They Have 24 Hours

Otherwise, one less Republican.

Where No Wealthy Nation Has Gone Before

From David Leonhardt, a sober assessment of what would happen if the tea party-dominated Republicans win the White House and Senate and keep the House:

What would the combined effects of the new Republican revolution be? Some government agencies would probably become less wasteful, learning to do more with less, and the private sector would take over some government functions. But those would not be the only changes. The American economy would also devote fewer of its resources to the areas that do not naturally create opportunities for profit in a free market: mass transportation, road building, early-stage scientific research, many aspects of education and public safety.

Whether you love that idea or hate it, it certainly would be different. Around the world, the historical pattern has been for government to grow as a society becomes richer and citizens vote for more of the services that the market often does not provide by itself. Federal spending makes up 22 percent of the American economy today, up from three percent a century ago.

In an aging society coping with a globalized economy, where health care and education continue to grow more ambitious and expensive, the country has a choice to make. It can allow government to continue expanding. Or, as a Romney administration would, it can take a more laissez-faire path than any wealthy country has previously tried.

Simpson-Bowled Over

With pulls revealing a shift to Mitt Romney on economic and fiscal issues, Andrew Sullivan says Barack Obama might lose unless he embraces Simpson-Bowles.

What Passes For Courage

The Economist calls Rep. Paul Ryan "a brave man" for his deficit reduction plan. I'm astonished by what passes for courage among pundits. The accolades he received when he died notwithstanding, Sen. Ted Kennedy wasn't brave for voting for massive government spending as a Democratic senator from Massachusetts. What would've been risky for Ryan, as a tea party-supported congressman from a conservative district, would've been backing entitlement reform with means testing, prudent post-Cold War defense procurement cuts, and some new revenues, if only by closing appalling loopholes -- in other words, by supporting Simpson-Bowles. But no. As the Economist itself writes:

Mr Ryan was...wrong to vote against the proposals of the Bowles-Simpson deficit commission, which he did on the grounds that it wanted to close the deficit partly through an increase in tax revenues. He believes that the gap should be closed wholly through spending cuts. Because Mr Ryan, in true Republican fashion, wants to increase spending on defence, everything else—poverty relief, transport infrastructure, environmental protection and education, for instance—will have to be squeezed intolerably.

Playing to the GOP's stingy base, which demands cuts for the poor and uninterrupted federal goodies for itself, is about as edgy as wearing a Yankees jersey in the Bronx. Of course Barack Obama didn't have the guts to accept the commission's recommendations, either, and it was his commission. At the moment there appears to be more courage at the weekly meeting of the St. John's Boy Scout troop than on the major parties' tickets.

Boom, Bust, Or Stuck Here In The Middle

A wise friend whose 4.0 in undergraduate economics beats my 3.71 (as I recall) in poli sci tells me I'm wrong to believe that paltry U.S. growth rates over the last two years compared to Britain's negative growth mean that we were better off with Keynesian fiscal policies instead of the Brits' massive cuts in public spending. He cautioned me against buying the canard that FDR's big spending ended the Great Depression. World War II did.

I replied that in fiscal terms, the war was a massive government spending program that gave us a booming economy (plus more debt by 1945 in proportional terms than we have today). I await his devastating riposte. In the meantime, Bruce Bartlett suggests that my friend is right, at least to an extent. Bad Keynesianism definitely doesn't work. Bartlett writes that the Obama stimulus barely stimulated:

[I]t appears that only 11 percent of total stimulus outlays definitely added to growth; the rest may have had no effect at all.

I think that much of the criticism of the stimulus legislation on both sides of the political spectrum has been misplaced. Liberals tend to decry the small overall size of the original package, while conservatives say it was too big. But perhaps the very limited allocation for investment and consumption was the problem.

Potentially, we could have had a smaller program that was far more concentrated on consumption and investment spending that would have given us more “bang for the buck,” done more to raise growth at a lower budgetary cost, and maybe made both sides happy.

Barack Obama's greatest error was focusing on health care instead of jobs during 2009-10 and letting Congress instead of the smartest economists he could find (including perhaps my friend) decide how to spend 2009's $800 billion stimulus. Those who want to vindicate Keynesian policies ought to make sure that they make the most of every public expenditure. They should yearn to prove wrong critics who say that government is genetically incapable of making smart decisions about what sectors of a private economy will benefit most from injections of taxpayer cash and create the most jobs most quickly.

Instead, as Bartlett's analysis shows, Obama has enabled his critics to say that the feds are ineffective, even incompetent. It didn't have to be that way. As Detroit roars back and Japanese automakers stall, Presidents Bush and Obama share credit for the amazingly successful bailouts of GM and Chrysler. But the stimulus was a bust, because Congress was in charge of deciding what programs would get funded. Maybe if Obama had served in the Senate longer, he would have known better than to let that happen.

As for Mitt Romney, he opposed the auto bailouts, and he's pledged to dust off Rep. Paul Ryan's hyper-austere, safety net-destroying budget for 2013-14 -- which would give us a chance to try it England's way after all. Dare I say dumb and dumber?

Hat tip to The Dish

Not Too Keynesian

In our four-year economic crisis, the U.S. has stuck with Keynesian economic stimulus while Great Britain abandoned it. According to John Maynard Keynes' biographer, Robert Skidelsky, the results are in:

Since May 2010, when U.S. and British fiscal policy diverged, the U.S. economy has grown—albeit slowly. The British economy is currently contracting. Unemployment in the United States has gone down by 1.4 percentage points; in Britain, it has gone up by 0.2 percentage points. And despite keeping up stimulus measures, the Obama administration has been more successful in reducing the government deficit—by 2.5 percentage points compared with [Chancellor of the Exchequer George] Osborne’s 1.9 percentage points.

Earlier this year, Paul Krugman wrote that “Britain . . . was supposed to be a showcase for ‘expansionary austerity,’ the notion that instead of increasing government spending to fight recessions, you should slash spending instead—and that this would lead to faster economic growth.” But, as Krugman wrote, “it turns out that . . . Britain is doing worse this time than it did during the Great Depression.”

For Keynesians, this is not surprising: By cutting its spending, the government is also cutting its income. Austerity policies have plunged most European economies (including Britain’s) into double-dip recessions. At last, opinion is starting to shift—but too slowly and too late to save the world from years of stagnation.

Why The Federal Government Grows...

...has nothing to do with Republicans and Democrats.

Speaker Moonbeam

Got $1 trillion?

Even More Of Us Are Keynesians Now

Tory Andrew Sullivan looks at the numbers and tilts against austerity:

For me, the true test of conservatism is empiricism. It doesn't look as if the Ron Paul medicine is currently working very well (although some of that blame must surely lie with the massive debt that Blair and Brown, like Bush, piled up in the last decade). Nonetheless: this is the data. Britain has flatlined or declined in the last six months. The US has grown.

So here's an obvious retort to Romney and his Obama-Is-A-European schtick. Obama should simply say that it is Romney who now wants to impose European-style austerity, and it isn't working. Obama, meanwhile, has chosen an American exceptionalism strategy, which is leading to growth. By relying on that renowned British homosexual, JM Keynes.

A Pox On Both Your Posts

On Dec. 3 Fred Clark questioned evangelical leader and former Nixon aide Chuck Colson's motives for accusing those who want to raise taxes on the rich of class envy:

During every day that [Colson] worked in the White House as one of the most powerful men in the executive branch, the wealthiest Americans were charged double the rate of income tax that they pay today....

[T]he top marginal income-tax rate today is half of what it was during Colson’s service at the top levels of the Nixon administration. And the capital gains tax today — the tax that matters more to the wealthiest Americans who make money from money rather than from work — is even lower. The capital gains tax rate is just 15 percent, which is why Warren Buffett pays a lower rate than his secretary does.

When Chuck Colson was working alongside the president, revenue as share of GDP was 17.6 percent. Today it is 14.4 percent — historically low, the lowest it has been since 1950.

So according to the standard set by his column, Chuck Colson and the rest of the Nixon administration were a bunch of soak-the-rich radical redistributionists driven by socialist envy.

Clark uses the word "socialist" several times, as if Colson had used it against those who wanted to raise taxes on high incomes. But neither that word nor "radical" comes up in Colson's column, which substantially detracts from the irony that Clark claims exists. Colson may well have thought taxes were too high in 1969-73; many conservatives such as he did, but they couldn't do anything about it since the Democrats controlled Congress throughout the Nixon administration. For his part, Colson errs in accusing those who favor higher taxes of falling prey to the sin of envy. Many experts sitting in cushy think tanks who aren't acting out rage akin to that of Russian peasants nonetheless believe that a sensible fiscal solution requires more revenue from the wealthy (whom else? Russian peasants?) than Republican obstructionists are willing to consider.

Neither putting words in an opponent's mouth nor questioning his motives is a good idea, especially in the name of our LORD. Let us reason together, brothers!

From A Cantor To A Gallop

Steve Benen hammers House minority leader Eric Cantor for his and and an aide's bizarre assertion that Ronald Reagan, who raised taxes more than any predecessor, didn't raise taxes:

Why do Cantor, his press secretary, and Republicans everywhere deny what is plainly true? Because reality is terribly inconvenient: the GOP demi-god rejected the right-wing line on always opposing tax increases; he willingly compromised with Democrats on revenue; and the economy soared after Reagan raised taxes, disproving the Republican assumption that tax increases always push the nation towards recessions.

In other words, Reagan’s legacy makes the contemporary Republican Party look ridiculous. No wonder Cantor’s press secretary started yelling: [Leslie] Stahl [who was interviewing Cantor on CBS] was bringing up facts that are never supposed to be repeated out loud.

Reagan was guilty of other acts of apostasy against 21st century hyper-conservatism as well. Cantor looks silly saying otherwise. Could it be this is the first time he ever got the question, at least in a setting where a camera was boring in so tight that you could see the pores under his makeup? If so, good for Stahl.

Here's what he should've said: "President Reagan was the first to stand in the path of the prevailing policy juggernaut of his time and say, quoting Bill Buckley the only time he used a one-syllable word, 'Stop!' Of course he didn't accomplish all he hoped when it comes to diminishing the size and scope of a coercive federal establishment. Of course he sometimes had to compromise. His courage inspires us not to."

Or some such. I don't really want Cantor to sound smarter, because he's been wrong about the budget.

Ryan's Hope

Jacob Weisberg on the competing GOP and Democratic economic plans:

If Obama wants to offer a convincing vision of the federal government's role, he will need to recognize the growing imbalance between generosity for the old and investment in future generations. Preserving our biggest entitlement programs in their current form because they have a powerful constituency is hardly a progressive stance. It's the definition of reactionary liberalism.

Do Nothing.

Balance the budget.

The 2012 Theses

Andrew Sullivan doesn't like the GOP budget plan much because, he says, it cuts rather than increases tax revenue and would reduce retirees' access to health care by replacing Medicare with subsidies for private insurance policies insurers might not even be willing to write. And yet:

You can gloat that the GOP has committed political suicide by essentially ending Medicare and Medicaid as we know them, but that is not a substantive response. They deserve political props for nailing this proposal to the door of the White House.

Woodstock On The Block

The most fateful debate in a generation about the role of the federal government is officially underway, writes Richard W. Stevenson -- and it's all about the expectations of those of us of a certain age:

The aging of the baby boom generation and the costs of maintaining Medicare and Social Security have put the two pillars of the social welfare system on the table for re-examination. The growing weight of the national debt has given urgency to the question of whether the government has become too big and expensive.

The tepid nature of the current economic recovery, following big stimulus packages, has provided an opening to challenge the effectiveness of Keynesianism as the default policy option for government. And the revived energy of grass-roots conservatives has given electoral clout to the movement’s intellectual and constitutional arguments.

Obama In "You Talkin' To Me?" Mode

Mark Knoller, the veteran CBS News radio reporter, had stayed behind in the press room Thursday afternoon in Chicago after listening to an audio feed of President Obama's speech at a fundraiser. Obama's microphone was left on, so Knoller heard his private conversations with home town donors about last week's 11th hour budget deal. "Politico" reports:

Obama, recalling a conversation with Boehner staff: “I said, ‘You want to repeal health care? Go at it. We'll have that debate. You're not going to be able to do that by nickel-and-diming me in the budget. You think we're stupid? … Put it in a separate bill. … We'll call it up. And if you think you can overturn my veto, try it. BUT DON’T TRY TO SNEAK THIS THROUGH.’ … When Paul Ryan says his priority is to make sure, he's just being America's accountant … This is the same guy that voted for two wars that were unpaid for, voted for the Bush tax cuts that were unpaid for, voted for the prescription drug bill that cost as much as my health care bill -- but wasn't paid for … So it's not on the level.”

Meat And Right

Solons of the left, right, and center have complained for years that policy debates have grown so rancorous than substance is crowded out and opportunities dwindle for finding common ground. Democrats in particular called on Republicans to put a serious 2012 budget proposal on the table.

And now that Rep. Paul Ryan has done so, we hear this from veteran Democratic operative Paul Begala:

The Ryan proposal could be the foil Obama needs. I hope every vulnerable Republican in Congress signs on to the Ryan plan to kill Medicare, because we will beat ’em like a bad piece of meat.

Congress And Abortion

Nicholas Kristof, reflecting on Democratic and Republican cowardice and incompetence (his words) leading up to last week's near-shutdown of the federal government:

Conservatives have sought to bar federal funds from going directly to Planned Parenthood and the United Nations Population Fund. The money would not go for abortions, for federal law already blocks that, and the Population Fund doesn’t provide abortions. What the money would pay for is family planning.

In the United States, publicly financed family planning prevented 1.94 million unwanted pregnancies in 2006, according to the Guttmacher Institute, which studies reproductive health. The result of those averted pregnancies was 810,000 fewer abortions, the institute said.

Publicly financed contraception pays for itself, by reducing money spent through Medicaid on childbirth and child care. Guttmacher found that every $1 invested in family planning saved taxpayers $3.74.

As for international family planning, the Guttmacher Institute calculates that a 15 percent decline in spending there would mean 1.9 million more unwanted pregnancies, 800,000 more abortions and 5,000 more maternal deaths.

So when some lawmakers preen their anti-abortion feathers but take steps that would result in more abortions and more women dying in childbirth, that’s not governance, that’s hypocrisy.

Hat tip to Maarja Krusten

Your Move, Mr. Speaker

Matthew Yglesias on why Republicans, not President Obama, now have to provide leadership on the budget deficit:

If Republican leaders don’t want to agree to any revenue increases, that’s their prerogative, but willingness to compromise on revenue is the sine qua non of a bipartisan deal. Absent that willingness, there neither can nor will be a bipartisan deal so there’s nothing for the president to say or do.

The real question then becomes: When will the Republicans produce a budget proposal? We’ve seen the White House proposal. Do Republicans have an alternative proposal that makes the deficit lower consistent with their position on taxes? If they do, I’d like to see them write it down on paper so we can talk about it.

Budget Balancing By Other Means

While Matthew Yglesias's scrappy comment-writers differ about the reliability of the information he presents, it does appear that, since there aren't that many rich people, means testing for Social Security and even Medicare wouldn't save much money.