The Presidential season took a big step forward over the weekend as Mitt Romney selected Paul Ryan as his VP choice and Ryan accepted despite vehemently denying he would on CNBC, multiple times. The Ryan news seems to have kicked up the anti Ryan Plan rhetoric.
As a matter of personal opinion I think there needs to be meaningful change in how we tax, borrow, spend and care for the old, sick and poor. There is no plan that can possibly be as bad as the democrats say the Ryan Plan is. However there is no plan that will be immune from unintended consequences or otherwise not negatively impact some segments of the population--I've been saying for years I expect no social security benefits when the time comes.
One interesting observation from my friends on Facebook who comment on such things was that in the early days of Obamacare my friends who support Obama said things like "well Obamacare may not be perfect but we need to try something" but there is no such sentiment from them about the Ryan Plan.
It will be interesting to see whether Ryan turns out to be a good choice. He obviously brings in some segment of the party that is further to the right of Romney but might push away voters closer to the middle than Romney and make it more difficult to bring in Democrats who are disillusioned with Obama.
Unless the Romney campaign figures out a way to distance itself from the Ryan Plan while at the same time keeping the Tea Partiers on board I think Obama will win. The Ryan Plan offers some pretty aggressive ideas that are not populist on the surface as the Obama plan is. I believe the Obama plan sounds less frightening in a populist way than the Ryan Plan--Obama wants to give everything to everyone for free while Ryan admits something will have to give.
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One final thought on the Obama presidency up to this point that I wish would get more attention paid to it. It is well understood that congress has not worked with Obama to get much of anything accomplished. People sympathetic to Obama of course blame the GOP-led congress but it seems to me that effective leadership means figuring out how to move forward such that you lead from the middle, make progress on your own agenda without alienating the other side.
Obama has not succeeded in overcoming this obstacle and his continuing to devote so much face time to blaming other people after almost four years should leave little hope that this will behavior will change and if it does not change then Obama's next four years (if reelected) are likely to be as ineffective as his first four years.
We need to start fixing things whether that is the Ryan Plan or something else and a politically neutered President would not seem to offer much promise.
27 comments:
When you are 3 years into a Presidential term following eight years of a disastrous term of undeclared wars and massive tax cuts, it is only objective reality to point to your predecessor's responsibility for present circumstances. As to Congress, Mitch McConnell said coming in that his mission was to unseat President Obama. The past clearly is a factor in the present and it does not establish a pressing need for a hedge fund manager as President. Rather than not counting on Social Security, I intend to vote and speak for people who will fight to preserve it for me and people like me.
Each party needs to show the American public how the math works and right now they just attack, attack, attack! The danger is where is the independent entity that can assess each party's programs and render an opinion we can trust. As the old joke goes you know a politician is fibbing if their lips are moving!
Obama has not figured out a way to lead. But maybe he just figures, "why bother?"
After all, he's got legions making excuses for his lacklustre (and I'm being generous here with the adjective) record.
For instance, "Congress has never done anything for the guy".
Well, his first two years of office he enjoyed a Democrat controlled House and Senate and the past year and a half a GOP House and Democratic Senate.
On its face, that's a hell of a lot for a President who started his term with a 70% approval rating to work with.
And what he's got to show for it? Tremendous fundraising reach in Hollywood and a mounting body count in Afghanistan.
And these wars that Obama said he'd end? Not ending. But because he's a Democrat the media doesn't devote any space describing these wars as "quagmire" and, of course, the "anti-war" movement dispersed quietly and in an orderly fashion in November 2008.
On a substantive level there is really only one thing anyone needs to know about the so-called Ryan Plan: Regardless of how you regard the social and economic choices it represents, there are no real-world assumptions under which it can do what it says it will do, it cannot work as a simple matter of arithmetic; e.g., http://tinyurl.com/8hvrvg7
People who praise it for one reason or another have either not done the math or want to believe it can work despite the math.
But I'm glad Romney picked Ryan: Not that I expect there will be enough numerate voters able or willing to understand that neither Romney's nor Ryans numbers add up and why they cannot add up this side of fantasyland but because the social choices, the 'vision thing' if you will, is limned more clearly.
I for one welcome a grown up discussion of real issues. The level of this campaign up to now is belittling to anyone with half a brain. Bring it on. Romney has now committed to making his case and he'd best do it or - well, I don't know what.
And reserve me front row seats for the Ryan - Biden debates.
I am glad Romney picked Ryan, too. Now, once we get past the mandatory demagoguery Democrats are so good at, perhaps we can all turn our attention to a serious problem and address it in a serious, adult fashion. We, the baby boom generation via our national governments world-wide, have left the current and future generations of taxpayers a problem the size of a stack of dollar bills from here to the moon and beyond; we have permanently lowered your standard of living through the increased taxes you will pay your entire working lives to at least service the debt that you inherit from us. Obama's plan of increasing taxes on the rich makes a dent in the problem and will probably be part of a real compromise solution, but it is woefully short of solving the problem or even changing the direction of the ever increasing debt curve; and its real purpose, as we all know is to kick the can past November, fooling enough people to get Obama re-elected. Only real cuts, probably across the board, in the near term (this year or next) rather than in the out years (imaginary cuts that never materialize) as politicians like to promise, will resolve the problem. Oh, and the problem will be resolved either by legislators through real fiscal discipline (real increases in taxes for all and real cuts for programs) or the laws of economics through inflation or bankruptcy (defaulting on the government's bonds, already mentioned in last year's debt ceiling debate). Productivity growth, assuming the government will get out of the way and allow the private sector to innovate, something that is not part of our present reality, could mitigate the pain a bit. Welcome to the future. The century of China has arrived.
Stick to investment blogging.
Anon 8:17. Unfortunately, the government's fiscal and monetary policies and investing are linked.
Investing is about adapting: if the Republicans win I'll invest under the assumption deficits, wars and social unrest go up while taxes, social support and infrastructure spending go down; if the Democrats win I'll more or less reverse that. No biggie.
OTOH arguing morality with folks who are not going to change their minds is certainly time wasted (take M.C. Gupta's advice http://tinyurl.com/8z6j47b ) but if an adult conversation is one where real numbers and socioeconomic outcomes are paramount and respected then some of the differences are worth talking about even on an investing blog.
The question of whether that kind of conversation, or any other, should occur on this blog is something our host must decide -- we're all guests here -- but his post limned the mix-up between morality vs. economic outcome(s) supposedly desired, at least by. That basically seems to be a more sustainable national account.
Shorter me: economics is not a morality tale and trying to make it one is playing the devil with solving the economic problem.
NB: Neither Ryan's nor Romney's numbers add up as evidenced by their steadfast refusal to supply sufficient detail for scoring yet these plans remain all the conversational rage, front page news, while budget plans (including the White House's) that actually are detailed and scored as being on track to sustainable national accounts remain relatively obscure. Now why would that be? Are we lacking in seriousness? Adulthood? Or is it something else?
Edit: "...mix-up between morality vs. economic outcome(s) supposedly desired, at least by most folks. That outcome basically seems to be a more sustainable national account.
RW. Not that I accept any of your assertions, but I would really appreciate it if you would educate us on how you logically reached the conclusion that deficits under Romney will assuredly be higher than those $1T+ annual deficits racked up by Obama.
Well, logically I often start with a google search. The 3rd link is here.
Hope that worked, been a while. And let's face facts, much of the deficits we now deal with are attributable to
1. Tax cuts that (hopefully) expire this year
2. unfunded war #1 (which is over)
3. Unfunded war #2 (which isn't over, but we now spend less on)
4. Unfunded Medicare Part D (not fixed, but partially improved by Affordable Care Act)
5. Recession. Gonna take a while to resolve this one.
Sorry it's devolved into politics today, Roger. For those who haven't (and I'd guess that's most commenters today) I'd recommend reading Ryan's plan. I think he's removed the "manifesto" and the social security privatization from the current version, but it's still a crazy read.
Government spending at 4% of GDP. While his running mate wants to "create a military so big no one would dare attack us." Sigh.
Anon 12:24, in cases where your disagreement with my assertion(s) is based on a disagreement about facts I am quite willing to supply those facts along with supporting data and analysis.
In the case of my expectation of larger deficits under Romney -- the $1T number you cite for deficits while Obama was in office is in the right ballpark but of course not all a result of Obama's policies (see http://tinyurl.com/6suqpm3 ) -- the lack of detail in Romney's plan renders detailed analysis fruitless IMO (which is why I don't place too much weight on the link Steven Drone points to although I think it is probably more accurate than not).
So my expectation really rests upon three key observations:
History: Deficit spending and growth in the national debt has accelerated under every Republican administration since Nixon but not under Democratic administrations. As they say, past performance is no guarantee of future results but it does mean something.
National accounting 101 and basic math: The deficit is not simply a number it is a ratio, there is a numerator (spending) and a denominator (revenue). The deficit in the current account grows when either the numerator grows or the denominator shrinks (usually they're both moving of course). Romney and Ryan do not have the same budget plan but they both cut revenue, mainly but not exclusively in terms of taxes.
National accounting and macroeconomics 101: Both the Romney and Ryan plans cut spending to compensate for the loss of revenues but not nearly enough and with mechanisms that are poorly specified. The best one can say after all the hand waving is done is that those mechanisms will either not work at all or they could improve the national account only during a significant economic expansion, one that grows revenues much faster from productivity gains even with lowered taxes.
That kind of growth is nowhere on the horizon, we'll frankly be lucky to avoid another recession, therefore the odds are better than even that the deficit would grow at a faster rate under a Romney/Ryan regime than under an Obama regime.*
*In the case of Obama's budget at least we have a detailed plan to work with that is fully scored and projected to reduce the federal deficit over the next decade; i.e., http://www.whitehouse.gov/omb/budget
Remember too that a Romney/Ryan administration would inherent Obama's last budget just as Obama inherited Dubya's; there is no magic wand that allows any administration to begin from scratch, a zeroed out baseline.
I mostly agree with you random, the only problem is, ryan is #2 on the ticket, not #1.
RW, this is 12:24. Thank you for the response. Food for thought.
if you really misheard, then why the HELL did you label your post as you did????
lighten up, i've been making various types of jokes on every topic since the site started.
According to Wikipedia:
"Jared Bernstein is a Senior Fellow at the Center on Budget and Policy Priorities.[1] From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joseph Biden in the Obama Administration.[2] Bernstein is considered to represent a progressive, pro-labor perspective."
Jared Berstein is the person linked to by RW in support of his position that the Ryan Plan does not add up. Seems to me that Mr. Bernstein has a bias in favor of Obama/Biden and his opinions about the Ryan Plan should not be taken at face value.
JT: If you are through with the ad hominem case perhaps you would care to address what Bernstein actually said?
No?
I presented other links and analyzes in support too, any comment on the substance there?
No?
Well then.
anon 7:40 here. The problem with Bernstein et al is that their math is based on their own assumptions, not what the candidates have actually put forward.
For starters, you might want to read Mathematically Possible in today's WSJ. Note that the article is on the opinion page, where it belongs.
I realize this cuts both ways, not trying to make the case one way or another. Just note that it is important to read the fine print in politics as much as in corporate earnings.
What you're saying isn't really correct. The assumption isn't made because of some bias. The assumption is made because the "tax plan" is purposefully unclear. Yes, if you ask the candidate, "everything is on the table."
However...
1. Tax plans put forward by all candidates of the party favor the wealthy. Surely there is not a question on that.
2. how much is the municipal bond tax exemption worth? Is it big enough? What I read elsewhere is telling me that killing the mortgage interest deduction and the charitable contribution deduction are the only things big enough to achieve the numbers.
I'm sorry, but if the candidate isn't going to provide details, then I'm going to have to assume the candidate's plan won't work.
I think in reality we all know the plan forward:
1. Let the Bush tax cuts expire. If you wanna delay it another year due to the Great Recession, OK
2. Responsible spending cuts - and the defense and TSA budget MUST be on the table. I'm not interested in cutting social spending budgets that are a fractional piece of the budget.
In any case, thanks for the reference to the NYT article, and thanks for the rational discussion, whether I agree with it or not. It's rare to voice opposition to the party waving the flag and not be called a "tax and spend liberal" or "constitution hater" or something like that.
Mark Thoma is a professor of economics and sympathetic to working folks but not attached to a political party so perhaps this column at http://tinyurl.com/9fh9r3p will elicit less suspicion of bias* viz
"The debate on this topic should be welcomed. We need to figure out how much government we desire as a nation, and how to pay for it. But the debate must be based upon facts."
The article does outline most of main issues in our debate here quite clearly with a number of resource links so those who are not locked into an opinion may find it clarifying.
* sorry for getting snappy on the subject of bias but accusations of a prejudice sufficient to misrepresent facts or lie requires supporting evidence beyond reference to a personality, workplace, origin, etc. But I really do apologize and second Steven Drone's approval of the civility displayed during this conversation.
OTOH I agree that it is necessary to read the fine print any time and especially when it comes to politics. For example, the cited WSJ article (http://tinyurl.com/8kjlmey) stating that Romney's tax plan is "Mathematically Possible" actually does not contradict the Tax Policy Center's position; i.e., there is insufficient detail in Romney's plan for scoring but here are some real-world scenarios consistent with what appears to be its main stance and, when scored, it can't work mathematically in any of them.
What the WSJ opinion piece does is tacitly admit the main element of that position and then gets a statement from a Romney economic adviser saying, well yeah we didn't say yes or no on that but here's the fix. The fix being we will cut out more tax deductions including "the exclusion of interest on tax-exempt municipal bonds, and the exclusion of interest on life insurance savings."
See, now when AEI calculates the plan it can work mathematically ...right?
When pigs fly maybe: Never mind that cuts in those deductions would be inconsistent with Romney's stance that savings should be encouraged, can you or anyone else imagine any real-world scenario in which Romney's constituency would allow him to remove those deductions, in effect increasing their taxes?
This topic is probably talked out here but it really does matter so I would encourage everyone to analyze any and all arguments carefully. I'm inclined to doubt either political party is capable of doing what it says it is going to do these days, at least if it is in any way inconsistent with the desires of their major funding sources, but as the Thoma article above points out there really are some things worth arguing about this time around, more than the usual 'culture wars' stuff, and therefore worthy of both clarification and factual accuracy.
Thanks for the talk and to Roger for hosting it.
The topic may be "talked out here," but it certainly will be talked again and again between now and Nov 6; that's the real advantage of the Ryan nomination, get off the petty stuff and get to the real fiscal issues that are killing us. Most politicians really do care (hope that is not just wishful thinking), but they have to get elected before they can do anything; hence the posturing and patronizing their bases (both sides). The real question is whether or not the politicians elected this Nov can put their ideology aside, hit the reset button, and work together (including working with the other side and maybe even compromising) to truly address and begin resolving the fiscal hole we are in. It certainly did not happen over the last 3 1/2 years; we will all make our own decisions of who is responsible for that, who has the best ideas for going forward, and vote accordingly. I think most people think leadership (or lack thereof) starts at the top; but, we will hopefully have a decision come Nov 7 (not always the case with recent elections) and can move forward toward resolution of our truly monumental problem, where all participate and all endure some pain.
I really wonder if our problem is truly "monumental." The same term was tossed about by fiscal chicken littles in the 70's and '80's before the first banking takeover (the "Keating Three" et al.) and before the Clinton/Congress budget balancing. After the latter, we went from deficit/debt concern to worries about surpluses and the potential scarcity of long term bonds in a seeming blink of an eye. . I suspect that with the will to fix things on both sides a five or ten year plan would have things sorted out very fast, even faster if the economy cooperates. Of course, we will also need a suspension of the ideological nonsense now prevalent.
I'm aghast at how a sophisticated investor like yourself can be so simple and naive politically.
Recycling Fox News talking points is not political discourse, it's idiocy.
Obama is not trying to give anything away for free. Obamacare was developed by the Heritage Institute and was the official Republican position, praised by Boehner, McConnell et al. They only decided they didn't like it the day Obama proposed it.
Roger, stay in your area of competency. Your political consciousness is a mass of inaccurate cliches, and on this topic you only embarrass yourself.
From a previous comment: "real increases in taxes for all"
What a great way to completely destroy an already sick economy.
Hey Roger
One can only hope that the Republicans will come to their senses and go forward with the original plan to cut 2 1/2 dollars for every dollar in tax. This was similar to the Reagan plan but he insisted on 3 dollars for every dollar in taxes.
It is my understanding that Obama wanted this but Boehner wouldn't go for it.
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