Asymmetrical Information

From the article:

"The independent nonpartisan Congressional Budget Office reported last month that 94 percent of the $500 billion deficit for next year is due to George Bush's excessive spending and ineffective tax giveaways for the wealthiest Americans," he said.

Didn’t Kerry vote for that “excessive spending” or for higher levels of “excessive spending” such as the Medicare prescription drug benefit (the Democratic alternative will was $900 Billion compared to the current $534 Billion plan)? More importantly - since he has so few bills that became law to his name – which side did he come down on during budget negotiations between the House and Senate – for the more or less “excessive spending”?

The only new spending I can recall that Kerry recently voted against (without supporting a more expensive proposal) was the $87 Billion for the troops in Iraq. I have no doubt that Kerry will try to raise taxes if elected but there is nothing in his record - particularly given his unwillingness to support any form of Social Security or Medicare reform - to lead me to believe that he would not be worse than Bush when it comes to “excessive spending.”

There are people who have earned the right to severely criticize the spending habits of President George W. Bush. Indeed, a large number of fiscal conservatives and libertarians would not be acting hypocritically. However, John Kerry is not among them! He has no option but to try and bribe Democrat voters. These folks desire goodies which will cost us plenty.

Still better than what Bush is doing.

I find it odd that people think the President controls spending. A cursory reading of the Constitution reveals that Congress has this responsibility. Perhaps it's fashionable these days to be ignorant about government.

At any rate, Jane has it exactly right about entitlement programs. Judged on a dollar weighted basis, they are virtually all government does. Any candidate for federal office who ignores the problems facing entitlement programs is highly irresponsible. Bush has set forth his plan. John Kerry seems to feel these programs should simply allowed to go bankrupt. This marks him as a political hack lacking in critical reasoning ability.

Senator Kerry has promised that, if elected, he will impose spending caps-- except on health care, education, security, and Social Security.

These items compose something like 90% of the Federal budget.

http://www.irs.gov/pub/irs-pdf/i1040gi.pdf page 76

Try 48%-69% at most. These rants would be more productive if there was at least a slight effort made at looking at the actual facts.

I find it odd that people think the President controls spending. A cursory reading of the Constitution reveals that Congress has this responsibility. Perhaps it's fashionable these days to be ignorant about government.

Speaking of ignorant, must we continue to entertain this stupid argument since Reagan introduced it? Name 1 budget that has become law in the last 30 years over a Presidential Veto.

Bush, on the other hand, has wielded a fierce budgetary axe. Sure.

Come on Jane. If there's a bipartisan consensus on anything in Washington, it's on spending money.

Hey, Boonton:

I'm lookin' at the same page you are -- I've got it on the wall next to my desk. How are you reaching the numbers that you've got? (Especially the 48% number.)

Starting from the "law enforcement and general government" pie slice (3%) and going right, it's next "SSN, Medicare, etc." (38%) and then "National defense, veterans and foreign affairs" (20%). Then we've got "Net interest on the debt" (8%) and "physical, human and community development" (10%) and "Social programs" (21%)

There are the footnotes that I'm not really interested in typing in (they provide some breakdowns of the above), but if I were generous to Kerry, the number that I'm coming up with is 72%.

That's SSN, etc. (38%), only the active military part of the defense budget (17%), the physical development, etc. (10%) and health research and public health, etc. (7%)

"Try 48%-69% at most."

Oh?

Let's do the math here from your own source . . .

8% is net interest on the debt. The only way we can avoid that is to default on Treasury bills like a Third World country, which would plunge the world into a second Great Depression. So that's not something he can touch.

Kerry said no cuts in security. So defense is off the table, and we're now up to 28% untouchable.

Social Security, Medicare, and General Retirement is mostly Social Security and Medicare, and the rest is federal pensions for military and civil service retirees. So now we're up to 66% untouchable.

Looking at the "social programs", we note that the category includes Medicaid. Medicaid alone is 7% or so of the budget, which brings us up to 73% of the budget being off limits before we add in the following other items in "social programs" and "physical, human, and community development" -- Health research, public health programs, and all forms of education aid.

So, at least 75% of the current budget, from the very beginning, is off limits to spending caps under the Kerry announcement.

So, what is Kerry going to cut? The EPA?

It is a constant source of amazement that we blame the President for so much, especially GWB. He has kept every campaign promise. He did not say he would not spend money. He simply said he is a compassionate conservative, whatever that is. He seems to be more like LBJ reincarnated.

As ignorance is the topic, it becomes necessary to reveal that budgets become law through 13 separate appropriation bills, thus there could be no budget that became law over a single presidential veto. Presidents propose budgets and Congress disposes of them. The founders of our republic made Congress the first branch of government and mandated that all budget measures originate in the House. A unanimous Supreme Court ruling validated the authority of Congress to allocate funds when Nixon attempted to use impoundment to challenge this authority. There is no doubt that Congress controls the spending of the US government. While it's true that the President has veto power, it's also true that there are significant political consequences for using this power. Bush may have been feckless in refusing to assert his authority, but Kerry actually voted for the reckless spending that Congress authorized. The difference is the difference between a crime of commission and a crime of omission.

partially paid for by closing my eyes and saying "I do believe in balanced budgets" three times while tapping my heels together and visualising Tinkerbell.

Which, after all, is more than Bush has done. Democratic presidents have credibility on budget deficits - they balance budgets. Republicans don't.

Van wrote:

It is a constant source of amazement that we blame the President for so much, especially GWB. He has kept every campaign promise. He did not say he would not spend money. He simply said he is a compassionate conservative, whatever that is.

Good point, for those of us on the POTUS’ right who cringed at the steel tariffs (1), prescription drug benefit, campaign finance “reform” bill, and education spending – the fact of the matter is that there were all things that then candidate Bush was in favor of in some form or another. Bush’s track record then is one in which he implements or tries to implement (2) the policies he said he favors while a candidate.

For a fiscal conservative to vote for Kerry, we would have to assume that he would do something pretty much the opposite of what he’s campaigning on (higher taxes, higher levels of spending than Bush, no entitlement reform) or that Democrats would never regain control of the Senate during a Kerry presidency and we would have gridlock. Of course with gridlock that time bomb of Social Security and Medicare just keep on ticking and we’re four years closer to the baby-boom retirement.

As bad as Bush and Congress have been on spending, it is still better than what Kerry and his party wants and with Bush, we have a chance at getting some decent reform of entitlement program reform.

TW

(1) Many people forget that while Bush did tout the virtues of free trade in general, he also said he wanted to “enforce our nation’s laws against unfair trade practices” which would include the Anti-Dumping Act which was the legal basis for the steel tariffs.

(2) The notable exceptions being federal regulation of carbon dioxide emissions and possibly being an opposition to “nation building” but in light of higher energy costs when he took office and 9/11, it made sense to change both of these policies.

Lumping Social Security in with the rest of the budget was and is a bad idea. When the Greenspan Commission recommended it in the 80s it was done so that Social Security could run a surplus that would be borrowed by the Federal Government. This was supposed to cushion the impact of the Baby boomers entering the system. In effect it created a slush fund that the government used to increase spending while making it look like they hadn't raised taxes. (To spread the blame Reagan was in office, and the Demos had the Congress) From that point on we paid about twice as much FICA on our payroll taxes as were needed to pay out the claims of current SS recipients. Everyone thought Al Gore's lockbox was a funny idea, but it would have helped to trim government spending, or at least ensured that the government accurately accounted for spending.

My point, which was hidden in rambling, is that I don't think that Social Security belongs in budget discussions. It just tends to cloud matters by allowing the government to pull accounting tricks that would make Enron accountants blush. Essentially, if I understand it right, they are counting the income twice. They count it as an asset to Social Security while treating it as income to the Federal Government (which they promptly spend.) This makes it look like the budget is closer to balanced then it actually is.

I tend to stay away from economics arguments because I don't really know enough but, and I am surprised no one has brought this up, it seems like if you want to cap spending you'd go for Kerry. There seems little question that Kerry, if elected, will be President while the houses of congress are Republican, therefore effectively curbing spending. Seems to me it doesn't matter what he says he'll spend money on, the congress won't let him.

Conversely, things like that stupid Medicare bill get passed. A worse bill you can not find, even worse than the cheaper one Clinton tried to get passed. They get passed because of partisan politics.

Go Gridlock!!!

Kate wrote:

I tend to stay away from economics arguments because I don't really know enough but, and I am surprised no one has brought this up, it seems like if you want to cap spending you'd go for Kerry. There seems little question that Kerry, if elected, will be President while the houses of congress are Republican, therefore effectively curbing spending. Seems to me it doesn't matter what he says he'll spend money on, the congress won't let him.

Except of course that Medicare and Social Security (about 40% of the budget and growing) are on auto-pilot for dwarfing discretionary spending and bankruptcy unless some major reforms are made. So much for the virtues of “gridlock.”

Conversely, things like that stupid Medicare bill get passed. A worse bill you can not find, even worse than the cheaper one Clinton tried to get passed. They get passed because of partisan politics.

Actually there were two bills which were worse than the current legislation - the House and Senate Democratic alternative bills which were $600 and $900 Billion over ten years (both worse than the $534 Billion bill we got). But Kate is quite correct that the current bill is because of partisan politics, namely that Bush and the Republicans wanted to get a bill passed to take the issue away from Democrats. The result was that the first couple of bills proposed by Bush and the Republicans (cheaper than the one actually passed) ended up being more expensive to get it through the threat of a Democratic filibuster in the Senate.

I'm lookin' at the same page you are -- I've got it on the wall next to my desk. How are you reaching the numbers that you've got? (Especially the 48% number.)

Jane said the exemptions covered:

"health care, education, security, and Social Security."

I missed the 'security' line and just looked for health care, SSI and education. Putting 'SSI & Medicare' (38%) together with 'physical, human and community dev.'(10%) gives you 48%. Add in Defense and you are up to 68%. I assumed 'physical, human & community dev.' would include education. I see your estimate too is well below Jane's 90%, which she obviously made up out of nowhere.

8% is net interest on the debt. The only way we can avoid that is to default on Treasury bills like a Third World country, which would plunge the world into a second Great Depression. So that's not something he can touch.

This is a C+ answer. Interest is not fixed but variable. While the gov't cannot directly change it long term interest rates can fall if the gov't signals that it is getting tough on the deficit.

As ignorance is the topic, it becomes necessary to reveal that budgets become law through 13 separate appropriation bills, thus there could be no budget that became law over a single presidential veto.

That's cute, how many appropriation bills were enacted over Presidential veto. This whole 'Congress spends the money' routine was tired back in 1983, do you really think you are going to score any pointed with it 20 years later?

While it's true that the President has veto power, it's also true that there are significant political consequences for using this power.

How about the budgets Bush has proposed? This congress has been remarkable for going along with Bush...even for a congress of the same party as the President.

Boonton, by implying that there are considerable savings to be gained from current levels, through reduction in interest rates, you demonstrate that you don't really wish to have a reasoned discussion, but merely wish to engage in rhetorical point-scoring.

I didn't say there was considerable savings, I only said that interest was not fixed and even there some savings could be realized.

I didn't say there was considerable savings, I only said that interest was not fixed and even there some savings could be realized.

Actually, you called it a "C+ answer," implying that the maker of the statement was significantly less informed on the subject than yourself.

So then, teach us. Would you like to wager that those savings will be significant enough to seriously alter the figure as a percentage of the federal budget?

Not a significant % of the budget but it can be a significant portion of the deficit which is only a portion of the budget.

More disingenuous twaddle. Interest rates are so low right now that to suggest that any significant lowering can take place by signaling that the govt. is going to be "tough on the budget" is simply deeply ignorant or deeply dishonest. You don't want to have discussion, you simply wish to wave your hands and shout.

Interest rates don't have to go significantly lower if the goal was to freeze spending except for the categories Kerry listed. I only countered the assertion that interest spending was totally out of the gov't's hands unless it wanted to default on the debt.

The immediate deficit is bad but the true problem is the future projections showing unending deficits unless incredible economic growth suddenly kicks in and doens't stop for decades. Let's face it, the Bush administration has snorted the deficit drug and now does not care about it.

No, boonton, you countered, in part, by saying...

"While the gov't cannot directly change it long term interest rates can fall if the gov't signals that it is getting tough on the deficit."

This is a D- statement, since it fails to account for the simple fact that there is very little room for rates to fall further. Yes, future deficits are potentially horrible, particularly if nothing is done about the growth in entitlement spending.

The 30-year bond is currently at 5.02%. If it dropped to 4.02% interest costs would fall by 20%.

That, of course, would require rolling over the 5% debt into 4% debt. It would be hard to achieve a full 20% reduction immediately but the point stands. There's room for rates to go down & it doesn't take a huge drop to generate savings....let alone a simple 'freeze'.

"how many appropriation bills were enacted over Presidential veto?"

Appropriations bills have hardly ever been vetoed, regardless of differing congressional and presidential politics. The president cannot veto one bloated item, he has to sign or veto the whole bill, including thousands of different items. So any appropriations veto would shut down major parts of the government. I might think this was a good thing, but my chance of being elected president is zero. Anyone who can make it into that office will have a long list of government programs he considers very important - and you can be sure Congress knows about that and has attached some of them to the pork.

It's absurd to attempt to exonerate Congress from responsibility for excessive spending. Budgets prepared by the executive branch are political documents. Congress typically ignores them. The White House can only impact budget proceedings by threatening a veto, but this usually carries little weight.

This doesn't let Bush off the hook. He has shown no leadership on spending, and he has attempted to distract the public with political spin. But there's nothing to indicate that Kerry would spend less. His voting record in the Senate doesn't support such a conclusion.

Both parties seem inclined to spend large sums of money. The public seems to accept this, because they continue to elect representatives who appropriate these funds. The highway bill that was just approved by the House has enough supporters in that body to override a veto.

Congress has the ultimate power to approve or reject spending. That is simply a fact, and arguing otherwise shows a basic ignorance of American government.

Except of course that Medicare and Social Security (about 40% of the budget and growing) are on auto-pilot for dwarfing discretionary spending and bankruptcy unless some major reforms are made. So much for the virtues of “gridlock.”

You might want to rethink that--the only reform done under single-party fiscal-conservative government has been a massive expansion of the Medicare benefit. That's not only the absence of reform, it's a definite step in the wrong direction as far as you're concerned.

Yes, future deficits are potentially horrible, particularly if nothing is done about the growth in entitlement spending.
Now who's engaging in "disingenuous twaddle?" Social Security has been subsidizing government spending since the 80s. The assumptions that it's future collapse are founded upon are at the very least dubious. Fairly minor steps taken now could ensure that Social Security remains solvent for the foreseeable future. Medicare may be a different matter.

Comments are Closed.