freeman2 wrote:Why don't we follow Clinton's precedent which we know worked out pretty well. ?

Because Clinton's "achievement" was done in the midst of the dot-com boom, not in recovery from the worst recession in history. Raising taxes now is uncharted territory--I'm not saying it can't work; I am saying it could have unintended consequences in a weak economy.

fate

Raising taxes now is uncharted territory--

What specifically do you mean by uncharted?
US tax rates are the lowest they been snce 1945.
Whats uncharted about raising taxes on the wealthy 3 points? There's plenty of analysis on the proposed tax increase that indicates it will not harm the economy in any way, and will contribute needed revenue.

Studying the effects of a potential fiscal cliff, the CBO said allowing income tax rates to rise for wealthy Americans while maintaining rates for the less affluent would not hurt US economic growth much in 2013

http://www.economywatch.com/in-the-news ... 09-11.html

I find it interesting that conservative think lowering taxes will stimulate an economy, by putting more money into the economy through consumer spending and investment
But still claim that the money spent directly under the stimulus had no effect. Its as if they were two different kinds of money...

rickyp wrote:What specifically do you mean by uncharted?

Your reading skills . . .

When was the last time we raised taxes while trying to extricate ourselves from a huge recession?

US tax rates are the lowest they been snce 1945.
Whats uncharted about raising taxes on the wealthy 3 points? There's plenty of analysis on the proposed tax increase that indicates it will not harm the economy in any way, and will contribute needed revenue.

Sure there is--from liberal economists.

However, "analysis" is not history. Those same analysts told us what a smashing success the Stimulus would be. Based on the accuracy of their prognostications, it's just as safe to believe a tax increase would be catastrophic. (Btw, I think they worked for Romney as pollsters)

Studying the effects of a potential fiscal cliff, the CBO said allowing income tax rates to rise for wealthy Americans while maintaining rates for the less affluent would not hurt US economic growth much in 2013

http://www.economywatch.com/in-the-news ... 09-11.html

Again, with the reading problem. You skipped a word.

The word is "much." I bolded it for you. Given that we are currently screaming along at less than 2% GDP growth (if you subtract end of fiscal year government spending, it was really pathetic), if it doesn't hurt "much," that might be too much. 1 percent of loss might be enough to tip us into a recession.

I find it interesting that conservative think lowering taxes will stimulate an economy, by putting more money into the economy through consumer spending and investment
But still claim that the money spent directly under the stimulus had no effect. Its as if they were two different kinds of money...

I find it interesting that no amount of Keynesian economics is ever enough to prove that it has negative side effects. I also find it interesting that liberals complain about waste and inefficiency in the Pentagon, yet somehow believe that other aspects of government are more efficient than the private sector.

Fiscal conservatives view all branches of government as inefficient. Liberals see government as THE key. Pelosi promised Obamacare would create half a million jobs. Other liberals have said what a great return we get on Food Stamps and unemployment.

Look around. Government efficiency surrounds us.

fate

When was the last time we raised taxes while trying to extricate ourselves from a huge recession?

The US came out of recession some time ago.
As you actually acknowledge ...

fate

Fiscal conservatives view all branches of government as inefficient. Liberals see government as THE key.

You have a source for this, or is this your interpretation.
I'll go with your interpretation for now....

A fiscal conservative is someone who believes that govnerments should live within their means.
You can be Keynesian and a fiscal conservative.
Run surpluses in good times, paying off debt. Run deficits in recessions to blunt the effects of a recession...
Your country gave up on fiscal conservatism in 1980, and bought into other economic myths. The results of which came due in 2007 2008.

Your absolutist definition defies evidence to the contrary.
Sensble people don't look at Government as a solution except where private enterprise fails. But, the historical record of where a govenrment solution is required includes everything from a professional military to fire departments, libraries, schools etc.
Historically governments have been involved in successfully providing solutions often.Like any other organization competent management with good plans and the right resources can succeed whether the organization is govenrment run or private. And organizations with poor management , poor planning and inadequate resources can also fail whether private or govenrment.
Compare the FEMA response to Katrina to the reformed FEMA response to Sandy.... Though not perfect the second response was immeasurably more effective than the first. Probably had something to do with NOT hiring unqualified people to manage the organization.
Compare the investment results of Bain capital with the investment made by the Department of Energy in "alternative energy companies".

Romney’s private-sector Bain Capital record doesn’t look much better. Of the 77 businesses the firm invested in while Romney was in charge, 22 percent filed for bankruptcy or went out of business by the eighth year. In 8 percent of those companies, Bain’s entire investment was lost.
This rate of failure is understandable, you may say, given this is new technology — there’s bigger risk involved.
Well, someone forgot to tell the Department of Energy about the high failure rate in early-stage technology investments. Because they didn’t experience it.

The failure rate at DOE was 6%.

Read more: http://www.politico.com/news/stories/07 ... z2BwRHYNNW

Much of what I've learned about US govenrment beareaucracy does suggest it at times is uniquely inefficient. But on closer examination its usually becasue the political masters have hampered the way they have to operate with rules and regulations that manifest the inefficeincy.
Example: Medicare isn't allowed to negotiate with drug companies to get the prices that the Canadian Medicare system gets for the same drugs.... Making them hugely more expensive and contributing to the 50% greater expenditure in health care, with less result.

If you really believe that private enterprise always delivers greater efficiency, you should broaden your horizons and read some business books on companies like Sunbeam or Enron...(Or maybe the history of some of those Ban investments...)
Organizations can be well run or poorly run whether or not they are private, not for profit, or government.

Ricky:

Compare the investment results of Bain capital with the investment made by the Department of Energy in "alternative energy companies".


Romney’s private-sector Bain Capital record doesn’t look much better. Of the 77 businesses the firm invested in while Romney was in charge, 22 percent filed for bankruptcy or went out of business by the eighth year. In 8 percent of those companies, Bain’s entire investment was lost.
This rate of failure is understandable, you may say, given this is new technology — there’s bigger risk involved.
Well, someone forgot to tell the Department of Energy about the high failure rate in early-stage technology investments. Because they didn’t experience it.
The failure rate at DOE was 6%.

Read more: http://www.politico.com/news/stories/07 ... z2BwRHYNNW

This is the sort of analysis that has resulted in my leaving the Democratic Party. There's a basic confusion here about the role of Private Equity and the role of government. In private equity, you are judged by your profitability. If you invest in 5 companies and one goes bankrupt, two tread water and two earn 10X multiples of money invested, you are a hero. Your returns are off the charts and your investors are happy. You've created a substantial amount of wealth.

When the government invests in companies, it takes the entire downside, but only receives interest income if the company hits a home run. Essentially you are a high risk junk bond investor with a small interest rate return. Now it is true that in some senses the government is a silent partner of any successful business investment because of taxes and our common interest; however, to prove the DOE's case, they have to show how their investment resulted in medium to long term economic activity that otherwise would not have existed.

In the analysis presented in this article and parotted by Ricky, they've declared that just 6% of the DOE investments have failed. However, it's only been 2 or 3 years for these investments. We won't know the failure rate until the loans are repaid. I think in most cases they are still outstanding. By the way, the junk bond default rate is less than 5% per year. These bonds are typically paying much higher interest rates than the DOE is getting.

By the way, I do agree with Ricky's other point that governments can be run poorly, average, or well, and that we all have an interest in their being run well.

rickyp wrote:fate

When was the last time we raised taxes while trying to extricate ourselves from a huge recession?

The US came out of recession some time ago.
As you actually acknowledge ...

Barely. Again, take out the end of fiscal year government spending binge and you'd be at about 1.3% growth for the last quarter. That is not exactly a thriving economy.

fate

Fiscal conservatives view all branches of government as inefficient. Liberals see government as THE key.

You have a source for this, or is this your interpretation.
I'll go with your interpretation for now....

That has been Obama's entire approach. He's not tried private solutions for much of anything.

A fiscal conservative is someone who believes that govnerments should live within their means.
You can be Keynesian and a fiscal conservative.
Run surpluses in good times, paying off debt. Run deficits in recessions to blunt the effects of a recession...
Your country gave up on fiscal conservatism in 1980, and bought into other economic myths. The results of which came due in 2007 2008.

Says you.

In any event, the problem is that "government" (both R and D) has managed to spend money in good and bad times. With very few exceptions, we run a deficit, no matter the conditions or who is in charge. The main difference under Obama is the size of the deficits.

Stop babbling about Bain. Romney's not running any longer. If the company's record was so bad compared to the government's, why is he rich and the government has been running trillion dollar deficits?

The failure rate at DOE is 6% . . . according to Jennifer Granholm . . . are you joking? Can you get a more biased op-ed? This is the same woman who ranted maniacally from the DNC lectern and drove Michigan into poverty.

Get a serious source or just expect the laughter you deserve.

Compare the FEMA response to Katrina to the reformed FEMA response to Sandy.... Though not perfect the second response was immeasurably more effective than the first. Probably had something to do with NOT hiring unqualified people to manage the organization.

This is a foolish statement. Anyone would have learned from the errors of Katrina.

Beyond that, they've made any number of blunders during Sandy. It's been anything but smooth.

ray

When the government invests in companies, it takes the entire downside, but only receives interest income if the company hits a home run.

Not necessarily.
There are dozens of different ways investment can be structured and rewarded..... (Deserves a thread perhaps.)

ray

In the analysis presented in this article and parotted by Ricky, they've declared that just 6% of the DOE investments have failed. However, it's only been 2 or 3 years for these investments. We won't know the failure rate until the loans are repaid. I think in most cases they are still outstanding. By the way, the junk bond default rate is less than 5% per year. These bonds are typically paying much higher interest rates than the DOE is getting.

Fair point. In 8 years if 22 percent are bankrupt the DOE will be at Bain's level of achievement...
The benefits that come from the govenrment investment aren't just the financial returns. Its the creation of an industrial base and culture that can lead to spinoffs, innovation and growth.Its whats happened in S. Korea after their initial government investment in technological industries. Its what happened in the US after the govenrment subsidized the creation of the computer...
This can happen, and does happen, solely through private investment. But, when private investment can't be found - but the creation of the industry makes sense within the long term development of a countries economy , theen government investment can be wise. Romney and republicans keep talking about the oil in Canada as a great source that could free the US from middle eastern oil. I applaud that, and remind them that the only reason it is a sucessful industry today was the initial investments by the Canadian and Alberta governments...
(We could go on.....and mention the early US government involvement in frakking and the great future shale gas seems to represent...)
Point is, just as in organizations - theres good and bad government investment. It should probably fail more often than private because it should be in areas that are too risky for most private inveestors... with more long term than short term benefit. But to demonize it categoricaly as Fate does, is as wrong as saying that all government is worse than all private industry.

The real question with regard to government funding of alternative energy start-ups is whether there are private sources of capital for these companies? I suspect that there is a lack of funding for these Kinds of risky investments with no clear showing that there will be huge profits to make up for the risk. To say that if private equity won't invest then government should not invest seems to indicate an obedience to free-market ideology without an empirical assessment of what our best energy strategy should be. As far as I am concerned, if the private sector can develop alternative energy, great, let them do it. However, I have yet to see the evidence that the private sector will do an adequate job of developing alternative energy (maybe RJ or DF can provide the evidence for this)

The private sector is developing alternative energy. I've seen several deals at work. There are hundreds of billions of dollars being invested by venture capital firms in new alternative technologies and business models in the US alone every year.

There is a place for government investment in new technologies. But that is distinct from investing in existing companies.

I believe in alternative energy. In 20 years we will have solar in this country regardless of which companies the US sinks money in to. The technology will get there eventually. In fact, the US role is counterproductive. By investing in early incomplete technologies we create additional barriers for breakthrough technologies from the marketplace. For example by subsidizing ethanol from corn we've created less incentive to convert switchgrass to fuel which would be of real economic value.

ray

The private sector is developing alternative energy. I've seen several deals at work. There are hundreds of billions of dollars being invested by venture capital firms in new alternative technologies and business models in the US alone every year.

Yeah. Now. We're past the nascent period.... Go back and look at frakking technology. It started 30 some years ago. Now that it has been proven, in large part becasue of government seed financing, its taking off.
And from the recent reports, may make the US energy independent by 2020 as oil drilling is now using frakking - not just natural gas. (recent report said US may be largest producer of oil because of frakking, in thirty years.)
Lets do hope it doesn't destroy the aquifers or start earthquakes...

ray
.

I believe in alternative energy. In 20 years we will have solar in this country regardless of which companies the US sinks money in to. The technology will get there eventually. In fact, the US role is counterproductive. By investing in early incomplete technologies we create additional barriers for breakthrough technologies from the marketplace. For example by subsidizing ethanol from corn we've created less incentive to convert switchgrass to fuel which would be of real economic value.

Your example, ethanol, is indeed egregious. But isn't this a result of your political system and the need for Presidential primary candidates to pander to Iowa? Well, more than any other reason?
And the reason governments invest and start industry in nascent technoloiges is that most investment companies aren't willing to risk capital required to start an industry. Because it takes time, not just to start making profits but to build the culture of the new industry. Silicon Valley came out of the birth of the computer. That started with government funding in the 60's. Private capital didn't get involved in a big way till the late 70s.
The problem with most capitalists is that they aren't willing to lose the money required for 20 years. They want a quicker turn around.(Well, not a problem so much as a reality. )
The US is competing with countries that are neo-mercantile in nature. They are willing to make the 20 and 30 year investments in building new industrial sectors. Through government funding. Unless you start into an industry at the same time, you end up playing catch up. And sometimes the competitive edge is never over come.

ray

There is a place for government investment in new technologies. But that is distinct from investing in existing companies.

In what way? Was it a disaster for the US to choose IBM as the developer of computer technology for the military?
Using existing companies as incubators for new ventures provides a great deal of infrastructure that can be used to accelerate the development cycle.
Indeed this idea lead to incubator companies that specialized in providing support to many start ups...
I'm not saying its fool proof. I'm saying that its a strategy that has worked dozens of times.

Ray Jay wrote:The private sector is developing alternative energy. I've seen several deals at work. There are hundreds of billions of dollars being invested by venture capital firms in new alternative technologies and business models in the US alone every year.

There is a place for government investment in new technologies. But that is distinct from investing in existing companies.

I believe in alternative energy. In 20 years we will have solar in this country regardless of which companies the US sinks money in to. The technology will get there eventually. In fact, the US role is counterproductive. By investing in early incomplete technologies we create additional barriers for breakthrough technologies from the marketplace. For example by subsidizing ethanol from corn we've created less incentive to convert switchgrass to fuel which would be of real economic value.

Well said.

Ricky:

Go back and look at frakking technology. It started 30 some years ago. Now that it has been proven, in large part becasue of government seed financing, its taking off.

The predominant view is that it is a private sector success story. You may want to read a more comprehensive analysis.

Unless you start into an industry at the same time, you end up playing catch up. And sometimes the competitive edge is never over come.

We aren't playing catch up in search engines, i-phone apps or smart phones. Is that also because of government investment?

Ricky:

Was it a disaster for the US to choose IBM as the developer of computer technology for the military?

I don't know about this, but the motivation was for a better military and not to line the pockets of political donors, as with Solyndra. The irony of this discussion is that it started because you brought up the point of good government comparing FEMA's response to Katrina and Sandy. Here are examples of Obama's poor investments in ethanol (which he increased above and beyond Bush) and poor energy investments (many politcal investments that have gone bankrupt and have not advanced the technoloy). You now make excuses for him that it could work, or that he had to cater to Iowa (which McCain did not).

rickyp wrote:ray

The private sector is developing alternative energy. I've seen several deals at work. There are hundreds of billions of dollars being invested by venture capital firms in new alternative technologies and business models in the US alone every year.

Yeah. Now. We're past the nascent period.... Go back and look at frakking technology. It started 30 some years ago. Now that it has been proven, in large part becasue of government seed financing, its taking off.

It will be interesting to see how the EPA regulates it and if it continues to "take off."

In any event, I agree with Ray. There is a big difference between initial investment in technology and investing in companies that are producing an unproven product with a sketchy market outlook (like Solyndra). If you want to prove that similar amounts of taxpayer funds were invested, feel free to prove it.

Your example, ethanol, is indeed egregious. But isn't this a result of your political system and the need for Presidential primary candidates to pander to Iowa? Well, more than any other reason?

Interesting thought. However, if it is the case, isn't Obama the perfect one to make things right? He doesn't need Iowa any longer and the country should not be wasting money on corn-based ethanol.

And the reason governments invest and start industry in nascent technoloiges is that most investment companies aren't willing to risk capital required to start an industry. Because it takes time, not just to start making profits but to build the culture of the new industry. Silicon Valley came out of the birth of the computer. That started with government funding in the 60's. Private capital didn't get involved in a big way till the late 70s.

Apple--government funding?

Go down the list. How many Silicon Valley companies are the result of government investment?

The problem with most capitalists is that they aren't willing to lose the money required for 20 years.

20 years?

Gee, I wonder why?

It didn't take 20 years for the Wright brothers to get into the air without government assistance.

They want a quicker turn around.(Well, not a problem so much as a reality. )
The US is competing with countries that are neo-mercantile in nature. They are willing to make the 20 and 30 year investments in building new industrial sectors. Through government funding. Unless you start into an industry at the same time, you end up playing catch up. And sometimes the competitive edge is never over come.

Yup, because central planning is brilliant:

BEIJING — China in recent years established global dominance in renewable energy, its solar panel and wind turbine factories forcing many foreign rivals out of business and its policy makers hailed by environmentalists around the world as visionaries.

But now China’s strategy is in disarray. Though worldwide demand for solar panels and wind turbines has grown rapidly over the last five years, China’s manufacturing capacity has soared even faster, creating enormous oversupply and a ferocious price war.

The result is a looming financial disaster, not only for manufacturers but for state-owned banks that financed factories with approximately $18 billion in low-rate loans and for municipal and provincial governments that provided loan guarantees and sold manufacturers valuable land at deeply discounted prices.

China’s biggest solar panel makers are suffering losses of up to $1 for every $3 of sales this year, as panel prices have fallen by three-fourths since 2008. Even though the cost of solar power has fallen, it still remains triple the price of coal-generated power in China, requiring substantial subsidies through a tax imposed on industrial users of electricity to cover the higher cost of renewable energy.

The outcome has left even the architects of China’s renewable energy strategy feeling frustrated and eager to see many businesses shut down, so the most efficient companies may be salvageable financially.

I know this is hard to believe, but sometimes rigging the market gets you kicked in the shorts.

You have been wont to say China owns the market, therefore our government HAS to invest in companies like Solyndra or the Chinese will have a permanent advantage.

Some advantage.

Sounds like THEY need Romney.

A history lesson in the government's "interference" in the marketplace.
http://thebreakthrough.org/blog/Case%20 ... report.pdf

fate

Go down the list. How many Silicon Valley companies are the result of government investment?

All of them really. The computer, silicon chip, internet, GPS, etc all came about because of some kind of government investment or financial intervention...
Read freemans link and educate yourself.