At 9:30 am last Monday, New York Times White House correspondent Jackie Calmes began poring through five fat volumes of the just-released federal budget. She had already written two budget reports, one for the Sunday paper, another for Monday’s, and each was waiting in a malleable form on the Times website. Calmes’s first precious hour with the document was spent not writing a budget story, but updating one. And that’s how she’s spent most of the week.
Calmes has been covering the federal budget in some capacity for twenty-six years—her first was under Reagan when she was working at Congressional Quarterly. She has seen the process change, but the basics remain the same. Calmes spoke to CJR assistant editor Joel Meares this morning about how the Times approached Obama’s third budget, sorting through the muck to find the newsworthiest angles, and dealing with those who like to throw stones at the paper for which she works. This is an edited transcript of that conversation.
Tell me how the details of this budget first come to be in your hands.
The general distribution this year was 9:30 a.m. on Monday and it was embargoed until 10:30 a.m., so you can have an hour to digest it. They also hand you a disc at 6:30 a.m. on Monday morning to start looking at it. Frankly, though, I didn’t take advantage of that. If it had been the president’s first year, when everything’s a big surprise, I would have done that. But this year I had a fairly good sense of what was in it from early briefings with the administration. Every administration that I’ve been familiar with has leaked choice details weeks in advance. Then, the actual briefing on the budget overview is held on the days leading into the weekend. They’re geared towards getting weekend coverage before the budget generally comes out on the Monday.
When did the briefings start for this budget?
In this instance there were two of us at a briefing on Friday: two national newspaper reporters, including myself, and two senior officials from the White House Office of Management and Budget. They talked us through the major details and we got to ask questions.
That seems to be a PR coup for the White House.
They get to put their first stamp on the story. But on the other hand, they’ve invited people in who know a little bit about this, so it’s not like you’re going in completely tapped into their take on things. You bring some sophistication to it, and you know the questions to ask.
Is that the only briefing you have?
Fairly late Sunday there were briefings at the White House for more print journalists—there were twenty or so—with other budget and West Wing advisors. They walked us through the major points. I learned a little more but not much more than I had learned on Friday. As we left, there were some broadcast people going in for a separate briefing. There are also separate briefings for people who aren’t journalists at all, people who are influence-shapers, talking heads—the people who they know other reporters are likely to go to for quotes, whether in print or on the air.
In your experience does this White House disseminate budget info in much the same way as its predecessors?
It varies with each administration. I haven’t done it every year but I’ve had a piece of it nearly every year for twenty-six years. It’s much the same every year in some ways, because it’s the government and there is a structure to the budget that is virtually unchanged. The books are very similar. The fundamentals are the same.
Does that also apply to the way you report on the budget? Or have there been changes with technology and the developments of new styles of journalism
What’s really changed about how you do a report on a budget—and I have remarked to people about this this week—is the Internet. Like everything else, you have to feed the beast instantly, and constantly, so you have less time to digest the numbers and the policy implications. It’s one of the reasons you have the administration and the one before it, and I think the Clintons, giving you a heads-up to some of the national reporters. It’s their chance to get the message out and to describe it in their way.
In the past, budget day would be really big wherever I worked, all hands on deck. Every reporter with a beat would be rushing through a book to get to the section that dealt with his or her area—transportation, health, defense . This year, that still happens, but to a much lesser degree than it used to. It also comes down to the fact that it’s bigger in a president’s first year because that’s his first statement of priorities.
What was the priority this year?
This year, the feeling was that we could put as much as possible on the web straight away. So it was on the web all day Monday—an overview story that I did and then separate smaller pieces and graphics that others did. For the paper on Tuesday there’s a sense—and this isn’t unique to The New York Times—that readers who are interested in the budget have already gone online and absorbed it there. And so there is less space given over to budget coverage in the paper the next day than there once was.
It sounds like you have everything you need before the budget physically arrives. I’m wondering then what you do with it in the hour before embargo when it does finally land in the office?
We get multiple sets of the five-volume budget. Some editors look through them, the beat reporters look through them—for instance, Robert Pear absorbed everything he could on health policy—but it’s less of an all-hands-on-deck effort than it used to be.
When I get it, I start at the back where there are tables numbered F-1 to F-10. The really important tables are F-1 and F-2, where you get the spending outlays, receipts (tax revenues), the overall deficit, the total budget, the size of it as a percentage of GDP. You have to know what you’re looking for. If I were doing this for the first time I would take the previous year’s budget and study that before I just went in cold.
I did a story Sunday night embargoed for Monday’s paper, and at 10.30am on Monday, when the embargo on the budget itself was lifted and I had been through it, I updated the story online. An hour later, I updated it again, because the president had spoken in Baltimore. Then you start getting reactions. So, all day Monday you are updating for both things you learn and the reaction to the budget. It’s all great for the reader but the one drawback for anybody who covers the budget is that spending that much time feeding the beast of the web, it’s time you’re not really digging into the numbers and the policy. I’m still looking for things in it today.
How do you decide the initial angle of the first big budget piece—what to focus on most intensely? Is it a group effort at the Times?
I definitely suggest my thoughts, but there is other input. My editor here, Dick Stevenson, who has the virtue of being a former fiscal and economic and White House correspondent himself, does a lot of talking with me. The editors in New York—and Bill Keller and Jill Abramson both headed the Washington bureau—also have their thoughts. It definitely is a group effort. And then it falls to me to execute it.
Were the angles here obvious?
Pretty much. You always want to look at both the projected deficit for the current year, because that’s when the administration updates its figure, but also for the year for which the budget is intended. You want to look at how big that deficit is not just in dollar terms, but also as a percentage of the economy, the GDP, because that’s how economists across the board judge whether a deficit is sustainable or not. The rule of thumb in the United States and abroad is that 3 percent of GDP in a growing economy is considered sustainable. So, I look to see how much over we are—and we are well over right now. You also look to see what the trend is. When will those numbers, both in dollar terms and as a percentage of GDP, start to come down?
Next, you start looking for the mix of the revenues, and the spending outlays, not just for the next fiscal year but also for the next ten. You try to gauge trends—because we are on a very unsustainable trend, given the aging of the baby boomer generation and the inexorably rising cost of health care, in the private and public sectors. Then I begin breaking it down into the exact new domestic spending initiatives, domestic spending cuts, the military cuts—especially since we’re winding down two wars—to see what they’re projecting. Then you look at increases in and decreases in the tax code. In this budget, of course, there was intense interest in what the deficit was, what the numbers were going to be, and how soon they’d come down.
And all of that plays out in a very heated context you have to capture.
The backdrop to this budget is the much more comprehensive recommendations of the president’s own bipartisan fiscal commission. We already knew he was not going to embrace the fiscal commission’s recommendations—the commission would have reduced projected deficits by $4 trillion over ten years and the president claims that his budget will reduced those accumulated ten-year deficits by $1.1 trillion, so he’s about at one-fourth the level of his fiscal commission. That’s because the fiscal commission took on the entitlement benefit program to an extent the president did not.
The budget came later this year than usual, why is that?
A lot of the time the budget is released a lot closer to the State of the Union address. Traditionally, in the State of the Union address, the president previews the major elements that are new in his upcoming budget. The president did a little of that this year, but a) there wasn’t much new to preview, and b) the budget was delayed by three weeks after his State of the Union Address because the Senate had delayed confirmation of his new budget director late last year. That gave budget director Jack Lew a six-week late start on the budget. In addition to that, the president and Congressional Republicans did not agree to a tax-cut compromise until late December. All of that affected the bottom line—what budgeteers call the “base line”—from which you calculate.
Do you feel pressure about shaping the budget narrative, given the influence of The Times?
Yes, but not really any more pressure than I feel during any other story. I have the comfort of expertise, which helps a lot—I’d be a lot more pressured if I were twenty years younger and less experienced. But I do feel pressure to get it right. When I didn’t work at The New York Times—and everybody likes to throw stones at the Timeswhen they don’t work there—we used to joke that when The New York Times makes a mistake, reality must adjust. Now that I’m here, I realize The New York Times must not make a mistake because reality does not adjust. But what I can do is inadvertently force a lot of other people to make mistakes because other people pick up on our stuff and other papers run our stories. Every journalist at the smallest entities feels the pressure to be accurate. But if it’s possible to feel more of that pressure, then working for the Times will do it to you.
You mentioned how much people like to throw stones at The New York Times. Some in the right-wing online media have actually done just that wit your budget report, writing that your coverage was a little rosy.
They usually write to me too, to let me know. There are some days when I cannot open my reader e-mail not just because I am too busy but also because I’m just not in a psychological state to take some of the nastiness that you get.
I feel like I’m balanced. I don’t do anything at The New York Times that I didn’t do at The Wall Street Journal. I just do journalism. I get critics from the left too. If people are going to look at my stories through the ideological glasses they bring to it, they’re likely to be disappointed, because it’s my job to go down the middle.
You’re still a strong believer in that middle ground, even as it’s being challenged by online media and cable news?
I think about what I would want. I grew up in Toledo, Ohio, and my first jobs were in west Texas, and I was hungry for news that played it straight and gave me both sides. If I were someone who’s not in the thick of it, as I am, I would want to know facts and context in a way that helps me make my decisions. I think there are a lot of people who feel that way. Every time I feel a little tired of covering the budget, I tell myself that I write to people who truly want to know what the situation is and what it is that’s driving these deficits and what each side is proposing to do about it.
Speaking of a middle ground, at yesterday’s presser you asked the president why he hadn’t sat down with the Republicans. He gave you a pretty pat answer about what’s going on behind the scenes and being encouraged by the GOP response so far. Were you satisfied with that answer?
It wasn’t for me to be satisfied and he gave me pretty much the answer I expected. But it was good to get his perspective. It helped because until he spoke yesterday, all I had to go on what he was thinking, was what officials or what people close to the White House were saying. It never hurts to hear from the president even if you’re not getting the most candid answer he could give you.

Very helpful interview, Joel.
I do take issue with Ms. Calmes' assertion, here: "You want to look at how big that deficit is not just in dollar terms, but also as a percentage of the economy, the GDP, because that’s how economists across the board judge whether a deficit is sustainable or not."
"[A]cross the board" is not true: the Austrians and other libertarian and non-interventionist economists have long argued why the government's percentage-of-GDP metric is unreliable (at worst, fraudulent) in determining sustainability of deficits or growth. E.g., see Ron Paul here and Peter Schiff here.
Granted, the Keynesians and other interventionists, historically, have held sway in public policy circles and the news-media, and still do. But the others should not be ignored by the press simply because the govt conveniently ignores them.
#1 Posted by Dan A., CJR on Wed 16 Feb 2011 at 07:55 PM
She said economists, not flat earthers, green cheesers, or assorted rightwing loonies. Neither Ron Paul or Peter Schiff have any expertise whatsoever to contribute to discussions of economics. Why should any serious person listen to these goofballs about the budget? Anyone can pull opinions out of their butt, but that doesn't mean anyone, especially a reporter, has to treat them seriously.
#2 Posted by James, CJR on Wed 16 Feb 2011 at 08:52 PM
Decent interview. Interesting details on how to find information in the budget, about the editorial input in how to report the budget (the angle), and about the focus of the reporter (deficits. What's driving them and how to control them. And centrism. Down the middle, beltway centrism.)
On the topic of sitting down with republicans, it's not really enough to ask "Why aren't you talking to them?"
During the Obamacare debacle, republicans have proven themselves irrational actors operating in bad faith.
You can't work with the republicans. They will block you, lie to you, and they will not support you - votes or otherwise - even if you adopt their ideas.
Some of the tea party freshmen are worth working with on issues of military cost containment and civil liberties because they haven't been bought yet and they're committed to their ideals more than they're committed to the party goosestep.
But the republicans, as a whole, are either radical, bought, or to timid to reach out to democrats because of one of those sides will tear into them.
That is the Washington reality these days. Rush, Rove, and Rupert run the republicans. What have you to work with, other than Rand and Ron?
#3 Posted by Thimbles, CJR on Wed 16 Feb 2011 at 11:52 PM
Way to respond, "James." The finest of neocons would blush. Unfortunately for you and the court-economists, such breathtaking displays of mental enormousness do not count as argumentation. They translate roughly into "I give up."
Still, the floor is yours if you actually have a leg to stand on in the wake of your self-destruction.
I won't hold my breath.
What I will do is offer all the serious CJR readers further insight into why journalists should not take as Gospel the proclamations of govt-approved, govt-connected, and govt-funded economists.
"Bernanke was wrong while Peter Schiff was right":
youtube.com/watch?v=V5sDKwMP6Pc
"Ron Paul predicted the 1987 Recession in 1983":
youtube.com/watch?v=9FmlsK_nJKU
"Austrian Thymologists Who Predicted the Housing Bubble" (including Ron Paul, and dating back more than a decade):
lewrockwell.com/block/block168.html
Ludwig von Mises predicted the Great Depression:
online.wsj.com/article/SB10001424052748704471504574443600711779692.html
Friedrich von Hayek (et al.) predicted the Great Depression, while John Maynard Keynes predicted "no more crashes in our lifetime":
safehaven.com/article/9168/the-great-depression-and-forecasting-still-getting-it-wrong
Indeed, "Anyone can pull opinions out of their butt."
Anyone like John Maynard Keynes, Ben Bernanke, "James"...
#4 Posted by Dan A., CJR on Thu 17 Feb 2011 at 12:53 AM
Hey, Thimbles. I've figured out how to get around the "HTML tag" error. Just remove the "http://www" part of each url. (Do'h!)Your links won't be active, but oh well. At least you'll be able to post your entire response.
#5 Posted by Dan A., CJR on Thu 17 Feb 2011 at 01:07 AM
Not all economists are "govt-approved, govt-connected, and govt-funded" except in your fevered mind @Dan A.
Let's take neurosurgeons and turkey farmers. Everybody has an opinion about the use of stereotactic techniques in neurosurgery. You do, I do, neurosurgeons do, turkey farmers do. Neurosurgeons are free to express their opinions about current issues in neurosurgery. Your average turkey farmer is also free to express his opinion about current issues in neurosurgery. You, too, Mr. @Dan A.
However, the neurosurgeon is not obligated to give your opinion or the turkey farmer's opinion very much value when it comes to evaluating new stereotactic techniques in neurosurgery, which is a field in which he has much expertise. Similarly, a journalist, writing a story about stereotactics in neurosurgery, is not obligated to treat the turkey farmer's opinion with equal weight as the neurosurgeons' opinion, no matter how loudly the turkey farmer expresses his opinion. Okay?
Same with federal budget issues. A journalist isn't obligated to include every innumerate wacko's opinion with equal weight when writing stories about economic issues. They aren't even obligated to treat those opinions with a straight face. Doing so actually diminishes their credibility; it makes them look like they have no critical thinking or analytical skills.
Unfortunately, many journalists, like Joel here, for example, or Matt Bai, or the journalists at Washington Post, are intimidated by the wacked-out rightwingers and find it easier to include their ridiculous distortions with a seemingly straight face, to avoid accusations of "liberal bias." Thus you saw Mr. Meares include the opinion of innumerate ideologues like Andrew Sullivan as a legitimate opinion on the subject of the federal budget. Yeah, Mr. Sullivan, in his weird, 1980's Thatcherite mindset, follows your Hayak as well. Totally irrelevant to todays American economic picture. Totally irrelevant. Okay? I don't really give a crap what he said back in the 1920's in Britain. Okay? It's irrelevant.
And nobody really gives a crap what your opinion is on the federal budget either, you having no expertise or qualifications in that respect.
#6 Posted by James, CJR on Thu 17 Feb 2011 at 06:33 AM
Honest to betsy Dan, Keynes is not a bad economist, and the new Keynesians have had a better predictive record than the Austrians (Schiff was convinced hyperinflation was coming down the pike. It isn't, not until demand picks up.)
It took no special genius to see the housing bubble, I watched in horror as the US doubled its external debt in 4 years during 2003-4 to 2007. Everybody who was watching the markets knew that fraud and "irrational exuberance" were blowing up real estate values.
The only people who didn't pick up on it were neo-classical freidmanites, randians, and the clueless monkeys on CNBC. (Ben Bernanke is a devote Milton Friedman scholar who has used Milt's "federal reserve must pump liquidity into the markets" strategy to manage this recession.
http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021108/default.htm
Greenspan is a clueless Ayn Randian jackoff who didn't believe in the existence of fraud because "the market punishes fraud". Neither are Keynesian. Keynesian theory is a bit hetrodox within the economics profession these days, making keynesian economists rather hard to find.)
Calling a crisis wasn't hard. Predicting the fallout right was. Guys like Krugman and others have gotten the predictions right because they have better models.
Schiff? Not so much.
http://themessthatgreenspanmade.blogspot.com/2009/01/mish-schiff-catfight.html
#7 Posted by Thimbles, CJR on Thu 17 Feb 2011 at 11:57 AM
A good video on the Budget:
http://www.democracynow.org/2011/2/15/obamas_37_trillion_budget_calls_for
"JOHN NICHOLS: Well, it’s just horrifying, Amy. You know, one of the most frustrating things is how our media covers budgets. And it is, frankly, a repetition of spin. And so, so much of the media reported yesterday that the White House was proposing $70 to $80 billion worth of cuts in Pentagon spending. What that really is is Secretary Gates saying, "Here are some things that we don’t think we need." At the end of the day, however, there are not cuts in military spending. This is an expansion of Pentagon spending at a dramatic level, three to five percent, depending on how you measure it.
And the important thing is, here you have President Obama saying that they’ve gotten down to the lowest level of domestic spending, domestic discretionary spending, since the Eisenhower era. That certainly sounds good as a sound bite, but understand what that means. It means that now Pentagon spending, defense spending, is a dramatically higher level of what our budget goes to. And I wish President Obama would remember what Dwight Eisenhower said about defense spending versus domestic spending. Dwight Eisenhower said, every time you buy a bomb, every time you pay for a bullet, that’s money that comes out of building a school or putting a roof on a house. I just think the President is making a lot of wrong choices here."
#8 Posted by Thimbles, CJR on Thu 17 Feb 2011 at 12:00 PM
Bill O'Reilly of the comments section says: "How dare you challenge your Divine Overlords!"
Sure thing, "James." Just show me where to wave my incense, Mr. Guardian of Approved Opinion.
(At least put up a fight, man.)
Thimbles,
-- Since before the FED came into being, the interventionists — Keynesians, monetarists (Friedman, Greenspan), et al. — have held sway in policy; yet, when things go bad, it's the free market (non-interventionism) that gets the blame. Gee, I wonder why it works like that! Do you think it may be because non-intervention doesn't allow for corporatism, easy (bribe/electioneering) money, military empire, etc.?
-- I have never seen Schiff give such an absolute prediction of hyperinflation. I've seen him say that under certain conditions, it will come, but not that it is definitely going to happen at this or that pin-point time.
-- The Austrians did not just predict the bubbles: they've been predicting the booms and busts since around the turn of the 20th century.
-- Krugman's (et al.) "predictions" are not predictions at all: they are disingenuous Keynesian justifications for more of the same "economics" that caused the booms and busts in the first place. (Krugman: "The addict obviously hasn't been given enough heroine! Dr. Feelgood hasn't been given a chance to work!")
-- Fancy, wordy, mathematical models have precious little to do with what drives the economy: human action. And that is why, as you said, it is not difficult to predict the bubbles; it is why it has been rather easy for the non-interventionists to predict the destructive results of interventionist policy action.
#9 Posted by Dan A., CJR on Thu 17 Feb 2011 at 03:45 PM
I'm not making an argument, Mr. @Dan A. I am patiently explaining to you why Ron Paul's and Peter Schiff's opinions, while they have every right to express them, aren't worthy of inclusion into a serious discussion of the budget. You flatter me, but I don't think that I am the *official* Guardian of Approved Opinion. Though, I might be willing to consider the post, if offered.
#10 Posted by James, CJR on Thu 17 Feb 2011 at 10:59 PM
Dan, I'm not going to go to deep into this, I just want to recommend that you read some of the Keynesian stuff a little more open mindedly just as you would expect us to read your Austrian stuff.
The fact of the matter is that, before Keynes, there was classical austrian economics. There were no interventionists since Milt Friedman was aboutt 20 and Keynes was a classical economist.
The result of that was the roaring 20's free market and the crash.
After which it took the stimulus of the second world war to dig us out. From the 50's to the 80's there were minor recessions and major booms guided by a lot of infrastructure investment and a lot of regulation in the financial sector which minimized systemic risk.
In the 1970's and 80's, there was an inflation problem and a "surplus of democracy" problem which was broken by Reagan and Volcker (Volcker choked off investment through high interest rates until people learned to not expect an increasing standard of living, Reagan broke the unions in order to teach American workers not to expect an increasing standard of living, inflation has maintained a low rate once everybody learned the lesson that wages will not necessarily go up).
As the government became less interventionist as regulators and through regulation, financial instability has grown worse. Greenspan's 'puts' lead to more and more expensive "Minsky Moments"
http://www.youtube.com/watch?v=gRE-IDYfi8Y
This happens not as a result of interventions, but as a result of the forces of intervention capitulating their mission to protect the public.
Similar to a situation with a doctor who "interferes" with the processes of the body to prevent death, you don't scrap the hospital because of a few bad doctors.
You reform the system of doctors.
#11 Posted by Thimbles, CJR on Sat 19 Feb 2011 at 01:33 AM
And back on the topic, in reference to Calmes remarks on entitlements, which Trudy Lieberman has commented on:
http://www.cjr.org/campaign_desk/qa_new_york_times_reporter_jac.php
and the Deficit Commission comment:
"The backdrop to this budget is the much more comprehensive recommendations of the president’s own bipartisan fiscal commission. We already knew he was not going to embrace the fiscal commission’s recommendations—the commission would have reduced projected deficits by $4 trillion over ten years and the president claims that his budget will reduced those accumulated ten-year deficits by $1.1 trillion, so he’s about at one-fourth the level of his fiscal commission. That’s because the fiscal commission took on the entitlement benefit program to an extent the president did not."
you have this:
http://voices.washingtonpost.com/ezra-klein/2011/02/was_simpson-bowles_really_so_g.html
The Simpson Bowles document was a joke, and I said so at the time here, but it's unusually popular among "centrists" and washington group thinkers.
#12 Posted by Thimbles, CJR on Sat 19 Feb 2011 at 01:40 AM
Trudy has commented on Jackie's centristy omissions in the past:
http://www.cjr.org/campaign_desk/a_curious_omission_at_the_times.php
#13 Posted by Thimbles, CJR on Sat 19 Feb 2011 at 01:46 AM
"War prosperity is like the prosperity that an earthquake or plague brings." -Ludwig von Mises
Thimbles,
Your thesis (Sat 19 Feb 2011 at 01:33 AM) is EXACTLY what I believed almost all my life. It's what I was taught by govt education. It is the hands-down dominant thesis to this day. But I believe that it's wrong, and I'll explain why. But firstly, consider this:
Q: Why has the popular, interventionist thesis been so dominant for so long?
A: It justifies the maintenance and expansion of the State's power.
Now, I can imagine what you're thinking as you sigh, but just hear me out for a bit.
Even if you don't agree that the "WWII brought prosperity" line is terribly misguided, think about this tangential anecdote of sorts:
-- Would Dept of Education textbooks do much besides justify and even glorify govt and its military and economic wars?
-- Do DOEd textbooks seriously question the FedGov's scope of power?
No and no. (Do you sense where I'm going with this?)
Far as I "knew,"
-- Lincoln never unquestionably violated civil liberties; nor did he unquestionably violate the Constitution. (LIES)
-- Wilson did all he could to avoid war; his raping of the Bill of Rights was justified during war. (LIES)
-- Hoover's policies were hands-off, laissez-faire. (LIE)
-- American natives were unprovoked, backward-living, aggressive, head-hunting savages until the govt and govt-subsidized settlers reformed them; Custer et al. were well-intentioned agents of westward progress. (EVIL F'ING LIES)
-- Voting is the embodiment of freedom in America; w/o govt, there would be less liberty. (HYPERBOLE/REALITY-INVERSION)
-- Etc., ad nauseum.
Thanks mostly to the Internet, I discovered the alternative sources of scholarship in history and economics that were concealed from me in school and on TV.
I gave the govt/interventionist side more than its share of my consideration — more than ¾ of my life. What I got from it, mostly, was deception, omission, fallacies, lies. I have since given more consideration to what the govt and its agents of truth have tried their best to prevent me from considering: the whole, politically incorrect truth.
Finally, on-topic:
The end of the Great Depression was the ceasing of hostilities which signaled to the market a coming transfer of demand, labor, and capital from the destructive (govt/military) sector to the productive (private) one; rationing was loosened and lifted; and so on.
Also, as one "crack-pot" Austrian economist puts it:
'It was a 'stimulus" provided by about a two-thirds reduction of federal spending, from $98.7 billion in 1945 to $33.8 billion in 1948. See the Statistical Abstract of the United States [.pdf], and click on #14, “Federal Government Finances” on the left.
'As Bob Higgs has said, every Keyensian economist in the world, led by Paul Samuelson, predicted an economic calamity at the time, and every Keyensian in the world was dead wrong. ... Today’s Keynesians, led by Paul Krugman, insist that they have no idea whatsoever why the Great Depression did not resume after WW II ended. Thus, they haven’t learned a single thing in over 60 years. ...'
[lewrockwell.com/blog/lewrw/archives/25637.html]
BTW: Have you heard of the "Great Depression of 1920"?
#14 Posted by Dan A., CJR on Sat 19 Feb 2011 at 07:47 AM
First, if you think I'm relying on high school text books for my information, you're incorrect.
Second, Truman's economy did not perform well as it adjusted to the influx of men coming home, and that was as America became the preeminent manufacturing hub in the world while the rest of the world remained bankrupt and devastated after world war 2. America actually had to subsidize foreign markets to get buying circulating again and to prevent further nations from joining the Soviet Bloc.
http://en.wikipedia.org/wiki/Marshall_Plan
So yes, there were a few years of rough global adjustment which, with lots of American government generosity, were overcome. That was different from the Great Depression during which liabilities persisted while the assets that secured those liabilities collapsed. The liabilities created a persistent drag on the economy that was relieved when the federal government spent like their lives depended on it and grew the economy beyond the size of the of the private sector debts (plus inflation tends to reduce the weight of liabilities whereas deflation increases them, making them crushing). Once the private sector had recovered, you had a government debt but you also had a large economy to handle it:
http://krugman.blogs.nytimes.com/2009/08/28/the-burden-of-debt/
The recession of the 1950's was similar to the recession of the 1920's, there was a temporary disruption as a surge of soldiers turned labor returned to work and the nation had to adjust to find jobs, but house values didn't collapse, banks didn't fold right and left, and eventually the system took off. That wasn't the case in 1929 and it's not the case now.
I didn't want to get too deep into this, since it's not topical to the article, but *puts on Al Pacino impression* you pull me back in. >:(
#15 Posted by Thimbles, CJR on Sat 19 Feb 2011 at 10:41 AM
That's what I used to believe... until I broke free of the official mind-mold.
"First, if you think I'm relying on high school text books for my information, you're incorrect."
Read my words more carefully. Your thesis is the govt-approved version, which naturally aligns with interventionist theory, which — surprise! — is conveniently justified by the DOEd textbook version. It all serves to legitimate the expansion of the "warfare State," and to apologize for its depredations everywhere.
War spending and regulatory regimentation lead to prosperity for the MIC, Wall Street, and other govt-connected interests. What have the war on drugs and the wars on Iraq, Afghanistan, and "terror" done for the rest of us? The answer is self-evident.
#16 Posted by Dan A., CJR on Sat 19 Feb 2011 at 06:38 PM