We are on the wrong path right now thats for sure, but seems to me that Toomey has some new approaches lets atleast see what can be done. before as Jim would like have a middle east right here in our own streets. That sure wouldn't make anything any better.
Its not a Republican democrat or any party problem its a slow and steady destruction of our constitution. there is good and bad in all of the party's the problem is with our current political structure one or two great ideas become lost in the aisles.

I think Senator Toomey has well thought out plans and the right vision for the future and I back him 100 percent.
Jody Licker

I'm on board to see some major changes in politics locally, I realize my little voice can't do too much in Washington, but locally I can do lots to dig into what our local politicians are doing, the previous gathering of politicians has sucked us dry, yes, Toomey hasn't always done things that make me happy but I'm willing to give him the chance to make some changes. I'm a conservative, but not a radical like Jim would like to see happen. Marching in the streets does nothing for our economy but make people look like they have too much time on their hands and no job. I work for a living, that comes first.

I just hope people realize that what Toomey is advocating here is going to result in pay cuts. He's talking about laying off a massive number of public sector workers to liquidate labor and drive down wages. He thinks there will be more jobs if everybody gets paid less. There's not any real evidence to support the "growth through cuts" approach, and the fact that his stated aim is to make everyone take a pay cut should make this politically toxic.

But the reality is that nobody has to take a pay cut. The alternative to the Republicans' deflation strategy is an inflation strategy, which would result in higher wages, more bargaining power for workers, and lower real household debt.

Yes, that is sort of what I am arguing, except not just government employees will benefit if the Fed sets a higher price level target, prints a bunch of money and Treasury stuffs it in envelopes and mails it to Americans. The trade deficit is more important than the budget deficit. Anything that lowers the dollar relative to other currencies makes our exports more attractive and makes it easier for households and the US government to deleverage faster.

Giving people more money means that they have more money to spend in the economy, or that they can deleverage faster from their debts. If businesses see sales increase, they will hire more workers, who will spend more money at other private businesses, and on and on. The problem the economy is facing is that there is too much idle capacity - too many people sitting on the couch not producing anything, too many factories and store fronts with no people to run them. More aggregate demand would put more of this idle capacity to use.

By contrast, Pat Toomey's plan would put more people out of work and drag down everybody's wages.

What's Toomey talking about re: corporate taxes? I'd rather pay GE's than my own! Individuals have to pay am AMT--an"altermative minimum tax, so that, even when they have tons of deductions, a high income still pays a modicum of a fair tax. The same should be required of corporations.

S - it's not counterintuitive - the missing ingredient is money.

There's two things that could cause a recession - a real shock (like an earthquake or a plague that massively destroys our capacity to produce) or a nominal shock (people get worried about the economy and they increase their holdings of some financial asset, be it cash, long-term Treasuries, high-quality assets, rather than spending it on currently-produced goods and services.)

We are experiencing a nominal shock. We did not suffer some catastrophic event that ruined our ability to make stuff. We are suffering from low aggregate demand - people are hoarding money. The policy response from Congress and the Fed should be to satisfy the demand for money so people start spending again.

If people had more money, they'd spend more, or pay down debts faster. There's no reason all the stores that were doing well in 2007 wouldn't be doing well again if people had more money.

Missy, my position is that taxes should not go up right now, but I do think we will need higher taxes after the economy recovers, because we need to bring the deficit down. However, I do think we need more inflation right now. Not problem inflation like we had in the 70's, but the 3-4% "Morning in America" inflation that America had after 1984. Yes, that means higher prices, but it also means higher real wages. All your debts are in nominal terms, so it makes it easier for you to get out of debt faster.

All you ever hear from republicans is pay and benefit cuts and tax breaks for business. Business want the protection of our fighting forces, police, educators,nurses, educators, our law and order courts, and our infrastructure roads and bridges ect. And yet they want to pay little or no taxes. That leaves the burden on the workers and the retired.

Jon, do you really forget how the great recession started. It also doesn’t fit your limited definitions for the causes of a recession. The beginning of the "Great Recession" was Dec 2007. It was caused by a declining housing market. Sub prime mortgages had exploded and “inflated” the housing market. The US economy was driven by easy credit, a financial system leveraging that easy credit, questionable hedging of the subprime investments, high trade deficits (got that one right), and most of all, poor decision making by the American consumer. And where is your economic philosophy pointing. Right back to the ease of the American consumer to be empowered with easy credit and spending ability. American society wants instant gratification, not a disciplined and practical approach to attain one or two of their desires after needs are met. We are supposed to learn from history, not repeat it.

To the point of the trade deficit. It does need to get better. But until America can manufacture profitably, it will not happen. And the manufacturing left because the tax rates are too high and the union workers want more money than their marginal productivity adds to the profit margins after employing them for wages, health insurance, retirement, and other benefits. their extravagant purchases,

To put it bluntly...the accounts do not balance. Something must be done before the creditors take action.

I guess Bethlehem isn't as liberal or progressive as Jon Geeting claims. Go figure!

Manufacturing left America because of technology, globalization and the trade deficit. Our manufacturing output is actually up. (http://www.economist.com/node/18332894) It's the manufacturing employment that's down. Technological improvements have equipped us to make a lot more stuff with many fewer people than we needed in the past. That's a good thing. It is not why we have 10% unemployment. We'd be doing even more manufacturing if the dollar was lower. If the Fed targets an inflation rate of 3-4%, that's going to increase manufacturing firms' exports.

Technology fell behinds as unions started demanding higher wages, health insurance, retirement, and other benefits leaving less for capital improvements. That is when globalization and the trade deficit starting taking off. The labor for manufacturing was more cost effective abroad, and companies could build a new factory with half the zoning regulations here in the US (does every public bathroom need to be ADA accessible or should there just be a couple on every block within a shopping district). Finally technologic improvements were made in the US. Mostly in the new markets of computing and biotech (technology manufacturing technology). So while the global manufacturing market has grown since the 1970s, meaning the % of US manufacturing has also grown, does not correlate to the traditional manufacturing position that the Caterpillar plant in York, PA or even closer to home, Mack Trucks had. Your web link even points to that fact, although stating it is due to overseas sales. Yes logistics will have an impact but Asia and Latin American are emerging markets looking to develop. Cat and Mack manufacture equipment to aid infrastructure development. As they get build up with modern technology, lower employment costs, and a lower tax basis, what do you think will continue to happen to the trade deficit? What a risky bet to make instead of a disciplined and methodical approach. Your inflationary strategy puts the US on the ropes of bankruptcy if notes are called in.

But you're not denying that making US labor costs would fall relative to other countries if the dollar was lower. There's no question that a lower dollar would boost our exports, and improve the position of Caterpillar and Mack Trucks to compete globally. That's the whole point of the push to allow the renminbi to appreciate - when China pegs their currency to ours, it makes their exports less expensive, and ours more expensive.

I think the greater risk at this point is that we won't do enough to stimulate demand and suffer through a lost decade. Core inflation is very low right now and unemployment is very high.

I feel that messing with inflation is real risky buiseness. I would assume all things would go up, not just wages. So it would not have the effect that you describe, Mr. Geeting. And I fear the people it would really hurt are the poor and elderly. I say, go the more traditional way of eliminating wasteful spending, make cuts, not raising taxes and paying down the deficit.

Reducing nominal spending will slow growth. Aside from "not raising taxes" all of the policy you are advocating would slow job growth. The economy needs more spending, not less. It's also not the case that we only have two choices: slow growth or hyperinflation. 3-4% inflation is totally manageable. That is what we had during Reagan's "Morning in America" and everybody thought things were doing well then. If you really care about the poor, I think you should want to see upward pressure on wages and lower real household debt.

The question is will it be better for manufacturing in the US if the dollar was less than the yuan. No. Because then my purchasing power is also lower. The product produced in the US might be less expense compared to the one from China, but it still cost me more. Now add that to increased federal taxes to make up for the stimulus your referring to, and my expendable income is even lower. That is why a smaller more efficient govt is better. Eliminate wasteful spending and keep more money in the pockets of US citizens to use responsibly. With lower taxes, more competition can enter the market. If we then buy the American built product, or value added product, that can be produced by a work force whose wages, health insurance, retirement, and other benefits are in line with their marginal productivity; the US economy can rebound. But what Toomey is really talking about is getting the government operating efficiently to lower taxes which will help business here in the US as well as tax payers. Right now we have government workers at zero or less than marginal productivity after factoring wages, health insurance, retirement, and other benefits. Look at your positions of Records Coordinator at Open Society Institute and Political Analyst/Blogger at Lehigh Valley Independent. Where are the dollars coming from to pay your salary. It is obvious that you have a vested interested in bigger government and why you have time to respond to every post.

Why then are US policymakers on both sides of the aisle calling for China to let the renminbi float? What do they think that will do for US employment?

Mr. Wagner, there's a big difference between Weimar hyperinflation and 3-4% inflation. The Fed currently has an inflation target of 2% and is consistently not hitting it. They're not even trying to hit it. We could use a period of above-trend inflation to bring down unemployment and deleverage faster. It's not true that *any* increase in inflation will lead to hyperinflation. The Fed is perfectly capable of setting a higher inflation target or price level target and hitting it without overshooting. (http://www.ft.com/cms/s/0/4d54e574-d57a-11df-8e86-00144feabdc0.html)

Core inflation is a concept developed to confuse the public. There is an overall realignment of pricing going on at present. Housing pricing is still collapsing as a result of the ending of a financing mechanism for a large portion of the American public. The price of most other items is rising. Core inflation excludes the most important items of all... food and energy. What kind of measure of inflation is one that excludes food and energy? One designed to fool the public...

Keep this in mind going forward...as inflation begins to take off, the economy will appear to look as though it is recovering from recession.

Toomey is advocating the Club for Growth position that has been wrong for the past decade. The fact is the housing bubble reduced the amount of money that people can spend, especially for those who spent above their means. If people don't have money to spend- unemployed, can't get credit, decides to reduce debt (voluntarily or not)-- then why would the private sector invest. They have over capacity now! The Republicans have plan to cut deficit by cutting government spending. Examination of their assumption for an economic recovery because of debt reduction is that people will take on a lot more debt than they had before 2008. Pretty dumb idea. The stimulus never was. Cuts by states offset federal spending (stimulus). So it didn't fail except that Obama had no guts to push through real stimulus. If spending is 70% consumer, exports will not work. We need more government spending to get jobs and hence money back in the economy to support Toomey's masters. Otherwise they will invest elsewhere. Why should they invest in USA when there is no market?

Its not a Republican democrat or any party problem its a slow and steady destruction of our constitution. Toomey hasn't always done things that make me happy but I'm willing to give him the chance to make some changes <a href="http://www.buildingself-esteem.com">Building Self Esteem</a>

Toomey hasn't always done things that make me happy but I'm willing to give him the chance to make some changes. I'm a conservative, but not a radical like Jim would like to see happen. <a href="http://www.buildingself-esteem.com">Building Self Esteem</a>