Wednesday, July 14, 2004

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Don't rush me off the fence, part III

Brad DeLong and Daniel Gross make compelling cases for me to get off the fence on the Kerry side of the yard. Their argument? The Kerry economic team beats the Bush economic team.

Brad links approvingly (yes, approvingly!!!) to a Jonathan Weisman story in the Washington Post, which opens as follows:

From a tightknit group of experienced advisers, John F. Kerry's presidential campaign has grown exponentially in recent months to include a cast literally of thousands, making it difficult to manage an increasingly unwieldy policy apparatus.

The campaign now includes 37 separate domestic policy councils and 27 foreign policy groups, each with scores of members. The justice policy task force alone includes 195 members. The environmental group is roughly the same size, as is the agriculture and rural development council. Kerry counts more than 200 economists as his advisers.

In contrast, President Bush's campaign policy shop is a no-frills affair. Policy director Tim Adams directs about a dozen experts who make sure the campaign is in sync with the vast executive branch that is formulating policy. Adams's group also analyzes Kerry's proposals and voting record. Fewer than a dozen outside task forces, with five to 10 members, also help out on education, veterans' issues, the economy, and energy, environment and natural resources, said campaign spokesman Scott Stanzel.

The campaign policy gap argument sounds pretty persuasive -- except that the lack of a campaign policy team for the Bushies shouldn't be surprising. Indeed, the Weisman article notes that the Gore campaign had the same set-up in 2000:

[T]he difference in structure between the Kerry operation and then-Vice President Al Gore's campaign in 2000 is "black and white," said Bianchi, who formulated economic and budget policy for Gore as well. Back then, Gore had a wealth of policies already formulated by the Clinton administration. After eight years in power, weary Democratic policy experts weren't clamoring to share new ideas. A stripped-down campaign policy shop existed mainly to push proposals that moved only incrementally beyond then-President Bill Clinton's or to ensure Gore's campaign proposals were consistent with the administration's record.

The party out of power is always going to have the bigger policy team. The campaign policy team for a sitting President or VP should resemble the current Bush arrangement -- ensuring coordination with the relevant economic policymaking bureaucracies.

Indeed, if you read Ray Simth's front-pager in today's Wall Street Journal on skyrocketing property tax increases, Adams seems to hold his own in the spin department:

In many parts of the country in recent years, strapped local governments have imposed big increases in property-tax rates, as well as in home assessments, to fill budget shortfalls. In response, voters have organized efforts to repeal or slow property-tax boosts in states from Virginia to Oregon, in some cases with the support of frustrated local officials....

Nationally, Democrats have tried to seize on the rising anger over property taxes and shortfalls in municipal budgets to attack the Bush administration for tax cuts that reduce funds available to local governments, contributing to what presidential candidate John Kerry has dubbed a "middle-class squeeze." Sen. Kerry has proposed an economic stimulus package that includes payments to state governments to help them avert spending cuts and tax increases.

"Sen. Kerry has long recognized that the decision to focus on tax relief for the wealthy over any form of state fiscal relief has led to many backdoor tax and tuition increases at the state and local level," says Gene Sperling, a Kerry economic adviser, who headed the White House's National Economic Council during the Clinton administration.

Tim Adams, policy director for the Bush-Cheney campaign, counters, "The effect of the Bush administration's tax cuts on state revenues is minimal compared to the impact" of the economic downturn. He adds that some of the states' budget problems can be traced to spending sprees in the 1990s, as well as other broader economic shocks.

There's no doubt that many state and local governments experienced big shortfalls with the economic downturn that began in 2000 after the flush years of the 1990s boom. Sales taxes, which had been rising rapidly, suddenly tumbled, while revenue from corporate taxes shrank. Tax cuts spurred reduced federal spending. Many states, feeling the pinch, cut back their funding to local governments, dealing them a double whammy.

[Er, blaming the bad economy is good spin for the Republicans?--ed. Yes, because most Americans have proven surprisingly sophisticated in recognizing that a lot of the hits the economy took a few years ago -- the dot-com crash, the terrorist attacks, the corporate scandals -- had little to do with Bush.]

Spin is one thing, substance is another -- and here, DeLong does have a suitable counterargument, linking to Stan Collender's National Journal column from late June:

Has anyone seen or heard from the Bush administration's economic and budget teams lately?

National Economic Council Director Stephen Friedman has been practically invisible since he took the job.

Greg Mankiw, the chairman of the Council of Economic Advisors, essentially hasn't been heard from since he made a politically incorrect statement back in February about the outsourcing of jobs.

Joshua Bolten, the director of the Office of Management and Budget, has hardly been a public advocate for the Bush administration's budget policies and projections. Indeed, he has been one of the least visible OMB directors in decades.

Treasury Secretary John Snow has been making a few television appearances in recent weeks. But he hasn't said much that has made the news and seems to be perceived more as a cheerleader than as a policymaker.

And Vice President Dick Cheney, who in the past has spoken up for the administration on the economy when it needed someone to do so, now has serious overall credibility problems because of the foreign policy and military decisions he has helped shape....

All of this presents the White House with a huge problem: Less than five months before the election, no one within or even near the administration has the standing or credibility to defend and promote the Bush budget and economic records other than the president himself...

Similarly, Daniel Gross' Slate article -- which speculates on who would be Kerry's Robert Rubin -- opens with this line:

Quick—name the secretary of the treasury. I bet you can't. Or if you can, you had to think about it before you remembered the eminently forgettable John Snow.

Gross also has this killer quote from Richard Nixon's former Secretary of Commerce founding Concord Coalition member and classic Wall Street Republican Peter G. Peterson, from his just-released book, Running on Empty:

In sum, this administration and the Republican Congress have presided over the biggest, most reckless deterioration of America's finances in history. It includes a feast of pork, inequitable and profligate tax cuts, and a major new expansion of Medicare that is unaccompanied by any serious measures to control its exploding cost.

DeLong goes on to observe:

The stunning contrast between the enthusiasm with which economists--lots of economists--lots of very good economists--are donating their time to Kerry and the extraordinary silence on the Bush side is, to my way of thinking, the most interesting thing that emerges from Weisman's article....

John Kerry is not Bill Clinton, but John Kerry's economic policies could still be very good for America. It will be our job--Sarah Bianchi's and Jason Furman's, George Akerlof's and Lael Brainerd's, Harry Holzer's and David Cutler's, Alan Auerbach's and Ceci Rice's, Larry Katz's and Roger Altman's, Gene Sperling's and Alan Blinder's, Laura D'Andrea Tyson's and Bob Rubin's, and mine and all the rest of our's--to help him make it so. Who will George W. Bush have to help him? Tim Adams? John Snow?

So maybe I should get off this fence -- no wait!! Two possible counterarguments:

1) Kerry gets hamstrung by the loony left. Even if Kerry's economic team is fiscally prudent, his governing coalition might not be. In the early nineties, Clinton had a similar choice between two sets of policy advisors, and went with the fiscal conservatives. Would Kerry have the latitude or the inclination to make the same choice? As Brad put it, "Kerry is not Clinton."

This is Jason Zengerle's concern in The New Republic (subscription required). The key graf:

[W]hen Clinton was president, liberal Democrats were quiescent enough to let him govern from the center; he embraced welfare reform and fiscal conservatism without suffering a reelection primary challenge. In a Kerry presidency, the Democratic Party's far more energized left--conditioned by [Fahrenheit 9/11 director Michael] Moore to guard against Democratic sellouts--may not be so forgiving.

2) Kerry may not listen to his advisers. Bruce Bartlett makes the following comment on Brad's blog:

I do believe that Kerry would help himself by making fiscal responsibility the key message of his campaign. I say this as a Republican, because I believe that my side has gotten off on the wrong track and because I believe competition is good in the political arena as well as in the economy.

The problem is that Kerry has yet to throw the smallest bone to the fiscal responsibility crowd. Brad is willing to take him on faith because he trusts his advisers. I won't, nor will most middle of the roaders. They need to see something tangible on the table.

Both of these concerns -- as well as my qualms with the Bush economic team -- could be addressed during the general election campaign.

Sooooo.... it's still too early to jump off the fence. Still sitting and learning, sitting and learning....

UPDATE: James Joyner thinks that the differences in teams is less significant in terms of policy outputs than DeLong:

I would argue that the near-invisibility of Bush's economic team goes a long way towards proving a point I've been making for years: Presidents don't much matter in domestic economic matters. The Fed has taken total control of monetary policy for years and fiscal policy operates within a very narrow range. The days of 70% marginal tax rates are beyond us for good and we've pretty much cut taxes as far as is likely. Presidents matter more in international trade, since they can encourage open markets or swing toward protectionism but, again, only within pretty narrow bands.

On the other hand, Steve Chapman points out in his Chicago Tribune column that the Bush administration has acquitted itself badly on one issue it has some influence on -- pork-barrel tax cuts for corporations:

Corporate welfare--an array of direct subsidies, tax breaks and indirect assistance created for the special benefit of businesses--is one of those things that politicians would rather criticize than abolish. For the most part, it has a deservedly bad image. But when it comes to helping out companies from their own districts, most members of Congress think there is no such thing as unjustified federal aid....

Although his budget director once said it is "not the federal government's role to subsidize, sometimes deeply subsidize, private interests," President Bush has proposed only piddling cuts. Under his leadership, the budget for corporate welfare has remained as high as ever--about $87 billion a year, according to the Cato Institute in Washington.

FINAL UPDATE: Both Josh Chafetz and Noam Scheiber weigh in on the Weisman story.

posted by Dan on 07.14.04 at 05:59 PM


There is some indication that Kerry was read the riot act by his economic advisers after his silly "Benedict Arnold" comment. He's gone back on that rhetoric.

Also, from what I remember hearing once, he's scaled back on some of his grandiose plans, promising small, incremental changes. Even for outsourcing, his only proposed change so far is to reduce a so-called tax break, and reduce taxes overall. That sounds good to me.

And whatever objections I may have to the rest of his plan, at least he seems to be willing to listen to his advisers instead of channelling God (see Bush, foreigh policy of).

posted by: Liberty Bil on 07.14.04 at 05:59 PM [permalink]

Don't do it Dan! Resist the temptation, go back over to the light side!
One of the advisors cited in the Wash post article is Thea Lee from the AFL-CIO. She came to speak at my college, and she is a psycho-leftist neo-Marxist. She said that she's willing to accept protectionism if it ensures better labor standards for workers at home or abroad.
Don't compromise your principles Dan. Viva Bush!
And don't give me the BS that divided gov't under Kerry would result in less federal spending. Supporters of this theory point to the reduction in the federal gov't under Clinton with a Republican Congress, but the reason spending decreased was for the most part because of cuts in defense spending b/c of the end of the Cold War. I think it's clear that defense cuts right now are neither politically feasible nor good ideas. Kerry as President would propose huge spending increases, bigger than Bush's, and the Republican Congress would compromise with smaller spending increases--but the deficit would grow nonetheless, especially if Kerry gets his growth-squelching tax cuts passed.

posted by: Crash on 07.14.04 at 05:59 PM [permalink]

"The effect of the Bush administration's tax cuts on state revenues is minimal compared to the impact" of the economic downturn.

Some good spin that is.

"It wasn't our reckless, inequitable tax cuts that f&cked up local finances! It was the crappy economy!"

In any case, I don't think you need to worry about Michael Moore and his gang of crazies lefties. They just want to get rid of Bush, and the remarkable unity on the left is very pragmatic. The left likes Edwards because he makes them feel good. They don't know a lot about economics and as long as Kerry doesn't do something like cut food stamps they'll be fine.

posted by: praktike on 07.14.04 at 05:59 PM [permalink]


I know this post is on economic matters but are you truly indifferent on social issues?

For me a party that would advance something like the same-sex marraige amendment is one I simply can't vote for, no matter what else they propose. Their view of how the US should work is so different to mine that I shudder to think they could someday inplement it.

posted by: GT on 07.14.04 at 05:59 PM [permalink]

>One of the advisors cited in the Wash post article is Thea Lee from the AFL-CIO. She came to speak at my college, and she is a psycho-leftist neo-Marxist. She said that she's willing to accept protectionism if it ensures better labor standards for workers at home or abroad.

All God's children are 'advisors'. Picking up the most radical of any such crew and then ascribing anything to them is about as meaningful as the great Whoopi controversy.

>And don't give me the BS that divided gov't under Kerry would result in less federal spending. Supporters of this theory point to the reduction in the federal gov't under Clinton with a Republican Congress, but the reason spending decreased was for the most part because of cuts in defense spending b/c of the end of the Cold War.

Sorry, that's a load of bologna. Specifics vary, but the reason spending was cut under Clinton is because they had the foresight and guts to make it happen.

>I think it's clear that defense cuts right now are neither politically feasible nor good ideas.

No, but wiser spending is an abundantly good idea. The current money shovelling into defense helps nobody.

>Kerry as President would propose huge spending increases, bigger than Bush's, and the Republican Congress would compromise with smaller spending increases--

Oh, the ever watchful Republican Congress. Straight face alert!

>but the deficit would grow nonetheless, especially if Kerry gets his growth-squelching tax cuts passed.

I thought you guys thought all tax cuts promoted growth?!?!

This administration and its congressional cohort are, indeed, the drunken sailor. Needs to stop, and right away.

posted by: Bill Skeels on 07.14.04 at 05:59 PM [permalink]

This is a one issue election, and that issue isnt the economy.

posted by: Mark Buehner on 07.14.04 at 05:59 PM [permalink]

This should be a headline! Kerry bloats government before even taking office! Jeez, I can feel the tax pinch already. Wonder what useless social programs they're going to blow it on now. Dan, I'm begging you, don't cancel out my Bush vote.

posted by: Ernie Oporto on 07.14.04 at 05:59 PM [permalink]

Dan, it's funny that Kerry has to convince you with regards to the economy, not Bush.

The historical record is clearly on the side of the Democrats: higher average GDP growth, lower unemployment and more job creation, lower inflation, smaller growth in spending and even higher average stock market returns.

There is nothing but pure ideology to support the thesis that somehow Republicans are better for the economy.

posted by: gw on 07.14.04 at 05:59 PM [permalink]

Yes, Kerry's prescription for nationalizing health care, ignoring the social security meltdown, and raising taxes on everyone making more than 100K per year (except his wife who evidently is shirking her duty) is a great prescription for a good economy.

posted by: Matthew Cromer on 07.14.04 at 05:59 PM [permalink]

'Deficits don't matter' -- Cheney

'Nuff said -- me

posted by: erg on 07.14.04 at 05:59 PM [permalink]

Matthew, restoring taxes for the well-off (those making over $200k per year) to the levels at which they were under Clinton might indeed be a good recipe for the economy. After all, when taxes were at those levels under Clinton, the economy boomed. And all this without wrecking the budget. What's wrong with that?

I've said this before: Whoever claims that ANY tax increase, regardless from which level, is bad for the economy, must logically favor a 0 % tax rate. Otherwise there must be a non-zero optimal tax rate to which taxes should be raised if they fall below it. Of course, we don't know what the optimal tax rate is (and it may change over time), but you can't categorically claim that tax increases are bad for the economy.

posted by: gw on 07.14.04 at 05:59 PM [permalink]

I think the phrase is "CYA," Dan. Credit for openly questioning whether or not to bow before the great benighted Leader, though. Or maybe you are a perfect proxy for the thinking of what DeLong calls "adult Republicans" - not quite sure that Bush is going to prove to be a historic disaster, so not quite sure how hard or how far away to run away from him. After all, he could get a second term, and then there might be payback. On the other hand, if he loses or continues to be the spectacular failure in all fields that he has been so far, it might be a case where last off the boat has least credibility.

I don't know if it comforts you much, but lots of thoughtful Republicans seem to be going through the same contortions.

posted by: Nass on 07.14.04 at 05:59 PM [permalink]


For the record - this must be one comfortable fence.

I'm thinking split-rail.

posted by: Norm Abrams on 07.14.04 at 05:59 PM [permalink]

Mark Buehner: This is a one issue election, and that issue isnt the economy.

Many people who say this would be thinking of abortion as that one issue. You are probably thinking of the war on terror.

But I think you have something in common with the single-issue anti-abortion voters. You put rhetoric over actual action.

Republicans have pretty consistently passed anti-abortion bills that they knew would be rejected by the courts. They have rejected compromise bills that might actually pass the courts' scrutiny. So do they really want to do something against abortion, or do they merely want to keep the topic "hot" for their campaigns?

Similarly, the war on terror has been a great campaign topic, but what has actually been done about it? Ten times as many troops are engaged in the distraction in Iraq than in Afghanistan while the terrorists are planning new attacks on us relatively unperturbed in Afghanistan and Pakistan. Supposedly we know this. It sounds like a pretty imminent threat to me. And yet there is no pre-emptive action being taken in this case. Why not?

posted by: gw on 07.14.04 at 05:59 PM [permalink]

So the argument is, Look, Kerry's got lots of advisors, Bush has very few, therefore Kerry is better for the economy? I know you backed off from that somewhat and made allowances for party-in-power, party-out-of-power concerns, but my reading is that you didn't replace that original claim with another.

I am really annoyed at deficit spending, but a definition of a Good Economy has got to start with low unemployment, some encouraging return on investment, and low inflation for those on fixed incomes. Despite the predictions of the Democrats, Bush has accomplished at least that.

Or perhaps more precisely, Bush hasn't screwed that up, as politicians often do.

posted by: Assistant Village Idiot on 07.14.04 at 05:59 PM [permalink]

More advisors = better advice?

Um, kind of like how the Senate operates?

Has John Kerry shown anyone anywhere anytime that he can corrale this team into one direction OTHER than "Hey--we're not Bush."

What a load of crap, Brad. It's not the quantity. It's the quality. And that should be the focus of the Kerry campaign.

posted by: jd on 07.14.04 at 05:59 PM [permalink]

Sorry to be so cynical here, but Kerry's focus will be to get through the campaign. Not to inspire, not to seek a mandate for any program he or his advisers want to pursue, just to make it through.

So he will call for fiscal responsibility in the abstract, while also calling for a variety of spending programs and tax cuts aimed at specific interest groups that would effectively negate the promise if he could get them enacted. And then, after the election, he will get a fairly small subset of his campaign's current set of "advisers" and make up his mind what he wants to do. Probably after setting up the foundation of his fundraising network for the 2008 campaign.

We don't get to vote on a program this year, folks: not on economics, or trade, or immigration, or simplifying the tax code. It will be all about values, and character, and hair. And before Dan gets too excited about Kerry's economic advisers, I'd urge him to remember that Bush's campaign made a big deal in 1999 about Bush getting briefed on foreign policy by Henry Kissinger and George Schultz. Look how that turned out.

posted by: Zathras on 07.14.04 at 05:59 PM [permalink]

JD, lol, "quality". You are joking right? Did you forget how the Bush admin leaned on the quality/quantity debate on Iraq? I guess we forget things that are days old now. On the economy, its an even bigger joke -- here's Bush's "quality" economic predictions.

posted by: Jor on 07.14.04 at 05:59 PM [permalink]

Hey Jor,

The point is that DeLong presumes that just because Kerry has lined up a bunch of people on his economic team--what their role is, NOBODY knows--that somehow the sheer number of advisors equates to better overall advice. It's simplistic and deceptive to make that argument.

We don't know the role of any of the people in that list. We don't know how the circle is set up, how they arrive at decisions, or how policy gets forumulated. We don't know anything other than DeLong--a guy with a dog in the fight--is impressed that the list is a long one.

Given that DeLong himself has admitted that the president's effect on the economy is relatively small, I don't know why this impresses him so much.

Further, the real question is how Kerry manages these people who supposedly advise him. Is Kerry good at selecting advisors and then managing the process of formulating policy? The presidency is, to a large degree, about managing people. We know how the current president goes about doing this--loyalty is paramount, etc. But how does Kerry? We have yet to see.

posted by: jd on 07.14.04 at 05:59 PM [permalink]


I find it fatuous for Kerry to talk about raising taxes on the ass-busting peons who earn 200K from building up a small business when he and his wife pay almost nothing in taxes for a $3 billion fortune and its income.

Last year she reported 5 million dollars income. What a crock! Let's see her full returns so we know how the fabulously wealthy skate by while piling confiscatory taxes on the hoi palloi who want to accumulate capital. She won't release them because the tax shelters she uses will look so incredibly bad when JFK is saying the upper middle class need to turn out their pockets to pay for class warfare redistributionism.

Yes, I think it is absurd to raise taxes on people who make $200,000 a year. Lower taxes = higher economic growth all things equal. We need to look at scaling back spending -- here Bush and Kerry are both bad, but Kerry is worse -- Bush at least has Social Security privatization on the agenda, is less of a spender, wants cost controls on medicare, and recognizes that it takes tax cuts first to get spending cuts later.

posted by: Matthew Cromer on 07.14.04 at 05:59 PM [permalink]

Ah Dan,

Come on over to the current party of fiscial responsibility, the Dems. In the 80's it was the Pubs, but the last 3 years have shown us what they can do with a surplus. It's been a trillion dollar a year swing! $1,000,000,000,000

Oh yeah, 95% of Dems don't want to force everyone to wear gray Mao jackets. Yeah, throw them a bone, but don't you think JK is smart enough to figure out why Clinton got elected 2 times and Bush is going to have a tough time this year. It's always about the economy, and eveyone with a brain knows it. You can bet that GB thought his tax cuts would work much better than they have, but thats what happens when ideology runs into reality - reality wins. I'll bet you $10US (really!)that JK picks a winner for his Tresury guy, after seeing how much Rubin and Summers helped Clinton politically.

James Joyner is right and wrong, right in the short term, but wrong with horizons over 2-3 years. Reagans simplification of the tax code did wonders, and so did Clintons focus on keeping the deficits small. The right economic policy for the times works wonders on the economy, and what has given you the impression that Bush and his team even cares about anything but cutting taxes today so my kids can pay higher taxes? Is this the right policy for today? Well, the evidence in its favor is rather weak...

posted by: mickslam on 07.14.04 at 05:59 PM [permalink]

Since you do not live in a battleground state I would suggest voting for neither Kerry nor Bush.

You will sleep easier at night & your conscience will not bother your in the morning.

posted by: franklyn a on 07.14.04 at 05:59 PM [permalink]

Joyner says "presidents don't matter," but didn't Bush put a lot of his political capital into the tax cuts? Wasn't that his big "welcome to DC" on-the-house free drink of legislative latitude? And isn't it hard to refute the economists' argument that it (and the resulting deficits) was a lousy idea?

Still, it would be nice if Kerry would commit to fiscal probity a la Clinton.

posted by: wally, or bert on 07.14.04 at 05:59 PM [permalink]

The "terrorists are planning new attacks on us relatively unperturbed in Afghanistan and Pakistan?" Why would they leave Teheran?

posted by: wally, or bert on 07.14.04 at 05:59 PM [permalink]

I've said this before: Whoever claims that ANY tax increase, regardless from which level, is bad for the economy, must logically favor a 0 % tax rate.

So if I think X is too high in cost, be it taxes, gas or milk prices or the cost of a home, it follows that I should support 0 taxes, free gas, free milk and free homes?

posted by: h0mi on 07.14.04 at 05:59 PM [permalink]

JD -- look at Delong's graph. Economic forecasts are tought, but a dylexic third grader sitting in front of SAS could have done better than that. Just LOOK AT IT.

On (1) I don't subscribe to TNR, but it doesn't even make sense -- when you think of the outrages that have mobilize the left recently, tehy usually involve (1) Iraq (2) Environment (3) Science/stemm cells (4) Health -- Coverage,Sex Ed etc. (5) Abortion. Although the economy is bad, the repeal NAFTA hasn't really been the galvanizing movement. And you should know this yourself just by reading some lefty-blogs. I believe Moore's movie was about Iraq, but mabye I'm wrong.

Dan, Continue to sit on the fence -- or better yet, go ahead and tie your wagon to the Bush gravy train. Not like they led you off a cliff in the past? Just imagine how great things will be when they don't have to worry about getting relected. What's great though, is this time there will be no excuse about the Whole world believing Bush was a great guy (er, I mean Iraq had WMD). OR the Neo-Nut line of, "well we didn't know he was so incompetent, becacuse we are too stupid to read a newspaper and see that in almost every other area of policy, the Bush admin has royally fubard things up" -- that line just won't fly either. I highly suggest concocting the next lame excuse now, cause it seems like its gonna have to be a pretty complex hoop. You might even want to test it out on the blog, see what peopel think.

BTW, the last time I recall you towin the party line and being outraged, over the outrage -- lets see how things turned out Seymour Hersh says the US government has videotapes of boys being sodomized at Abu Ghraib prison in Iraq.
"The worst is the soundtrack of the boys shrieking," the reporter told an ACLU convention last week. Hersh says there was "a massive amount of criminal wrongdoing that was covered up at the highest command out there, and higher.".
But I'm sure its all a big joke. FOUR MORE YEARS! FOUR MORE YEARS!

posted by: Jor on 07.14.04 at 05:59 PM [permalink]

“I know this post is on economic matters but are you truly indifferent on social issues?”

The number one issue is still the war on terror. President Bush clearly understands that the Muslim world must be encouraged to enter the 21st Century if we are ever to have peace. There are far too many Democrats who feel uncomfortable with such a goal. They are multiculturalists, who in their heart of hearts, consider all cultures of equal value; the West has no business “imposing” its supposedly white man values on people with darker skins. I do not even slightly sense that Senator Kerry will stick with the program to challenge the Arabs’ culture of self pity and victimization.

posted by: David Thomson on 07.14.04 at 05:59 PM [permalink]

“There is some indication that Kerry was read the riot act by his economic advisers after his silly "Benedict Arnold" comment. He's gone back on that rhetoric.”

Since when? Both Kerry and Edwards continue with the populist "Two Americas" rhetoric. Trade protectionism is a very strong theme in their campaign. There is no doubt but that this is very disturbing to both Robert Rubin---and surprisingly even possibly Hillary Clinton. I am going to take the liberty of quoting two paragraphs from page 353 of Rubin’s ---In An Uncertain World---:

“Unfortunately, rather than running primarily on the economic record of the Clinton-Gore administration, the Gore campaign took something of a populist tone. Income distribution is a critically important economic issue for any society: the question is the language you choose and the sense you convey with your words. At any time, but especially at a moment when people were benefiting economically, language tinged with class resentment seemed to me politically and substantially unproductive. If Gore were to win, his populist rhetoric in the campaign could hurt business confidence and investment, which was not the way to start a new administration.

All of this, of course, is a long-standing debate within the Democratic Party, which has its philosophical schisms just as the Republican Party does. I am not a political analyst, but I’ve been around this debate for many years, listening to the vigorous policy and political arguments on both sides. My view remained what I remember Hillary Clinton telling Bob Reich after the 1994 midterm election debacle: that the key in the general election is the 20 percent of swing voters in the middle of the electorate, and that class conflict is not an effective approach with these people. In response to this kind of criticism, Gore’s campaign strategists are quick to point out that Gore got more popular votes than Bush. But whatever one’s view of the outcome, I think the Gore campaign should have done better, given that he was running as an incumbent Vice President amid the best economic conditions in many decades.”

posted by: David Thomson on 07.14.04 at 05:59 PM [permalink]

From the Note:

"'It seems to be working, in the sense of making the outside people feel warm and fuzzy, like they've been consulted,' said one close economic adviser. 'It's mostly so all these people can say they're working with the Kerry campaign.'"

Wonder what Brad DeLong thinks of that quote.

posted by: jd on 07.14.04 at 05:59 PM [permalink]

Brad DeLong seems to share the foible with many other academics of judging an administration according to how closely it resembles academia. Heck, he'd probably change his mind about the Bushies overnight if only they'd hire a few hundred professors, then send them all on sabbatical while a team of graduate assistants runs the government. We'll see how well Prof. Drezner resists falling into this worldview.

I see that Matthew Cromer has read the same Don Luskin article that I have. I like Don, but every so often he writes something that makes me go "huh?" This time he's forgotten that capital gains don't count as income until they're realized.

posted by: Paul Zrimsek on 07.14.04 at 05:59 PM [permalink]

Clinton also ran on the economy.

Kerry so far has yet to define his major running point in my mind. He has hit on several points: the economy, terror, and the budget. Though when he make specific proposals I tend to disagree.

posted by: cube on 07.14.04 at 05:59 PM [permalink]

No David, the war on terror cannot supersede the rest.

Evene if I agreed with you that only Bush can win the war on terror (and I don't, at all) I would still be worried by the kind of country the GOP wants to turn America into.

This whole WoT is a silly exaggeration. Our enemies can certainly cause damage but they have no ability to destroy the US. Comparing our current anti-terrorist policies to WW2 or the CW makes no sense except to scare people.

On the other hand a constitutional amendment that institutionalizes discrimination can change the nature of the US for the worse for many decades. I can't live with that.

posted by: GT on 07.14.04 at 05:59 PM [permalink]


In an actively managed portfolio of 3 billion, you would expect a lot more realization of capital gains than 5 million dollars.

It seems very likely that her assets are managed in a sophisticated trust-based tax dodge. She can answer all the questions by opening up her returns from previous years.

posted by: Matthew Cromer on 07.14.04 at 05:59 PM [permalink]


Ponder the consequences of the release of a smallpox at 20 sporting events nationwide, and the deaths of 10+ million Americans.

Your claim that terrorism is not a threat is frankly absurd.

PS the stupid amendment is DEAD. And it was always destined to die.


Go ahead and vote for Kerry. Your colleagues will all love you (they hate Bush with a fashion as Postrel so aptly noted) and you can freely express self-righteous outrage about all the bad things that always happen in war. When he endangers the future of this country by neglecting the oncoming social security demography, nationalizing health care, and bailing out on democratization of the middle east (ensuring the swamp is never drained) you can claim ignorance and righteous indignation that you "had no idea" with a bit of selective forgetfulness.

posted by: Matthew Cromer on 07.14.04 at 05:59 PM [permalink]

Matthew, please don't treat me like an idiot. Massive biological terrorism is the stuff of spy novels, not reality. If you like to be scared be my guest. I try to keep informed. The only real risk is a nuclear bomb and even that doesn't have the capacity to destroy the US.

And, since I see no difference between Bush and Kerry on fighting terrorism (actually I think Kerry will be better) the WoT is not a voting issue for me.

But the Constitutional amendment is. The reason it was defeated is because of Dems in the Senate. If the GOP had the control it wants it would have passed. That's why I'll be voting for Dems.

posted by: GT on 07.14.04 at 05:59 PM [permalink]

Matthew, I see you have opened up an irrelevant, speculative diversion about Teresa Heinz Kerry's wealth in order to avoid having to address my main point. So people making $200k and up a year are "peons", except for Teresa Heinz Kerry who makes $5 million a year and therefore must be hiding something.

Don't get me wrong, I have absolutely nothing against people earning $200k a year (or $5 million, for that matter). I'm doing pretty well myself, thank you very much. I probably also got a nice little chunk out of the Bush tax cuts, but you know what - I really couldn't care less, if I have to pay $2k more or less in taxes each year. I don't even know how much exactly I got in terms of tax cuts, and I frankly don't care. It doesn't affect my spending habits at all, for one thing. I somehow doubt that many people who earn as much as I or considerably more are very different in that regard. (One practical reason - and also the main reason I don't know how much of a tax cut I got - is that the total tax burden varies depending on many other factors, such as new mortgages, variation in income from one year to the next etc. - the $1-2k in income tax cuts thus seem mostly like a rounding error then.)

Anyway, back to my main point. The tax rates as they were under Clinton did not prevent a huge economic boom which helped balance the budget. The tax cuts under Bush did not get us out of the recession any faster than the tax hikes under Clinton did, but they busted the budget.

And to clarify my point about the optimal tax rate, also for h0mi, who completely misunderstood it:

IF you agree that the "OPTIMAL TAX RATE" is NOT ZERO, THEN you must accept that a tax increase from a tax rate LOWER THAN THE OPTIMAL RATE to the optimal rate is a GOOD THING.

I.e. unless the optimal tax rate is 0 %, you must accept that there is such a thing as a GOOD TAX INCREASE.

Given the economic boom under Clinton, which grew out of a recession and which was accompanied by reasonably low inflation, lots of new jobs created, and the budget balanced, it doesn't seem unrealistic to assume that the tax rates under Clinton were pretty close to optimal. Thus restoring them would seem like a sensible approach to me. (In fact, I would favor restoring them for everybody, not just the $200k/year "peons"...)

But, hey, now you can tell us again that surely Teresa Heinz Kerry must be hiding something because the LA Times estimated she is worth $900 million to $3 billion (which gets rounded to just $3 billion by you) and surely she must be making more than $5 million per year. We shall also assume that she is evil and uses (perfectly legal) trusts and other tax shelters, which other rich people would never think of using. (Yeah, right.) We shall assume all this so that we can distract from the real issue, which is that this President is handing out totally unnecessary tax cuts to people making lots of money and thereby wrecking the budget.

We shall also continue to ignore the historical record to which I tried to post a link last night (do HTML links not work anymore, Dan?). Here it is again, this time without HTML tags, to it will hopefully come through:

The record is pretty clear - even if you quibble with some of the numbers and say they don't conclusively prove that Democrats were that much better, there is no way to turn them around to somehow prove that in fact Republicans were better for the economy - as measured by GDP growth, job creation, inflation, unemployment, spending and even the stock market! It's a myth based on ideology and clever campaigning. That even with Bush's particularly abysmal record - higher spending, higher deficits, highest (and only) net job losses since the Depression - there is still even a question around this puzzles me.

So what is it? Are you looking at economic theories and say - "Hm, in theory, the Republican approach ought to be better" - and then ignore reality? Don't you have to update a theory if it is repeatedly disproven?

posted by: gw on 07.14.04 at 05:59 PM [permalink]

"Similarly, the war on terror has been a great campaign topic, but what has actually been done about it?"

Well, lets see...

-The terrorist camps hosted by the Taliban have been destroyed, the regime has been driven out of power, hundreds if not thousands of AQ fighters were captured or killed in the fighting, terrorists and Taliban have been confined to hiding in caves and cannot move openly without being slaughtered, the populace is thoroughly anti-Taliban and pro-UN/America, the country has elections scheduled for this year.

-Pakistan has gone from creating the Taliban, funding terrorism, and selling nuclear technology to fighting a running war with AQ. Pakistan captured and extradited:
Khalid Shaikh Mohammed AQ operations chief,
Abu Zubaydah AQ coperations chief,
Mustapha Ahmed al-Hawsawi a 911 conspirator,
Ramzi Binalshibh a 911 conspirator,

Yemen has gone from one of the foremost terrorist sponsors to an active ally against AQ, helping to capture and kill key AQ figures

Libya has gone from a rogue state seeking WMD and harboring terrorists to disarming, decrying terrorism, and at last report threatening to attack Chad should they not hand over AQ members.

Saudi Arabia has gone from the worlds largest financier and supporter of AQ to actively fighting AQ in its streets, killing a number of AQ recently.

US pressure has dryed up funding to Hamas, Jihad, and Hezbollah.

-KIA Muhammad Atef, AQ commander of military operations
-KIA Mohammad Salah AQ operations planner
-KIA Tariq Anwar al-Sayyid Ahmad, AQ operations planner
-KIA Hamza Al-Qatari, AQ financier
-Captured Sharqawi Abdu Ali al-Hajj, AQ facilitator
-KIA Abu Hafs the Mauritanian, AQ spiritual leader
-KIA Abu Jafar al-Jaziri and Abu Salah al-Yemeni, AQ Yemen leaders
-Captured Ibn Al-Shaykh al-Libi and Abd al-Hadi al-Iraqi AQ Afghanistan trainers
-Iranian custody Saif al-Adil, OBL security chief
-Captured Abdul Rahim Riyadh AQ logistician
-Captured Ahmad Omar Abdel-Rahman
-reported KIA Abu Mohammad Al-Masri, AQ embassy bomber

posted by: Mark Buehner on 07.14.04 at 05:59 PM [permalink]

Mark, your list of killed and captured terrorists is taken from news reports that date back to March 2002. As the Washington Post reported then:

Nine senior al Qaeda members have been killed and three captured during the war in Afghanistan, leaving the whereabouts of an additional 15 on the Pentagon's list of most-wanted terrorist network leaders still unknown to U.S. military authorities, government officials said yesterday.

A similar accounting of the leadership of the ousted Taliban movement shows two killed, four captured and 21 unaccounted for, the officials said.

Did the war on terror somehow end with the overthrow of the Taliban government and the killing or apprehension of less than half of Al Qaeda's leadership?

I don't dispute that the Afghanistan war was a good thing; on the contrary I'm saying we should have focused more and longer on Afghanistan. The Taliban is still active there and trying to make a comeback. Terrorists are still hiding in the mountains between Afghanistan and Pakistan and plotting attacks on us there. Yet we are not focusing on them because we are stuck in the mess in Iraq. The war on terror was taken seriously by this administration only for a few months at the end of 2001 and maybe at the beginning of 2002. Then they dropped the ball, began the irresponsible Iraq adventure and turned Iraq into a new breeding ground for terrorists.

Oh, and Saudi Arabia started fighting Al Qaeda after Al Qaeda was stupid enough to launch attacks in Saudi Arabia, not because we persuaded them. And they are still financing and breeding terrorists there - we should have focused on that after the Afghanistan war, not on Iraq.

posted by: gw on 07.14.04 at 05:59 PM [permalink]

An argument I don't understand is the harmful effects of the tax cuts on the states. Why is it better for the states to receive funding from the feds than to tax their own citizens again?

I also don't understand the claim that the tax cuts have hurt us in the short run. The economy was clearly in recession and it clearly isn't now, and yes we can argue magnitudes and timeframes. As a Kerry supporter, do you get to just assume higher marginal rates would have brought us out of the recession faster? Or, even better, that more jobs would have been created by paying people to remain unemployed to a greater extent? The argument about the debt is a long term one, lets not get confused.

As to the issue of whether debts matter, suddenly the only metric of the economy that seems to matter is the debt. Debts may matter, but it seems odd to argue similarly that productivity increases don't matter, that growth doesn't matter, that an expected S&P correction after last year hasn't materialized doesn't matter, and so forth.

All we hear about is fiscal responsibility. It is fiscally responsible, Laffer permitting, to increase federal spending by 100% and raise tax rates on yucky corporations by an amount to compensate (and force them to pay the new tax). Sound good to everyone? How about 200%? Think how great the economy could be with all this responsibility!

posted by: Jason Ligon on 07.14.04 at 05:59 PM [permalink]

Dan asks what if Kerry was hamstrung by the loony left.

I would ask back: Is that chance worse than already knowing that Bush is hamstrung by the loony Right?

You know what you are getting from Bush. It is not great...not even good. There is no Presidential track record for Kerry so you can ascribe him any position, but I think there are enough signs to think that things could be better...a lot better.

posted by: Rich on 07.14.04 at 05:59 PM [permalink]

The point DeLong was making, which stands, is that Kerry is getting advice and support from serious and knowledgeable economists and financial experts. Bush isn't.

Wailing about Theresa Kerry's tax returns doesn't change that.

And Dan, I find it bizarre that you worry about Kerry possibly being "hamstrung by the loony left." After all, the Republican Party is virtually captive to the loony right.

posted by: Bernard Yomtov on 07.14.04 at 05:59 PM [permalink]

Bush gets plenty of advice from serious and knowledgeable economists. To declare, or even infer, that, because they are not part of some trumped-up, press-release induced campaign squad, they are somehow less informed is a wad of rat feces. It's not believeable in any way.

Brad DeLong knows this. His standing as arbiter of reputable economists is dubious and narrow--what, a bunch of his friends and ideological cohorts show up working on the Kerry team and we're supposed to believe that he's objective in judging their insight and acumen? DeLong may be a smart man, but his wisdom is hardly unparalleled. His open partisanship tears at his credibility.

posted by: jd on 07.14.04 at 05:59 PM [permalink]

A month or so ago, David Brooks had an NYT columns in which he effectively endorsed the view (based on conversations with "mainstream" economists) that the Bush economic plan was a B-, and not a failing grade. When you get that kind of uncritical praise from your house organ, I think it's fair to say your policy leaves something to be desired.

posted by: SomeCallMeTim on 07.14.04 at 05:59 PM [permalink]

Jason Ligon: As to the issue of whether debts matter, suddenly the only metric of the economy that seems to matter is the debt. Debts may matter, but it seems odd to argue similarly that productivity increases don't matter, that growth doesn't matter, that an expected S&P correction after last year hasn't materialized doesn't matter, and so forth.

(Funny you forgot to mention jobs.)

No, all those things do matter. As I posted above, pretty much all economic metrics have been better under Democratic Presidents than under Republican Presidents - over the last 40-60 years. Here is the URL again:

Any thoughts?

posted by: gw on 07.14.04 at 05:59 PM [permalink]


Some points about your two concerns:

(1) Half of the looney left just wants the budget closer to in balance ;). Also, electoral punishment for the War in Iraq is probably the biggest issue for the looney left to begin with.

(2) Pelosi is doing a better job holding down the fort than Foley/Gephardt were doing.

(3) As Zell Miller ("D"-GA) once said of John Kerry, "He was balancing budgets before it was politically correct for Democrats to do so". Kerry signed on to the Gramm-Rudman-Hollings deficit reduction act, so I don't think there's too much evidence that he will suddenly have to spend.

(4) Simply undoing a certain amount of Bush damage -- from reinstating the global gag rule to improvements on environmental policy -- will probably give him plenty of cover with the looney left. Much of this comes at little or no cost to the government.

(5) WaPo had an article yesterday (DeLong links to it I think) about Kerry's policy shop and how he interacts with them, and pointed to a case where Kerry overruled his policy advisers who wanted more spending.

posted by: niq on 07.14.04 at 05:59 PM [permalink]


Don't get me wrong. As a libertarian (small 'l'), I continually struggle with the historical records of people who SAY they are going to increase spending vs. those who SAY they are going to decrease the size of government. It is a real problem. Can I really vote based on the idea that historically Dems have promised much spending but haven't delivered while the Repubs have promised little and delivered much? I don't understand the mechanism, so I default to pachyderm status by looking at what each person's stated ideal state is.

I curse Bush for spending too much, so I look to Kerry, whose plan is to spend even more. His gripe with the drug plan is that is isn't generous enough, for Chrissake. A significant portion of libertarians believe that Kerry hamstrung by Republicans would be better than Bush getting his way.

The short answer, and the honest one, is that I don't understand what drives the data you have presented. I also note some odd assumptions for some subsets of data not applied to other sets of data on the chart, and I know that the chart was put together for a specific purpose. I would have to spend some time convincing myself of the lack of hanky-panky.

A question for you would be, if Dems don't raise taxes and they don't increase discretionary spending, why is that their platform every election? Why is the rhetoric always you don't care about X because you don't spend money on X? Are we really going to hear Kerry say, "George Bush increased spending on education too much!" He DID spend too much federal money on education, but I can't see Kerry coming out against it.

I dunno.

posted by: Jason Ligon on 07.14.04 at 05:59 PM [permalink]


I forgot. About jobs. I don't mention them because I don't think presidents create jobs. When businesses need people, they hire people, but sometimes they don't need people because of bad economic situations and sometimes they don't need people because of improving technology. I haven't seen a government plan yet that will *poof* create great jobs.

posted by: Jason Ligon on 07.14.04 at 05:59 PM [permalink]

Jason, have you actually read the Democratic Platform of 2000?

We can never take our economic prosperity for granted nor can we afford to go back to either tax-and-spend or cut-and-run - the failed policies of the past. It took innovative, new Democratic policies to create the environment where prosperity could bloom.

Taken together George W. Bush's $2 trillion tax cut, his campaign-season spending proposals, his support for an unspecified but unprecedented missile defense system, and his support for privatizing Social Security add up to an assault on the surplus - causing Americans to have to choose between drastic cuts in education and health care or a return to the days of deficit spending. This is not a choice Americans should have to make. With fiscal discipline and a commitment to honoring our values, we can both save Social Security and give Americans the ability to create a nest egg without turning back the clock on our prosperity.

Al Gore has stepped up and taken responsibility by proposing a Medicare Lock Box that would insure Medicare surpluses are used for Medicare - and not for pork barrel spending or tax giveaways.

The only point where credit is taken for more spending, curiously, was this:

A strong, flexible, and modern military force is the ultimate guarantor of our physical survival and the protection of our interests and values. Today, America's military is the best-trained, best-equipped, most capable, and most ready fighting force in the world. With Bill Clinton and Al Gore in the White House, Democrats reversed a decline in defense spending that began under President Bush, boosted pay and allowances, and provided the funding for a new generation of weapons.

Meanwhile, over in the Republican Platform of 2000 we read that all the good stuff that happened under Clinton was thanks to the Republican control of Congress. Gee, the Republicans still (ok, again) control Congress, yet with a Republican in the White House all fiscal discipline has somehow been abandoned.

The Republican Platform also contained this gem:

The arrogance, inconsistency, and unreliability of the administration’s diplomacy have undermined American alliances, alienated friends, and emboldened our adversaries.

Whereas a Republican President would never do such a thing, of course!

posted by: gw on 07.14.04 at 05:59 PM [permalink]

I don't mention them because I don't think presidents create jobs.

Well, I tend to agree, but we keep hearing from George Bush that his tax cuts created or will some day create millions and millions of new jobs.

Obviously, he hopes that people have a short memory and won't remember that under Clinton tax hikes "created" millions more jobs while Bush is still in the negative in spite of all those tax cuts.

posted by: gw on 07.14.04 at 05:59 PM [permalink]


I didn't read the platform, but I watched the speeches and debates. When Gore went to NAACP, what did he say? When he went to AARP, what did he say? When he went to AFL-CIO, what did he say?

He promised money. Over and over again.

More directly. Do you believe that the center left coalition could exist in the absense of promises of redistribution?

Let me clarify. There are two reasons I have never voted for a Democrat.

1) They are horrifically wrong on my hot button issue, which is the right of self defense. I will drop every other issue for that one if I feel threatened, and I will become an activist against the party that I feel is threatening me. This is a whole different discussion, but suffice it to say that it is fundamental to me. This election, I don't feel especially threatened except for Boxer, Schumer and the usual clowns. I'm not really worried that Dems will persue it as a party to any great extent.

2) I love the ACTUAL civil rights positions of the Dems, as in the case of the opposition to PATRIOT, free speech, no government in sex lives, and so forth. I despise that redistribution winds up being called civil rights by the same group. It has always seemed to me that the very core of the Dem platform is "I will take money from some guy you don't know and give it to you, as long as I have your vote." I view this as so dangerous and seductive, I wind up spending all of my effort fighting it. The insanities of the right strike me as so much less likely to become law that they don't matter. The recent marriage amendment is a good example. They are running counter to history, so I can ignore Santorum and his asinine speeches.

What is a Democratic party without redistribution? I might vote for that one ...

posted by: Jason Ligon on 07.14.04 at 05:59 PM [permalink]

"I will take money from some guy you don't know and give it to you, as long as I have your vote."

But somehow Republican pork barrel spending and corporate welfare don't fall into that category?

That the Democrats are a "redistribution" party is a right-wing charge with no evidence to back it up. It is, ironically, the same charge the socialists use in parts of Europe to attack conservatives there: that conservatives are trying to "redistribute" wealth from lower income groups to higher income groups.

posted by: gw on 07.14.04 at 05:59 PM [permalink]

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