February 23, 2003


These days we see strange and bizarre signs in the media of a bitter, desperate, and hidden struggle over the making of Bush Administration economic policy.

Fred Barnes, writing in The International Economy, says that Karl Rove and Dick Cheney have been the key players in the Administration's "decision to change direction," to reject the belief that "no further stimulus was needed," and to "change tack and... propose a package of tax cuts to assure a growing economy, notably in 2004." By contrast, U.S. Treasury staff "point out privately" while talking to the G-7 Group that the "package was never about stimulus..." But the G-7 Group's Treasury sources' boss, newly-hatched Treasury Secretary John Snow, tells journalists and other industrial country finance ministers that the tax cut package is intended to boost short-term global growth and is especially needed "in view of the uncertainties over Iraq."

Meanwhile, Cato Institute head William Niskanen claims that Alan Greenspan's "statements [about the inadvisability of widening the deficit] indicate he is leaving the job"--that Greenspan has decided that spreading his view of the long-run folly of Bush Administration fiscal policy is more important than being nominated for another term as Federal Reserve Chairman, and that we are now in a position in which the Federal Reserve Chair ruins his chances for reappointment by simply repeating his long-held and widely-publicized beliefs about the shape of good economic policy.

Trying hard to send a different message about what the Bush Administration attitude toward Alan Greenspan really is, those senior Bush Administration officials who leak to the G-7 Group state emphatically that "the people with power [in the Bush Administration] understand that" failing to reappoint Greenspan "would be suicide for the administration.... [T]he administration knows that [Greenspan] commands more international respect than any other single economic figure." They go on to say that the Bush Administration has already privately offered Greenspan another term as Federal Reserve Chair. And they dismiss reports about "hard-core political GOP operatives... refusing Greenspan another term" as "jokes."

However, those senior White House officials who leak to Fred Barnes say something very different. They say that the firing of former Treasury Secretary Paul O'Neill was the metaphorical putting of a horse's head in Alan Greenspan's bed: "a shot across [his] bow." They tell Barnes that the firing of O'Neill was intended to be:

...bad news for Greenspan, hardly a friend of the Bush family after his tight money policy helped doom the re-election chances of President Bush senior in 1992. White House aides can recite the date--June 2004--without hesitation. That's the deadline for the chairman's reappointment. For Greenspan, the message in the O'Neill canning is that the same awaits him should he jeopardize Bush's re-election prospects by raising interest rates...

Meanwhile, the Washington Post's Dana Milbank puzzles over strange inconsistencies in Bush Administration rhetoric. Vice President Cheney was sent out on January 30 with talking points about how the Bush Administration's tax cuts would ultimately pay for themselves: produce higher revenue in the long run. Did anybody warn him that President Bush's Economic Report of the President would, less than a week later, assert that "it is not true 'that tax cuts pay for themselves with higher output.... Although the economy grows in response to tax reductions, it is unlikely to grow so much that lost tax revenue is completely recovered by the higher level of economic activity'"? Vice Presidents rarely like being made to look like idiots who don't read or fail to understand their briefing materials. Did whoever made up Cheney's talking points want to mousetrap him--to create the impression that he and his staff are completely out of the loop when those whom the G-7 Group sees as the serious "people with power [who] understand" discuss economic policy?

One thing that does seem clear is that there are two battling factions, and each is desperately asserting that it is in full control over the things that really matter. One faction says that firm control over the substance of economic policy is held by serious people who understand political and economic realities: understand the value of the experience and reputation of Alan Greenspan, understand the risks and dangers involved in widening the deficit, understand the trade-offs and the point of balance between short-run policies to boost demand and long-run policies to boost growth. The other faction says that firm control over economic policy is held by people who think it is long past time to pay Greenspan back for allowing unemployment to reach a peak of 7.6% in the summer of 1992, and that only fools worry about whether Bush Administration policies are creating serious problems that subsequent post-2010 administrations will have to try to deal with.

The fact that each faction wants to convince the outside world that it is really in firm control is no surprise. In the Bush Administration (as in the Ottoman Empire during its decline) the perception of power is often the reality of power: who would win the power struggle inside the Topkapi Palace and gain the ear of the Sultan often hinged on whom outsiders believed had already gained the ear of the Sultan. One consequence of our habit of electing unknown southern governors to the Presidency is that only blind luck will give us a President who is more interested in and informed about economic policy (or, for that matter, foreign policy) than a late-Ottoman Sultan. And nobody I have found (save possibly Kevin Hassett of the American Enterprise Institute) believes that this President is profoundly interested in or well-informed about American economic policy. So we have to hope that the internal struggle in the corridors of power produces a good Grand Vizier, one who can gain the confidence of and then manage the Sultan while keeping the substance of policy on the rails.

This is one hell of a way to run a railroad...

Posted by DeLong at February 23, 2003 08:28 PM | TrackBack

Eloquent analysis. Especially the Sultan part.

I have more, but let me think about it.

Posted by: John Thullen on February 23, 2003 09:18 PM

Eloquent analysis. Especially the Sultan part.

I have more, but let me think about it.

Posted by: John Thullen on February 23, 2003 09:19 PM

"One consequence of our habit of electing unknown southern governors to the Presidency is that only blind luck will give us a President who is more interested in and informed about economic policy (or, for that matter, foreign policy) than a late-Ottoman Sultan."

Could you elaborate on the connection you see being unknown southern governors and the disconnect over economic policy? It *sounds* right, but I can't quite say way.

Posted by: Jason McCullough on February 23, 2003 10:54 PM

Bravo. But two questions: Why should we think that a well-known Northern governor (or senator, etc.) would be more informed or care about economic policy than an unknown Southern one? How do find and elect politicians who know anything or care about economic science? I don't know any as of now. Do any of the Democratic presidential candidates have a passion for economics?

Posted by: Bobby on February 24, 2003 12:09 AM

I can't answer Bobby's or Jason's questions. But since I read, and commented on, the post about the Bush Budget ("The Bush Budget Once Again"), I started thinking about the connection between the current administration's domestic and foreign policies, and the somewhat WILD and breakneck feel that they both seem to have.

As a foreigner, I've been trying to quell my instincts to resort (in these circumstances) to labeling as follows: "Southern Republican President = Idiot Redneck". I want the conservatives to KNOW this. I tried, honest.

But for the life of me, I can't rid myself of the suspicion that Dubya came to power with the following ideas:
- that foreign policy is about finding the best person to pick a fight with;
- that domestic policy is about finding some taxes to cut.

I struggle to find any evidence of more sophisticated thinking going on in the man's head. All the spin that's been put on these positions strikes me as utterly after-the-fact. Shit, he wants to fight Saddam, let's make the "moral case for war" as best we can. Shit, he wants to cut taxes, let's find a case with which to defend that action.

Posted by: Michael Harris on February 24, 2003 12:35 AM

There is a transparently simple explanation. It is all part of a diabolically cunning master plan for controlled confusion to confound alien intelligence until the ultimate decisive battle against the forces of evil at home and abroad.

Posted by: Bob Briant on February 24, 2003 01:03 AM

Micheal, after 9/11 the Administration made a conscious decision to (I believe this is a direct quote) "round up all of the bad guys [regimes]" in their effort to respond (Ms. Rice?).

12 years later the Gulf War still lingers. Iraq has not complied with the terms of its surrender. It remains a threat to world energy supplies and continues to sponsor instability in the Middle East via Saddam's monetary and logistical efforts. (That instability supplies much of the fodder for the region's extremism.) Given the opportunity Saddam has shown he will use WMD without a second thought. Since the negative effects in Brussels and Topeka would be great even if Saddam only nuked his Kuwaiti neighbors, ousting Saddam isn't a wild idea.

I wish I didn't think the "wilder" economic policies being outlined aren't being sought for a specific reason as well. Unfortunately, I do not believe the interests of the U.S. overall are any part of that calculus.

Posted by: Stan on February 24, 2003 07:33 AM

Nice analysis.

Let me propose a hypothesis or two in support of the "southern governor = economic screwball" claim. Many southern states are quite poor and are alone unable to pay even for the minimal social services they provide. Those state social serives are largely subsidized by the federal government (more so than the same services in non-southern states, anyway). Because the local government contributes so little to the services of the state in those states, the leaders of those governments have a general insurance policy against gross and idiotic tinkering with state budgets in pursuit of earwig ideology. That is, they can screw up all they want: Their mistakes affect state finance only a little, and therefore they pay only a small political cost for the harms done.

When and if one of these governors makes it to federal office, she or he will have little experience in or concern with the difficult process of devising economic policy. They've "grown up" seeing their tinkering carrying few costs. The expect the same to continue at the federal level.

Alternatively, the reason for southern governor incompetence could be purely cultural. The south has never overcome the cultural legacy of slavery. Southern governors may continue to see themselves as a part of or subservient to a wealthy patrician class and to define themselves against the middle or lower class interests of the states. In the southern states economic policy is simply a matter of bolstering local connections through direct or indirect forms of graft. (What scraps the middle and lower classes get is from leaders who do not see a conflict between the interests of their patrician allies and these other groups.) When elected to federal office, this practice is continued, economic policy being seen as a means of carrying out the bolstering of patrician connections writ large.

There, two hypotheses, ripe for the savaging.

Posted by: Robert Tennyson on February 24, 2003 07:49 AM

Michael Harris says Bush only has two policies: Finding easy fights and cutting taxes. This shows a complete lack of awareness of Bush policies. Bush has also shown an interest in the systematic rollback of environmental protections, the rollback of civil liberties via the Ashcroft Justice Department, the protection of corporate crooks, whether on Wall Street or in energy trading rooms, and the long-term implementation of extremely conservative ideologues in our courts.

To expand on Robert's hypothesis that Southern governors are sheltered from bad economic policies I would add that economics appear to be less important in southern elections than in the rest of the country. Religion and a corrupted form of states rights play a huge role. Monied-interests are able to add bad economic policies that help their specific interests into a political spectrum that is paying less attention. Net subsidies from both coasts then help the South stay afloat financially.

So if the South is pitted against the Northeast and California, why does the rest of the country vote with the South?

Posted by: Dan on February 24, 2003 08:55 AM

the germans, the french, the belgians and now the southerners, gentlemen, please.

Posted by: Hans Suter on February 24, 2003 09:31 AM

In answer to Dan's question about why other states vote with the south I recommend this lovely map of the United States. It shows which Bush-voting states suck money from the Federal government and which are net contributors.


Of course, pollkatz has a lot of other interesting Bush approval graphs including this masterpiece of consolidated polling:


Posted by: Dave Roberts on February 24, 2003 09:39 AM

The bashing of southern governors here is unjustified. We have had three such presidents lately: Carter, Clinton, and Bush. I don't think Carter or Clinton "defined themselves against the middle and lower class interests," and Bush, ranch, pickup and all, hardly gets his ideas, such as they are, from deep southern roots.

Nor do I think that it is fair to say that southern governors are less informed about economic policy than other politicians. Was Bush Sr., or Reagan, superior to Clinton in this respect?

Posted by: Bernard Yomtov on February 24, 2003 09:57 AM

The Grand Vizier's Trick: Subdue Terror Through Economic Growth

A big part of winning the war on terrorism is convincing potential terrorist recruits and supporters that their interests are being served by America and her allies (for details, see Hernando De Soto's The Other Path -- The Economic Answer to Terrorism). People are at their most convinced when they are psychologically addicted. Psychological addiction takes shape in the part of the brain called the nucleus accumbens, which is fired by the prospects of professional success, romance and laughs (PSRL). Increasing PSRL will be the consuming focus of credibly sustainable providers of lifelong learning and career services (LLCS). In particular, these providers will race to provide financing, as most customers will need loans in order to consume their initial bundle of LLCS. These loan programs will, in time, democratize access to LLCS -- and hence, expand prospects of PSRL to all potential terrorist recruits and supporters. So conspicuously turbocharging maturation of the LLCS market should be a big part of the war on terrorism.

The LLCS market is also expected to be worth hundreds of trillions of dollars in the coming decades. So turbocharging maturation of the LLCS market will also deliver substantial economic growth.

More on this at www.opportunityservices.com/introduction.html



Frank Ruscica

The Opportunity Services Group :: Have Fun to Get Ready

Posted by: Frank Ruscica on February 24, 2003 10:14 AM

My reading was that two different things were be co-mingled. 1) We have tended to elect unknown, southern governors, and 2) that unknowns have economic policies that are unknown(and given the adherence to politically-unwise, but economically-sound policies, unlikely to be good). The corallary is that politicians whose economic policies are known tend not to be the ones we have been electing lately.

Posted by: theCoach on February 24, 2003 10:21 AM

I don't think Carter or Clinton "defined themselves against the middle and lower class interests

I don't know about Carter, but its something of a miracle that the good guys won out with Clinton. Go read Krugman's stuff on policy entrepreneurs.

Posted by: Jason McCullough on February 24, 2003 10:33 AM

I'd like to return to Bobby's second question: How do we promote politicians that are knowledgeable about economics? I think this is a crucial question for the health of our government, but one we don't attend to much amid the steady flow of policy debacles. First off, I think the criteria should be a bit broader: we should look for politicians who 1) care about the important details of policy, 2) have a decent capacity for critical thinking, and 3) will listen to and utilize people with subject-area expertise. These attributes help to foster good policy across the board, not just in economic matters (though the problem may be most acute there).

So why don't we have leaders with these qualities? Well, for one thing, they just don't seem to be the most essential attributes needed for success in national politics, particularly for initial political success. Still, if politicians are judged on their performance, it would seem to be in their self-interest to work on these attributes. But outside of the presidency itself there isn't much accountability for bad policy outcomes, and many times the factors determining policy success, such as prevailing economic conditions, are just outside the politician's control. So maybe the incentive isn't so strong after all. And maybe these attributes reflect more fundamental elements of personality not commonly found or nurtured among those with a political bent.

At the same time, our system is not conducive to time-consuming private deliberation and open-minded consultation. And if voters aren't doing their homework, why should the people they elect make the effort? Of course they should in a moral sense, but the Jeffersonian ideal was not to trust in the moral superiority of our leaders. It's hard to blame the general public though, given the abysmal quality of media coverage, particularly of economic issues. One can argue that the media are only following the dictates of the marketplace, but most media elites would claim to have a higher purpose. If so, then they should have at least a rudimentary understanding of the issues they cover, which at least in the area of ecoomic policy it is clear most do not. This seems to be true of opinion leaders more generally, and seems to reflect the tendency noted by Krugman for people who make their living with words to hate math.

Yes there is good economic analysis out there if you look for it, but that's just not good enough. And leaders can't be given a pass on an issue simply because there are pesky numbers involved.

I also place a large measure of blame on economists, among whom involvement in policy discussions is often looked down upon. Who else will educate the public, politicians, and opinion leaders about economics if not economists? That is where I think an organized effort needs to be made.

Of course, you economists may tell me that even if politicians were fully informed it would not change their political calculations, but it seems to me that if the media and the public were also well informed then the political calculations would change.

Sorry for the long post--I just think this question deserves some serious attention.

Posted by: crumudgeon on February 24, 2003 10:51 AM

Thanks for the pollkatz links. One thing I found interesting is that the map shows Florida as a Gore state. I'm not sure we have the time or the energy to get into that argument.

Posted by: Dan on February 24, 2003 10:58 AM

I'd have to say that Bernard is right, insofar as Carter is concerned -- he is an anomoly. But he came to the fore during that period in the seventies when Southern politics was splintered between the southern strategy Republicans and the Dixiecrats. Somewhere in there, a civic-minded Democrat could make his way into the party ranks and expect the votes of those Dixiecrats who had not yet gathered the nerve to leave. Once the old Dixiecrats had (more or less) shifted parties, this was no longer possible; the need to court the (old or new) southern patricians returned. Here, we can consider the two Bill Clintons: The first was a liberal governor crushed after one term. The second, an old-boy politican who (perhaps) aided the middle and lower classes in the intersticies of a generally patrician-oriented political strategy.

Posted by: Robert Tennyson on February 24, 2003 11:00 AM

I don't really see any difference between the Southern electoral college benefits of Carter and Clinton.

Northeastern or Midwestern liberals don't run well in Presidential elections in the South. It doesn't matter which party they're from, although it's obvious most of them are in the Democratic Party. And because of demographic shifts, the South has become more important in national elections over the past 50-60 years. So it's hard to win a national election with a wipe-out in the South. That's what created problems for Dukakis and Mondale, though neither were strong candidates.

Generally speaking, Republicans run well in the South because their conservative politics gets the white majority votes - so it makes sense for Republicans to run candidates from OUTSIDE the South, just as it makes sense for Democrats to run candidates with Southern roots.

Posted by: Anarchus on February 24, 2003 11:45 AM

The unknown southern governor comment was used in the closing argument of a debate at the folloing link. The argument is that unknown governors are a blank slate that people can project their hopes onto but are not the best the parties can offer. Clinton Carter and Bush are included in this group but a case can be made to include Reagan.


"This year we seem to have a Republican candidate with no weaknesses--the perfect president-to-be. I've talked about a flawed--but I think an extremely well-qualified--candidate with a long track record full of things to like and dislike. How is it that the Republican candidate has no weaknesses? Because he is an unknown governor--someone without significant relevant experience, someone on whom everyone can project all their hopes as one projects them onto a blank screen. We have elected two unknown governors in the recent past. And I don't think anyone here would say that either Jimmy Carter or Bill Clinton has lived up to anyone's hopes. I don't think anyone today would say that either Jimmy Carter or Bill Clinton was the best that the Democratic Party had to offer.

If you believe the polls George Bush the Second has a lead of between one and six percentage points, and we are on the verge of electing another unknown southern governor. What will his flaws turn out to be? In context it's pretty scary. I don't think we should encourage this pattern: I very much hope that George Bush the Second is the last unknown governor that either party nominates. And I think the only way to ensure this is to convince both parties' establishments that nominating unknown southern governors is a bad idea--not only because of the quality of governance we get, but also because we can make it no longer be a road to the White House.

Posted by: bakho on February 24, 2003 12:30 PM

>>So we have to hope that the internal struggle in the corridors of power produces a good Grand Vizier, one who can gain the confidence of and then manage the Sultan while keeping the substance of policy on the rails.>Could you elaborate on the connection you see being unknown southern governors and the disconnect over economic policy? It *sounds* right, but I can't quite say way.<<

My take: the South simply hasn't understood the Civil War (which is pretty obvious when one reads Southern conservative accounts of it) the way we're happy Germans have taken their WWII defeat. Hence, a tremendous amount of resentment towards the Federal Government that was "imposed" upon them when the war ended.

Problem is: economic policy is formulated mostly at the federal level. Had we a majority of Republican governors, we would probably have seen a shift towards decentralized state-level S-timulatory policies. But that's not going to happen either, all the contrary.

As far as the link between foreign policy and and the President's southernness is concerned... Hmmm... Well besides a long tradition of white supremacist theories, which a Southern president perhaps feels compelled to apply to the world at large... Well, then in this specific case, I am tempted to think about Texan oil interests, but since this is a national-level tabou, well...

Posted by: Jean-Philippe Stijns on February 24, 2003 12:36 PM

Robert Tennyson rightly points out that Southern Democrats are very different now than in Carter's day. It is worth adding that Southern Republicans are now quite different, too. The Coach seems to have it right that we are (Brad is) conflating two different sets of facts into a single category of politicians. We have an extraordinarily "Southern" political structure right now, with Dennis Hastert the only real relief. DeLay has pretty much stood up and told the world that Hastert can be effective as long as he agrees with DeLay. So there is something special about Southerners, but it may have more to do with a common view of how economics fits into politics than actual ignorance - politics is about winning, about setting (Southern) things right after you win, not about optimal policies. If Southerners are to blame, it isn't just the presidential ones.

So the problem isn't Southern governors. The problem is Southerners (see above) and governors. Bill Clinton isn't "Southern" in the way that Carter was. Reagan wasn't Southern at all. But we sure do like to elect governors to the White House. Governors, to the extent they stick to their knitting while in that office, have no real impact on foreign policy and don't get to participate in macroeconomic policy. That is not very thorough training for the presidency.

One post asked whether Senators would be better prepared. In the sense that they are familiar with the issues, yes. Trouble is, they may never have had anything very large to administer and, if Gore is any example, they tend to get wrapped up in jargon that the general public does not find compelling.

Another post asks how we get the public to stop electing the economically ignorant. That is probably the wrong question. The public cannot differentiate between the economically ignorant (or economic snake-oil salesman) and the well-informed (or well-intentioned). Hubbard couldn't have been completely out of his tree with his "Rubinomics" attack - he is smack in the middle of the nation's wiliest political machine. The form his attack took was stupid, but Hubbard knows very well that the public can be sold just about anything, as long as "it's your money" is part of the sales pitch. Most of the public hears more about economics from politicians than from economists, I'd wager. That may be all you need to know about why we elect the ignorant.

Posted by: K Harris on February 24, 2003 12:37 PM

Frankly, I do not think we are paying enough attention to the idea that the Administration wishes to change Social Security and Medicare in fundamental ways.

February 24, 2003

Bush Proposes Major Changes in Medicare and Medicaid

President Bush has begun one of the most ambitious efforts to reinvent Medicare and Medicaid since the programs were created 38 years ago. Combined with his earlier plan for Social Security, the proposals offer a fundamentally different vision of social welfare policy, many experts say.

Mr. Bush's proposals for Medicare and Medicaid, taking shape in recent weeks, would transform these pillars of the Great Society and their guarantee of health benefits to the elderly, disabled and poor.

States would have far more power to determine who receives what benefits in the Medicaid program, which covers 45 million low-income Americans. The elderly would rely more on private health plans, and less on the government, for their health benefits under Medicare, which covers 40 million elderly and disabled people.

The administration's vision for Medicare and Social Security moves away from the notion that everyone should be in the same government-managed system with the same benefits. It promises individuals more choices, including the option of picking a private health plan or investing some of their Social Security taxes in the stock market.

But critics say these proposals would also mean less security, fewer guaranteed benefits and more financial risk for beneficiaries.

The magnitude of the Bush proposals is only gradually dawning on members of Congress. Unlike President Bill Clinton and former Speaker Newt Gingrich, Mr. Bush has not boasted about the boldness of his vision for these programs, perhaps because he is mindful of the voters' anxiety about major changes in health care....

Posted by: anne on February 24, 2003 12:50 PM

February 23, 2003

Are the Poor Suffering From Hunger Anymore?

The Bush administration and Congress are giving almost every poverty program the once-over, pushing changes that will affect everything from Medicaid to housing assistance. But two programs are receiving unexpected scrutiny: food stamps and subsidized school lunches.

Advocates for revamping those programs argue that both of them too often serve people who don't need help, and that even among those who do need help, food stamps can encourage dependency.

In tough economic times, limiting food aid could be a politically unpopular move. Americans typically do not regard free food as a form of welfare, and other attempts to limit it have met with mixed reactions....

Posted by: anne on February 24, 2003 12:54 PM

"We are feeding the poor as if they are starving, when anyone can see that the real problems for them, like other Americans, is expanding girth," said Douglas J. Besharov, director of the American Enterprise Institute's Project on Social and Individual Responsibility."


Posted by: anne on February 24, 2003 12:59 PM

Under the peculiar institution of Texas constitutional design, the Governor there is more figurehead than fountainhead.

Posted by: RonK, Seattle on February 24, 2003 01:17 PM

Jean-Philippe Stijns writes:

"Problem is: economic policy is formulated mostly at the federal level. Had we a majority of Republican governors, we would probably have seen a shift towards decentralized state-level S-timulatory policies. But that's not going to happen either, all the contrary."

WHAT? WHAT? We do have a majority of Republican governors, 26, which is down from a recent high of 32 in 1998. Also, a majority of state legislatures are Republican (22 to 16 with 12 split).

States, be they Republican or Democrat controlled, have systematically slashed taxes while continuing to increase spending. Today, 45 of the 50 states are facing budget shortfalls. Cutting state taxes certainly has not resulted in a supply side boom as the deficits and falling tax receipts suggest. Additionally, the taxes that were reduced increased the regressive level of taxation within the states. On average the lowest 20% of state populations pay more than twice the level of taxes as the top 1%.

Here's a couple sites that might help with general information and are interesting analysis.




Posted by: Dakota on February 24, 2003 01:51 PM

Crumudgeon writes: "It's hard to blame the general public though, given the abysmal quality of media coverage, particularly of economic issues."

Interesting, but I think the Jeffersonian assumption that public opinion will be well-informed on complex issues is unrealistic. Frankly, we don't have the time to investigate all these issues and make informed decisions. That's why we elect representatives, so that they can do this for us.

For a detailed discussion of the limitations of public opinion and the implications for democracy, see Walter Lippmann's book "Public Opinion" (1921).

Posted by: Russil Wvong on February 24, 2003 01:56 PM

Thanks for the summary, Bakho.


Look at Table 15.3; the share of GDP spent by local and state governments didn't really change in the 1990s. It peaked at 10% in 1992, slid on down to 9.4% in 1999, increased by .1% in 2000, and then increased by .3% in 2001.

Receipts, in Table 15.1; did pretty much the same thing; 9.8% in 1992 and 9.8% in 2001.

Taxes went up from 9.4% to 10% from 90-93, and spending by pretty much the same amount.

If the only question is "why are the governments in deficit," then I'm afraid the answer lies entirely in 2002 (recession, I'd guess); nothing happened in 2001, that's for sure.

Posted by: Jason McCullough on February 24, 2003 02:04 PM

What a bunch of crap this thread has become.

You have three data points. Carter, is an "anomoly", Clinton a "miracle", and Bush more western than southern. On to these few points are projected ad hominems ad nauseum.

Posted by: lol on February 24, 2003 02:16 PM

Russil, you have hit the nail on the head. Information costs are too high for most people to be fully informed on most policy choices. That makes it pretty difficult when many policy choices are not intuitive. For proof, ask a couple of Grandmas to explain why free trade is supposed to benefit them. "Its your money" is the perfect example of how ignorance is not bliss.

Posted by: Stan on February 24, 2003 02:27 PM

"But for the life of me, I can't rid myself of the suspicion that Dubya came to power with the following ideas:

- that foreign policy is about finding the best person to pick a fight with;"

Why then, did the U.S. not send troops to Afghanistan until 1 year and 10 months--not to mention 3000 civilian deaths--into G.W. Bush's presidency? And why did the U.S. not mass troops in Iraq until

"- that domestic policy is about finding some taxes to cut."

And that makes him an "idiot redneck"? Sort of like J.F. Kennedy?

From JFK's January 24, 1963 address to Congress: "As I have repeatedly emphasized, our choice today is not between a tax cut and a balanced budget. Our choice is between chronic deficits resulting from chronic slack, on the one hand, and transitional deficits temporarily enlarged by tax revision designed to promote full employment and thus make possible an ultimately balanced budget." Lest members of Congress failed to get the point: "I repeat: our practical choice is not between a tax-cut deficit and budgetary surplus. It is between two kinds of deficits: a chronic deficit of inertia, as the unwanted result of inadequate revenues and a restricted economy; or a temporary deficit of transition, resulting from a tax cut designed to boost the economy, increase tax revenues, and achieve--and I believe this can be done--a budget surplus."

"Shit, he wants to fight Saddam,..."

You mean, as opposed to letting Saddam develop weapons that can be used by himself or terrorists, to kill thousands or millions of civilians? (While he also kills thousands or millions of his own people?)

It seems to me that someone wanting to "fight"...or even to "kill"...Saddam Hussein doesn't give even the slightest indication that a person is either an "idiot" or a "redneck." The world would probably be a much better place if someone had put a bullet in Saddam Hussein's brain 20 years ago. It probable that more than 100,000---if not 1 million--Kurd and Shiite Iraqi men, women, and children would be alive today, if someone had. Not to mention Iranian and Kuwaiti men, women, and children.

Mark Bahner

P.S. Though I don't think it makes him an "idiot redneck" to go to war against the Iraqi government without a Congressional declaration of war, I do think it makes Bush a violator of the Consitution (just like Clinton, G.H.W. Bush, Reagan, etc.) That's wrong, and he shouldn't do it.

Posted by: Mark Bahner on February 24, 2003 02:46 PM

Russell, I agree with you about the Jeffersonian ideal. In trying to throw a bunch of ideas out there, I obviously misstated my point. I don't expect anyone to have an informed opinion about the gamut of policy issues our leaders face, but I think it is a necessity that they be able to sniff out the snake-oil salesmen a good portion of the time. Otherwise, the situation is hopeless. But I think people can figure these things out, if they are getting good information. No, my grandmother doesn't understand free trade, but she does understand the basic fiscal situation.

My point (well, my point with respect to economic policy, anyway) was that I believe too many opinion leaders are ignorant of economic issues, and that includes columnists and talking heads who view economics as a matter of simple ideology and thus within their area of expertise. There are too few Paul Krugmans and Brad DeLongs out there. I think the economics profession has a duty to try to improve the level of discourse. Of course there are some huge areas of contention within the field, but I think we tend to overlook the tremendous amount of basic, generally-accepted knowledge that can be disseminated.

If the effort is futile, well, what other options are there? Using the Fed as a model for other policy areas? That doesn't hold much appeal for me, but I would love to hear suggestions.

Posted by: crumudgeon on February 24, 2003 02:54 PM

Mark Bahner uses the JFK tax reduction of forty years ago to support the current tax cut proposals. Yes Mark, JFK cut taxes to stimulate the economy and you clearly want to follow his lead. What you don't say is that JFK cut the top tax rate to 70%. Are you saying you support a 70% top tax rate?

"I knew John Kennedy. John Kennedy was a friend of mine. . . "

Posted by: Dan on February 24, 2003 03:24 PM

\i{"Michael Harris says Bush only has two policies: Finding easy fights and cutting taxes. This shows a complete lack of awareness of Bush policies."}

I'm a foreigner. Sue me ;-)

Actually, I think of the other things you mention less as actual \i{policies}, more as a winding back of things GWB just instinctively doesn't like or respect that much.

Mark B, your response smacks of the post-hoc desperation that I'd noticed most hawks adopting. One year and 10 months? His restraint is impressive. In defending the gung-ho let's get Saddam stance, you fail to address what made him a clear and present danger in the last 6 months compared to the previous 1 year, 10 months etc etc. Or why HE is the greatest threat to Western security, and why everywhere else is geting the kid gloves treatment. Why HIM, and why NOW?

As for defending Dubya on the basis of his curent stance involving "a temporary deficit of transition, resulting from a tax cut designed to boost the economy", there's a He's-no-Jack-Kennedy quote just waiting to be thrown at you. But I'm a foreigner and a gentleman, so I'll let someone else do my dirty work.

Posted by: Michael Harris on February 24, 2003 03:53 PM

I keep forgetting not to use inappropriate formatting codes!

Here's some words from Camille Paglia, interviewed in Salon.
Q: Do you think the Bush administration's focus on Saddam is a diversion from this global campaign against terrorism?

A: The real diversion is from other global hot spots. If we get bogged down in Iraq, China might think it's a good moment to retake Taiwan. Saddam is an amoral thug, but he's not the principal danger to American security. The real problem is a shadowy, international network of young, radical Islamic men. And we have played right into their hands since last summer by coming across as a bullying world power, threatening war with Iraq and acting completely callous to the resulting human carnage and death of innocent civilians. What privileges American over Iraqi lives? Why does the chance of American casualties through random terrorism outweigh the certain reality of Iraqi devastation in a crushing invasion?

... I tried to be open-minded about Bush's case for war. I waited for him to present the evidence for an imminent threat to the U.S. But months passed, and they hemmed and hawed. It was words, words, words. Do they think the American people are fools? That we can't be trusted to understand a casus belli? There was a shiftiness, a sleight of hand, a kind of blustery bravado and smugness: "Well, we know, but we just can't tell you, because it would compromise national security." Give me a break -- we're about to go to war and kill or maim thousands of innocent people. Americans will die too. And they couldn't lay all their cards on the table?

Posted by: Michael Harris on February 24, 2003 03:57 PM

>>WHAT? WHAT? We do have a majority of Republican governors, 26, which is down from a recent high of 32 in 1998. Also, a majority of state legislatures are Republican (22 to 16 with 12 split).<<

Nice catch, my apologies. I confused net wins in gubernatorial races with a majority of governors. (Yet aren't we talking about 24 Dem vs. 26 Rep? What more am I missing?)

But then, the President's reluctance to help the States is even more puzzling to me... Non comprendo. I mean, we're trying to boost short-term aggregate demand, right?

Posted by: Jean-Philippe Stijns on February 24, 2003 04:03 PM

As to the extent that Bush can be termed "a Southern governor", read this review in the Texas Observer of Michael Lind's recent book, "Made in Texas: George Bush and the Southern takeover of American Politics": http://www.texasobserver.org/showArticle.asp?ArticleID=1257
'Nuff said.

Posted by: John Bergot on February 24, 2003 04:29 PM

Michael, (in response to you and Camille) why does the President need to show an imminent threat to the U.S. in order to justify military action against Saddam? Unlike "the other hot spots", Iraq has been violating UN Security Council resolutions for over 12 years. Iraq's behavior in this respect justified military action many years ago. It is Iraq's lack of compliance with its terms of surrender that justifies military action against it. One hour of extra time to prove its compliance was more than Iraq deserved. Justified military action has been withheld under the premiss that Saddam could be contained.

9/11 changed the calculus on Saddam's containment. Bin Laden showed that Saddam is a much greater threat than previously thought. He does not need to develop a long range delivery system for his WMD arsenal because there "is a shadowy, international network of young, radical Islamic men" more than capable of fulfilling his needs. In light of 9/11, the fact that Saddam invaded his neighbors, gassed his people, and likely still is seeking (and holding) WMD (that there is every reason to believe he would use) suggests that containment is no longer a viable strategy. Saddam must be disarmed sooner rather than later.

Bytheway, of course there is an imminent and direct threat to the U.S.! Much of the world's petroleum resources are located in the gulf. Even if none of it was purchased directly by the U.S. or Europe an interruption of supply would have catastrophic effects on economic activity in those two regions. Severe disruptions in Saudi, Kuwaiti, and Iraqi supply would have major economic repercussions around the globe. If Saddam again attacks his neighbors while holding nuclear WMD the economic impact should be expected to be huge.

The real question is: When Saddam is already in breach of his disarmament obligations, why should the world give him more time to acheive a greater level of threat?

Posted by: Stan on February 25, 2003 08:05 AM

As for this observation: "Why does the chance of American casualties through random terrorism outweigh the certain reality of Iraqi devastation in a crushing invasion?"

1. It's not "random" terrorism, it's the intentional targeting of U.S. civilians with the intent to maim and kill,
2. There's already "certain devastion" in Iraq taking place because of Saddam's tyranny against his own people and because of the UN sanctions (which were a bad idea from the start),
3. The objective of the invasion will be to crush Saddam and the Republican Guard, not to crush the Iraqi people or the nation's infrastructure, and
4. It's the job of the U.S. government to protect its citizens from attack, else what's a national government good for?

Last, the loose, shadowy network of Islamic thugs is part of the problem, but a the states that offer support to the shadowy network are a larger part of the problem. The Taliban and Saddam Hussein are hardly the only two supporters of the network, but they are supporters and their demise will send a signal to the rest of the STATE SPONSORS of terror - and will interdict the flow of supplies and money from the radical mullahs in Iran to their Hezbollah proxies in Lebanon.

It's only a start, not an ending . . . . .

Posted by: Anarchus on February 25, 2003 09:11 AM

3. The objective of the invasion will be to crush Saddam and the Republican Guard, not to crush the Iraqi people or the nation's infrastructure,

The Iraqi people is utterly irrelevant. Neither you nor your governement care about them.


Posted by: Antoni Jaume on February 25, 2003 12:12 PM

Antoni, in your self-righteous attempt to show the most respect for Iraqi lives you are very far from the truth. Is Saddam somehow taking great pains to protect Iraqi lives? Are the lives of average Iraqis somehow the major concern of the states opposing action? No in both cases.

During the course of war the U.S. will go to great pains to avoid loss of civilian lives. Admittedly this is not entirely for altruistic reasons at a political level, but the popular U.S. and world opinion that drives it is entirely counter to your comment.

Posted by: Stan on February 25, 2003 01:18 PM

No, I do not attempt to show the least respect to the Iraqi people.It is simply that I can not stand the pretention that it is a concern in US policy. Because if Bush US government cared about people, they would have done quite other actions previously , amongst them a greater help to Karzai Afghan government to restablish the civil foundation of the society in Afghanistan. At leat that could be advanced as a proof of character.


Posted by: Antoni Jaume on February 25, 2003 01:45 PM

No War in Iraq ! Finish Afghanistan First !

OK, time to start with the scary stuff. This quote is from www.afghan-info.com ... there is a bit of slant in it, but it's largely true.
The most powerful warlord during the Mujaheddin's battle against Kabul regime. The most destructive and antisocial element during the years 1970-1975. He carried out a number of terrorists acts within territory of Afghanistan during the Mohammad Daoud presidency and following regimes . Gollbuddin Attended two years of engineering faculty in Kabul University and involved in politics in late 1970 and became member of "Ikhwan-e Muslimin" (Muslims' Brothers) movement in 1970. He received most of military and financial aides from the United States government and CIA during the Afghan War against Kabul regime.
After that Mujaheddin became to the power of Kabul regime, Gollbuddin has continued fighting against Raban's government and his Defense Minister Ahmad Shah Masoud.

Now, he is against the United States and says that " US is the main enemy of Islam". By the American press consideration he has close tie with International Terrorist Organizations. He was elected Primer Minister by the government of Rabani in late 1995.

This man is now Not On Our Side. Unlike the Arabs and miscellaneous grab-bags of troops that were Al-Qaeda, this guy is a Genuine Afghan War Hero (and War Criminal, but Afghanistans that kind of place, capiche).

I repeat He Is Not On Our Side. He fought the Afghan central government in the post-Soviet era, flattening much of Kabul in the process ... and thats when Massoud was running the defence. Trust me, there are very few people who could match Massoud in defence in Afghanistan (Massoud is dead, btw. Couple of journos from Al-Qaeda, with a camera that had a couple of after-market additions).

We almost had it in the palms of our hands. One hundred lousy million bucks could have given us the American University in Kabul, and had a whole bunch of Afghans whose instinctive reaction to "CIA" is to say "CIA put my cousin through university. Now he is an engineer". Geez, I know the CIA has this thing about human assets being messy and hard to control ... but we coulda shoulda woulda got a whole bunch of non-white good Muslims who are loyal enough to the USA (ie hate al-Qaeda enough) to be the assets that get infiltrated into the shadowy networks.

Instead, we get a war in Iraq, a war that is going to be "won" in short order, and then chew up a whole bunch of time, money, attention and effort to keep the place stable and running (and Kurdistan looks as ugly as ever. Postwar Iraq will be a representitive government - Franks will represent the Iraqis, and Turkey will represent the Kurds. Iran is already talking about how it would be shocked, shocked, if the Iraqui Kurds got the weapons of anti-Saddam exiles in Iran to fight a Turkish Occupation).

Basically, this war against Al Qaeda isnt a conventional war. But unconventional wars are hard and messy, take a long time, and never have a moment to say "We've won".

So we'll have a conventional war instead.

The wrong war, in the wrong place, at the wrong time.

Ian Whitchurch

Posted by: Ian Whitchurch on February 25, 2003 02:39 PM

Dear Stan

Your argument that "9/11 changed the calculus on Saddam's containment" doesn't wash with me. I expect we won't change each other's mind. But the specious linking of radical Islamic terrorists with Saddam's regime seems no less specious now to me than it did when it was first used as a desperate justification for aggression against Iraq.

The post-9/11 terror attacks have been at Western targets in developing countries, indicating that one effect of successful terrorism has been to make further successful terrorism much more difficult to achieve. Add to that that Saddam's main interest seems to be in preserving his hold on power and his lifestyle rather than fighting a holy jihad, and add to THAT that Saddam's regime is not closely linked to "Islamic fundamentalism" and you have a pretty weak argument for saying the calculus of containment has changed so much we need to fight a war!

Posted by: Michael Harris on February 26, 2003 03:45 PM
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