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

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


Apples and oranges. Medicare, unlike Social Security, is not funded out of debt except in the same sense as anything in the general budget. The cost of Medicare is escalating just as the cost of health care is escalating and that is the fundamental problem. The cost of administering Medicare (about 2%) is not increasing beyond inflation despite the fact that it addresses the health needs of those who use medical care most heavily, the elderly. The cost of administering private insurance (about 5.5%), however, is increasing more rapidly than inflation despite the fact that it primarily addresses younger clients. So, I don't see that Medicare is the problem, per se. Rather, putting negotiating power in the hands of Medicare administration would go a long way toward reducing costs. As it stands, the individual has no negotiating power. Not being able to afford medical care is not negotiating power despite the arguments that have been presented by some.
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