the top economists
from the international monetary fund
last week it knowledge
that the fund blew its forecast for greece in other european economies
because it did not fully understand how government austerity efforts would harm
your mind economic growth
it jet i don't even know how to really
digest this
because it was clear
there was a
tremendous amount outcry
from economists did seem to me across the spectrum
who said that you know everything that we know of keynesian economics
suggest that if you ka
spending
and raise taxes particularly on those people who spend money
during an economic downturn you're going to
deep in the economic downturn
but yet apparently at the i_m_f_ they don't have uh... pattern of phone
through the internet
the new and highly technical paper litigated the issue of fiscal
multipliers
we've talked about this on this program the impact that it was your fall in
government spending or tax collection
has on the country's economic output in other words
there is not necessarily a one to one relationship between government spending
halifax the economy
government spending in specific types of government spending and specific tai chi
types of
tax increases or cuts
have an implication beyond that one dollar
in the context of the economy
we know that the multiplier effect for instance for unemployment insurance is
around one dollar and sixty two cents for every one dollar unemployment
insurance you give
to unemployed people it has a one dollar in sixty two cents
impact on
the economy on the g_d_p_
because that dollar gets spent in spent in spent again
because that first recipient of that dollar
puts it immediately into the economy
and in buying products that will have a greater affect that is d multiply
if fiscal miss go by multipliers are small
writes howard schneider
believe this is in the uh...
new york times
countries can cut spending faster or raise more in taxes without short term
damage in other words
the fiscal multiplier
for tax increase
on
make more than four hundred fifty thousand dollars a year he's they
returned it
because they don't spend this money anyways
if they are large
like unemployment insurance
in the process can become self-defeating or hurting other words if you stop
unemployment insurance they come in
they can become self-defeating at least miss short run
with each dollar of government spending cuts for example costly economy more
than a doll ellen lost output
and that's actually increasing the debt g_d_p_ ratios
so the i_m_f_ has now conceded this point
and it's why you see the greek economy
even though they impose this austerity is supposedly to cut their deficit
going to the twilight and increase their deficit
and you see the same thing in britain
you see the same thing in spain
you see or haver
this type of este ready has been imposed
so the implications of of
four years of government job cuts
under
president obama
despite the fact that the
there were seven hundred twenty five thousand more jobs in the private sector
they're almost us seven hundred thousand
for your government jobs
that is why we have had such time the
such a hard time recovering
from this recession
the decrease in spending the shrinking of the deficit is also
than a huge lag in the recovery of this recession
so all of what we're seeing over the next two months
is
nothing more
than an attempt to cut long-term spending and do it on the backs
essentially senior citizens
either by cutting into medicare in the
the form of raising eligibility age
or cutting social security
in the form of of
under counting the
inflation adjustments that seniors
need to maintain some type of parity
in their retirement so they don't have to move from
to enter the catholic
this is all attempt by
the establishment
and the wealthy in this country
to basically pay government bills
by shrinking the social support systems of our country
that's all it is
and in the case of president obama's i think at least a part of that is also
if we get a deal on cutting social security
it's going to be one element uh... my legacy
have checked off that box