I Forgot About The Balanced-Budget Multiplier

A view simple concept–if you expand government spending and taxation by the same amount, then there is an equivalent increase in national income. Hence, there is more income, but not more national debt.  Great!

I wrote about the concept of the balanced-budget multiplier and of raising taxes and government expenditure by the same amount, dollar for dollar. These ideas were first put on the national stage in 1943 by Paul Samuelson, the Nobel laureate. He argued that such a policy would be one-for-one expansionary: each dollar spent is a dollar of new national income. As long as interest rates are near zero — as they were then and are now — there should be no “crowding out” of private expenditures by government ones.

This is an expansionary change in fiscal policy that won’t require additional increases in the national debt. We should start a dialogue right now about taking such action, before the damage of protracted unemployment worsens.

via Tax and Spend, but Keep Your Balance – Economic View – NYTimes.com.

Coral Gables Can’t Manage The Biltmore

I have written before that the city of Coral Gables has no business owning a large, historic hotel, and the last few years have shown us is that the city is over its head. The city management have been incapable of auditing and managing the hotel’s lease.

Perhaps the hotel should be returned to the federal government and the National Park Service, which has the policies and the money to keep track of what is happening at the hotel without getting itself tied up in unseemly relations with the hotel’s management.

The city will not have the resources and willpower in the future to keep track of the Biltmore, even if it wins a costly legal battle with the lessee, and we will then return to the same problem again.  Certainly, the Biltmore is a great asset for Miami-Dade county, but the city of Coral Gables is too small an operation to care for its historic qualities.

America’s Debt And The Economically Illiterate

From the best and seriously conservative Economist, it is embarrassing to our nation that the US is led by people who haven’t the slightest idea about basic economics, or have chosen to ignore economics for personal advantage.  Either way we are stuck in a stagnant economy, huge unemployment and nothing happening to reverse course.

The sticking-point is not on the spending side. It is because the vast majority of Republicans, driven on by the wilder-eyed members of their party and the cacophony of conservative media, are clinging to the position that not a single cent of deficit reduction must come from a higher tax take. This is economically illiterate and disgracefully cynical.

via America’s debt: Shame on them | The Economist.