Fiscal Cliff Blame Game (part 2)

I posted recently about polling on the Fiscal Cliff, and who voters were most likely to hold responsible if there were to be a negative outcome. Well, the polling showed a heavy lean towards the blame being placed on congressional Republicans, and newer polling shows that the gap has virtually closed. This is all of
Of course this is all according to polling, and since I have a hard time believing that the numbers closed as much as the polls would indicate I would imagine that one of them is wrong.

Another point of interest, assuming that this polling is somewhat accurate is the gap between the parties willingness to compromise. I wish that compromise wasn’t such a dirty word…

From All Sides, Fiscal Plans Fall Far Short of What’s Needed – Steve Rattner

From All Sides, Fiscal Plans Fall Far Short of What’s Needed.

Well, long story short, I agree with Mr. Rattner again. I think that he’s right that neither side has had a sufficient plan, but that doesn’t make their proposals equal (that would be just too convenient for the Ralph Nader’s of the world, who I actually do like). I think that in the middle of these debates it would have been wonderful to watch real reforms take place. Let’s look at it from a health stand point, as if our nation was a human body – we are having a very hard time trying to stop the bleeding from our wounds after having fallen on our face in a drunken stupor, but we don’t seem willing to stop the drinking that is causing our wounds inside and outside of our body… Does that make senses? We have a broken system, and it can’t get better until we have a discerning decision making body that wants to live and thrive. I have plugged this group multiple times before, but maybe it takes some outside ideas to get things working again, and I think No Labels might be our 12 step program… If for no other reason I encourage you to check out their plans for reform that would help us move forward, especially their plan to Make Congress Work.

– Grady

From All Sides, Fiscal Plans Fall Far Short of What’s Needed

DECEMBER 3, 2012

Originally published in the New York Times

We don’t yet know whether our economy will take the icy plunge off the fiscal cliff, but do we know this: At present course and speed, any budget deal that emerges from the intense brinkmanship now under way would fall short of every sensible ambition for fiscal reform.

Forget about balancing the budget. Forget about paying down any of the government’s $11 trillion of obligations (the debt owed to the public). Nor will the package currently being discussed achieve the minimal target of centrist deficit hawks (myself among them), that of stabilizing the rate in which the national debt is growing in relation to the economy.

Battered by four years of trillion-dollar-plus deficits, this “debt-to-G.D.P.” ratio has climbed from 36 percent in 2007 to 73 percent at present. Halting its rise would require at least $4 trillion of revenue increases and spending reductions (including the nearly $1 trillion of savings enacted last year) over the next decade.

President Obama has put on the table a package that should be commended for its willingness to both increase taxes on the wealthy and at least dent the mushrooming costs of entitlement programs, most importantly Medicare.

But “scored” fairly, the Obama plan would contribute about $3 trillion to lower projected deficits, at least $1 trillion short of what’s needed.

The Republicans are much further from the mark, having not yet even put forward a formal plan. However, none of the intimations from their leaders suggest that their plan will exceed the White House’s in size.

While the Republicans have importantly conceded on the need for tax increases, they’ve vociferously objected to Mr. Obama’s proposed $1.6 trillion in added revenue as excessive. On Sunday, the House speaker, John A. Boehner, said that he would support around $800 billion of new revenue over the next decade, similar to what he offered during budget negotiations with Mr. Obama in July.

And on the spending side, while criticizing Mr. Obama’s proposals as too timid, the policy changes that the Republicans have endorsed – such as raising the Medicare retirement age and slowing cost-of-living increases for Social Security – fall well short of Mr. Obama’s.

Both sides appear more interested in reaching an understanding that avoids the cliff than in achieving the full range of necessary reforms.

And forget about the huge overhaul of our Rube Goldberg tax system and government spending priorities dreamed about by fiscal reformers. What’s likely to emerge will be better described as tweaks, and maybe not so many of those.

The bible of deficit hawks – the report of the Simpson-Bowles commission – now feels quaint, with its talk about rewriting the tax code to eliminate loopholes and lower rates, not to mention its call to revamp federal spending to emphasize investment programs that will aid American competitiveness and growth.

Perhaps a surge of courage will inspire Congress and the White House to embrace more sweeping change.

But the brutal process of stabilizing America’s fiscal problem is so charged with political peril, for Congress and the White House alike, that the willingness to go big and to go bold seems likely only to diminish as the cliff steadily approaches.

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The Radical Is Romney, Not Ryan – Steve Rattner

After hearing Governor Romney muddy the waters in the last debate I was really frustrated to find out that he muddied the waters even more than I had initially though… He said that we should just throw all of the studies out about the campaigns approaches to taxes and spending because we all have different studies making opposing arguments, and it’s just a push, we can’t know which one is right… Well, as it turns out, the studies that Romney was referring to ended up being Blog Posts (and yes I realize this is a blog post – I just don’t claim that it could go toe-to-toe with Obama’s actual study). If you want to read more about Romney’s “tax study” problem click here (The truth about Romney’s ‘six studies’). Other than that I think that this Rattner article is really interesting and I encourage you to read it.

Cheers,

Grady

 

The Radical Is Romney, Not Ryan

OCTOBER 15, 2012

Originally published in the New York Times

MITT ROMNEY, moderate. That earnestly sought post-debate public image contrasts starkly with Mr. Romney’s actual positions on many issues, especially the future trajectory of government spending.

Clinging tightly to a studied vagueness when pressed for unpopular specifics, Mr. Romney has put forward a budget framework that would not eviscerate Medicare and Social Security, as is commonly believed, but would slash everything else that’s not defense.

President Obama should use Tuesday night’s debate to press Mr. Romney to defend — or even just explain — these proposed cuts, which would be far more draconian than those advanced by his running mate, Paul D. Ryan. Mr. Ryan is widely viewed as the real fiscal hawk, but in key areas, his views on spending levels are actually closer to Mr. Obama’s than to Mr. Romney’s.

All in all, Mr. Ryan and Mr. Romney do see the future similarly — over the next decade, they want government spending reduced to about 20 percent of the United States’ gross domestic product, below the historic average of around 21 percent. (Recognizing that an aging society costs more, Mr. Obama proposes to hold spending at its current level, 23 percent.)

These differences may not sound like much, but by 2023, each percentage point of G.D.P. could represent about $250 billion in federal spending.

Though Vice President Joseph R. Biden Jr. brought it up repeatedly in his debate with Mr. Ryan on Thursday, Social Security — the single biggest government expenditure — is not on the battlefield. Mr. Romney and Mr. Ryan have each backed away from threats to privatize or cut it and now propose to spend the same amount on it as Mr. Obama would in the coming decade.

That’s not the case with Medicare. Mr. Obama and Mr. Ryan have each endorsed similar packages of about $950 billion of savings over 10 years, while Mr. Romney has opposed any reduction, making it virtually impossible for him to achieve his overall spending limit.

To be sure, Mr. Romney and Mr. Ryan agree — and differ with Mr. Obama — on many matters, like how to contain the growth in Medicare spending and whether to raise the eligibility age.

And they part company from Mr. Obama when it comes to the Affordable Care Act (the Republicans demand its repeal, claiming it would save about $1.6 trillion) and Medicaid (Messrs. Romney and Ryan want it turned over to the states and want to cut nearly 20 percent from Mr. Obama’s planned levels).

But with respect to nearly half the budget, Mr. Romney and Mr. Ryan widely diverge from each other.

Mr. Romney is calling for a huge increase in defense spending — roughly $2 trillion more over the next decade than Mr. Ryan wants to spend, which is only $400 billion above Mr. Obama’s budget — even though the military is not asking for such an increase. Such an increase would force giant reductions, about 40 percent, in everything that’s left.

“Everything else” isn’t some catchall of small items, like feeding Big Bird. We’re talking about a vast array of programs including civilian and military pensions, food stamps, unemployment and disability compensation, the earned income and child tax credits, family support and nutrition, K-12 education, transportation, public safety and disaster relief. And on and on.

All told, Mr. Romney would allocate $6.9 trillion for these items, compared with the $9.3 trillion proposed by his own running mate (and Mr. Obama’s $12 trillion, which itself represents a 9 percent reduction from current levels, after adjusting for inflation).

No doubt some of what is buried within “other mandatory and nondefense discretionary spending” can be eliminated. Perhaps Americans won’t miss a few national parks or the space program.

But also nestled within this category are critical outlays for investments in infrastructure and research.

Eating the seed corn is never advisable, yet that’s what Washington is already doing. The share of spending on infrastructure (roads, airports, dams and the like) fell from 2 percent of G.D.P. in 1971 to 1 percent in 2010.

More — not less — government money needs to be invested in these kinds of growth-generating projects (not to mention education and training).

I recognize that in the real world, cuts on the scale envisioned by Mr. Romney will prove politically untenable, which would force a President Romney to rethink his agenda.

But as a statement of intent, it’s Mr. Romney — not Mr. Ryan — who has produced the budget that would more dramatically reduce the services offered by government, and in ways that would shock and outrage most Americans. We can only hope that Mr. Obama will draw those contrasts clearly in the debate.

via The Radical Is Romney, Not Ryan.

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The First Presidential Debate of 2012 (Complete) Romney vs.Obama – 10/3/2012 University of Denver

Presidential Debate 2012 (Complete) Romney vs.Obama – 10/3/2012 – Elections 2012.

Here is the full debate, and I’m going to put my quick thoughts below (so that I don’t spoil anything if you want to make up your own mind), but I’ll post some more thorough thoughts later.

Full Debate

OK, so far all of the analysis that I’ve heard tonight is that people feel that Mitt Romney got the best of this debate. On a personal note I don’t necessarily agree, but I understand how that might be true when speaking about the electorate. I think that this is going to be surprising to many because of the views that people have about these 2 people and their person-ability (and on that note I think that Obama looked much more comfortable but that Mitt looked more engaged, as he looked the President in the face almost the entire time that he wasn’t speaking). However, this isn’t all that surprising as this debate was about domestic issues (aka: The Economy), and considering the fact that this debate was almost entirely about President Obama’s record (because the voters know at least something about it), and the roles will likely flip in the coming debate (particularly in the foreign policy debate).

I think that the topics that we will likely hear more about over the coming days will be much of the same:

• Medicare – Romney supports the voucher approach, and Obama doesn’t
• Taxes – they both need to define more clearly what they want on personal and corporate rates
• Military – (this may be wishful thinking) They didn’t talk too much about this, and it mostly seemed like a preview of the Foreign Policy debate when they did

I would love to hear more specifics about each of these things however. I want to hear about Romney’s plans to close loopholes, but I’m in suport of that. And I want to hear Obama defend the Affordable Care Act, as it still seems mysterious in a lot of ways (although I support so much of it), and I want to hear them both define their approach their plans for foreign policy from this point forward (even though I feel like I understand the President’s approach so far). I would also appreciate a more cooperative conversation about regulation, but I think that’s pretty wishful thinking.

I took some notes, and I’m going to watch this video again, and consolidate my notes so I can make a few more observations about what took place tonight. Please feel free to let me know what you thought about this debate if you have an opinion, I would love to hear from you.

-Grady

The Candidates on Medicare

The debate over Medicare has been very heated lately, and Steve Rattner is back with some charts. I have been trying to figure out for quite a while what I thought about the different candidates and their positions. So far what I’ve seen is that Mitt Romney has tried to avoid the issue altogether, while Paul Ryan and Barack Obama seem to be quite similar and that they wants to make cuts in spending, but that the cuts would be to payments to providers (which Paul Ryan asked for in his budget, but accused Obama of hurting Medicare when he suggested the same thing). Meanwhile, Mitt Romney has suggested we make no changes… I think that a bad idea. I’ll just let Steve Rattner’s charts from Morning Joe do the talking from here.

The Election Breakdown By “The Issues”

So as much as I love to talk about swing states I think that breaking down the election by “issues” is very important, because they can be barometers for why people vote as they do, which is kind of the whole point of voting (having purpose and reasons). So here we go, these polls are from Politico & George Washington University:

Steve Rattner: When Right Thinking is Just Plain Wrong

When Right Thinking is just plain wrong.

I didn’t understand for a long time why cutting spending too quickly is a threat to the economy (and even in saying that I can feel eyes being rolled at their computer/phone screen), but I had always been told that it would put the money back into the people’s hands and in to the market, and thus spur the economy to cut taxes. And while this might not be the main purpose of this article I think that it is a very good lesson in economics for Joe six pack. Saying that cutting cutting government spending will help the economy draws a picture that can be deceiving (not to say that the people shouldn’t have control of their money), but what actually happens when there are tax cuts is that people pay off debts or invest in savings (and both of which are great things for citizens). But what does this mean for the economy as a whole you ask – well this means that all of that money that the government is spending (whether rightfully or not) will not be spent at as quickly of a rate if it were put in the hands of the people, which would in the immediate slow economic growth more likely than not. I’m not arguing that the government should always maintain control of the people’s wealth, but as you’ll read below Mr. Rattner makes an analogy about stopping a car too quickly, and that is how this conversation needs to be changed. For any science buffs out there, government spending levels should be talked about more like the rate of acceleration and deceleration in order to gauge immediate economic impacts, but of course this is relevant if the conversation is about the immediate economy. Enjoy the article, I always love what Steve has to say.

-Grady

*An Addendum:
I asked my very intelligent and well educated, conservative friend to share his thoughts on this post and he responded under the condition that he remain anonymous. His response is at the very bottom of this post.

When Right Thinking is just plain wrong

AUGUST 2, 2012

Originally published in the Financial Times

During the past few weeks in the FT, the “Right Thinking” warriors of the Republican party have laid out their manifesto in broadly appealing principles rendered so gauzily as to nearly erase from history the hard-edged specifics that some of these same authors have sworn allegiance to.

But then the memories of GOP dogma kick in: vast, unaffordable tax cuts; evisceration of social welfare programmes; deep cuts in spending on practically everything else, from food stamps to national parks; steadfast opposition to gay marriage; intimations of harsh treatment of the US’s 11m illegal immigrants.

And on and on. The contrast between the high-minded commentary that appeared in these pages and pre-existing policy proposals could not be starker.

Proving that his silver tongue is matched by a silver pen, Congressman Paul Ryan issued a call to “restructure” entitlements so “important programmes can succeed well into the 21st century”.

In fact, what he has proposed in his draft budget is to transform Medicare from an entitlement programme in which seniors receive the care that they need into a voucher plan in which the elderly would receive a fixed allotment to buy their own insurance. If that amount proves insufficient or the insurance does not deliver adequate coverage, well, tough luck!

Medicaid, healthcare for the poor, would suffer a different, but equally disabling fate. It would be turned over to cash-starved states, the fiscal equivalent of being sent to the knacker for execution.

Meanwhile, Glenn Hubbard says the US needs to fix its riddled tax code and get its fiscal house in order. Well, of course it does; every sentient American knows that. But Mr Hubbard blithely ignores the plan put forth by Governor Mitt Romney, who he is advising: 20 per cent across the board tax cuts costing $2.8tn over the ensuing decade, to be paid for by closing loopholes that Mr Romney has refused to specify (apart from two minor items.) Even in a cynical age, that is cynicism of mind-boggling proportion.

The Romney/Hubbard tax plan would not result in net additional revenues, which means reducing the deficit would require spending reductions on a vast and – I believe – politically unacceptable and socially undesirable scale.

Finally, Mr Hubbard offers up the thoroughly discredited argument that deficit reduction can spur near-term economic growth. He should ask the British (or the eurozone members) how that austerity stuff is working out for them.

Amid all the disingenuousness lie a few hopeful wisps. Senator Olympia Snowe’s cri de coeur for the GOP to retreat from its extremism to the centre right is welcome – even coming on the eve of her retirement – as is the estimable Jon Huntsman’s call to embrace the progressivism of Theodore Roosevelt, a giant widely admired across party lines.

But that same Teddy Roosevelt was the first president to espouse national healthcare, while Mr Huntsman, a former Utah governor, advocated repeal of ObamaCare during the Republican primaries. Now he says full repeal of ObamaCare is “unlikely” and wants the “pointless sound bites” dropped.

Barack Obama mostly escaped a direct lashing. Instead, Republicans were sure to include code words to subtly identify the incumbent’s alleged failures: “defeatism”, “crony capitalism”, “ad hoc responses”, “bureaucrats” and the like.

In fact, Mr Obama is far closer to the right approach than his Republican nemeses. Putting in place a long-term deficit reduction plan is an urgent priority but it should be balanced between tax increases and spending cuts and phased in gradually, just as a speeding car should be decelerated slowly.

US spending on social welfare programmes can be curbed humanely, without gutting the social safety net. And of course policy certainty would benefit business and consumers alike. But let’s put the blame for the current drifting where it belongs: on Congress.

By all means go back and read the Right Thinking series, just also be sure to read the transcripts of the Republican presidential debates and the policy papers of Mr Ryan, Mr Romney and others who form the true core of the Republican party.

ADDENDUM: here is my friend’s response

I understand your economic argument that gov’t spending goes straight to the bottom line of GDP immediately. However, borrowing money for our government to spend today brings forward consumption from the future as you know. So look forward fifteen years and understand you have pulled economic activity from this America to the America of fifteen years ago and oh by the way we borrowed money to do so, so we have to tax the citizenry higher than we would have. You have a situation where we have less growth already and then you have to tax higher just to service your debts….not a winning proposition….Also, where I throw my hands up with that spending=growth at any cost bull shit is that it assumes that any single dollar spent is good for economic growth regardless of how that dollar is spent. This clearly does not pass the common sense test. Do we really think failed solar companies are on equal footing with whatever business idea did not get funded in the private market place because of crowding out of capital…..fuck no when we put it like that. Also let us not just look at the surface of what happens with a funding a shotty solar company (it is just an easy target so I’m using it). The government obviously spends the money….they either tax or borrow money to do this…borrowing the money implies taxation later to repay the debts along with their interest or inflationary policies which as you know are a hidden tax. So they spend the money on this solar company….the citizens who have already been taxed have to pay more for their energy bills because solar does not work out so hot. Then you have a citizen you has been taxed (today or later) paid more for his energy bill and has nothing to show for it……is this representative of economic growth….no

Sorry for any grammar errors I was going fast.

I do think you opinion is a valid one for 10 years ago.

I appreciate his response, and I think that this gets us closer to a more constructive debate.

Football and Socialism – By Bill Maher

Ok, so I know that this will completely rub a lot of people the wrong way, but I believe it’s worth sharing. Sometimes it’s ok to be uncomfortable, or to hear someone say something that you disagree with. I have grown to love listening to people who I don’t agree with more than people who I agree with because I think I’m actually growing! (And If you’re already bored of me just skip to the video).

I don’t consider myself to be a socialist (I was an Economics major who thinks that people are flawed, no system is perfect), but the unbelievable FEAR or socialism in our country has just hit such a flagrantly ignorant level that I have to say something… Go ask your grandparents what they think of Social Security, and Medicare – and remember that they are “socialistic” programs by nature… I’m not saying that they are unflawed systems, but let’s at least have a fact based, and historically based discussion. I would Love to talk about this with anyone who is confused with why I would ever say such things (meaning, feel free to comment and discuss). The point that he is trying to make here, that I think Many people would sympathize and empathize with these days is that sometimes some people are over rewarded and some people are under-rewarded, this doesn’t mean that I think they should be paid the same amount. I just think that it’s fair to say that societies and cultures where people legitimately have a chance to be a part of the group have by far the best chance at moving forward as a whole. I’m not saying I have answers as for how we should go about this, but just that it’s ok speak out if you see something like this as poorly functioning at the present.

The one thing about Bill that really seems like a major blind spot to me is his impatience for religion all together (as he does make a snark at faith in the video) but I’ve learned to look past it, because I think that there is still a lot to learn from someone like Mr. Maher outside of this one topic that we see differently. I have heard him say that he thinks there is possibly something more (a higher power) but you would never know it from his comments about religion… I will stop trying to justify my interest, but I do think that Bill Maher would be a great person for a lot of people I know to listen to on many topics, as he is honest about how he feels to say the least. Ok, I’m done.

Enjoy