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  • The Republicans in opposition

    Posted by Michael Kennedy on January 19th, 2013 (All posts by )

    Bill Kristol (corrected thanks to Joe) has an excellent column today on where Republicans could go in the next four years. I have little confidence that the House GOP can bend Obama to their will on the deficit or spending. He is riding high with the aid of the mainstream press and TV. The public does not understand the spending issue, or at least not enough of us do. The Republicans represent the “Eat your vegetables or there will be no dessert” philosophy and that is not popular right now. What do we do ? Here is one suggestion.

    He quotes UN Ambassador Pat Moynihan in 1975.

    The United States goes into opposition. This is our circumstance. We are a minority. We are outvoted. This is neither an unprecedented nor an intolerable situation. The question is what do we make of it. So far we have made little—nothing—of what is in fact an opportunity. We go about dazed that the world has changed. We toy with the idea of stopping it and getting off. We rebound with the thought that if only we are more reasonable perhaps “they” will be. .  .  . But “they” do not grow reasonable. Instead, we grow unreasonable. A sterile enterprise which awaits total redefinition.

    I feel much the same way. I would have much preferred the GOP to have voted “present” when the “fiscal cliff” matter was before the House. I would like to see them do the same when the debt ceiling issue is voted on. Let Obama have his way but show that we do not agree.

    unapologetic opposition means openly and aggressively making the case for free markets as unequaled engines of economic opportunity and growth; it means advocating government policies that are “limited in their undertakings, concrete in their means, representative in their mode of adoption, and definable in terms of results”; and it means showing a commitment to “speaking for political and civil liberty, and doing so in detail and in concrete particulars.” Making these arguments would be “liberating” for American diplomats and for American foreign policy, Moynihan claimed. “It is time, that is, that the American spokesman came to be feared in international forums for the truths he might tell.”

    Part of our problem is the fact that a significant segment of the Republican Party belongs to the current “ruling class”. I expect them to roll over in hopes that they will seem less “confrontational” to the low information voter. Some of them are “appropriators” in the purest sense. They “bring home the bacon.” Some of them are sincerely mistaken in their position. One of those is John McCain on foreign policy. Andy McCarthy goes into some detail on NRO.

    I doubt we will convince anyone about the risks of our policy toward radical Islam until some disaster occurs. Right now, our worst risk is the economic policy of Obama, which may change the entire course of our history. From Kristol’s column:

    Surely, then, it is time for Republican spokesmen to come to be feared in our national forums for the truths they might tell. Truths about the consequences of our weakness abroad and of our debt at home. Truths about the scope of reform necessary to improve health care. Truths not just about liberalism but about crony capitalism, not just about big government but about big business and big education.

    I would add the fatal attraction of the financial community which has captured the Fed and may run our economy into the ground. Another excellent piece from the Weekly Standard goes into detail.

    If the GOP wants to be the party of sound money​—​not only as a vital tenet of government fiscal responsibility but also as the ethical foundation for free-market capitalism​—​Republicans should start focusing on the harmful consequences of unwarranted money creation by our central bank. People need to understand how the Fed’s efforts to “stimulate” economic activity through monetary policy are fomenting a destabilizing fissure between the real economy and the precarious world of high finance.

    When money creation is out of sync with productive economic growth, the link between honest effort and reward is damaged. It is disheartening to keep working away at providing real goods and services while others are seen to receive arbitrary gains whenever the Fed bestows its latest quantitative easing gifts on financial markets. And it’s discouraging to plan carefully for the future only to have seemingly prudent economic decisions transformed into disappointing, life-altering mistakes.

    The article is worth reading, especially for the GOP House members.

    Today we are witnessing an increasingly divisive tension between high-profit activities conducted at trading desks for big money-center banks and next-to-nothing returns offered to average savings account holders. The Fed’s aggressive liquidity injections are showing up as asset bubbles in sophisticated global financial markets even as domestic consumer price indices show only modest increases; this two-tier effect favors “whales” who can wager millions on exotic credit instruments while stiffing modest savers with negative real returns.

    According to the latest semi-annual report issued by the Bank for International Settlements, the gross market value of outstanding over-the-counter derivatives is $25.4 trillion​—​yes, trillion​—​with 75 percent of the contracts linked to interest rates: forward rate agreements, swaps, options. In June 2008, shortly before the crash, the gross market value of outstanding OTC derivatives was $20.4 trillion, with 46 percent linked to interest rates.

    So what has actually changed since the pre-crisis financial situation? Instead of tamping down speculative betting on interest rates in favor of rational market pricing of loanable funds, the Fed’s monetary policies are stimulating it. No wonder traditional financial intermediation​—​the kind that used to channel depositor funds toward promising new businesses​—​is now oriented toward gaming various hunches about the Fed’s next move. Even smaller banks are learning to churn their Treasury holdings rather than make loans to private-sector borrowers​—​especially since federal regulators are evaluating their portfolios.

    Why are “too-big-to-fail” banks still supported by the government ? Why shouldn’t the GOP oppose these giant speculation machines ? The principals didn’t vote for them. My children, at least three of the five, will have great difficulty ever buying a house. My younger son, a fireman, is the only one without a college degree but I helped him buy a condo in 1993 when the real estate market was going through a weak spot, and he was able to get into the game of musical chairs and now has a nice home.

    I am very afraid of what is coming. The Republican Party would do well, I think, to anticipate this and stand for principle rather than expediency, as they seem to be doing. I know their job is to get elected, not govern, but for once they could stand on principle. It might even work out well for them, if not for the country, as Obama’s policies crash the economy. Finally;

    If we want to preserve the morality of a free-market system, we cannot permit our central bank to carry out monetary policy in ways that play favorites. It’s especially egregious that the Fed has become complicit in drawing off capital into the abyss of deficit financing; clearly, our central bank is catering to the political class, bailing out Washington itself through massive purchases of government debt obligations. Monetary policy today delivers the biggest benefits to the world’s largest borrower​—​our federal government.

    If we continue to allow the Fed to underwrite deficit spending and inflict the resulting monetary distortions on the people who actually contribute real value to the economy, who live and work in the belief that saving is a virtue, we will witness the steady demoralization of democratic capitalism.

     

    64 Responses to “The Republicans in opposition”

    1. VSSC Says:

      At present the Republican party represents only the Republican professional political class.

      That is why their voters stay home.

      The party of government and it’s increasingly degraded clientele is well represented. The rest of us have no representation.

      I do not think they are capable of change.

    2. Sgt. Mom Says:

      What VSSC said. I despise the establishment GOP vampire squids with a white-hot passion.

    3. Lightwave Says:

      It doesn’t help that most of our Republican leaders profit mightily from the same stream of Fed money they should be fighting against.

      20 years from now, we’ll look back at the GOP failure of the Clinton/Bush/Obamee era, where we grew the national debt by 400% from 1993′s $4 trillion until now (and we’ll have made it 500% or more by the time Obamee gets done) as the end of America.

      Only for a few months in 2009 were Republicans not in a position to do something about it. Meanwhile, we’ve spent 12 trillion dollars that we did not have to spend in the space of one generation.

      All that was made possible by the unconstitutional actions of the Federal Reserve.

    4. Subotai Bahadur Says:

      Chrystal is getting his wish, not from the point of view of acting as a minority party fighting from that position; but rather that of a minority party standing in the corner whimpering with tail between legs.

      They just had a “Three Day House Republican Retreat” [can you conceive of a more apt name for a gathering of Institutional Republicans?] and sorted out their strategy for this session. They are going to act as if the Democrats hold the majority in the House.

      http://thehill.com/homenews/house/278051-republicans-lower-expectations-as-democratic-majority-flexes-new-muscle-

      Mind you, that is accurate. The last few Republican defeats have been because the technically minority Democrats voted as a bloc, and were supported by the technically Republican Speaker of the House along with 40 of his minions. That leaves the 170 or so other Republicans losing on any given issue while Boehner acts as Pelosi’s owned Speaker of the House pro tem.

      The Institutionals have already surrendered on the Debt Ceiling, after promising us two weeks ago that the reason they surrendered on the Fiscal Cliff fiasco, was because the real battle was the Debt Ceiling. Now they say that the battle is the Sequester. Or maybe the Continuing Resolution that we use in place of a constitutional budget. And after that, it will be because the press might say bad things about them if they do not yield to Obama.

      We need a second party.

      Subotai Bahadur

    5. Mike_K Says:

      I disagree about the Speaker but you all are correct about the political class Republicans. Trent Lott was a perfect example. He never held a real job. On the other hand, Bill Frist is a real guy. I don’t know why he didn’t run again and stay Majority Leader but it may have to do with frustration. He had pledged to serve only two terms but seems to have given up any pol;itical ambition.

    6. Joe Citizen Says:

      The guy’s name is Kristol. Bill Kristol. Son of Irving Kristol.
      Sheesh…

    7. Mike_K Says:

      Good point. Thank you, Joe. I must have been thinking of Billy.

    8. Bill Brandt Says:

      We are heading towards the precipice (think Thelma and Louise in the T-Bird ;-) ) – and nobody is saying anything. I am wondering if the time is ripe for a 3rd party.

    9. Simon Primer Says:

      There is no hope for Republicans for the same reason that there is no hope for conservatism in Mexico. Obama’s margin of victory was made up of newly registered legal or illegal aliens. In four years that margin will be bigger due to more immigration and more anchor babies reaching voting age. This shift will increase the immigration and amnesties. There is nothing the Republicans can do to change that and whatever form their opposition takes is irrelevant.

    10. S O Says:

      “we’ve spent 12 trillion dollars that we did not have to spend in the space of one generation.”
      @Lightwave:

      Wrong metric. The budget deficit isn’t what the country lacks. The trade balance deficit is what it doesn’t have.
      The budget deficit is merely about asking for money instead of just taking it. There’s a lot of potential for raising revenues after three decades of mostly cutting taxes.

      ———————————————

      “Obama’s margin of victory was made up of newly registered legal or illegal aliens.”
      @Simon Primer

      Contrary to propaganda, there’s almost no voter fraud whatsoever. 310 million people in the U.S. and voter fraud is so uncommon you could memorise the names. So practically nothing of Obama’s lead consisted of “alien” votes at all.

      “Despite many instances of electoral fraud internationally, in the U.S. a major study by the Justice Department between 2002 and 2007[2] showed of the 300 million votes cast in that period, federal prosecutors convicted only 86 people for voter fraud – and of those few cases, most involved persons who were simply unaware of their ineligibility.” http://en.wikipedia.org/wiki/Electoral_fraud

      The bigger issues are voter suppression, much gerrymandering and the occasional local or state level election fraud by officials.
      http://www.theatlantic.com/magazine/archive/2012/10/the-league-of/309084/

      ———————————————

      What the Republicans need are proposals which work, and don’t merely work in favour of donors.
      (1) something against unemployment
      (2) something against trade balance deficit
      (3) something against the poor state of public infrastructure
      (4) something for more private capital investment in production capacity
      (5) something for better consumer protection (food, banks) and less oppressive copyright regime
      (6) something to reduce health care spending (allowing Medicare to negotiate all drug prices, for example!)
      (7) pass a budget which actually gets confirmed in the Senate and isn’t just for show
      (8) make sure government agencies work well by ensuring proper funding and confirmation of qualified leadership appointments, not trying to prove government isn’t the solution by strangling it
      (9) make sure military spending cuts are aimed at the plenty waste in the Pentagon budget by withdrawing unconditional opposition to any Pentagon cuts and force Pentagon to actually cut fat and wasteful programs

      and finally, but rather first than least:
      (10) something to make Congress do its job

      I bet they wouldn’t have any difficulties coming back to power in 2016 on federal level and in many states if they forced the social warriors, warmongers, lobbyist puppets, scaremongers, evangelic crusaders, propaganda believers and Rand disciples to STFU and focused on this list.

    11. Tim Says:

      1) What have the Democrats done? They have controlled most of the Government for 4 years now. Republican proposals have been ignored.

      2) You’re against modern Economics on this one proving you’re “against science”.

      3) Democrats have spent trillions, are we better off? Murtha international, high speed rail to nowhere, bankrupt green schemes, etc.

      4) Democrats are raising taxes on investment. If you tax something you get less of it.

      6) Repealing Obamacare is a good start.

      7) Republicans have passed a budget. It’s the Democrat controlled Senate which refuses to pass one. Obama’s was defeated in the Democrat controlled Senate 96-0.

    12. S O Says:

      Tim, did you reply to me?

      about (1)
      They still appear to be the better choice in the eyes of the majority of voters. That’s the challenge.

      about (2)
      I actually have a university diploma on economic science, so I’m at a loss how my concern about the trade balance deficit could be “against science”. http://www.bea.gov/newsreleases/international/trade/trad_time_series.xls

      about (3)
      Spend smarter. You can’t improve or even only maintain infrastructure without spending.

      Seawalls rarely fail in most developed countries.

      Commuters waste inordinate amounts of time in traffic jams.

      “As of last year, 11.5 percent of US bridges, crossed by an average of 282,672,680 vehicles daily, were graded as “structurally deficient” by the Federal Highway Administration (FHWA).” http://www.businessinsider.com/american-bridges-in-need-of-repair-2012-6

      On a related note, South Koreans are going for Gigabit internet access.
      “According to the State of the Internet report from Akamai for Q4 2011, the average Internet speed in South Korea during the quarter was 17.5 Mbit/s” http://en.wikipedia.org/wiki/Internet_in_South_Korea

      about (4)
      Doesn’t matter. Be better, voters may reward it and the economy needs it.

      about (6)
      Afaik “Obamacare” doesn’t really increase costs of health care, but mostly moves them around. There’s much propaganda in the air about the law, but simply repealing without replacing it without some plan which drives up the ratio of insured people as does “Obamacare” is rather political suicide than a path to power. Besides, not going to happen.
      So (R) should focus on cutting excess costs instead. That’s a problem, for many of these costs are the profits of donors.

      about (7)
      Who cares? The majority of voters don’t, that’s officially documented. The (R) people need to be better than so far in order to convince a greater share of voters than so far – quite a challenge given the demographic change.
      Complaining about what the (D) did is irrelevant. The voters already factored that in and their majority still voted for (D).

    13. Mike K Says:

      A few responses to SO

      “The budget deficit isn’t what the country lacks. The trade balance deficit is what it doesn’t have.
      The budget deficit is merely about asking for money instead of just taking it. There’s a lot of potential for raising revenues after three decades of mostly cutting taxes.”

      So you propose confiscation of income ? I don’t understand your point. I do know that, if you spend more than you take in, you go broke. If you are a government with the ability to print money, everybody goes broke. Weimar had a reason to inflate the money supply. They were protesting the reparations from the Versailles Treaty. Those debts were unreasonable; France was trying to force Germany to pay the cost of the war. However, Germany wound up with Hitler, a worse outcome. “Cutting taxes” has resulted in the same revenue levels by GDP as the past 40 years.

      “Contrary to propaganda, there’s almost no voter fraud whatsoever. 310 million people in the U.S. and voter fraud is so uncommon you could memorize the names. So practically nothing of Obama’s lead consisted of “alien” votes at all.”

      It is very difficult to prove vote fraud but it is significant that the Democratic Party fiercely opposes attempts to prove that voters are who they say they are. There have been a number of cases where it was proven, and Democrats were the culprits. In 1960, there was enough evidence the Attorney General Rogers felt he could reverse the results in Illinois and Texas. Nixon declined for the good of the country.

      “What the Republicans need are proposals which work, and don’t merely work in favour of donors.
      (1) something against unemployment
      (2) something against trade balance deficit
      (3) something against the poor state of public infrastructure
      (4) something for more private capital investment in production capacity
      (5) something for better consumer protection (food, banks) and less oppressive copyright regime
      (6) something to reduce health care spending (allowing Medicare to negotiate all drug prices, for example!)
      (7) pass a budget which actually gets confirmed in the Senate and isn’t just for show
      (8) make sure government agencies work well by ensuring proper funding and confirmation of qualified leadership appointments, not trying to prove government isn’t the solution by strangling it
      (9) make sure military spending cuts are aimed at the plenty waste in the Pentagon budget by withdrawing unconditional opposition to any Pentagon cuts and force Pentagon to actually cut fat and wasteful programs”

      The response to (1) is easy. Reduce regulations that are punitive and ineffective. Add a cost factor to new regulation to see if it costs more than it would accomplish.

      The trade balance is affected by labor cost. The new Obamacare taxes, which you seem not to understand, will drive more manufacturing offshore.

      “The most controversial of the latest ObamaCare taxes is the Medical Device Tax that hits entrepreneurial firms making equipment such as heart valves and hip replacement parts. They face a 2.3% profit on gross sales – a tax they must pay even if they have no profit at all. Many firms say this tax – slated to collect $29 billion over 10 years – will soak up virtually all of their research budgets.”

      This is a tax on REVENUE, not profit. Many of these are startups with no profit for years !

      You mention infrastructure and “seawalls”, which I suppose must refer to New Orleans. The money for leveee work was spent by the local Democrat machine (Nagin, et al) on casino parking lots, not seawalls. Notice the locals voted in Republicans after that event.

      “(7) pass a budget which actually gets confirmed in the Senate and isn’t just for show
      (8) make sure government agencies work well by ensuring proper funding and confirmation of qualified leadership appointments, not trying to prove government isn’t the solution by strangling it
      (9) make sure military spending cuts are aimed at the plenty waste in the Pentagon budget by withdrawing unconditional opposition to any Pentagon cuts and force Pentagon to actually cut fat and wasteful programs”

      (7) The Senate has not passed any budget since 2009. How can a House budget be for “show” when it is the only one ?

      (8) Some government programs do not deserve to exist and many others are counterproductive.

      (9)The Pentagon budget is a leftist target and will be until it is zero. The battleship Iowa was relocated to southern California because the lefty San Francisco city council opposed it as a war memorial. It would help to nominate someone who can manage large organizations, which usually excludes Senators.

      Sorry to go on so long. I thought SO posted a reasonable set of questions that should be answered unlike some of our trolls.

    14. S O Says:

      @Mike

      A deficit budget can be addressed by more revenue just as it can be addressed by less expenses or a combination of both.
      The U.S.gov can easily increase the revenue to match the expenses, no problem. It only takes political will (and majorities) to do so. There would be some economic effects, which ones depend on many factors.
      The U.S.gov can easily decrease spending to match the expenses, no problem. It only takes political will (and majorities) to do so. There would be some economic effects, which ones depend on many factors.

      The real problem of sustainability isn’t the budget deficit, but the trade balance deficit. Unlike the budget deficit the trade balance deficit indicates that the country does indeed live beyond its means.
      The budget deficit (which is mostly about crisis-related spending and revenue losses) merely indicates that politicians did the easy part (spending), but not the hard part (making sure revenue matches spending) of their job.

      “It is very difficult to prove vote fraud”

      No, it’s actually simple. All you need to do is to compare legitimate voters with actual voters. Florida did a lot of noise about voter fraud and in the end found almost no cases, IIRC them being rather accidents.

      “The response to (1) is easy. Reduce regulations that are punitive and ineffective. Add a cost factor to new regulation to see if it costs more than it would accomplish.”

      I suppose more than this is required, much more.
      “Unpopular and ineffective” is rare. The problem is rather that “unpopular and effective” is even more rare.

      “The trade balance is affected by labor cost. The new Obamacare taxes, which you seem not to understand, will drive more manufacturing offshore.”

      The trade balance is first and foremost the story of a country not producing as many goods as it consumes and invests, and unable to compensate this with excess services. To not drive production out of the country is not a solution in itself (and opinions vary on the effect of Obamacare, obviously) as the status quo is insufficient.

      The lack of industrial output is dramatic and requires a huge structural changes. It’s a quite encompassing story, and I suppose in the short term the best fix would be a devaluation of the USD. The Renminbi’s growing strength did obviously not suffice, so a weaker U.S. currency is required to achieve a balanced trade in a few years.

      “This is a tax on REVENUE, not profit. Many of these are startups with no profit for years !”

      That’s hardly unique, and an economist automatically expects this effect to be nullified by ceteris paribus more modest pay increases and product price increases. The market has most likely a very price-inelastic demand with prices merely kept in check by competition.
      Besides, startups with no profit for years usually have very little revenue either and I doubt entrepreneurs are actually important in the market for such parts.

      Dunno how they figured the tax would be a good idea, though; I’m no friend of very specific taxes. Taxation should be rather broad like a VAT or a tax on all incomes, for example. The more specific, the more likely there were undue lobbying influences.

      about (7)
      They voted on a budget they knew would not be accepted by the senate. That’s for show.

      about (8)
      Agreed, but this should be determined by looking at the individual cases. I’m allergic against ideological positions which dumb it all down to positions such as “government is the problem”.
      The right thing to do is to look at programs and proposals and decide based on their costs and merits individually, no matter how the budget situation looks like.
      You may have a deep budget and everyone wanting budget cuts, but when you get a program proposed which costs 100 millions this year and will yield 200 millions savings every other year you better go for it and spend that money!

      about (9)
      Excessive expectations, waste promoted by lavish budgets for a decade, gold plating instead of accepting good enough solutions, not-invented-here syndrome, inefficient personnel system, accounting so bad Enron was better, inefficient bases, too many entanglements in distant places, too many mismanaged and ultimately cancelled projects etc etc
      There is lots of potential for savings, and the (R) hardliner position that no cuts (or even reduction of proposed budget increases!) are tolerable has helped the Pentagon to keep the wasteful operation running instead of being forced to cut the waste.
      BTW, I doubt the democrats would reduce it to zero. Too many (D) politicians like to play great power games just as do their (R) counterparts, especially the presidents.

    15. VSSC Says:

      SO…

      Perhaps the Republicans should just become Democratic officially. Now they represent only the Republican professional political class, serving as token opposition.

      [You hold a degree in economics - for $1500 a lawyer can get that expunged.]

      There is no voter fraud..right. No welfare fraud either. No Social Security Number fraud. No disability Fraud. Never was assembled such Honest Legions of Rent Seekers. A Pilgrimage of Civic Virtue.

      The reason our government attracts so many fraudsters is that it is a Control Fraud in Progress.

      Which is why for instance I quite forgive the peasants who are taking whatever they can get now. Take disability, it’s likely the only money from Social Security you’ll ever see.

      The Rubinomics Control Fraud is coming to an end. Of course it is.. There’s no reason for the Republicans who still care to represent their voters to foolishly attempt to make it solvent, a fools errand…it cannot be done. Nor should more be extracted from the defrauded taxpayers weary backs. When you are in the grip of criminals whose weakness and fears [oh yes] give you the wiggle room to preserve your own modest monies then you should.

      If the 170 actual House Republicans want a Parliamentary solution to our Great Question then they should walk out, as the voters did on Romney. This President Bammu revels in crisis, let the Republicans pick the ground for once. Of course they will not. The Great Question will remain.

    16. Mike K Says:

      “The U.S.gov can easily increase the revenue to match the expenses, no problem. It only takes political will (and majorities) to do so. There would be some economic effects, which ones depend on many factors.”

      This is the old static revenue assumption of the left. “Many factors” include people changing behavior. In the 1960s, Sweden instituted a very high tax rate (90% or so) on income above a certain level. They assumed that only plutocrats would be affected but it turned out that senior physicians in the Swedish socialized medicine program were also affected. What they did was to work until their income reached the threshold of the high tax rate. Then they went to Greece or the Seychelles for the rest of the year. You could not get an appointment with a senior doc after October.

      Watch California. Jerry Brown’s budget is “balanced” with static revenue assumptions. Let’s see how balanced it is by July.

      As for the rest, I tried. Some San Francisco county supervisors want to abolish the Defense Department.

    17. VSSC Says:

      Sweden was not government by Control Fraud. It was making honest mistakes, and hence was able to correct them fairly easily.

      Honest Mistaken is not the Great Question of our time.

    18. S O Says:

      To be fair, there are also some right wingers who would prefer a militia-only government. ;)

      I don’t see where or how you spot a static anything in my statement. Seriously, I studied this stuff for years. The typical economical model uses a curve, not a line for such things. Lines are being used for five minutes during a lecture, then the lecturer adds the detail of using a curve. Economists show linear models to laymen only if they don’t trust the latter’s education or intelligence.

      Besides, the doctors issue is a non-issue. Many German doctors have revenue caps which mean they can only make bucks for 11 months. The result is that they go on vacations during the year. 1/12th less work per doctor means 1/11th more job opportunities doctors, so no problem at all. Same in other branches of the economy. Opportunities left open by those who are full mean opportunities left open for others. This is quite unproblematic unless it’s about an export sector, where it might be a pity.

      I understand there has been a lot of propaganda about the Laffer curve exception and a ludicrous quantity of Americans and even British believe in this exception to be the norm, but that’s really a sad joke. Countries not carpet bombed with the Laffer curve propaganda for three decades still know that raising taxes is usually a really foolproof way of raising revenues. The exceptions are exceedingly rare.

      Besides, tax levels in the U.S. are nowhere near 90%, in fact they’re far below 50%. It’s speaking volumes that you’re resorting to a “90%” example to make the point, for the Laffer curve exception only becomes debatable beyond 70%.

      @VSS:
      “[You hold a degree in economics - for $1500 a lawyer can get that expunged.]”

      Hardly. I’m living in a country which didn’t turn its justice system into a sick joke yet. Besides, what’s your argument? Or where is it?

      “There is no voter fraud..right. No welfare fraud either. No Social Security Number fraud. No disability Fraud. Never was assembled such Honest Legions of Rent Seekers. A Pilgrimage of Civic Virtue.”

      Totally off topic, in conflict with what I actually wrote and also: http://en.wikipedia.org/wiki/Straw_man

      About the rest; you don’t look at actual statistics provided by agencies, CBO or people of the other political wing, don’t you? You’re quite nebulous, but I assume you point at the nonsense about Social Security being bankrupt or something. Fact is, calculations have shown it’s quite safe for almost two decades to come and relatively minor changes can extend this a lot.
      —————–

      I keep an eye on U.S politics in part because it’s entertaining (much drama and stupidity), in part because it’s dangerous even to foreigners – especially when political fashions or myths leave the country and infect others.
      Being neither (R) nor (D), I see quite a lot of evidence pointing out that the (R) wing is not exactly strong in regard to making use of statistics or science (just remember the legendary issues it has with evolution, global warming, age of earth).
      There’s too much ideology in U.S. politics, and said ideology appears to be easily manipulated by lobbyism.The opposition to cap & trade is almost entirely founded on lobbyism of the coal sector, for example. Similar for climate change denial. Laffer curve / trickle down voodoo economics are based on upper class lobbyism.

      Sadly, the (R) wing of the country has extremely effective propaganda to repeatedly hammer even the biggest nonsense and fantasies into right winger’s minds.

      Meanwhile, the (D) wing shows the same issues, albeit at a smaller scale. The biofuel nonsense, for example. It’s almost 100% a product of corn industry lobbying. The (D) wing is also catching up in its ability to fire up the base and to distribute propaganda – it made ‘progress’ in this regard since about 2007.
      The ability to shut down the intake of conflicting information and the tendency to vilify political opponents is strong on the (D) wing as well.

      The U.S. is playing ping pong ball with no real progress and ever more indicators of wear.
      I expect the next crash late this decade (one crash per decade has already become a national custom). The reason is the non-sustainability of the economy in its current state. It would need much less resource misallocation and much more capital investment to become sustainable. Alternatively, the population in the U.S. could keep running its economy as usual at the price of greatly reduced consumption.

      Bad news for (R); they would sit in the White House during the crash if they enter it in 2016.

    19. Mike K Says:

      SO, I’m sorry to say that you are edging into troll territory with your adjectives.

      “hammer even the biggest nonsense and fantasies into right winger’s minds.”

      Same old, same old.

    20. S O Says:

      http://www.nytimes.com/2013/01/20/us/medicare-pricing-delay-is-political-win-for-amgen-drug-maker.html?_r=0

      @Mike K:
      That was intended as a factual statement, and it was one.
      Keep in mind I’m a foreigner, without much or even anything at stake in such debates. My baseline position is neutrality and I can easily spot country- or party-specific propaganda by noticing its absence in other countries or languages.

    21. S O Says:

      BTW, I don’t think I can convince anyone here. I’m just fooling around.

      I can (and likely do) cause cognitive dissonance, become unpleasant, you begin considering me as a troll and block/delete my comments or something.

      This is how it works. The two political wings in the U.S. have long ago had a breakdown of their capacity to communicate with each other driven by an overemphasis on ideological purity and propaganda. Likewise, their capacity (and intent) to listen non non-partisan voices broke down as well.
      It’s part of the mess.

      Now if I only understood the how, the why and how to prevent it in my country…

    22. VSSC Says:

      @SO,

      Ah. I had taken you for an American Academic, with the brandishing about of the degrees..etc. My point was a degree in economics = criminal conviction. Since that is the economics our government practices.

      You are just shall we say, watching.

      You certainly aren’t living here, or you wouldn’t pronounce with such surety on what our defects AREN’T… and telling us what they ARE, with the certainty that only detachment provides.

      My Dear Sir you know less of my nation than I do of Iraq, and I’ve invaded it. Twice.

      SO do enjoy the show, and as to the matter of advising others what they’re problems are and how to avoid OUR problems…if they wish to avoid our fate they must not, not, not listen to experts, or let them govern. For here experts DO govern through the bureaucracy, the people vote but are not sovereign. Drunk with power the Experts decided to gamble [Rubin] and they all got very rich. We The People did not.

    23. Mike K Says:

      “I can easily spot country- or party-specific propaganda by noticing its absence in other countries or languages.”

      You seem unable to spot the example you provided of influence peddling and crony capitalism. You will find few at this site, except trolls, who are positive about the entire ruling class of the US regardless of party. The Tea Party, which is vilified and hated by the ruling class of both parties, is growing and learning. It will take over the Republican Party or form a third party if necessary. I was a Perot voter until Perot self-imploded in 1992.

    24. S O Says:

      @VSSC:
      “Ah. I had taken you for an American Academic, with the brandishing about of the degrees..etc. My point was a degree in economics = criminal conviction.”

      You don’t think this is a bit extreme considering there are about 310 million Americans, more than a hundred thousand of them being economics of some form or another?
      This is quite telling about you; especially your willingness to have prejudices well beyond plausibility.

    25. VSSC Says:

      My Dear SO,

      As I don’t know your country, I cannot know how you are ruled. Here we are ruled by criminals. Another blanket statement needing qualification – not all of them are criminals. Just the ones executing a workable plan and that plan is Control Fraud. There are of course many simple rent seekers, even a few lost souls who think they serve the public [who really would be happier someplace else]. However the core, soul, and operating principle of our government the last two decades is *Control Fraud*. That is a term that came out of our Savings & Loan crisis of the 80s [a warning we failed to heed] and is defined as the CEO or Head of State [in say Latin American Nations. and now this one] who uses the Laws shielding the company and it’s officers [or the State and it's Officers to loot the assets of the enterprise.

      And that is how the last two decades trillions of dollars a year are extracted from America, in taxes, in debauched money, in outright theft, in any number of Wall Street schemes, in the destruction of our industries, in the pillaging of our pension funds from sea to shining sea, in the looting of social security, at the Fed Discount Desk [free money!! To banksters]. I can go on.

      I had mentioned earlier I don’t mind the people faking disability for the check – it’s going broke – as that’s the only Social Security money they’ll ever see. I might also mention that the governments own estimate of Medicare/Medicaid fraud run about 30%. That’s a trifling $60-90 billion a year, but it adds up. That’s still small time crime, but you get the picture.

      Our ruling class are criminals executing a Control Fraud. And providing intellectual cover for them the entire way, the Expert equivalent of the gun moll are economists. For instance there’s a name for the economics of the last 15 years: Rubinomics – after Clinton’s Treasury Secretary. He thought it a great idea to merge deposit banking with Wall Street – What could go wrong? We may also refer to Mr Krugman, who would have been quite happy with Trillion dollar coins.

      I think you’ll find the parties don’t matter, and are usually interchangeable in terms of policy. I think if you consult any number of respected American Academic Historians they’ll agree that Americas regime of democracy ran from Andrew Jackson to FDR, and we are ruled by a “Populist Bureaucracy” since the New Deal. You may be wondering how a bureaucracy of all things could be considered populist. Allow me to dispel the cloud: It means they take their policy queues from ACADEMIC EXPERTS. Because of course they understand what the people need. They’re experts. They’d rather be caught in a Thai Lady Boy whorehouse raid then TALK with the great unwashed as equals but they understand them..for you see..they STUDY THEM. And receive public grants to do so. WE THE PEOPLE don’t know what we need, but our experts who study us, DO.

      You may rest assured that as far as impacting policy the Head of any major university’s Dept has more votes than 10 million of us. They also would be hard pressed to disagree with the above, except perhaps in the tone you do…

      And it’s not working anymore.

      Yes they’re corrupt. Either that or they didn’t get the memo.

    26. VSSC Says:

      Is this a typo or a tech guys Freudian slip into eloquence? You decide..

      “It means they take their policy queues from ACADEMIC EXPERTS.”

      Should be cues, but then again..maybe queues it is..

    27. Simon Primer Says:

      S O,

      So Democrats fought so hard to prevent ID checks on election day because they believe checking ID violates some civil liberties? Funny how they only care about rights when it comes to immigrants. Even if every single immigrant voter was legal it is still the end of America. They let them in and gave them citizenship in order to have their votes. The second generation anchor babies are 100% legal and more are reaching voting age every year. Every election will swing more to the left. Soon we’ll be as vibrant and successful as Mexico.

    28. S O Says:

      @Simon;

      ID checks were introduced because they discourage minorities more from voting than white men. Some (R) were caught on tape stating they were pushing for ID checks etc. to win their state in 2012. It was not a measure to fight voter fraud (for which there’s only slightly more evidence than for Iraqi WMDs), but to distort elections. It was effectively an election-rigging scheme, just as the almost epidemic gerrymandering:
      http://tinyurl.com/cwq42yx
      http://tinyurl.com/ayovne6

      BTW, it’s sad how neither team (R) nor team (D) actually fight for civil liberties at all. If they did, there would be no “Patriot” Act, no drones killing a citizen abroad and the recurring talk about impeaching POTUS would be all about the GWOT, and nothing else. Oh, wait. Both GWB and Obama would have been impeached successfully, there wouldn’t have been mere talk about it.

      You guys don’t make a hypocrisy-free impression on me either. Instead, you’re very much in camp with the far right wing because you seem to tolerate the same BS that the far right wing typically tolerates. If you were really no team (R) partisans, you wouldn’t repeat team (R)’s talking points and scares so quickly either.
      ____________________________________________

      The fear that Hispanics will ruin the country resembles the fear that the Irish will ruin the country. Now how did this work out?
      Mexico is different because its institutions suck even more, not because of more tan or funny language.
      ____________________________________________

      I (try to) tell you; what you need aren’t the talking points or fears. It’s ways to pursue the 10 points mentioned before, and ways which actually work. This means other ideas than the ordered and paid for propaganda for lower taxes and less regulation.
      The U.S. politics needs to leave fantasytown and lazytown. They need to work hard to find room for improvement, simple reciting of the same old recipes which had been used for decades is not going to help to change course.
      Resorting to ideology is intellectual laziness. Ideology is so simplistic that it’s almost always wrong. They merely differ in how badly wrong they typically are.
      Same for talking points.

    29. VSSC Says:

      “Narcissist academics. Perhaps in 200 years, the story of the decline of Western Civilisation will be summarised with those two words.” – Spandrell
      ================================

      Actually what’s happening with the Amerindians SO is the Dems are betraying and replacing yet another victim/constituient group: the Blacks.

      Just as they did first Southern and then Northern/Rust Belt working class whites. As far as institutions – meh – if Americas pre-1965 immigration institutions were working yes the Mexicans would work out, as every previous group did. The major institution is “work”. If the Irish – like me – had gotten off the boat and been met with welfare, diversity, victimization cults and all the rest they would have not assimilated and made it either. Especially the Irish as they basically arrived with the Man, family and culture destroyed. Similar to the Inner City blacks now. To the extent the Irish were met with it’s equivalents [Boston] they remained ruined.

      If America is allowed to work [literally] it works. You become American. The children raised here are usually indistinguishable from the rest except in hue, which matters far less than the detached think it does.

      As far as our politics and Mr Wilson’s 10 points >> our politics is about POWER. Usually running a close but absolute second is MONEY. But always POWER. As far as diversity that simply acts as accelerant for a thousand who to whom daily.

    30. VSSC Says:

      For strangers from distant lands who do not understand our politics, welcome. **It would be wise now to flee.** However for the Brave – not Republican, no longer Democratic Center Leftist Professor Adam Garfinkle of the Center Left American Interest has a running 11 part series on what’s wrong and how to fix it, our government as it actually IS below. I think he’s dreaming this gets fixed. But he’s right in why it doesn’t work and can’t be reformed.

      http://blogs.the-american-interest.com/garfinkle/2012/10/15/whats-wrong-and-how-to-fix-it-part-2-politicalinstitutional/

    31. Mike_K Says:

      The talking points never die.

      “ID checks were introduced because they discourage minorities more from voting than white men. Some (R) were caught on tape stating they were pushing for ID checks etc. to win their state in 2012. ”

      Maybe they were worried about those precincts with 102% Obama votes or the ones with zero Romney votes. My mother was turned away and not allowed to vote in what is now Jesse Jackson Jr’s district in 1996 in spite of the fact that the polling place was in the lobby of the building she had lived in for 30 years. Her problem was that she was one of about five elderly white women in the 33 story building. Can’t be too careful.

    32. Mike_K Says:

      “If America is allowed to work [literally] it works. You become American. The children raised here are usually indistinguishable from the rest except in hue, which matters far less than the detached think it does.”

      What has ruined immigration as the door to becoming an American is the welfare state. The Los Angeles County hospital has, for years, had a bus to the border in Tijuana for the mothers of “anchor babies” to come to the clinic.

      I have spent hundreds of hours operating on illegal immigrants who will never pay me a cent and whose injuries are due to their drunken behavior. Most of them live in dormitories (small houses with 30 residents) in Santa Ana and get drunk every weekend even if they work during the week. Often they work at day labor and gather at lumber yards looking for a few hours of such work. Of course they pay no taxes. One reason why Texas works well is that the state is supported by sales tax which everyone has to pay, legal and illegal.

      My favorite patient was a guy walking on the railroad tracks Memorial Day 1986. He had his SONY Walkman in his ears and didn’t hear the train coming. After hours fixing his liver and about 30 units of blood, he recovered. When he came to the office, his brother came with him to translate. It turned out they had a gardening business in San Juan Capistrano. When I heard this, I said he could repay me for saving his life by cutting my grass for a year. I did a lot of barter with uninsured patients. He said no, he was too busy. A few months later, he tried to sue Amtrak. THey had lived in California for years but he had never learned English.

    33. S O Says:

      @Mike K:
      “Maybe they were worried about those precincts with 102% Obama votes or the ones with zero Romney votes.”

      Show us one, or else it’s all fantasy.

      Compare the latest welfare state ashing in the comments with this
      “The second generation anchor babies are 100% legal and more are reaching voting age every year. Every election will swing more to the left. Soon we’ll be as vibrant and successful as Mexico.”
      as it triggered my remark about Hispanics and Irish.

      It’s obviously an unnecessary move to discuss Hispanics if what’s meant is really the lower class.

      I don’t share your apparent views regarding lower class, Hispanics etc.
      The key problem here is not the redistribution of income through welfare of any kind – that’s a necessity in part because some cannot work (disabled, elderly, young, sick) and because the economy doesn’t meet its purpose of generating goods+services AND distribute the purchasing power in an acceptable way. You need income redistribution by the state as long as regulation of the economy does not force it to distribute purchasing power acceptably (they still pay women much less than they should after accounting for female-related risks etc., for example).
      The problem isn’t the amount of transfers, but the motivation effects it creates as well as an excessive degree of complexity. There are models for how to do the transfers with almost no undesirable effects on motivation (and almost no administrative costs), but these proposals provoke strong intuitive rejection by those who dislike the current system since they’re not willing to analyse the details. Thus the system works, but not satisfactorily.

    34. VSSC Says:

      The actual system is working FINE for the system. I don’t think you understand our government. It is a pervasively criminal enterprise from top to bottom. Any ideological or racial matters pale compared to the corruption. Whatever the spark that is the tinder and will be the fuel.

      As a side note we are noticing that we are strangely becoming more like Latin America. That must be a coincidence.

      I’m Irish. We had to work and/or fight. If they had redistribution it would have ruined our chances, as it did in Boston.

    35. fiona Says:

      Dear SO – Since you don’t (evidently) live in Florida, I suggest you stop opining about it. Before the election in 2012, those Republicans who do live here did their research and found in excess of 40,000 dead people on the voting lists. In addition, there were a number of non-citizens who had falsified (or had it done for them) their assertion that they were citizens – some of them had been voting for years. It took a court case to get the dead voters removed from the rolls, although the verification of their status came from Social Security data. An effort was made by Democrats to delay the process beyond the 30 day period before the election so that the voting rolls could not be checked.
      Of course, we can’t really check the number of dual voters, that is those who live in New York or other places but receive absentee ballots to also vote in Florida. Unless of course they brag about it.
      Sitting in a Democratic County running poll watchers for Republicans, I can tell you that you have NO idea what goes on here.

    36. Mike k Says:

      He isn’t interested. He knows it all.

    37. Jonathan Says:

      The key problem here is not the redistribution of income through welfare of any kind – that’s a necessity in part because some cannot work (disabled, elderly, young, sick) and because the economy doesn’t meet its purpose of generating goods+services AND distribute the purchasing power in an acceptable way. [emphasis added]

      That a purpose of the economy is to “distribute purchasing power” is a value position that you do not explain. You also do not explain why this distribution should be done in a particular way or who should decide how it will be done.

      People who advocate income redistribution tend to be vague on the details. It’s as if they see the private economy as a perpetual motion machine that will continue to create wealth at the same rate no matter how much wealth creation is taxed, so that it’s only a question of how much of the national income to siphon off to their favorite transfer programs (the answer is generally: “more”). But this idea is absurd. Taxes at the rates advocated by redistributionists significantly reduce the amount of capital available for future investment, which reduces compound growth. Are the disabled, elderly, young, sick better off receiving a larger share of a smaller economy or a smaller (but in the long run larger in absolute terms) share of a much larger economy? This is not a rhetorical question, and the fact that redistributionists do not seem interested in it suggests that they are more interested in accumulating power for themselves than in actually helping anyone else. Also, it is not obvious why disadvantaged people are better off receiving govt subsidies than they would be in a mostly private economy where they would have access not only to more private charity but also to greater economic opportunity.

    38. Jeff the Bobcat Says:

      I forget who said “the power to tax a thing is the power to destroy it” or something like that, but it seems true to me.

      I do not understand how the “let’s tax them more” crowd don’t grasp that the people being taxed will react and change their behavior. It’s not as if the taxpayer is going to say with a shrug of his shoulders, “Oh well, i guess I need to just work harder now.*sigh*”. We can’t expand our businesses if the funds to do so have just been redistributed to people who don’t do anything.

    39. S O Says:

      @Fiona

      Dead people on voting lists is nothing relevant as long as nobody votes in their names.
      I note you don’t specify your “number of non-citizens” (the vague feeling is probably more comfortable to you?) nor did you take into account that I mentioned some of the voter fraud goes back to accidents, such as people simply getting it wrong instead of having the intent to commit voter fraud.

      “Of course, we can’t really check the number of dual voters, that is those who live in New York or other places but receive absentee ballots to also vote in Florida.”
      Actually, that’s quite simple in other countries. Feel free to learn how to organise elections from them.
      I know, a repulsive thought. Americans learning from foreign countries.
      Yet another reason for why the U.S. has so many almost unique problems.

      “Sitting in a Democratic County running poll watchers for Republicans, I can tell you that you have NO idea what goes on here.”

      I can tell none of your observations made it into a high profile scandal big enough to justify the widespread assertion of voter fraud that the American right wing has become so fond of (in part in order to distract from gerrymandering and political leadership failures).

      @Jeff

      It’s quite simple; the change in behaviour is almost never large enough to overcompensate the rate hike. Plus often others are eager to fill any gaps left. There’s almost always a reaction and almost everybody acknowledges this, but this is not a binary problem. The mere existence of a reaction does not mean higher rates yield less revenue.
      Meanwhile, there’s democratically legitimised intent to spend a certain sum of money, and you need to have matching revenues in the long term.

      The U.S. fiscal problem is one of not getting that the reactions aren’t as big as the big money-driven propaganda asserts and one of not being responsible adult enough to accept that one has to pay one’s bills with one’s own revenue/income sooner or later.

      @Jonathan
      “That a purpose of the economy is to “distribute purchasing power” is a value position that you do not explain. You also do not explain why this distribution should be done in a particular way or who should decide how it will be done. ”

      Just think about it. The economy obviously shall produce goods and services. Now who if not the economy is supposed to distribute the incomes a.k.a. purchasing power?
      The latter question of yours is not so useful. It’s common practice in science to first determine optimums if possible, second if that’s not possible one refers to the legitimising power of popular sovereignty / democracy.
      In other words: If a democratically elected government/parliament says the economy’s income distribution pattern is in need of improvement/intervention, then this is the true.
      Having been unable to find a superior theoretical outcome, there’s to an enlightened modern person little alternative to simply accept the rule of the majority as the way to make a decision nevertheless.
      Keep in mind that to not intervene is a decision in favour of the economy’s distribution of income and there’s no evidence whatsoever that this outcome is optimal. All you need to see this is to consider the different preferences of people that have no influence on the purely economy-driven income distribution whatsoever.
      This is drifting into the realm of philosophy, but fiscal policy is surprisingly much related to philosophy.

      “Taxes at the rates advocated by redistributionists significantly reduce the amount of capital available for future investment, which reduces compound growth.”

      A typical progressive would point out that this is utter nonsense as proved by the growth rates of the 50′s and 60′s under extreme income tax regimes. I do know that American conservatives blame a lot on Great Society programs which took effect in the late 60′s and troubles basically began in the early 70′s. The same troubles can be observed in other countries as well, though. They’re more correlated with a multitude of macroeconomic and demographic issues than with transfers.

      @Mike K:
      I studied this kind of stuff (fiscal policy, economic policy, growth and income distribution) full time for 5 years at a university and have since piled on the knowledge. I don’t know all, but I know a lot. It’s inevitable with my resume.

    40. Mike K Says:

      Does anyone else wish that SO would find someone else to lecture ?

    41. Jonathan Says:

      I wish that SO would attend some better lectures so that he could get a clue about economics and political philosophy.

      He seems to think that an economy is a machine or institution to be managed by central authority, rather than the sum of the voluntary actions of countless individuals acting on their own judgment and for their own benefit. He also has a quaint faith in mob decisionmaking or what he calls popular sovereignty.

      But it is never too late to learn.

    42. Jeff the Bobcat Says:

      “It’s quite simple; the change in behaviour is almost never large enough to overcompensate the rate hike. Plus often others are eager to fill any gaps left. There’s almost always a reaction and almost everybody acknowledges this, but this is not a binary problem. The mere existence of a reaction does not mean higher rates yield less revenue.
      Meanwhile, there’s democratically legitimised intent to spend a certain sum of money, and you need to have matching revenues in the long term.

      The U.S. fiscal problem is one of not getting that the reactions aren’t as big as the big money-driven propaganda asserts and one of not being responsible adult enough to accept that one has to pay one’s bills with one’s own revenue/income sooner or later.”

      It’s been documented many times that rising tax rates reduce revenues over time. Falling rates increase revenues. Forbes 10/15/12 has an article which clearly documents this.

      And yes you do need to match revenues to expenses, but why is it always increase revenues not lower expenses? Plenty of talk about it lowering expenses, but no action. Maybe because spending is how elected officials earn the votes of citizens. As long as the government taxes someone else to pay for a program, a large portion of the voting public doesn’t care where the money comes from. So the Progressives say, “Lets just raise rates on the people who already pay the lion share of income taxes; there aren’t enough of them to vote us out of office.” Liberals/Progressives must give out awards to officials who raise rates the most! Maybe it’s a resume filler like being a candy striper!

      Yes we do need responsible adults who will cut expenses, produce a budget, and live by it.

    43. S O Says:

      “It’s been documented many times that rising tax rates reduce revenues over time. Falling rates increase revenues. Forbes 10/15/12 has an article which clearly documents this.”

      I didn’t have the illusion to convince anyone here, but I didn’t expect you to bring up kindergarten math like that article. It’s about as dumb as it gets.
      For starters, it would need real, not nominal dollars on the right scale in order to eliminate inflation effects from consideration.
      Next, it would need to look at cases which were really about lowering tax rates, not about lowering tax rates AND many other measures such as extending the tax base, manipulating deductions etc.
      Then it would need to do a hundred pages worth of calculations in order to eliminate the influence of
      Theory-wise, the whole article is useless because even the Laffer curve model only suggests the effect for high tax rates. Now even if sometime in the past rates were cut from too high to something lower and even if this had meant an increase in revenue, it doesn’t mean anything about the effects to be expected for further tax rate cuts or moderate tax rate increases according to the Laffer curve model.
      Last but not least; there are more than a hundred countries with decades to centuries of archived taxation. It’s most questionable why anyone would look at the U.S. only in order to answer a general question.

      Now if you take such a piece of crap article as evidence, then I can entirely understand how you fell for the Laffer curve nonsense. Most likely, opinion came first and then it was reinforced by perfectly uncritical absorption of propaganda.

      “And yes you do need to match revenues to expenses, but why is it always increase revenues not lower expenses?”

      Because population growth and inflation naturally lead to higher expenses. Look at gov expenditures as % of GDP (keeping in mind stable expenses look like big growth in such diagrams if an economic crisis reduces revenues GDP to below the natural GDP growth path).
      http://www.usgovernmentspending.com/spending_brief.php
      There was probably no substantial %GDP growth of expenses since 1990 at all once you factor in the economic crisis since 2007 – even though the (R) doubled military expenditures.

      @Jonathan:
      In case of doubt, one should rather believe the one who invested years in learning the stuff, bought forward arguments and some amount of references to scientific models, not the one who took his knowledge from editorials, talk radio and political activists and brought forward talking points.

    44. Jeff the Bobcat Says:

      Kindergarten math? Oh you wound me so… The Forbes article was the easiest article for me to find quickly.

      Jonathan, I give up with S O. He must be roommates with Joe Citizen.

    45. Mike K Says:

      “I didn’t have the illusion to convince anyone here, but I didn’t expect you to bring up kindergarten math like that article. It’s about as dumb as it gets.”

      Here we go. Trollsville.

      You are so brilliant, SO, that you are wasting your time with us kindergartners. Time for you to go educate someone who agrees with you and who appreciates your brilliance. Way past time.

    46. S O Says:

      Simply don’t present such crap as definitive evidence to me. Higher standards need apply.

      Try articles from peer-reviewed journals, complete with articles replying to it.
      Science, not political propaganda meant to comfort those who already believe in the big lie.

      Or use your words as argument, but please stay at least coherent like the Laffer curve, which at least has an explanation for why there’s no revenue at 0% rate while the “lower tax rates always increase revenue” crowd has no such explanation.
      The key point about the Laffer curve is the point at which its differential is zero, after all (the maximum revenue point). Any actual debate about it would focus on the rate belonging to this point.
      This article provides a couple opinions on what this rate is:
      http://voices.washingtonpost.com/ezra-klein/2010/08/where_does_the_laffer_curve_be.html

      The ideological position that lower tax rates = more revenues is obviously wrong. There is a turning point.

    47. Jeff the Bobcat Says:

      That article simply shows rates and revenues in a line graph format. It seems to me that there is a lagging effect of rate changes as they work through the economy and the graph in the Forbes article shows it pretty clearly.

      I’ll try a different angle: if I take money out of my businesses to pay for increased taxes that will be less money to use to grow my businesses. That effect occurs when the rate moves up at all. So the government takes money from me that I would have used to grow the economy and gives it (less a handling cost)to someone who will do whatever with it. One dollar out of my pocket yields less than one dollar into their pocket. Maybe I’m being conceited in believing that I will be more productive in using that dollar, while someone who needs government assistance will probably be less productive with it.

      Are you trying to say the Laffer Curve is bunk? I read the article you link to and it seems to point to a belief that the effect of the Laffer Curve does exist and just where the tipping point is. Quite a range of opinions on the tipping point.

      In my businesses, when revenues are down I work to lower expenses AND work to increase my revenue base, not just raise prices. In this case, more taxpayers, less spending.

    48. Mike K Says:

      “Science, not political propaganda meant to comfort those who already believe in the big lie.”

      So economics is science ?

      Just like psychology ?

      Jeez.

    49. setbit Says:

      Jeff,

      I give up with S O. He must be roommates with Joe Citizen.

      Or maybe it goes deeper than that. Think about it for a minute: Have you ever seen them together in the same place at the same time?!?

    50. VSSC Says:

      SO,

      I notice you do not speak to the pervasive corruption. This is the dog that has not yet barked.

      Pay our expenses. Ours? Once in my lifetime was spending cut along with tax increases, that was under Clinton and only because the bond market threatened him. They increased taxes $240 Billion and cut spending $250 Billion, mostly from the Miltiary. It’s not possible for the bond markets to threaten the government now, as we have a Fed captured bond market. One does not threaten onself, or one’s master. They will never apply increased revenue to deficits. Never.

      As to your knowledge – studying academic materials for years gives you knowledge of those academic materials and the ability to lecture on the materials. It does not mean people can apply the fruits of your research – especially economics – in real life. There interests may not coincide with yours – which are apparently getting society to conform to your theories.

      As an asnide, Tolkien invented not only an entire world and cosmology but several spoken and written languages – Elvish, Dwarvish and the Black Speech of Mordor- which you as an economist surely are a native speaker – need not utter here…

      However until recently these languages although fascinating had little practical use. I don’t doubt however they are offered as University courses at mine the taxpayer expense. They may indeed now allow one to generate a practical income and indeed contribute as Mr. Peter Jackson has and is creating an entire industry.

      Finally there is no need to study US political economy in depth, there is only need to learn the term Rubinomics, follow a Linked In chart of Goldman Sachs, and to understand our reigning economic and poltical model…here it is in economists terms:

      Ash nazg durbatulûk, ash nazg gimbatul, ash nazg thrakatulûk, agh burzum ishi krimpatul.

      But you already know that, of course.

    51. Jonathan Says:

      Nov shmoz ka pop!

    52. S O Says:

      Seriously, the fundamental problems of the U.S. economy are clearly visible with some economic science knowledge and pretending the same is not necessary while not seeing the problems but believing in what one has been fed by partisan sources is not impressive.

      “That article simply shows rates and revenues in a line graph format. It seems to me that there is a lagging effect of rate changes as they work through the economy and the graph in the Forbes article shows it pretty clearly.”

      The problem is what “seems” is irrelevant. The metric used (nominal GDP) is full of noise and the used statistic data is insignificant (much less than 30 events, a joke in comparison to what serious research has looked at).
      Real research, real economic arguments look very different. The article is what one can produce in fifteen minutes if one ceases to think critically or professionally.

      “Are you trying to say the Laffer Curve is bunk? I read the article you link to and it seems to point to a belief that the effect of the Laffer Curve does exist and just where the tipping point is. Quite a range of opinions on the tipping point.”

      Indeed, quite a range. Look at what tax experts say and contrast it with what the right wingers say. Got it?

      The problem with the Laffer curve is that it’s irrelevant and so extremely often misinterpreted or misused as excuse for misinterpretation (albeit anti-tax ideologues began to forget about the bigger part of the curve long ago).
      The Laffer curve’s turning point is well beyond 30%, only the people you guys call corrupt (the politicians) pretend otherwise – economists don’t. Even Mankiw, a quite reliable team (R) player and recurring (R) POTUS or -candidate advisor, doesn’t dare to claim outright that the Laffer curve turns at commonly applied tax rates.
      He’s evasive and in addition to focussing on the long term he doesn’t clearly state where the curve turns except that it’s probably at less than 60% in the long term.
      As a summary, it’s safe to assume that tax revenue can be increased with an increase of effective tax rates (tax rates, deductions, exceptions etc. taken into account).
      The propaganda that raising taxes = less revenue is just that: Propaganda. Voodoo economics. Ordered by and paid for by those who save lots of taxes with lower rates.

      A lot of interesting and factual discussions can be had about an optimal government revenues system. The public discourse in the U.S. and especially the Laffer-curve based propaganda are so far from it, it barely makes sense to mention actual economic research results in such a context.

    53. Mike K Says:

      To quote SO, “blah, blah, blah.

      Don’t you ever get tired of your own opinions?

      We do.

    54. Jeff the Bobcat Says:

      “A lot of interesting and factual discussions can be had about an optimal government revenues system.” Interesting – not so much. Factual – so much exuded from the Left and the Right muddies the water to the point that the truth is difficult to determine.

      I can answer the question of what is the optimal government revenue system. It’s the one that takes the least amount of money required to operate our essential national government programs, like defense, border control, Federal Courts, etc. Any more than that is less than optimal. The key word is essential.

      A choice to make, which is better a larger, more intrusive government, or smaller, less intrusive? A majority voted in November for more government that gives more benefits to them, as long as they don’t have to pay for it. Once trained to receive benefits, the people will react forcefully when the benefits are taken away, reduced or they are required to pay for what they receive. Think Greece.

      Taxation is a necessary evil. It is a taking of the private property of the citizenry by the government using force if required. Yes, we have to pay for the expenses we incur. Those expenses should be planned for using a zero base budgeting process formulating from the list of ESSENTIAL services provided. Not just taking last year’s spend on programs with a bump up this year.

      But we’re told we don’t need to discuss spending since there is revenue to be gotten from the “rich”, revenue is the problem. Not in my view and I guess that puts me in the minority.

    55. S O Says:

      “I can answer the question of what is the optimal government revenue system. It’s the one that takes the least amount of money required to operate our essential national government programs, like defense, border control, Federal Courts, etc. Any more than that is less than optimal. The key word is essential.”

      That’s an opinion, but scientifically incorrect as a general statement. It’s furthermore almost certain to fall through in a democratic test (election) as it did many times already.

      In economic theory, the popular tool of marginal rates would be used to explain the optimum budget size.
      (Realistically assuming there’s but one maximum and no relative maxima), one would say that the last government dollar spent needs to do as much good as creating the last dollar revenue did harm (the latter including opportunity costs). In math; d(value)/d(harm)=0.

      A LOT of what you guys write is included in this statement (see “value” has to be decided, and your preferences would assign a rather low value). The point is that we’re living in kind-of-democracies where the majority kind-of decides. Minorities dissent, but this says nothing about them being right or wrong. The democratically legitimated valuation of government services is higher than yours.

      I believe I mentioned before that economists resort to majority votes to aggregate preferences and tell “right” and “wrong” apart when economic science can’t prove “right” or “wrong” with logic or math. (Economists are still waiting for philosophy to come up with a better method.)
      The best size of government is such a case (while the revenue-maximising tax rate isn’t).
      __________

      The American right wing regularly gets Greece wrong, as do most people. I suppose it’s just glad it has a new bogeyman to point fingers at. Sweden with its old welfare state model was such an inconvenient bogeyman for big government, regularly being rated to have one of the highest quality of life world-wide. Greece is much better for pointing fingers.

      Greece is not a story of big or small government, but one of patronage or programmatic policies, though.
      It’s basically the Congress’ pork-adding tradition on steroids, and this began with Greek independence early in the 19th century when different rebel leader were paid off and became patrons, sustaining power by bribing followers. This malaise pre-dates the invention of social insurances and modern-style social transfers by about three generations.
      ______________

      I would also (fruitlessly, of course) advise against making the recent talking points and propaganda about makers vs. takers one’s own. It’s to simplistic, bound to be wrong in most all cases.

      Likewise, you guys appear to overemphasise the (de)motivational effects of government actions.
      Hey, I talk about (de)motivational effects in economics all the time – money is basically an illusion giving trust into one’s ability to motivate others. Still, you guys seem to exaggerate the effects by not paying much attention to the limits.
      Economically speaking, a certain government action may have a demotivational multiplier effect of 0.8 or 0.63 or 0.4 (in fact, it’s usually an exponential function, not a constant). When you guys speak it’s more as if said multiplier was always zero or close.
      To understand the existence of a cause-effect chain is the easy part; learning about the strength of this causality is the tricky, and this is where you guys appear to be lazy (see our Laffer curve discussion).

      This is typical of ideology; everything gets simplified to simplistic until almost everybody gets the ideology, but the simplification means that the application is almost guaranteed to be inaccurate e.g. wrong.

      Economics is hard work, requiring years of learning and discussing. It can’t be replaced by ideology.

    56. Mike K Says:

      Since this thread has been infested with self-described economists, a study by a real one might be of interest. It is a pdf file.

      I strongly encourage a reading of the report. It does not reassure Republicans, as the 38 year period of deficits since 1980 are unprecedented in our history. The conclusion, however, is that the problem is one of spending, not revenue, and that the spending is on entitlements. The problem will not be addressed, let alone solved, until entitlements are reformed. That was the Romney/Ryan agenda and the public seems unwilling to deal with it. The better they understood Romney and Ryan’s agenda, the more rational, and self destructive the results of the election appear.

      Figure 8 in the document shows that marginal income tax rates (from 70% to 30%) do not correlate well with revenue.

      The entire report is well worth reading, especially for self-described economists.

    57. Jeff the Bobcat Says:

      Wow you like to wander in the weeds!

      “That’s an opinion, but scientifically incorrect as a general statement. It’s furthermore almost certain to fall through in a democratic test (election) as it did many times already.” Yes it is an opinion. An opinion based on my personal belief about what the government should and should not do, and how they go about what they do.

      The question remains the same, Big government versus smaller government. And true, it’s an ideological question.

      Most of your explanations, while very detailed, don’t answer that question.

      In the end, politics today is about Marketing. Returning to the theme of the thread, the Republicans must adopt a marketing plan that explains how endless spending will lead to bankruptcy. Prioritize spending, cut waste, increase efficiency and all of the other things we do as business owners and families.

      Right now each citizen (300+ million people) owes about $50,000 for their share of the national debt, and in my opinion if you tell people that often enough it will eventually change the narrative. Repeat the message again and again and again.

    58. S O Says:

      Jeff; how will those people react if you tell them next that they an service the debt by taking more credit? ;)

      “Most of your explanations, while very detailed, don’t answer that question.”

      I intended to do so by mentioning that economic science’s answer to the question boils down to let democracy do its job.

      Only god would have the knowledge and wisdom to aggregate the preferences of 310 million people correctly and of taking future generations’ interests into account properly. To let god decide (not by interpreting the bible, but by actually letting him send down a detailed budget) is the first-best option (unless one doesn’t believe in god). The second-best is to let the majority decide.

      Economic science cannot calculate the optimum spending levels; too many unknown variables. Economists can make assumptions and then calculate an optimum, but who knows if the assumptions are fine? God. And he’s not helpful here, despite what some people with a supposedly direct contact with him assert.

      “cut waste, increase efficiency”
      Agreed, but opinions vary even in identifying what’s waste etc.. At least one should adopt a good methodology for this, not follow ideology.

      @Mike K:

      Want to bet against me being able to show a German university diploma on economics dated 2002? You can even call the university to ask about the authenticity.

      About the link; have a look at figure 4. The health care-related expenditures are the main growth factor. This isn’t only about extending health care to a greater share about the population, but in great part (at least a third) it’s a story about a horribly inefficient national health care system (I know there are huge differences between states). Priority #1 should be to push for proper negotiation of prices by Medicare so the U.S. isn’t the big cash cow for pharma corporations any more (I once did a quick calculation and came up with an estimate that the stupidity/corruption of U.S. health care policy subsidises my country through cheapened drugs by up to about 0.5% of our GDP!).
      Instead : http://www.nytimes.com/2013/01/20/us/medicare-pricing-delay-is-political-win-for-amgen-drug-maker.html?_r=0

    59. Mike K Says:

      SO, I already noted that your NYT link validated my description of much of Obama’s economy as crony capitalism. That is actually a euphemism for fascism, probably not a term popular in German economics courses.

      What you describe as “healthcare” is Medicare, an extremely inefficient program designed by non-physicians and bureaucrats. I readily grant (and expand that description in my series on health reform) that physicians acted with short-sighted self interest in the 1960s and 1970s. Johnson began Medicare with the same attitude that Aneurin Bevan used in the NHS. He “stuffed their mouths with gold” by making the payment terms generous.

      I stuffed their mouths with gold.

      Around 1948, Nye Bevan engineered a notorious “bribe” to win the support of hospital consultants. The father of the NHS made his famous declaration after he brokered a deal in which consultants were paid handsomely for their NHS work while allowing them to maintain private practices.
      Source: Quote and story in the *Guardian, 2 July 2004.

      The same was done with Medicare and ended in disaster, as we see.

    60. S O Says:

      No, seriously, I know the difference between health care and Medicare.

      The share of GDP allotted to health care in the U.S. is ridiculous compared to developed nations with better health statistics.

      Just sort this
      http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS?order=wbapi_data_value_2010+wbapi_data_value+wbapi_data_value-last&sort=desc
      by a year.

      Easily a third too much, and that’s not all due to BMI issues.

      Team (R) is as responsible for the inefficiencies as team (D) simply because lobbyists buy both sides’ support.
      BTW, I don’t see how you manage to blame Obama on something described in an article which clearly says McConnell added the pork that will cost the people of the U.S. hundreds of millions in additional profits for his sponsors.
      ______________

      Americans should simply forget about the words communism, fascism, socialism, liberalism. Their everyday use of these words is so far away from the original (correct) meaning that they better make up some new words instead.

    61. Mike K Says:

      Hundreds of millions is a rounding error to Obama.

    62. S O Says:

      Mike K, realize it: A team (R) player inserted that crap into the bill, the current TOP team (R) player. The alpha male.
      Obama is not to blame for it.

    63. VSSC Says:

      I suspected German. Scandi’s are more modest. Authority sits on them with more humility.

      SO what you say *may* work for Germany. It will not work for America. The mess we have is the result of Americans tirelessly seeking to make us like Europe for a century.

      And I notice again you blithely ignore the pervasive corruption from top to bottom in USG. This is apparently your policy: assume honest government. Assume the Greeks for instance are telling the truth. They weren’t, but any reasonable person knew that before, then, and now.

      One would think Greece alone would have cured you of that, but humility is not a strength it seems.

      Hmm. Brandishing the degree again. You inform us with certitude expungement is not an option in civilized Germany. Well here in less civilized America bankruptcy law allows your credit record to clear of a bankruptcy after 10 years.

      2002-2013…you can be free.

      Economists Sir have thrown Western Civilization and those who’s fate is tied to it off the roof. We simply haven’t splattered yet.

    64. Mike K Says:

      SO does have a bit of Germanic tone to him. I have not visited Germany nearly as often as I have France and England. Even Italy and Spain even less. I did notice an arrogance in Germany, although it was actually in Austria. My wife and my six year old daughter were waiting in the Marktplaz for a ride in a little cart drawn by two horses. We stood at the spot the cart usually stopped but found the line kept moving toward the place where the cart first rounded the cathedral. We might as well have been waiting for the underground in Tokyo. The other tourists seemed to be all German and I commented to my wife that the Germans seemed to be very aggressive and rude. A woman turned around in front of me and said loudly in perfect English, “Well, thanks a lot !”

      I merely thanked her for making my point.