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


Apples and oranges. Medicare, unlike Social Security, is not funded out
of debt except in the same sense as anything in the general budget.

Granted. However, it is still nonsolvent.

The cost of Medicare is escalating just as the cost of health care is
escalating and that is the fundamental problem.

Just as fundamental is that we don't have enough kids.

But, regardless, health care inflates at a rate over and above CPI all over
the world. This is a complex problem and significantly tied to the cost of
research and medical advancement. It's not directly addressable through
policy.

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.

I don't see how the removal of that 3.5% delta solves much of anything.
Chickenfeed. Besides, the insurers do a lot of admin that the goverment
doesn't, such as fraud detection, and they negotiate with providers, where
the government simply sets a limit, causing some providers to opt out of the
system.

Suffice to say that the insurers provide some benefits for that 3.5%, and if
you make it go away, there will be unintended consequences that may be
larger than the savings.

Rather, putting negotiating power in the hands of Medicare administration
would go a long way toward reducing costs.

I doubt it. It would have to deal with the opt-outs, for one issue.

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.

I dont' agree that the situation is as black and white as you present. We
(personally) negotiate for medical services all the time, and prices come
way down when you tell them you're paying cash and they know you'll shop
around.

JG


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