Re: Is Anyone In This Group Enthusiastic About Any Candidate?


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John Galt wrote:
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---[snip]---
Carter only ran up a fraction of the deficits that Reagan and
the
Bushes ran up for the same period of time. Yeah, I guess I
would
have bitched about the Carter deficits if I'd been paying
attention
at that time, but there's no comparison with what came later.
No, but at the time, the deficit was one of the issues that
propelled Reagan into office. It was, at the time, considered
"runaway", and in the context of the overall economy (not gross
dollars) it wasn't much different than it was today.

I recall that period very well since I was in the DC area at the
time. It was not the size of the deficit that was the issue at the
time, but the out-of-control interest rates that everyone
including the federal government was paying. There was a great
deal of concern over the amount of credit that was being bought up
by foreigners and speculation about how that might influence US
foreign policy. The deficit was low during the Carter years, but
the interest was killing us.
I remember it differently as far as emphasis, but both were in
play, IIRC.
While Carter gets most of the blame for the high inflation rate of
the period, the blame really goes back to Fed Chairman Arthur
Burns who increased the money supply in an effort to get Nixon
reelected in '72.
The inflationary period was substantially attributable to Nixon. In
"Money Mischeif", Milton Friedman notes that the hyperinflation was
largely the result of Nixon telling Burns to crank up the printing
presses so as to pay of Vietnam debt.

Carter's deficit spending (as a percentage of the GDP), despite
the higher interest rates, was less than the Nixon/Ford
administration which preceded it and the Reagan deficit spending
was nearly twice that of the Carter administration. If it had not
been for Paul Volcker (appointed by Carter) who deserves the real
credit for ending the runaway inflation, Reagan would have been in
very serious financial difficulty.
Correct, but to be fair, let's note that the POLICY followed by
Voelker -- crank up the interest rates and choke the inflation
beast -- was a consensus policy developed by Voelker and Friedman
and authorized by Reagan. In fact, Friedman notes that one of the
reasons why the debt went up so far under Reagan is because they
expected the Fed's tight money policy to take longer to be
effective, and thus they counted on more tax bracket creep than
they got. No creep, lower tax receiepts.

JG


Yep, the hidden tax increases of the Reagan administration! Didn't
work just as the trickle down economy didn't materialize. Left the
mess to GHW Bush to eat the necessary tax increase.

Economy wise, Reagan was more of a disaster than Carter!
Carter was simply feckless. He had no idea how to solve the problems
he was left with, but he didn't do any additional damage. Considering
the record of the other presidents from Johnson on, that's high
praise.

Was Reagan more of a disaster? Like most things economic, you have to
first decide what statistics you think are most important, which is a
subjective exercise. One of my annoyances with partisan analysis is
that the stats are always cherrypicked to justify the desired
conclusion, not the other way around.

We had staglation at the beginning of his term. Unemployment in 1981
was 7.6% and inflation was almost 11%. On the way out, 5.5
unemployment and 4.6% inflation. Good results by any measure.

The increase in the debt is, of course, another matter.

JG


The economy is not zero sum, but it is clear that there are
trade-offs.
Absolutely.

One can get the appearance of better times by borrowing. Ultimately
you have to pay.
That's true, and easy credit distorts the market. You can sell more
cars if they are "$500 a month, nothing down" as opposed to "$400 a
month, 20% down" and certainly more if they are "$40,000."

On one hand, easy credit is good, because it stimulates production for
the goods easily acquired. On the other hand, it's bad, because it
encourages the manufacturers to jack up the prices until the monthly
payment hits the consumer pain point, as opposed to the cash price
hitting the pain point.

At this point, and with the situation we're in, I have to take the hard
line and say that any President who proposes a nonbalanced budget is
irreponsible, and any Congress that approves a nonbalanced budget is
irreponsible. Sending up a balanced budget requires a rearragement of
national priorities, but it's quite possible to do.

JG


And, a balanced budget may be achieved by cutting programs or by
increasing taxes.

Sure. The net has interesting lists of programs that were set up during
the Depression and WW2 that still get tens of millions of dollars to do
this or that thing, the need of which has long since past. The largest of
these is ag subsidies, which started out to support the family farmer,
but which has now mutated into a defacto alternative energy program.

No argument on this point. The ag programs no longer serve the family
farmer and cause a number of problems, not only locally, but
internationally too.

Just as an auto manufacturer needs to raise prices to cover costs or
else go out of business, so also must government raise prices (taxes) to
cover costs.

Not correct. Tax receipts increase with economic activity, the number of
going concerns, increase in the labor force, and a number of other
variables. It's correct to say that the financial needs of the goverment
increase with inflation, and that gross tax receipts have to increase to
cover, but not that tax rates have to increase to cover.

http://www.nationmaster.com/graph/tax_tot_tax_wed_sin_wor-total-tax-wedge-single-worker

http://www.nationmaster.com/graph/tax_tot_tax_as_of_gdp-taxation-total-as-of-gdp

Suffice to say that these are metrics that you don't want to "win",
because they indicate high levels of taxation as expressed as a % of
either labor costs or GDP, take your pick.

Nice data, but their relevance depends on whether or not the the citizens
of these countries are getting what they are paying for. Different
countries have different needs, different cultures, and may reasonably
elect to pay the government for some services that others may prefer to
purchase from the private sector. I've objected to these kinds of
comparisons in the past because they really don't tell us anything about
how well our government is performing.

Granted, but they do serve to bring into the debate how other countries
manage their affairs, particularly if you're discussing adding a program
that they're already doing to your own social portfolio. All this data shows
is that nations that have high standards of living and more extensive social
portfolios than ours (including universal health) get by on similar levels
of taxation to what we have today. That negates the "we must raise taxes in
order to have X" argument.

My salary might fluctuate with my economic well being, but I still have to
pay for the essential services like mortgage, insurance, etc. Likewise,
the government has the responsibility to provide the services that we
decide that we need and they have to charge for them accordingly.

Now, we've been hearing from the Demosocialists (the leftist wing of the
Democrats) that we need to raise taxes because the goverment needs money,
we need a heath care system, we need to improve education, etc. Do we?

No name calling, please! Socialism is government operation of some
function. No one that I am aware of is arguing for government owned and
operated health care.

Only the minority of far leftists. I suppose their candidate is Kuchinich,
but quite right, no mainstream candidate is going there.

On the other hand, a self-avowed conservative friend of mine IS arguing
that we should convert to nuclear power and that the power plants should
be owned and operated by the federal government. His justification? The
safety record of the US Navy.

Interesting thought.

Look down at where the US is on both of those charts, particularly at
Japan, Australia, and Canada, and where they are in relation to the US.
Not too far off. These are three countries where no sane person would
argue that they do not have (1) a more desireable health care system than
we have, (2) a better educational system than we have, (3) a desireable
standard of living, PLUS, Japan is certianly not a low-population
country, which is a legitimate point that could be raised vs. Canada and
Australia.

So, where's the money go, and does the govt. really need more?

Indeed! It is legitimate to demand to know how the government is spending
our money and even in the short time that the Democrats have had the
majority in Congress, there has been some commendable progress in
revealing who is asking for what. It is a start.

This is going to be a long hard battle. The Dems came in saying they were
going to do this and that, and the earmarking Democrats (Murtha et al)
scuttled a lot of those plans. There are tons of folks on both sides of the
aisle that don't want to upset the gravy train.

But it's more than just that. At some point, the 21st century Grace
Commission is going to have to start picking through that budget and
deciding what stays and what goes. The military is going to have to be
scaled back -- we're going to end up hunkering down in a defensive posture,
what some have called isolationism, just because it's cheaper. We'll
probably have to figure out how to take a third of the long term cost of
Medicare out of the system. Lots of tough choices are going to have to be
made, and they're not going to be pleasant.

The larger issue is to decide who is better at providing certain services.
No one would argue that we should have privately competing fire
departments. There are some who propose that some of our roads should be
privately owned and maintained.

And this is happening in some parts of the country, with success, but under
the licensure of the local govt. Obviously, somebody has to be in charge of
central planning, and the notion of central planning is not foreign to the
Constitution.

But, the major controversy now is health care. Personally, I am fed up
with the private insurance based system. It is not serving us well, is
increasingly expensive, is extremely difficult to use, and places an
oppressive overhead on the entire health care system. I find Medicare
much easier to use and understand and in talking with the various doctors
that my wife and I have used, they would welcome a single set of rules to
live by. This is a case where the private system has failed us and it is
time to give the government a chance.

Yea, but Medicare is going broke, so you can't use it as a model. If
Medicare was scaled back to the point where it was self sustaining (even if
you doubled the Medicare payroll tax), I doubt you'd like it much. So, it's
not much of a model, and in fact, MANY of these great health care systems in
other countries that we're envious of are *also* not solvent over the long
term.

Hell, who *wouldn't* like to drive a Rolls Royce that you were were able to
force your kids to pay for?

JG


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Relevant Pages

  • Re: Is Anyone In This Group Enthusiastic About Any Candidate?
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    ... No, but at the time, the deficit was one of the issues that propelled Reagan into office. ... It was not the size of the deficit that was the issue at the time, but the out-of-control interest rates that everyone including the federal government was paying. ... The deficit was low during the Carter years, but the interest was killing us. ...
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  • Re: Is Anyone In This Group Enthusiastic About Any Candidate?
    ... It was not the size of the deficit that was the issue at the time, but the out-of-control interest rates that everyone including the federal government was paying. ... The deficit was low during the Carter years, but the interest was killing us. ... I find Medicare much easier to use and understand and in talking with the various doctors that my wife and I have used, they would welcome a single set of rules to live by. ...
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