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October 21, 2014

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Letter to the editor:

Austerity is a necessary evil

For months now, liberals from columnist Paul Krugman to the president and politicians all over Europe have been promoting the concepts that growth is good and austerity is bad.

Not a tough sell, as austerity means less public spending and eventually higher taxes. Growth is good because growth would put more money in people’s pockets with new jobs and, of course, would raise taxes fairly painlessly.

The issue is unfortunately not so clear cut. Austerity is a means to an end, but growth is an end. Naturally, we all want growth, but none of us want austerity. France voted in an even more socialist leader promising less austerity and more growth, and, of course, the battle in Greece is just the same: The people like growth and don’t care for austerity.

Liberals make it sound like the various governments are sitting on boxes of cash, and all that needs to be done is to have the political will to get it out and spend it. In France, the same as here, the politicians say, “No problem. Just tax the rich.” Perhaps, but I don’t think that has been particularly effective at any time, anywhere.

So the world over, politicians are saying, “Just give us a shot and we’ll have growth, not austerity.” Spending money that governments don’t have has never worked yet, but I suspect the world’s about to give it another try. Watch Greece for a preview of the result.

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  1. Getting the private sector to create jobs is the main part of this equation,but the incentives and regulatory consitions must be right. Central governments need to allow the private markets the freedom and right conditions for unleashing private capital, and growth will begin to happen.

  2. The UK tried austerity and they are now back in recession.

    The US economy on the other hand is growing at a steady reate.

  3. Spending money we didn't have certainly worked during WW2 and the Marshall plan afterward.The truth of the matter is that we have been trying austerity and it's not working. We've been ignoring Krugman and listening to the Simpson-Bowles crowd who are a bunch of rich silver-spoons and corporate democrats.Do the conservatives make intellectually dishonest arguments ?

  4. We have used a great deal of fiscal stimulus to avoid another Great (or Greater) Depression. The result has shown us that we cannot borrow our way to growth. With the rest of the world leaning toward austerity, it's even less likely that we will be able to grow our way out of the current situation.

    We have an opportunity to take our medicine now and get it over with. We should allow all the tax cuts to expire as scheduled at the end of this year. We should implement the recommendations of the Simpson-Bowles Commision as a start. Our investment in our future cannot be painless and must be shared. The longer we delay, the greater the pain when it eventually happens.

  5. Simpson Bull is a bunch of manipulative garbage. If we were serious about cutting deficits why did we extend the Bush tax cuts last Christmas ?

  6. I believe that the letter writer and the poster Jim Weber are correct. Deficit spending may work occasionally when a country's overall debt level is extremely low, and thereby the government may in fact be successful in smoothing out rough patches.
    However, the obscene deficit spending now practiced by most western governments must end. We will have to suffer through a rather extended depression-like period before real growth is again possible (much like the bursting of the housing bubble).
    Posters like Bob Jack are advocating a line of thinking that will dismantle virtually all the social safety nets lovingly crafted by previous caring governments over the past several decades, and turn America into a third world country. Your Republican party appears to honestly agree with Mr. Jack's philosophy (or, more likely, he has bought into their line of thinking).
    Unfortunately, America's debt and deficit problems are now so outrageous that balancing the budget to satisfy the letter writer's wise counsel will also mean incorporating many of Mr. Jack's hard-hearted suggestions. I guess that means they're both right.
    Donald Desaulniers (FromBellevilleCanada)

  7. We remain a nation on the cusp of hardship for the masses. Allowing the tax cuts to expire is a prescription for more hardship and would deflate any hope for a robust recovery. At this juncture it is the government that must restrain itself. The source of any recovery must be the realm of private interests, primarily consumers and small business. These interests must be given the major share of booty with which to generate demand and propel recovery.Eventually any federal revenue enhancement should revolve around tax reform which falls ,to the greatest degree possible,on all Americans.

  8. Do the math: we CANNOT keep spending at current levels, with or without the tax cuts. Government spending must focus on ESSENTIALS such as defense of the continental U.S., not foreign soil, homeland security, LAW ENFORCEMENT at the federal level, border security, removal of illegals and foreign nationals, and infrastructure WITHIN the nation. SS and Medicare MUST be restructured for solvency. Business is waiting on this--the liberal threat to business paying for all of Medicare is preventing hiring. Get it done and make it clear that increases in wage limit subject to SS / Medicare taxes is limited to the employee portion. There is no funding for Medicaid so stop expanding it. Limit Medicaid benefits to those unable (non-able-bodied) to provide for themselves. And limit Medicaid to NECESSARY health care, not endless "insurance" plans and elective care. Stop Medicaid eligibility to adults who do not qualify for disability nor retirement benefits--we cannot afford so much dead weight. Maybe local governments and non-profits, including churches, can do something for American indigents. Expel the 7 million illegals in NON-agricultural jobs, stealing jobs from our long-term unemployed. Expel the other illegals usurping our government services from K-12, library internet to call home, anchor baby Medicaid, food stamps, TANF, utility payments, child care expenses. ELIMINATE federal tax code preferences for more than 3 children--illegals are defrauding our tax system by claiming additional child benefits whether the kids are here or not. And if they need more than 3 kids, THEY can pay for them--so can the "diggers" and people who want larger families. GET something done so people can budget. Let us determine if we have any discretionary money to spend, to create demand, to create jobs.

  9. Ridiculous things propagated by Repubicans:

    1) Get canadians with good health care coming down here to dramatize our deficits

    2) tax cuts create jobs

    3) tax cuts decrease deficits

    4) tax cuts cure cancer

    5) keep going with things that don't work: trickle down economics.

    6) Avoid thinks that will work : Keynesian economics

    7) Deregulation produces jobs

    8) deregulation lowers deficits

    9) Globaloney

    10) Health care for the wealthy hypochondriacs; the rest of us can get sick and die

    11) The clergy and rich folk ought to run the country;It's dangerous for the rest of us to read and write.

    12)It's deficits not unemployment we should be concerned with; since we don't want anyone cutting into our trust funds.

  10. We ought the call the bush tax cuts and them inheritance taxes "entitlements" too; as well as the oil and gas subsidies.

  11. We could have a war mongers tax , charge people who made money with defense contrators in the last ten years. We could fund the VA with that.

  12. Republicans are tax shirkers , deregulators and globaloneyists ; recovery is impossible under this regime.

  13. My liberal rhetoric hasn't been tried but we've been using Reagans old trickle down for thirty years and all we have is an unemployed middle class with poor health care and a fore closed house.

  14. The Left never saw a tax it did not like. Every year tax revenue should be justified by the Government on a Zero Based basis. There should always be a budget that justifies every dime to be spent.Wealth belongs to the People, not the state.
    Without the sweat of the People, there would be no wealth for the Government. No tax revenues to collect.This is a point that the Left does not get. It believes that wealth is a naturally occuring element in the universe which generates tax revenue for equal distribution to everyone.

  15. Michael,

    You are RIGHT on the MONEY.

    Don't listen to the windbag...he's a paid shill.

    I enjoy your commentary...
    it ain't MADE UP JUNK, or facks & figgurs rearranged to make statistics support an extreme TeaNut agenda.

    "Lies, damned lies, and statistics" is a phrase describing the persuasive power of numbers, particularly the use of statistics to bolster weak arguments.

    http://en.wikipedia.org/wiki/Lies,_damne...

  16. The problem right now is unemployment- tax subsized oil tycoon.

  17. "Trickle Down" economics is less preferred than "trickle out" economics. Under the latter all wealth generated remains with the creators of that wealth except what they decide to spend voluntarily. Under these principles, (other than for the common defense and the care of the elderly and disabled) all wealth would remain with those who create it at all levels of society. This keeps life simple for the Left.

  18. The Right never saw a tax cut it did not like, even if it's paid for with borrowed money. They weep openly about the debt (plus the interest) being passed on to our children and grandchildren but never seem to associate that with any tax cut they're receiving or their unwillingness to contribute more to pay our own way now.

  19. Actually oily most wealhty don't create wealth they inherit it look at Ensign, Frist, W, and all the rest.

  20. The fact is that it is not a tax cut that I like as much as I do not like taxes at all unless they are critical to the common defense or the care of the elderly or disabled.

  21. To say that the wealthy do not create wealth is to ignore the reality that only a minority of the wealthy inherit their wealth. Most create their own. Look at Gates, jobs and Buffett as examples. Do you actually think that there are no more wealth creators?

  22. The fed has stated a minimum of 11 years to get back to a pre-recession unemployment rate of 5%.
    Recessions have occurred every few years since the country was founded...about 47. Very little can be done about it.
    Austerity in Europe has put 12 countries into recession. Germany is stuck in the mud. The US has slowed but growth is taking place. Construction and housing are on the mend. Car sales are robust.
    Keep your fingers crossed!
    Our fiscal issues are due to medical cost inflation . Period!! Even defense is looking at $1 trillion in med costs in the next 10 years. Up from $16 billion a year a decade ago. Money that was spent on weapons systems is currently being diverted to medical.

  23. http://en.wikipedia.org/wiki/Jobs_create...
    employment growth in the United States was strong when the country was young and we had very little international economic competition. The current environment is going to slow things down for many years to come.

  24. Greece is a tiny country with a few million people and economic output $200 billion less than Los Angeles County. Forget Greece. They peaked as an economic superpower centuries ago. Greece should have never been brought into the euro zone.

    Greece, Italy, Portugal, and Spain need to go their separate ways. All these countries look to Germany for economic assistance. Germany needs to kick them to the curb.

  25. If someone thinks that austerity is the way to solve economic problems that we are facing they are totally dilusional. The only way out of this is to spend ,budget and allocate dollars toward debt reduction. When people are in trouble financially they absolutely have to pay their debts. Yet there is a right and wrong way to go about it.
    Pay yourself just like you pay your bills.
    This hole is very deep yet if you look at history we were in worse shape prior to ww2
    The fact remains we spent our way. Out of the recession ,instituted a Marshall plan ,more spending and yes educated our vets and paid off the debt,
    Don't buy into the scare tactics. All we need is a long term plan and to tell the naysayers to go kiss off

  26. There is an article in the paper today that reflects typical CEO pay of $9.6 million. Some earning over $100 million. These fools have a problem paying union wages but have no issue whatsoever taking billions for themselves. Many of these guys run marginal companies and take compensation that is 100 times what is made by CEOs in the rest of the world running similar businesses. It would help if some of this money made its way to the workers.

    Marvin... Regarding your comment that people have to pay their bills. Nonsense! People default, seek relief in bankruptcy court, steel and engage in other illegal activities. Nonpayments of medical bills amount to hundreds of billions of dollars. Walmart loses $4 billion a year to theft and corruption.

    Debt bubbles have occurred throughout history among nations. No nation has ever paid back massive debts.

    Read about the Latin American debt crisis, the Asian contagion, Russian debt crisis, and the Germans defaulting on their Treaty of Versailles obligations. People don't pay massive debts and neither do countries.

  27. Look we were out of work and in debt in 1948(more so even); and we had enough to rebuild Europe and Japan. Its time to reject conservatives and live in hope instead of fear.

  28. The upper 1% may be making a little less than they made a few years ago but the upper upper 1% is swimming in it. I have followed US and international real estate for 40 years. It's getting to the point where you can sell a $50 million property faster than a $200,000 property. There have been multiple sales in California in the $50 million plus range. Sales in New York in the hundred million dollar range. The Safra estate in the South of France sold for $750 million several years ago.

    The government needs to siphon off some of this ridiculous wealth. America and France are getting too expensive for the Americans and French. The cost of housing, medical care and education have skyrocketed to the point of disbelief. According to the medical industry households need incomes of at least $200,000 a year for wealth creation to even begin.

  29. http://abcnews.go.com/US/wireStory/top-c...
    My error. I meant public companies. If you look at some of the largest employers in the United States they do pay their workers squat. The average Walmart worker makes $11 an hour. Sounds good except for the fact you can't even buy a decent family health insurance plan for $11 an hour anymore much less a home or fund the child's education. How many in this country make less than $20,000 a year? Being an airline pilot was a very prestigious profession when I was a kid in the 60s. Today starting pay at Continental is $30,000 a year and they are hiring pilots with 500 hours of flight time. This would have been unheard of years ago.

    Ultimately what you want in a productive society is self-reliance. The ability for an individual to work, start a family, buy a home, save for retirement and medical expenses, put kids through school. Many people can no longer even accomplish one of these things.

  30. The pathetic part is that Hoover said as much and Obama is more or less echoing it.

  31. Why are all the people who know how to pull us out of this recession posting comments on the Sun's opinion page instead of running our country? Seems like a waste of brainpower.

  32. http://blogs.wsj.com/middleseat/2009/06/...
    I said starting pay. Pilots making $100K have years of experience.

  33. Richard...They don't have the guts to run for office. It' always easier to criticize what others do than to try it yourself.
    I was a medical trustee for many years (elected). Some of these issues are complex beyond belief. We worked on medical cost containment for decades and couldn't get to first base taking on medical and insurance lobbies.
    Politics is simple when sitting behind the computer. Not so simple when people threaten to kill ya.
    How many presidents have been attacked for nothing more than trying to do a very tough job.

  34. The only people I see getting killed are the lower middle class and poor kids in our service in central asia

  35. The Iraq war had the underlying objective: spending as fast as possible, throwing money away and borrowing to create massive debt. Iraq is now the most costly war ever fought in 2012 dollars, and to fight a third world nation!

    Bush manufactured the reasons for the Iraq War and Bush pals are using the National Debt created by that war to demolish social protection nets. Our money was THROWN away for nothing while war debts are still piling up.

    Republicans have created 80% of the existing National Debt over the past 30 years. Every Republican President since Reagan has experienced a large recession near the end of their Presidency, recessions created by greed: no crop failure, natural or international causes were involved.

    The debt we have today is not caused by Social Security or Medicare - it is caused by banking, real estate or insurance failures, themselves caused by deregulation and the ensuing greed.

    Cutting $1 trillion in National spending will reduce the GDP by 5% and that WILL cause a recession. Romney's plan is to cut spending, cut more taxes for the top income brackets and INCREASE the size of the military.

    The objective of the Bush tax cuts was to create prosperity - instead they created the biggest recession and expansion of the National Debt in 70 years. Now, the GOP wants to use the same philosophy that created the problem. Bankruptcy will soon become a way of life.

  36. Tax cuts for the wealthy is not an austerity plan - that is obvious.

    The wage earner cannot take advantage of tax shelters so they pay 25% income tax, while wealthy who can afford tax write-offs pay 15% tax on 'investment income'. Lobbyists for the wealthy end up writing the tax shelter laws, hand them to the representatives for the vote and get paid well. Wage earners have no paid lobbyists so they are discriminated against by the tax laws.

    Austerity that is being called for the wage earner and underprivileged is nothing more than class warfare - that is clear and obvious.

  37. be afraid.....................booooooooooooo!!!!!!!!

  38. Demand-side economics does work, if done correctly. During times of slow growth, spending to increase demand is a good thing, as long as during the good times, that spending is paid for. The problem we have is that we spend too much and tax too little during the good times. We should have (and could have) paid down the national debt significantly from 1995-2005. Instead, we got a ton more spending, and lower taxes. Increasing debt during good times is the problem (that is what Greece did: it borrowed a ton of money when times were good, instead of paying down its debt. The result now is a government with crippling debt and no way to borrow to stimulate growth, which is why Eurobonds may be necessary).

    As a liberal, I feel the government does need to make investments now, while the economy is slow, especially in infrastructure and education. I'm OK with our debt rising-- as long as we decide to pay for it when times are good. That means we all pay more taxes (especially the wealthy) and accept less government spending (including entitlements). The problem with Obama's stimulus was twofold: it tried to do too much and it spent too little. We need a massive road building program, money to expand rail, airports, and ports, and money for education, Primary, secondary, and post-secondary.

  39. The rich elite stole our jobs and houses but thats not enough they want our future- Medicare and Social Security

  40. "Let them eat cake"...

    Mitt Romney & the TeaPublicans.

  41. Wall Street destroyed over $10 trillion in retirement income using credit default swaps: mortgage insurance policies that had no cash to back them up.

    The most dangerous entitlements today are paid to those who manipulate the financial system, walk away with the profits to buy up the foreclosed homes.

    Entitlements are also dividend payments made year after year to those who do not work for the money they get. Example: "Dividend reinvestment". This (not what it means) is used by Capital groups such as Bain to borrow millions and then pay most of that cash to the investors. That company often goes bankrupt but the investors keep the cash paid to them.

    Example of "Dividend Reinvestment": K-B Toys was was purchased and taken private in 2000 by the leveraged buyout firm of Bain Capital for $305 million. Only $18 million of the purchase money was cash from Bain, the rest was borrowed against the assets of the company.

    Sixteen months after the buyout in early 2002, Bain Capital paid itself $85 million in dividends. Two years later, due to its enormous debt, KB Toys filed for Chapter 11 bankruptcy protection and closed 365 stores on January 14, 2004. Thousands of jobs were lost to make riches for a few.

    In the world of capital, fortunes aren't made by putting people to work or creating jobs - fortunes are made through manipulation, arbitrage, and thievery cast as 'weeding out the weak'. Put 10 million people on the street with another real estate failure and Occupy will be the future for sure.

  42. RefNv wrote this:
    "Gerry- The average pilot salary is $104,000. Pilots of smaller commuter planes make on average $65,000."

    What is the mean, mode, and distribution of those salaries? After all, the average pay for me and Warren Buffet is millions of dollars a year so I must be doing REALLY well.