'A new era of frugality'

Projections of economic future cry out for revival of U.S. productivity

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Charting your life by federal fiscal projections is like trying to forecast the weather with a photograph of the horizon.

Markets change. Interest rates fluctuate. Political moves are constantly altering the
future.

But even a photograph of the skyline gives a big picture.

The latest Congressional Budget Office numbers paint a dim hue of the immediate
future.

Unemployment is expected to rise again to near 9 percent by the end of the year, and to 9.2 percent by the end of 2013. Meanwhile, our gross domestic product – the value of all goods and services produced in a year – is expected to be a sluggish 2 percent in 2012 and an absolutely melancholy 1.1 percent in 2013.

In short, we’ll be brushing perilously up against recession for some time to come – at the apparent mercy, or lack of it, of world markets, particularly Europe.

Historically, growth has hovered around 3 percent. Compare that to 2013’s projected 1.1 percent.

And while these are only projections, projections are all we have. They are what businesses and government must consider when planning their respective financial futures. And to some extent, families will have to, as well.

“The U.S. financial crisis and recession have produced lasting shifts in consumer spending and savings reminiscent of the 1950s that may crimp profits and productivity,” a Bloomberg article sagely predicted in May 2009.

“This is going to be a new era of frugality,” an economist told the news agency back then. “This isn’t some flashy two- or three-quarter deal. This is a secular change in household attitudes.”

Ominously, Bloomberg noted at the time, “The last time U.S. gross domestic product grew at an annual rate of under 2 percent over a decade was the 1930s, when it expanded at an average 1.3 percent.”

We may match that record if we’re not careful, due to government overspending, weakness in the world economy, trade and manufacturing policies that punish American productivity, and this administration’s return to historically disastrous Keynesian economics that worship at the altar of deficit spending.

Many believe that approach actually exacerbated and elongated the Great Depression.

Clearly, we need a change in approach. We also desperately need manufacturing and trade laws that will revive American productivity, including lower taxes, smarter regulations and fairer trade rules.

As for the CBO projections, we must also make the same prayer to the spirits that Ebenezer Scrooge once did:

“Men’s courses will foreshadow certain ends, to which, if persevered in, they must lead. But if the courses be departed from, the ends will change. Say it is thus with what you show me!”

Comments (18) Add comment
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desertcat6
1140
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desertcat6 02/06/12 - 02:42 am
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President Obama has roughly

President Obama has roughly 12 months left. How many more trillions in debt is that going to cost the USA? Raising taxes isn't going to fix our debt problem. At most, it would only reduce the currently projected debt increase due to spending more than is received in taxes. The federal government needs to go on a massive diet for the good of the country.

Riverman1
84893
Points
Riverman1 02/06/12 - 06:09 am
0
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Ben Bernanke was firm the

Ben Bernanke was firm the other day about the 2013 projections being dismal. Another round of belt tightening should be planned by state and local governments... But what does Augusta do? We spend $100 million on a TEE center that no outside events will rent.

carcraft
26234
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carcraft 02/06/12 - 06:30 am
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I thank God every day that we

I thank God every day that we have a "do nothing congress" It makes it harder to waste more money on things like Solundra and Ener1 battary companies as well as pork projects!

robaroo
779
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robaroo 02/06/12 - 08:00 am
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Everybody agrees we need belt

Everybody agrees we need belt tightening, but no politician is willing to do what it takes to reduce the deficit. George HW Bush wouldn't. Barak Obama wouldn't.

None of the Republican candidates have belt tightening on their platform. They want lower taxes, but they also want to keep a large military, build a moon base, etc. I don't hear any serious proposals for balancing the budget. All I hear is what every politician since George Washington promised - "eliminate waste".

TParty
6003
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TParty 02/06/12 - 10:31 am
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Robaroo- You hit the nail on

Robaroo-

You hit the nail on the head. No one is talking about how tighten the belt. Obama just says he'll trim a trillion from the deficit- but somehow he forgets he doesn't control the purse and check books.

Romney spoke about some 69 point plan for taxes... good luck on that. Newt wants a moon base, everyone wants a war with Iran. I don't see anyone proposing or saying anything about how to fix our financial system except Ron Paul and his son Rand Paul.

allhans
23761
Points
allhans 02/06/12 - 10:38 am
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Don't group all of us in with

Don't group all of us in with the moon man. That's not playing fair.

As far a Obama trimming the budget, have you noticed that he never gives details on any of his "plans"?. Don't you wonder why?

Fundamental_Arminian
1849
Points
Fundamental_Arminian 02/06/12 - 10:38 am
0
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"None of the Republican

"None of the Republican candidates have belt tightening on their platform. They want lower taxes, but they also want to keep a large military, build a moon base, etc. I don't hear any serious proposals for balancing the budget" (Robaroo).

I must echo TParty's response. Too many people are forgetting the Pauls, Ron and Rand. Even if Ron Paul doesn't seem electable, we can make known our desire for sound money and fiscal responsibility by voting for him.

allhans
23761
Points
allhans 02/06/12 - 10:40 am
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Of course we could also just

Of course we could also just go ahead and vote for Obama, that would really show our disdain for Republicans. Might as well go for it.

JRC2024
9063
Points
JRC2024 02/06/12 - 10:48 am
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I am for slowing down

I am for slowing down spending in all areas. It will hurt for awhile but people will get use to less.Cut all payouts of government pensions, government retirement, entitlements, social security and every government program but leave the taxes at the level they are now and require the overage to be used to pay down the debt.

TParty
6003
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TParty 02/06/12 - 11:01 am
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When the Tea Party started

When the Tea Party started strong, and was focus- and not taken over by the established GOP- there was a lot of talk about fiscal responsibility. That needs to happen again. Real budgets, and true saving. Obama tried getting credit for saving something like $600 billion over ten years- and yet we are about to raise to the debt ceiling again just to pay the bills. That's not saving.

For the GOP establishment- we cannot fix our monetary problems with a large military industrial complex. Liberals- we cannot continue going down your path either. Rand Paul put out a tough budget proposal, something that would be hard for all Americans. Newt of course said it's wrong- I guess he already had plans for the moon base. But it's that establishment talk that is hurting this country. Focus everything on the fiscal issues- that's how we'll remove Obama and co.

The GOP cannot win if they make this election about having more god in our public lives, stopping contraception for women, and hating gays. Those are distraction issues. Stay focused on fiscal responsibility. And Ron Paul is the man for that.

dichotomy
33495
Points
dichotomy 02/06/12 - 11:22 am
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Rick Perry had a plan for

Rick Perry had a plan for belt tightening. He wanted to do away with 3 government agencies. Good approach. Of course he couldn't remember the 3rd and it cost him dearly. It didn't matter to me. Pick 3....any 3 government agencies and eliminate them. Heck, you could probably find 5 or 10. The only candidate who seriously addressed spending cuts and we threw him to the wolves because he had a brain fart...on TV....under tremendous pressure. I am sure that if he had been elected there would have been 25 staffers standing there to remind him which agency to whack. I do wish the American public would elect their politicians based on their policy instead of focusing on TV bloopers. Anyone can have a brain fart. If you don't believe me, ask Obama about the 57 states he visited.

ultrarnr
916
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ultrarnr 02/06/12 - 11:43 am
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Your cherry picking of the
Unpublished

Your cherry picking of the CBO numbers is very misleading. The predicted average unemployment rate for 2014-2017 is 5.6% and GBP growth average is 4.0%. I guess promoting a far right wing agenda does not include referencing a complete set of statistics. What the numbers really show is that current policies are working as shown by the jobs number last Friday. I occasionally read your paper for amusement not news.

TParty
6003
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TParty 02/06/12 - 12:15 pm
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dichotomy- Ron Paul was

dichotomy- Ron Paul was trying to hint to Perry there are 5 agencies to cut. Ron Paul is serious about cutting agencies.

burninater
9627
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burninater 02/06/12 - 01:10 pm
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ultrarnr, you hit the nail on

ultrarnr, you hit the nail on the head. Some people seem to think "opinion" is what you arrive at when you cherry-pick evidence to distort reality. My mom had a different name for that, she called it "lying".

However, the evidence agrees to some extent with the rest of this piece: increased frugality is upon most of us. There are, of course, individuals for whom frugality is the opposite of what the modern economy requires of them. And those are the ones that have bought our Congress. And those are the ones for whom Congress will continue to spend our tax dollars at unsustainable levels.

allhans
23761
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allhans 02/06/12 - 04:59 pm
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It is always good to read

It is always good to read before making accusations..i.e.

"Congressional Budget Office on Tuesday predicted the deficit will rise to $1.08 trillion in 2012.--------------
The office also projected the jobless rate would rise to 8.9 percent by the end of 2012, and to 9.2 percent in 2013.__________

These are much dimmer forecasts than in CBO’s last report in August, when the office projected a $973 billion deficit. The report reflects weaker corporate tax revenue and the extension for two months of the payroll tax holiday..."

harley_52
23621
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harley_52 02/06/12 - 04:02 pm
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burninater said "There are,

burninater said "There are, of course, individuals for whom frugality is the opposite of what the modern economy requires of them."

Hoo boy, ain't that the truth. Those Obama's spend tax money on living like kings and queens. They took two different jets to Hawaii for their recent seventeen day, $4 million family vacation.

That's frugality with a capital "F."

faithson
5193
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faithson 02/06/12 - 05:20 pm
0
0
nothing is going anywhere

nothing is going anywhere until we get it through our heads that both spending and revenue must be dealt with, hopefully at the same time. The idiocy of 'no new taxes', not even allowing the bush tax cuts to expire, only exacerbates the fiscal problems. There are compromises that can be made that will put America on a reasonable fiscal course, but unless the grover norquist infidels don't come around, why would the left just 'give in' ?

socks99
250
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socks99 02/06/12 - 06:57 pm
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Probably the world and the

Probably the world and the U.S. in it are poised for more of the same. Which is to say a continuation of the collapse of the global credit bubble and its contingent pressures on investment returns and sustainability of various pension and health care benefits. Apparently, the bottom-line might be that no one saved enough to generate the sorts of standards of livings that folks imagined. At some point, those with capital will tire of lackluster returns and losses and begin demanding stronger contracts, higher returns, and iron-clad collateral.

Whether or not our current political leaders can 'save' our local, state and federal governments is an issue that will take care of itself; some of our leaders will retire, and perhaps others will come to worse ends. In the end, however, it is the individual who is thrifty and frugal who'll fare best. And this is nothing new, just something forgotten during the great credit bubble.

KSL
131267
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KSL 02/06/12 - 07:16 pm
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Throwing away your vote on

Throwing away your vote on Ron Paul just gives obama another term and a lame duck term. There are plenty of ways to influence an elected official. Didn't amnesty for illegals during Bush's term?

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