That would seem a relatively trivial thing, except that Carmen Reinhart and Kenneth Rogoff's paper "Growth in a Time of Debt" (2010) is cited all over the
place by the GOP (including prominently and persistently by Paul Ryan) as proof that high public debt as a percent of GDP destroys all economic growth (and, in fact, produces negative growth on average). Thus, they say, we must practice austerity in order to starve a fever, or something like that.
But a new paper by some folks who finally got a chance to look at Reinhart and Rogoff's data and spreadsheets finds all sorts of dubious exclusions and groupings of data, and at least one presumably unintentional one — excluding several countries from the analysis.
While running the numbers correctly doesn't indicate that running a high public debt is a great thing, it shows the effect are much less negative, on average, than has been touted. And it bolsters arguments that, in times of economic distress, running a short-term deficit could have some significant benefits.
(Reinhart and Rogoff respond at http://goo.gl/zYBhb … their answer seems to be, "Well, it's still a bad thing, and there have been other papers that agree with us, and we're publishing a new paper soon so hang on." No commentary on the Excel range mistake. Um, whatever.)
Shocking Paper Claims That Microsoft Excel Coding Error Is Behind The Reinhart-Rogoff Study On Debt
This could be huge.
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They are doing a serious analysis in Excel??? Not in a database???
I am truly exasperated.
Well, for the limited number of records they're dealing with, it may make sense to do it in Excel. But it would have been nice if they'd had someone check their work …
Only a complete moron with think that high debt doesn't affect economy. Think about it rationally for a second. Unemployment is at an all time high. More people have left the workforce in the last few years then any time in resent history. All this been happening since we've been having trillion dollar deficits. Today less people are employed then the worst part of Bush's administration. The current administration hides the true unemployment numbers by dropping people off the workforce. If you look at any Democrats proposed budget right now it has the potential to drive this country into the dirt. Yet people still waste there time with these half baked propaganda excuses for why Republicans are wrong. Seriously, get a clue. The government should not be doing better than the private sector ever.
This article is more biased in the biased they're claiming to have found. First and foremost they claim a 2.5 percent increase in growth. Need I remind people that during the Reagan administration we experience over 7% in growth. This was due to lower taxes and lower government spending. They also site Canada. Canada's debt almost bankrupt the country. They were literally about to fall until they got their debt under control. How they can claim an increase in growth with high debt to a country that was going to fail is beyond me. The fact is if this data with supporting a Democrat proposal it would have been ignored completely. Even better it would have been supported. This is nothing but partisan hackery and media bias.
"They also site Canada. Canada's debt almost bankrupt the country. They were literally about to fall until they got their debt under control."
Sorry, but I don't know what era of our governance you're talking about. If you're talking about how our government shut down – twice – you're talking about our current PM Harper, who did that to avoid being forced into an election contesting his leadership – twice. He's been a no-compromise leader and a serious zit on our national face.
If you're talking about how we went from running deficits to surpluses, that's on our Liberal party, and then-finance-minister Paul Martin, who halved our health-care budget (40B in cuts) and helped the country produce surpluses, only for subsequent governments (including his own) to funnel that money into their personal business interests (like a 45B deal to get aircraft that has yet to get us any aircraft, or submarines that turned out to be in need of extensive repairs). We underwent a decade of tax cuts, lowering the federal tax rate to 5% (as of 2006).
Now, even places like Alberta are reconsidering, because, although we're by far the wealthiest of the lot, oil isn't giving the windfalls it used to. We're rather reliant on the Keystone XL to keep the good times rolling (and I'd rather we stop putting all of our money in one boot).
I should also point out that some places (like the province of Saskatchewan) never went into recession, and part of that was due to the fact that their government run (and highly regulated) markets were less affected by the boom and bust cycle, and that they'd positioned themselves for an exodus from neighboring Alberta (where they'd previously been sending most of their skilled labour).
There's more than one way to skin a cat.
+Patrick Bick the article sites the years 1946 to 1950 if I recall correctly. I remember a documentary I watched a while back that talked about Canada turning debt to surplus though tax cuts. Something America needs to do before there's another economic disaster. I believe its right around the corner with the current anti business policies in place.
That may be, but our businesses are being taxed much worse than yours and our economy is in relatively good shape. Considering that, pre-recession, our unemployment was about twice yours (with Alberta leading at <4%, national average 8%), and presently we're at a national 7.2%, with Alberta leading at ~4.5%. Edit: my mistake. Super-socialized and heavily-taxed Saskatchewan is leading with 3.8% unemployment.
You're also looking at a post-war boom from 1946-1950, an effect that kept up until around 1957. If you want an explanation why our tax system was set up the way it was, it's because we were in WWII.
I'd say their methods are worth re-evaluating, to put it mildly.
America had one of its biggest economic boom after the Reagan era. Not only did America start the technology boom but I believe changed the world. The quality of life in the entire world has been effected by it. With the freedom of America its amazing what happens when you leave the money in the peoples hands and not the governments. Many of our most productive people pay over 60% in state, local, and federal taxes. All that money could be building a huge economy but instead it's researching overweight lesbians and duck genetelia.
Actually, it's funding your military, which, if your figures were accurate, probably shares a lot in common with 1946 Canada.
+Patrick Bick the military I don't mind. However,we are also babysitting half the world. It would be nice if a few other countries helped out a bit. Canada has always had our back. I think if we would get a little more aggressive it would be better for everyone. We have to stop letting these dictators push us around.
… we didn't actually have your back on Iraq. Then-PM Jean Chretien actually called Bush a moron and refused to officially send anybody. Off the books, it's rumoured we sent a few. I don't know of any other operations we opted out of, though.
I agree that you guys shouldn't have to play world police. I think it's the larger part of your security problem (though defusing the Israeli-Palestine conflict would remove a massive thorn in everyone's ass).
I also think that, since probably half of your tax dollars are spent on the practice, bringing your people home (and keeping an eye on your black budget) would let you make more far-reaching investments in infrastructure, which are sorely needed in many parts.
All things said, the problem really isn't that big, but nobody's willing to cede agreement on how to do it. With these stakes, that troubles me (because if the USA/Rome falls, its neighbors go down with it).
I actually still think Iraq was a good idea. I think pulling out and letting Iran come it was stupid. But that's life. I just think giving another dictator a new oil well is stupid. Palestine is becoming another pain in the ass. Our news media here makes them out as innocent while they keep shooting rockets at Israel. I know a guy that lives in Israel. They are literally going though hell. They are trying to live with terrorist countries all around them. Life there isn't much different then America except for the constant fear of terrorist attacks.
I agree if America falls the world is fucked. Excuse my language, but it will not be good.
Re: Reagan prosperity.
Tripled the national debt.
@Randy – Sh’yeah, right — next thing you know you’ll tell me he used to be a Democrat, a union leader, and supported gun control.
It sounds crazy at first pass, but in grad school we learned to use Excel because it was free and powerful. That said, studies with real funding usually have some software behind them.
These and other sorts of errors in Excel are exceedingly easy to make, especially if there are more than trivial calculations involved. Excel is very handy for small amounts of data, but it's a poor tool for research.
A database program makes every manipulation step transparent and repeatable. You can point the program at a test data set and see if it gives correct results,
I don't what datasets they used, but I could tell you that the Private sector has had zero growth for the past 6 years.
And that number is easy to come by.
This is why, the taxes collected are not following Hauser's law anymore (that the average collections should be about 19.5% of GDP, regardless of the tax rate).
The problem is spending. When Obama came to office he increased the Federal Spending to ~25% of GDP, from Bush's average of 19.7% of GDP.
Any "growth" in the total GDP has been from Government spending. If you subtract all Government spending (which at this point should be obvious, it's not multiplicative on the economy anyways.) the Private Sector GDP has contracted over the last four years.
THAT is why tax collections have barely gone up, and why deficits will continue to be astronomical, until we deal with the entitlement iceberg.
'The government should not be doing better than the private sector ever.'
Compare private sector vs public sector employment rates over the last several years. While private sector employment has had a relatively healthy recovery from the Great Recession, it's been dragged down by continuing declines in public sector employment as part of cuts in public sector spending (see http://blogs.wsj.com/economics/2012/07/31/government-cutbacks-separate-this-expansion-from-other/ for example).
Even assuming you are correct Dave (and you're not), tell me how we can balance the budget observing Hauser's law;
I.E., the average tax rate collection has never gone above 19.5%. Spending is at 25% of GDP.
So what happens if we raise taxes?
GDP falls, as does tax collected, but it stays at about 19.5% of GDP.
However, because spending did not fall, the rate of spending per GDP will dramatically increase.
And yes, raising taxes will decrease revenues.
The Bush tax cuts increased GDP, and decreased the deficits, even though spending continued to increase under Bush.
'Our news media here makes them out as innocent while they keep shooting rockets at Israel. I know a guy that lives in Israel. They are literally going though hell.'
While not condoning or approving of sporadic unguided rocket attacks from the militants in Palestinian territories (Gaza in particular) into Israel, Israeli military retaliatory strikes and other actions have been much more severe. I would much rather live in Ashquelon than Gaza City.
+Rich White Iran coming in was always going to happen. The leader the US put in charge after taking out Saddam was pro Iran. It shows our global ignorance and as Patrick already stated, why we shouldn't be policing the world.
As far as taking on debt goes, you seem to think it is analogous to you and me taking on debt at home and swiping the CC, it's not. Because the US is a government which can provide value to citizens and a gov can also generate new jobs and GDP through spending.
Any Economics professor will tell you that interest rates are low during times of economic depression meaning its a good time for the gov to spend. They will get more bang for their buck.
This is about all I'm going to say as engaging someone who starts off calling everyone morons for something YOU don't understand is probably a waste of time.
The government does not generate wealth!
Good grief.
The government had to steal that wealth through taxes or destroy future generations prosperity by printing money we don't have.
There is no wealth creation there.
Here's the bottom line though, if such an economic theory worked in reality, our GDP growth should be the best in the world after spending 6 trillion dollars we didn't have over the last four years.
It's not. Like I said above, there has been little to no growth in the private sector and that will be amplified this year as ACA regulations kick in.
Further the government is the largest employer in the us with over 2 million employees with an average wage of 75k (which is well above the private sector average).
Every cent of that money for all 2 million employees has to come from taxes or inflationary money creation.
Just on that average wage alone (and not benefits of pensions) we need over 200 billion dollars.
The vast majority of Americans would have to be prohibitively taxed so that public employees can maintain their higher than average standard of living.
And you lefties act like we're talking about the wild west or something.
Was the government of the 80s like the wild west? Was the government of newt Gingrich and bill Clinton like the wild west?
Government is so encroaching on the private sector that the entrepreneurship that makes this country great is on the verge of vanishing within a generation.
Edit; corrected math I was off by a factor of ten.
'The government does not generate wealth!'
The major shareholders of a number of major defense companies would be more than happy to disagree.
Read the rest of my post. That wealth is displaced from other parts of society or displaced from future generations. It's wealth destroyed to create aircraft carriers
Further from CATO:
http://www.downsizinggovernment.org/overpaid-federal-workers
Total Compensation of Federal Employees is now an average of 126K dollars per year, if you assume that the taxpayer paying for that in the private sector is making 100K in salary (benefits aren't taxed), you'd collect 18.5K per taxpayer. (and remember, 100K is about 1.5 times the average salary+benefits)
That means it takes about 7 workers in the private sector to fund the public sector.
In reality the averages are far, far worse than that.
'Here's the bottom line though, if such an economic theory worked in reality, our GDP growth should be the best in the world after spending 6 trillion dollars we didn't have over the last four years.'
The highest GDP growth rates in the world last year in major economic powers were in China, India, Indonesia, Australia, and New Zealand (http://www.tradingeconomics.com/country-list/gdp-annual-growth-rate). What government spending and taxation policies of those countries would you prefer we emulate?
'It's not. Like I said above, there has been little to no growth in the private sector and that will be amplified this year as ACA regulations kick in.'
Depends on what you consider "growth in the private sector." In terms of employment, there has been a moderate but steady private sector job creation in the past three years (http://www.dpcc.senate.gov/files/images/DPCCPrivateSectorPayroll4513.png).
Overall private sector GDP growth since 2010 has been a fairly steady 4%; what has dragged the overall GDP down has been continued public sector cuts. (https://www.aier.org/article/7813-government-sector-recession, https://www.aier.org/sites/default/files/images/RR/RR20120903/RR20120903-bcc-1.jpg).
'Further the government is the largest employer in the us with over 2 million employees with an average wage of 75k (which is well above the private sector average).'
The largest single employer, yes.
But government employment has been in deep decline over the past four years (http://static4.businessinsider.com/image/4fd29fb3ecad04b27700000f-590/to-start-total-government-employment-is-far-below-where-it-was-when-obama-started-office.jpg), esp. on the state government level (http://static3.businessinsider.com/image/4fd2a0176bb3f77c1b000011-590/if-you-exclude-federal-government-workers-then-the-decline-in-public-sector-employment-is-even-more-severe-this-chart-represents-state-and-local-employment.jpg).
(Those charts are from http://www.businessinsider.com/the-private-sector-and-the-public-sector-under-obama-2012-6?op=1, which compares the growth of the private sector to the decline of the public sector under Obama.)
As to the "average" wage level, it's worth noting that "the government" (certainly on the federal level) has tended over the past 30 years or so to outsource much of its lower-skilled/paid workforce (funneling tax dollars back to private industry). The folks cleaning the floors and emptying waste cans in government building aren't government employees, they're private sector ones. That skews the average significantly.
Government workers tend to also be higher-educated, holding more managerial and professional jobs, than the average private sector employee. (There's some good analysis of the differences at http://www.factcheck.org/2010/12/are-federal-workers-overpaid/).
'Every cent of that money for all 2 million employees has to come from taxes or inflationary money creation.'
Correct, so far as it goes. But it assumes that those employees produce no value, and that they spend no money into the economy themselves (beyond the other expenditures they oversee or engage in).
And how is that inflation rate? Pretty darned low (http://www.tradingeconomics.com/united-states/inflation-cpi).
J'ust on that average wage alone (and not benefits of pensions) we need over 2 billion dollars.'
Out of a GDP of $15.7 trillion. Eek.
'The vast majority of Americans would have to be prohibitively taxed so that public employees can maintain their higher than average standard of living.'
I believe that comes to a total of $6.48 per person per year in the US.
+Morris Buel – The CATO numbers, and their problems, are discussed at http://www.factcheck.org/2010/12/are-federal-workers-overpaid/ .
1) LMAO – Factcheck.org is funded by the annenberg foundation, a left wing think tank that helped Obama get elected. Obama uses factcheck.org to help him combat "Right wing lies". (Aka it's a propaganda tool for the left.
2) From their site:
"First, BEA says the figure is inflated by including compensation that is actually paid to benefit retirees, not just for current workers. The figure is at least several thousand dollars too high, by our calculations."
We HAVE to include public pensions, because they also are completely funded by the private sector. In fact, I would say the Republicans aren't fighting that battle nearly hard enough.
If you include all public pensions in the yearly budget, our 2011 deficit was actually 5 trillion. If the Government was held to the same standards as the public sector they'd all be in prison for the complete manipulation of the numbers.
Btw, I love this bit:
"Second, the average federal civilian worker is better educated, more experienced and more likely to have management or professional responsibilities than the average private worker."
The average Public worker is just better than the average private worker and deserves better wages and benefits.
Except, it's not just about averages. Even when comparing the same responsibilities, and duties, on average Public workers make 150% of their private sector counterparts.
3) I wasn't even digging into any of this above, what I was talking about was the sustainability side. Using my averages and taxes collected of about 12 to 15 employees in the private sector to pay for public sector employees, it takes about 24 million to 30 million employees in the private sector to fund the public sector.
That's an insane amount of lost productivity.
And it is lost.
What do those 2 million plus Government employees produce? More tax codes, more regulations, more rules.
Just piling it on top of the already insane amount of Government we have. The tax code already at 75K plus pages had 20K pages of regulations and tax code added just from Obamacare.
How do you expect the average small business, that is by and far the largest employer sector in the private sector, to deal with that?
Already several thousand businesses are cutting hours to deal with the coming regulations.
What does that mean?
* Less pay, and more dependence upon help from the Government or Private sector volunteers. (Government means larger deficits)
* Even less tax revenue collected, which also means larger deficits.
Either way, our country is in a death spiral unless we seriously restructure, rethink our society.
+Jon Weber stop watching MSNBC. Your being programmed.
+Dave Hill there has not been job growth over the last 3 years. More people fall out of the workforce then jobs created. We need to create 250,000 just to keep up with the birthrate. There has actually been a steady decline in the employment rate since 2008.
+Morris Buel. I love it when people use factcheck.org. its like they have no idea that Obama use to serve on the annenberg board of directors. The amount of propaganda they have put out almost surpasses MSNBC.
I suppose I should make a tin foil hat and use that too? The government is programming us you know…
I'm pulling the rip cord on this baby.
'1) LMAO – Factcheck.org is funded by the annenberg foundation, a left wing think tank that helped Obama get elected. Obama uses factcheck.org to help him combat "Right wing lies". (Aka it's a propaganda tool for the left.'
I'll match your "Factcheck.org is biased left" with any number of folks suggesting that "Factcheck.org is biased right." That Obama has used it (as have various politicians of both parties) to support his positions is meaningless.
At any rate, I'd rather discuss the arguments and figures provided, not who provided them.
'We HAVE to include public pensions, because they also are completely funded by the private sector.'
If you are arguing about the total cost burden, that's one thing (though that then raises the question of what level of pension is, in fact, appropriate and societally beneficial). If you are comparing that public vs private sector employees are paid, it muddies the water, especially since it includes money allocated to the pensions / retirement funding of former public sector employees.
'In fact, I would say the Republicans aren't fighting that battle nearly hard enough.'
The GOP has done quite an effective job at fighting public sector employment, it seems to me.
'"Second, the average federal civilian worker is better educated, more experienced and more likely to have management or professional responsibilities than the average private worker."
The average Public worker is just better than the average private worker and deserves better wages and benefits.'
Education level roughly correlates to compensation (and vice-versa). As the numbers further down illustrate, for example, over 44% of federal civilian workers have a BA/BS, vs. under 19% of private-sector employees. Job responsibility also correlates (appropriately, I'd think) to compensation. 44% of federal workers are in management or professional positions, vs 32% of private sector workers; blue collar positions in the federal government have dropped by over half since the mid-80s (as noted previously, those jobs have been outsourced). Age / tenure also tends to correlate to compensation; the federal worker is 45, vs. 40 for the average private sector employee.
Now, if you'd like to argue that the government should be hiring younger, less experience, less professional, and less educated employees to those positions, that's certainly a conversation that could be had.
Except, it's not just about averages. Even when comparing the same responsibilities, and duties, on average Public workers make 150% of their private sector counterparts.
You're almost certainly conflating in pension and benefits, which are higher for public sector workers (which arguably has some offsetting savings, and regardless begs the issue of whether such pensions and benefits are a good thing or not; that they have mostly disappeared from the private sector isn't a valid argument).
The question of wage comparisions is argued back and forth in a lot of places. The numbers cited under "Pay Freeze" in the article in question suggest that lower-end jobs in the private sector tend to be, in aggregate, somewhat higher paid than their private sector equivalents; higher-end jobs tend to be lower paid.
'3) I wasn't even digging into any of this above, what I was talking about was the sustainability side. Using my averages and taxes collected of about 12 to 15 employees in the private sector to pay for public sector employees, it takes about 24 million to 30 million employees in the private sector to fund the public sector. That's an insane amount of lost productivity. And it is lost. What do those 2 million plus Government employees produce? More tax codes, more regulations, more rules.'
Really? That's all anyone in the government does is write rules and regulations? There are no financial (let alone societal) benefits to any of those rules and regs?
And I've lost track in your "public sector" category — are you including teachers, police and fire fighters?
Your fundamental assertion seems to be that government functions (and the people involved in providing them) are of zero or minimal value. Without getting into the question of whether there is waste or unnecessary spending in government, I so fundamentally disagree with your premise that it's likely impossible to continue the discussion to any significant end.
'Just piling it on top of the already insane amount of Government we have. The tax code already at 75K plus pages had 20K pages of regulations and tax code added just from Obamacare.'
Without questioning your numbers, I'd be inclined to agree with you that the ACA was unnecessarily complex, largely because of wanting to fit it into a framework of private insurance providers and insurance being arranged through employers, rather than setting up a single-payer system or paying for it through a straightforward tax.
How do you expect the average small business, that is by and far the largest employer sector in the private sector, to deal with that? Already several thousand businesses are cutting hours to deal with the coming regulations.'
I believe most of those hour costs are coming, not from the need to "deal with" the regulations, but to get out from underneath them. That is less a financial issue than an ethical one.
'What does that mean? * Less pay, and more dependence upon help from the Government or Private sector volunteers. (Government means larger deficits) * Even less tax revenue collected, which also means larger deficits. Either way, our country is in a death spiral unless we seriously restructure, rethink our society.'
I, for one, advocate instead a return to the Gilded Age, workhouses, and The Jungle. Taxes and regulation were much lower then, which indicates that life was much better.
+Dave Hill of course you don't want to talk about who provides the data. However, that's the most important part of the data. If you can really ignore the source then I'm sorry you have no credibility. Do you also listen to everything Media Matters says to. Lmao. That's the problem with liberals. They don't care about whether or not they're looking at propaganda as long as it matches their beliefs. This thread was originally about the biased of data. This proves the only reason you posted that is because it criticized Republicans. That proves my original point. You guys will do anything to make a Republican look bad even if there right. Data is worth nothing if its not from a viable source. You will completely attack a Republican on a slight technicality in data collection yet the entire liberal philosophy is based on fantasy. Thats what I call hypocrisy.
+Rich White – If Factcheck was just pulling numbers out of thin air, then, yes, that would be an issue. But the numbers (and quoted arguments) are cited in the article, on the page. So let's talk about them, vs. the aggregation site that presented them.
+Dave Hill no that's okay I've already made my point. I'd rather not discuss fantasy. Yes factcheck does pull stuff out of thin air. There are tons of examples of it. The fact is liberal policy has buried this country. The president's approval rating shows the people are figuring that out.
Also if one liberal bias media outlet sites another liberal bias outlet isn't that just propagating a lie. There's nothing credible about that. Its like inviting Ted Bundy to dinner because he hasn't killed anybody in like 20 years. Liberal policy is like a guy jumping off the Empire State Building and saying 5 feet before the ground "everything's been fine so far".
So have you actually looked at the article in question and at what's being cited before simply waving your hands and saying "Pulled out of thin air" or "Liberal media echo chamber" or coming up with non sequitur metaphors?
+Dave Hill typically I don't listen to homeless people who yell the world's ending either, what's your point?
I think you've made it for me, +Rich White.
+Dave Hill what that liberals base their policies on emotion and not fact. You're right that point has been made. And that point continues to get made the worst economy gets.
I've seen all I need to. Blocked…
@Dave Hill – Wow, I am very impressed at your ability to keep your cool and try to actually have a debate with the facts, instead of descend in to mud-slinging and name calling; which would appear to be Rich White’s tactic. I commend you Dave on being able to refute his talking points and try to get him to focus on the facts that you presented, instead of fall off in to fantasy land where liberals lie and make things up all of the time. Well done.
Thanks, Trevor. Discussions like that get freaking frustrating — but, ultimately, satisfying when I can feel that I’ve left things off being the adult in the room (and even moreso when someone makes a supportive comment like this).