Thursday, September 22, 2011

Oh Santorum

Another GOP debate tonight. I think Rick Santorum won the award for saying the dumbest things, mostly his military-related comments.

Someone from the military who just came out of the closet due to the repeal of Don't Ask Don't Tell asked if Santorum would reinstate DADT if elected President. (By the way, the audience booed when the guy said he was gay). Of course, Santorum said yes. Here were his reasons:

1. Repealing DADT gives gays "special status". What??
2. He said repealing DADT is bad because we shouldn't be allowing sexual activity within the military. How is that related?
3. He said "sex should not be an issue"... as a reason we should reinstate the policy that openly gay people can't serve in the military.

The other really great stupid thing he said is that we should put more money and people in both Iraq and Afghanistan because we do whatever it takes to "succeed" and we should do whatever the Generals say. I have no idea how he can reconcile that with his completely opposite approach towards everything else the federal government does. How is it "conservative" to support giving a blank check to a government bureaucracy? Imagine if he had said "we should give as much money to the EPA as the EPA says it needs to completely succeed at environment protection". I'll never understand how someone can say we need to cut spending in every program to help our unemployed, poor, children, elderly, etc., but be willing to spend as much money and kill (indirectly) as many of our citizens as needed to "win" (whatever that means) in Iraq and Afghanistan.

Another face-palm moment of the night was Herman Cain saying he wouldn't have beaten cancer if Obamacare had been in place because "government bureaucrats" would take too long to approve his treatments. Um, what government bureaucrats? Why are people still pretending Obamacare is a single-payer system? Cain would have had private insurance either way. It sounds like the system he doesn't like is Medicare, but none of them will ever suggest we should do away with that.

Wednesday, September 21, 2011

Obama's new debt deal

It's annoying to see the coverage of how Obama's proposed debt deal is "so liberal" and "clearly just for campaigning". Then we continue to hear more about how all the politicians in Washington can never compromise on anything. But is that really true?

As I've previously said, if you want to take a very basic ideological divide of how to close a budget deficit, the purely conservative approach would be all spending cuts, and the purely liberal side would be all tax increases. The compromise would be somewhere in the middle, which happened in all previous deficit deals under Clinton, Bush I, Reagan, etc.

Here's Obama's plan:

Most of it (2/3) is spending cuts. And this is just what he's going into negotiations with; he's not threatening to veto any plan that tilts even more towards cuts over revenues.

Meanwhile the Republicans claim they're the party most concerned about the deficit, yet they will filibuster any new revenues. In fact, their proposed "debt" plan from Paul Ryan actually *cuts* taxes.

I do believe Obama's plan has no chance of passing Congress. But that's not because it's some unreasonable and extreme left-wing plan. And it's not because all politicians in Washington are unwilling to ever compromise. It's only because the *Republicans* in Washington are unwilling to compromise. I don't know how you could see it any other way; you can support their rigidity, but you can't deny it. And if they're unwilling to accept a single penny of new taxes to fix the deficit, you have to wonder if they really think the deficit is much of a problem. They're treating it more like an excuse to just do things they'd want to do anyway.

Tuesday, September 13, 2011

Republican Presidential Debate

I watched most of the Republican Presidential debate tonight. I think there's very little useful information to gain from these debates, but there's a strange mix of frustration and entertainment that mysteriously keeps drawing me in. And sometimes it's just uncomfortable... like hearing the crowd cheer at the mention of the death penalty in the last debate and shouting enthusiastically that we should just let people without health insurance die in this one.

The basic problem with these debates is this... you have 1 minute to answer extremely complicated questions that most viewers know very little about. If the best answer is complicated and beyond the understanding of someone with no knowledge of the topic, trying to explain it in 1 minute isn't going to be very popular. If you want to get elected, your only real choice most of the time is to throw out catch phrases, play it safe, and try to start a controversy around one of your opponents. So you hear really stupid things in these debates, but you never know for sure if that was the candidate's belief for real, or if that's just what they thought is best for their campaign.

Best examples from tonight:

1. Perry defending HPV vaccination mandates because he's "always on the side of life". It should be obvious how much this contradicts his opposition to universal health care.

2. Question: What should happen if someone without health insurance gets into an accident and needs a treatment they can't afford in order to survive? Bachmann: I don't like Obamacare.

3. The crowd booing when Romney suggested there would be benefits to moving to a federal sales tax. Of course, they were just booing because "tax=bad". But really, shifting our taxation away from income and more into consumption is exactly in line with conservative politics. Earlier in the debate when they were praising Texas for not having an income tax, that's exactly what it meant: we have a sales tax instead. A suggestion for Romney: if you want to get elected, stop assuming people know anything. Don't try to explain something complicated; you should have just answered "no new taxes", and you would have gotten tons of applause.

4. Every candidate keeps saying we should lower taxes. Then Perry was asked if he agrees with Obama's tax cuts. He answered no because we can't afford to, so we'll have to raise taxes in the future to pay for it. I guess that only happens when Obama is the one proposing the tax cut?

5. When Bush became President, we had a budget surplus. By the time he left, we had a really bad deficit. The biggest policy contribution to that deficit was huge tax cuts (this is math, not opinion). So tonight the simple question was asked: were those tax cuts bad since they weren't paid for with matching spending cuts? Bachmann just said no because "we have a spending problem not a taxing problem". Ugh.

6. Ron Paul getting booed for suggesting terrorists hate us because of ways we've screwed them over in our foreign policy. There's such a strange contradiction in the Republican base in their views of the government and the military. "The government screws everything up, we need to shrink government" is guaranteed to get cheers on almost every topic, but you can't hint at that idea with regards to our military interventions around the world. "We need to cut government spending" is a reason to cut every program that helps our poor, but you must hate America if you make that suggestion for our military.

Friday, September 9, 2011

The End of Loser Liberalism

I woke up at 3:30 feeling wide awake... eventually I gave up on falling back to sleep, so now I'm on my 2nd cup of coffee and just finished reading Dean Baker's "The End of Loser Liberalism: Making Markets Progressive". I highly recommend it; yes it's interesting but mainly because it's free, so why not?

The basic idea of the book is that Democrats should change their strategies to be more about having a different foundation for the free market rather than having the government directly alter the outcomes of it. He agrees with the goal of a progressive society where more money is distributed downward, but he thinks focusing just on government programs funded by taxing the rich is an ineffective way to accomplish that and a political disadvantage. For one thing, whenever you let debates be summarized as small versus big government, people intuitively gravitate towards supporting the side of "smaller government". He sees much what we currently refer to as "the free market" as a system rigged by the government to benefit the wealthy and corporations at the expense of average workers and smaller businesses, where there are many opportunities for progressives to become more "free-market" than conservatives. In that sense I think some of his ideas could get some support from some libertarian-ish conservatives.

A couple of examples...

We typically think of patents as part of the free market, but in many ways, it's a government intrusion in the free market that creates monopolies and inefficiencies. For example, when a drug company has a patent on a certain medicine, their government-enforced exclusive right to develop/distribute it allows them to sell for far above the market value. And that effectively moves money from average Americans to the wealthy. There's clearly a good goal behind the concept of patents... it covers the cost of new inventions and provides additional incentive for innovation. But the book suggests we look for other ways of doing that which wouldn't create the same inefficiencies in the market and would cost the economy far less as a whole. Baker's suggestion is having a public pool of money that is used as an immediate payment to reward things like new medical inventions. Yes, that would be a new government program with a cost, but it could cost far less than creating a bunch of monopolies. It keeps the incentive of new inventions while letting the market immediately do its magic to find the cheapest and most efficient way to develop and distribute the new medicine.

Another example is our policies in free trade. He agrees that free trade is a net benefit to the economy and is part of having a "free market". But right now most of our free trade agreements are set up only to expose poorer Americans to international competition while preventing the same for higher-income, higher-skilled workers. This, in effect, is the government tampering with the market to distribute money from the poor, who are forced to compete with cheaper foreign labor, to the rich, who can now buy cheaper products without the same international competition. For example, factory workers in America have been completely exposed to competition from foreign labor, but drug companies and doctors have been protected from this by our laws. If I can save a lot of money buying something made in a foreign factory, I can do so. But what about health care? Operations and medicine are usually far cheaper in other countries. In America, the average heart valve replacement costs $160,000. In India it costs $9,000. That's a $110,000 difference that would easily cover the costs of either traveling there or paying an Indian doctor to travel here, but you can't do that through our health insurance system. If Medicare or your private insurance company were allowed to "outsource" health care just like our cars and clothes can be, that could save you and our government tons of money. If progressives pushed for simply opening up health care to free trade, that would go a very long way to expanding access to health care using power of the free market.

I'm not saying I agree with everything in the book. I'm just saying it's all interesting, and I'd like to see some of the ideas experimented with.

Saturday, September 3, 2011

Would higher inflation fix our economy?

Should the Fed purposely cause higher inflation for a while as a way to reduce unemployment? This is an idea I've seen from various economists lately, which I originally read from Greg Mankiw, who is now Mitt Romney's economic adviser.

We typically have a knee-jerk reaction that higher inflation is bad. But what effects would it have if money started losing its value more quickly? Because of the uncertainties of our bad economy, people are saving more of their money instead of spending or investing it in ways that would produce growth. But higher inflation would give more incentive to spend/invest that money, because otherwise it will just sit there losing its value. This would also benefit those who are in debt (at the expense of lenders) because it effectively reduces how much they really owe.

Obviously, you shouldn't make inflation too high because of the clear downsides. But if you assume the view of our economic problems that I recently posted, where high household debt and low spending are keeping us from a recovery, then it does seem that a move towards somewhat higher inflation would have an overall positive effect for the reasons above. It's effectively similar to fiscal stimulus but with 2 advantages: it wouldn't add to our national debt, and it wouldn't require passing a bill through the children in Congress. However, the Fed has shown no intention of using this strategy, even though Bernanke supported the idea in the past as a way for Japan to pull out of its slump in the 90's.