it was immanently predictable.

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The debate in Washington is all partisan political rhetoric. It's all about staying in office. That's what career politicians do. There is no real discussion about debt reduction vs. growth. There is no effort to even explore the reasons for our current situation. Why should there be? The economy is pretty good for those who are the government.

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......“We began this year with economists and business leaders saying that we are poised to grow in 2013,” he said. “But this week, we also received the first estimate of America’s economic growth over the last few months. And it reminded us that bad decisions in Washington can get in the way of our economic progress.”

Obama said there were “real signs of progress” in the 2013 economic outlook, citing increases in home prices and car sales.

But he said the unexpected economic contraction showed the wisdom of his “balanced” approached to budget negotiations with Congress.

“We all agree that it’s critical to cut unnecessary spending,” Obama said. “But we can’t just cut our way to prosperity. It hasn’t worked in the past, and it won’t work today. It could slow down our recovery. It could weaken our economy. And it could cost us jobs – now, and in the future."

I think he is right on.

Priority #1 is stimulating economic growth thus increasing jobs.

Dealing with the long term debt is a pressing need, but to prioritize debt reduction before the economy is on it's feet is counter-productive.

http://www.nytimes.com/2013/01/18/opinion/krugman-the-dwindling-deficit.html?ref=paulkrugman&_r=0

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......“We began this year with economists and business leaders saying that we are poised to grow in 2013,” he said. “But this week, we also received the first estimate of America’s economic growth over the last few months. And it reminded us that bad decisions in Washington can get in the way of our economic progress.”

Obama said there were “real signs of progress” in the 2013 economic outlook, citing increases in home prices and car sales.

But he said the unexpected economic contraction showed the wisdom of his “balanced” approached to budget negotiations with Congress.

“We all agree that it’s critical to cut unnecessary spending,” Obama said. “But we can’t just cut our way to prosperity. It hasn’t worked in the past, and it won’t work today. It could slow down our recovery. It could weaken our economy. And it could cost us jobs – now, and in the future."

I think he is right on.

Priority #1 is stimulating economic growth thus increasing jobs.

Dealing with the long term debt is a pressing need, but to prioritize debt reduction before the economy is on it's feet is counter-productive.

http://www.nytimes.c...aulkrugman&_r=0

Do you think that raising taxes stimulates the economy?
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If you cut government spending during a recession or slow recovery, economic growth WILL slow or stop.

I contend that the government cutting unneccessary spending would stimulate the economy. I think that business leaders would have more confidence in the future of the economy if they felt that the government was trying to fix some of its wasteful spending habits.
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If you cut government spending during a recession or slow recovery, economic growth WILL slow or stop.

I contend that the government cutting unneccessary spending would stimulate the economy. I think that business leaders would have more confidence in the future of the economy if they felt that the government was trying to fix some of its wasteful spending habits.

Look at Britain. They're sticking to their austerity measures and they've experienced negative growth for at least 5 quarters. When the economy is in the tank, or just beginning to recover, you don't cut off its lifeline (government spending). When the economy is booming again, that's the time to reel in spending.

Wasteful spending is always frustrating, but even wasteful spending has a positive economic effect.

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......“We began this year with economists and business leaders saying that we are poised to grow in 2013,” he said. “But this week, we also received the first estimate of America’s economic growth over the last few months. And it reminded us that bad decisions in Washington can get in the way of our economic progress.”

Obama said there were “real signs of progress” in the 2013 economic outlook, citing increases in home prices and car sales.

But he said the unexpected economic contraction showed the wisdom of his “balanced” approached to budget negotiations with Congress.

“We all agree that it’s critical to cut unnecessary spending,” Obama said. “But we can’t just cut our way to prosperity. It hasn’t worked in the past, and it won’t work today. It could slow down our recovery. It could weaken our economy. And it could cost us jobs – now, and in the future."

I think he is right on.

Priority #1 is stimulating economic growth thus increasing jobs.

Dealing with the long term debt is a pressing need, but to prioritize debt reduction before the economy is on it's feet is counter-productive.

http://www.nytimes.c...aulkrugman&_r=0

Do you think that raising taxes stimulates the economy?

Generally speaking, no. But that doesn't necessarily mean that raising taxes has to depress the economy.

Do you think it's possible for taxes to be too low?

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......“We began this year with economists and business leaders saying that we are poised to grow in 2013,” he said. “But this week, we also received the first estimate of America’s economic growth over the last few months. And it reminded us that bad decisions in Washington can get in the way of our economic progress.”

Obama said there were “real signs of progress” in the 2013 economic outlook, citing increases in home prices and car sales.

But he said the unexpected economic contraction showed the wisdom of his “balanced” approached to budget negotiations with Congress.

“We all agree that it’s critical to cut unnecessary spending,” Obama said. “But we can’t just cut our way to prosperity. It hasn’t worked in the past, and it won’t work today. It could slow down our recovery. It could weaken our economy. And it could cost us jobs – now, and in the future."

I think he is right on.

Priority #1 is stimulating economic growth thus increasing jobs.

Dealing with the long term debt is a pressing need, but to prioritize debt reduction before the economy is on it's feet is counter-productive.

http://www.nytimes.c...aulkrugman&_r=0

Do you think that raising taxes stimulates the economy?

Generally speaking, no. But that doesn't necessarily mean that raising taxes has to depress the economy.

Do you think it's possible for taxes to be too low?

I do! I also think we discount the collective tax rate and focus on the income tax. This is why I would love to see a combined tax (flat or fair) and end the income tax. I'm not a tax man or accountant, but I think it could be done fairly.

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......“We began this year with economists and business leaders saying that we are poised to grow in 2013,” he said. “But this week, we also received the first estimate of America’s economic growth over the last few months. And it reminded us that bad decisions in Washington can get in the way of our economic progress.”

Obama said there were “real signs of progress” in the 2013 economic outlook, citing increases in home prices and car sales.

But he said the unexpected economic contraction showed the wisdom of his “balanced” approached to budget negotiations with Congress.

“We all agree that it’s critical to cut unnecessary spending,” Obama said. “But we can’t just cut our way to prosperity. It hasn’t worked in the past, and it won’t work today. It could slow down our recovery. It could weaken our economy. And it could cost us jobs – now, and in the future."

I think he is right on.

Priority #1 is stimulating economic growth thus increasing jobs.

Dealing with the long term debt is a pressing need, but to prioritize debt reduction before the economy is on it's feet is counter-productive.

http://www.nytimes.c...aulkrugman&_r=0

Do you think that raising taxes stimulates the economy?

Generally speaking, no. But that doesn't necessarily mean that raising taxes has to depress the economy.

Do you think it's possible for taxes to be too low?

I do! I also think we discount the collective tax rate and focus on the income tax. This is why I would love to see a combined tax (flat or fair) and end the income tax. I'm not a tax man or accountant, but I think it could be done fairly.

I think that it can be done fairly also. However, fairness is sometimes subjective and I thnk we have to be very careful to eliminate as much of the regressive nature as possible. I would like to see something like this:

Necessities and Used Goods - very low percentage

Durable Consumder Goods - the baseline percentage

Luxury Items - very high percentage

Capital Equipment - negative percentage (stimulate growth)

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If you cut government spending during a recession or slow recovery, economic growth WILL slow or stop.

I contend that the government cutting unneccessary spending would stimulate the economy. I think that business leaders would have more confidence in the future of the economy if they felt that the government was trying to fix some of its wasteful spending habits.

I agree with this also. You can spend money and not necessarily do anything to stimulate the economy.

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......“We began this year with economists and business leaders saying that we are poised to grow in 2013,” he said. “But this week, we also received the first estimate of America’s economic growth over the last few months. And it reminded us that bad decisions in Washington can get in the way of our economic progress.”

Obama said there were “real signs of progress” in the 2013 economic outlook, citing increases in home prices and car sales.

But he said the unexpected economic contraction showed the wisdom of his “balanced” approached to budget negotiations with Congress.

“We all agree that it’s critical to cut unnecessary spending,” Obama said. “But we can’t just cut our way to prosperity. It hasn’t worked in the past, and it won’t work today. It could slow down our recovery. It could weaken our economy. And it could cost us jobs – now, and in the future."

I think he is right on.

Priority #1 is stimulating economic growth thus increasing jobs.

Dealing with the long term debt is a pressing need, but to prioritize debt reduction before the economy is on it's feet is counter-productive.

http://www.nytimes.c...aulkrugman&_r=0

Do you think that raising taxes stimulates the economy?

Generally speaking, no. But that doesn't necessarily mean that raising taxes has to depress the economy.

Do you think it's possible for taxes to be too low?

I do! I also think we discount the collective tax rate and focus on the income tax. This is why I would love to see a combined tax (flat or fair) and end the income tax. I'm not a tax man or accountant, but I think it could be done fairly.

I think that it can be done fairly also. However, fairness is sometimes subjective and I thnk we have to be very careful to eliminate as much of the regressive nature as possible. I would like to see something like this:

Necessities and Used Goods - very low percentage

Durable Consumder Goods - the baseline percentage

Luxury Items - very high percentage

Capital Equipment - negative percentage (stimulate growth)

EXCELLENT post! This is so freaking simple and would be so successful that it could not possibly happen. By the way, I also think that taxes can be too low.
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Taxes need to be a non-factor in discussions of economic growth. When they are the driving force behind whether we get economic growth or contraction; you have a serious tax problem. We did without Federal income tax for the 1st 140 years we were a nation. We did OK...I think we'd do OK again.

Can taxes be too low? No, of course not...oh, wait, unless you have a group that doesn't understand you actually have to pay for what you spend. We are taking in more tax $$ than at any time in history and running $1T deficits...The "rich" are paying the highest $$ and %'age amount of taxes than at any time in history...we don't have a "bleeding heart those evil rich people pay too little" fairness or too little tax problem. We have a spending problem.

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Taxes need to be a non-factor in discussions of economic growth. When they are the driving force behind whether we get economic growth or contraction; you have a serious tax problem. We did without Federal income tax for the 1st 140 years we were a nation. We did OK...I think we'd do OK again.

Can taxes be too low? No, of course not...oh, wait, unless you have a group that doesn't understand you actually have to pay for what you spend. We are taking in more tax $$ than at any time in history and running $1T deficits...The "rich" are paying the highest $$ and %'age amount of taxes than at any time in history...we don't have a "bleeding heart those evil rich people pay too little" fairness or too little tax problem. We have a spending problem.

First, statements comparing simple dollar amounts are not very useful in comparing historical trends.

Second, I don't think the "rich" are paying a higher percentage than at any time in history.

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Taxes need to be a non-factor in discussions of economic growth. When they are the driving force behind whether we get economic growth or contraction; you have a serious tax problem. We did without Federal income tax for the 1st 140 years we were a nation. We did OK...I think we'd do OK again.

Can taxes be too low? No, of course not...oh, wait, unless you have a group that doesn't understand you actually have to pay for what you spend. We are taking in more tax $$ than at any time in history and running $1T deficits...The "rich" are paying the highest $$ and %'age amount of taxes than at any time in history...we don't have a "bleeding heart those evil rich people pay too little" fairness or too little tax problem. We have a spending problem.

First, statements comparing dollar amountss are not very useful in comparing historical trends.

Second, I don't think the "rich" are paying a higher percentage than at any time in history.

The 15% capital gains tax on 10 million in passive income must be awful. We've got to do something for these people. How do they survive?

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If you cut government spending during a recession or slow recovery, economic growth WILL slow or stop.

I contend that the government cutting unneccessary spending would stimulate the economy. I think that business leaders would have more confidence in the future of the economy if they felt that the government was trying to fix some of its wasteful spending habits.

I agree with this also. You can spend money and not necessarily do anything to stimulate the economy.

Oh please, do tell. Some spending has a greater effect on growth than other spending, but it all helps.

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If you cut government spending during a recession or slow recovery, economic growth WILL slow or stop.

I contend that the government cutting unneccessary spending would stimulate the economy. I think that business leaders would have more confidence in the future of the economy if they felt that the government was trying to fix some of its wasteful spending habits.

I agree with this also. You can spend money and not necessarily do anything to stimulate the economy.

Oh please, do tell. Some spending has a greater effect on growth than other spending, but it all helps.

Our goal should be to do what is best for the country. If printing more money and using it to encourage people not to work stimulates the economy, we as a country still should not do it BECAUSE IT IS BAD FOR THE COUNTRY. Spending money unwisely is bad. Period.
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If you cut government spending during a recession or slow recovery, economic growth WILL slow or stop.

I contend that the government cutting unneccessary spending would stimulate the economy. I think that business leaders would have more confidence in the future of the economy if they felt that the government was trying to fix some of its wasteful spending habits.

I agree with this also. You can spend money and not necessarily do anything to stimulate the economy.

Oh please, do tell. Some spending has a greater effect on growth than other spending, but it all helps.

Our goal should be to do what is best for the country. If printing more money and using it to encourage people not to work stimulates the economy, we as a country still should not do it BECAUSE IT IS BAD FOR THE COUNTRY. Spending money unwisely is bad. Period.

You're confusing monetary policy and fiscal policy.

Of course we should strive to spend money wisely. But the notion that unwisely spent funds don't affect growth is factually incorrect. With that being said, there are some ways that government spending can benefit the economy more than others (and of course we should aim for these investments), but it does all factually contribute to economic growth. Period.

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If you cut government spending during a recession or slow recovery, economic growth WILL slow or stop.

I contend that the government cutting unneccessary spending would stimulate the economy. I think that business leaders would have more confidence in the future of the economy if they felt that the government was trying to fix some of its wasteful spending habits.

I agree with this also. You can spend money and not necessarily do anything to stimulate the economy.

Oh please, do tell. Some spending has a greater effect on growth than other spending, but it all helps.

No, not necessarily.

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If you cut government spending during a recession or slow recovery, economic growth WILL slow or stop.

I contend that the government cutting unneccessary spending would stimulate the economy. I think that business leaders would have more confidence in the future of the economy if they felt that the government was trying to fix some of its wasteful spending habits.

I agree with this also. You can spend money and not necessarily do anything to stimulate the economy.

Oh please, do tell. Some spending has a greater effect on growth than other spending, but it all helps.

Our goal should be to do what is best for the country. If printing more money and using it to encourage people not to work stimulates the economy, we as a country still should not do it BECAUSE IT IS BAD FOR THE COUNTRY. Spending money unwisely is bad. Period.

We did not print money to give to people who will not work. If we had, considering the amounts we are talking about, there woulddn't be any poor people. Well, not many. However, that assumes no bureaucracy. Which leads to another question. How many dollars do we spend giving a dollar away?

If we spend 8 million dollars building a base in Afgahnistan that no one uses, does that help the economy? If we over pay for medicaid services and the money leaves the country, does that help the economy? If we give a social security payment to someone who loses it all playing the futures market, does that help the economy? I'm not trying to be smart, just provoke thought and discussion.

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