Brad DeLong's Semi-Daily Journal: A Weblog: Max Sawicky Writes About George W. Bush and His "Disownership Society"

September 15, 2004

Max Sawicky Writes About George W. Bush and His "Disownership Society"

Yet another shrill critic of the Bush administration: Max Sawicky:

MaxSpeak, You Listen!: THE ECONOMY AND THE DEFICIT:
AN UPDATE: New report from the Congressional Budget Office on the "cyclically-adjusted and standardized budget measures."... [F]or Fiscal 2002-2004 inclusive, total deficits are projected at $955 billion... $204 billion [of which is due] to the crummy economy. For FY2004, the projected deficit is $422 billion, of which just $47 billion is due to the business cycle....

Homeland security is not a big piece of the puzzle. It's about $36 billion, in a $2.3 trillion budget. Defense by contrast is huge. One could justify borrowing for unforeseen defense and security contingencies, but once they are foreseen there is no such excuse. So Bush's excuses for the deficit -- the economy, the war on terror, and Iraq -- don't wash.

Given the sad progress of the economy since the official end of the recession in 2001, in and of themselves the 02-04 deficit numbers do not reflect bad policy. You need deficits to juice employment growth. The wonder is in how weak the effect has been, which points to the inadequacy of the composition of the deficits -- the reliance on tax cuts, and the targeting of those cuts to higher-income persons.... [T]he tax side [is] doing all the work of "automatic stabilization." This is a critical shortcoming, since even if politicians endeavor to respond to the recession, it tends to be later than optimal.

The most useful ways to make spending more sensitive to the business cycle (go up in bad times, down in good), would be through unemployment benefits, public assistance, and revenue sharing for state and local governments. The first was not well-oiled over the past three years. "Reformed" welfare... is not responsive to recession conditions.... The Federal government, Republicans in particular, did not take the economic slowdown seriously, except as an opportunity to enrich themselves and their donors.... Failure to alleviate recession destroys family wealth. Call it the Disownership Society.

Posted by DeLong at September 15, 2004 12:47 PM | TrackBack

Comments

Have you read about the trade deficit?
it's widened to 5.7% of GDP.
I reckon this and the budget deficit will likely cause massive inflation in a few years in order to devalue the debt.

Posted by: Andrew McManama at September 15, 2004 01:43 PM

http://www.nytimes.com/2004/09/14/health/policy/14conv.html?

A Doctor Puts the Drug Industry Under a Microscope
By CLAUDIA DREIFUS

WASHINGTON - In many ways, Dr. Marcia Angell is an unlikely muckraker. A pathologist by training, she is the former editor in chief of The New England Journal of Medicine. She is also a senior lecturer at Harvard Medical School.

But just days short of her 65th birthday and her first Social Security check, Dr. Angell is taking on the American pharmaceutical industry with a new book, "The Truth About the Drug Companies: How They Deceive Us and What to Do About It." ...

Q. Why produce an investigative book on the pharmaceutical industry?

A. Because everyone knows that prescription drug prices are sky-high. Americans pay far more for our drugs than people in other countries. The drug companies say, "We need high prices to cover our staggering research and development costs, and if you do anything to squeeze our prices, it will stifle innovation." The book was written to examine that argument.

Q. The pharmaceutical companies say their prices are steep because they spend somewhere in the neighborhood of a billion dollars per drug bringing them to market. Did your research support this assertion?

A. A group of economists - mainly funded by the drug companies - came up with the widely quoted figure on this. They said that it cost $802 million to bring a drug out. They, however, were looking at the most expensive drugs to develop: new chemical compounds developed entirely in house. Most new drugs aren't that at all. Most are what people call "me too" drugs, which are slight variations of older drugs already being sold.

According to these economists, the real cost of bringing out those rare original drugs is actually around $403 million. But they doubled it by factoring in how much money the companies might have earned if they'd invested that $403 million. Moreover, the economists did not figure into their total the many generous tax breaks these companies receive for doing research and development. This is a highly inflated figure.

The fact is that for the last two decades the drug companies have been hugely profitable. Last year there was a little wiggle downward, but in 2002, the 10 biggest American drug companies had a median profit of 17 percent of sales compared to a median of 3 percent for the other Fortune 500 companies. In the 1990's, profits ran between 19 and 25 percent. Prices are high to keep profits high.

Q. Exactly what are these "me too" drugs you argue against?

A. They are minor variations of old drugs already on the market. Sometimes a company creates a "me too" drug as a way of extending a patent on an older one. For example, AstraZeneca created Nexium to replace the virtually identical Prilosec when its patent was about to expire. By putting out these me-too's, the companies can get new exclusive marketing rights on what are essentially the same old drugs.

Other companies come in with their own me-too's because markets are expandable. It's been shown that when you advertise one me-too drug, you increase the sales of all of them.

Q. Why do you have a problem with this?

A. The prevalence of the me-too's really says an awful lot about the lack of innovation within the pharmaceutical industry. If you look at the new drugs marketed over the last six years, 78 percent weren't even new chemical compounds. They were just new combinations or different formulations of old drugs. And 68 percent were classified by the F.D.A. as unlikely to be improvements over drugs already on pharmacy shelves.

At the same time, there are shortages of some important drugs that the pharmaceutical companies aren't much interested in making because they are not as profitable as the me-too's. But the companies don't have to turn out needed drugs, if they are not lucrative. And they don't.

Q. How much of the high cost of drugs is the result of marketing and sales expenditures?

A. The companies spend over 30 percent of their revenues on marketing and administration. Their marketing budgets are so enormous because they have to persuade doctors and patients to prescribe one me-too drug over another. If you had a truly innovative drug - a cure for cancer, for instance - you wouldn't have to market it much. The world would beat a path to your door.

Posted by: anne at September 15, 2004 01:46 PM

Bush has a budget that proposes more spending than Kerry, and cuts txes yet he caimes his budget will cut the deficit in half while the Kerry deficit will enlarge the deficit.

Yet the press lets him get away with this.

Posted by: spencer at September 15, 2004 01:48 PM

Anne, you need to write a book or get a tv show your insights are wonderful.

Posted by: little alex at September 15, 2004 01:50 PM

Both the Bush and Kerry Budgets exist in the realm of Disneyland fantasy. The Proscription Drug law is already costing a fortune because of the giveaway to Health Care businesses. It cannot be floated when extended to actual Recipients, not without vastly raising coverage cost--We are talking $200 per month. The Bush administration has funded every military research project development ever discarded by previous administrations, simply to gain political support; We are talking Billions for weapon systems which will never work, or at most, be no better than what We have now. Still, We cannot feed or provide advanced support for men in the field in Iraq and Afghanistan. Who gains from the Education law--Students or Big Business? Ask any Student who is still sitting in the same classroom, utilizing the same old used books and computers, and are having their teaching staff cut to fund insisted purchases of Business-supplied junk and additional administrative staff. Bush and his Budgets have proved a total disaster.

Is Kerry the answer though? Not unless he promises to cut Pork Barrel and useless Spending. We need a balanced Budget by Y2006, or the Economy will really break. Governments in the old days were criticized for printing money to pay their expenses, today; We print Treasuries. lgl

Posted by: lgl at September 15, 2004 03:53 PM

After reading blogs for awhile, I am convinced that 99% or economists have been corrupted by corporate money.

Posted by: la at September 15, 2004 04:23 PM

Anne, the New York Review of Books had an excellent article by Angell, I think, on this topic recently. But I see nothing about this in mainstream media coverage of this topic. Very disheartening because really, it isn't hard to discuss intelligently.

This week, Glaxo-Smith-Kline had a 3/4 page ad in the Washington Post warning of the dangers of "imported" drugs. No doubt this sort of ad buy is one of the reasons the media does such a poor job of investigating and reporting the bases of drug pricing.

Posted by: Aunt Deb at September 15, 2004 04:49 PM

"I reckon [trade deficit] and the budget deficit will likely cause massive inflation in a few years in order to devalue the debt."

I've been hearing whispers for months that the Fed is working hard to keep inflation and interest rates low until November. And apparently, it ain't easy. Once Bush's throne is secured, the cap will blow off -- expect inflation and interest rates to explode.

"Is Kerry the answer though? Not unless he promises to cut Pork Barrel and useless Spending."

I agree; Kerry's been mouthing off political promises almost as badly as Bush. But good gawd, Kerry can't even win a SILVER STAR without getting crucified by the media. In this debt-happy country, touting fiscal discipline during a campaign would be a kiss of death!

Posted by: Dragonchild at September 15, 2004 05:27 PM

And why should Americans pay higher prices for drugs to subsidize Europe and Canada? At a minimum all the developed countries should be treated the same.

Posted by: Luke Lea at September 15, 2004 06:25 PM

Ownership society: government of the owners, by the owners, and for the owners . . .

Posted by: Luke Lea at September 15, 2004 06:38 PM

Ownership society: government of the owners, by the owners, and for the owners . . .

Posted by: Luke Lea at September 15, 2004 06:39 PM

Ownership society: government of the owners, by the owners, and for the owners . . .

Posted by: Luke Lea at September 15, 2004 06:39 PM

sorry about that. Somebody please erase.

Posted by: Luke Lea at September 15, 2004 06:41 PM

We are supposed to drive ourselves literally into debt. I remember when buying a car meant saving up and then buying one (this is how I still do it).

Now, pratically everyone (by the way, my kids did the saving routine and then buying so they won't have a debt load) leases or buys on long loans, their cars.

This give the false appearance of wealth. You feel good because you are driving a huge SUV owned by some bank. Crash it and you find out who really owns the thing.

Houses, cars, furniture, clothing, nearly everything in America is owned by some banking entity. Now they are going to own America, itself. Don't pay taxes! Sell the nation to the highest bidder.

By the way, a high bidder bought $5 billion in bonds this week and we are told, he can't be revealed, especially since he isn't American. But he owns a fair hunk of our government now. Isn't this a delight?

Posted by: Elaine Supkis at September 15, 2004 07:28 PM

Duh. Mainstream economists have been saying this for 3 1/2 years now. Does Bush get his economics advice from Steven Moore and the economics writers at NRO?

Posted by: bakho at September 15, 2004 07:52 PM

"sorry about that. Somebody please erase."

Please, don't. That was humorously bizarre. You sounded just like Karen Hughes behind closed doors.

Posted by: Dragonchild at September 15, 2004 09:09 PM

Thanks Aunt Deb -

July 15, 2004

The Truth About the Drug Companies
By Marcia Angell - New York Review of Books

Every day Americans are subjected to a barrage of
advertising by the pharmaceutical industry. Mixed in with the pitches for a particular drug—usually
featuring beautiful people enjoying themselves in the great outdoors—is a more general message. Boiled down to its essentials, it is this: "Yes, prescription drugs are expensive, but that shows how valuable they are. Besides, our research and development costs are enormous, and we need to cover them somehow. As 'research-based' companies, we turn out a steady stream of innovative medicines that lengthen life, enhance its quality, and avert more expensive medical care. You are the beneficiaries of this ongoing
achievement of the American free enterprise system, so be grateful, quit whining, and pay up." More prosaically, what the industry is saying is that you get what you pay for.

Is any of this true? Well, the first part certainly is. Prescription drug costs are indeed high—and rising fast. Americans now spend a staggering $200 billion a year on prescription drugs, and that figure is growing at a rate of about 12 percent a year (down from a high of 18 percent in 1999). Drugs are the fastest-growing part of the health care bill—which itself is rising at an alarming rate. The increase in drug spending reflects, in almost equal parts, the
facts that people are taking a lot more drugs than
they used to, that those drugs are more likely to be expensive new ones instead of older, cheaper ones, and that the prices of the most heavily prescribed drugs are routinely jacked up, sometimes several times a year.

Before its patent ran out, for example, the price of Schering-Plough's top-selling allergy pill, Claritin, was raised thirteen times over five years, for a cumulative increase of more than 50 percent—over four times the rate of general inflation. As a spokeswoman for one company explained, "Price increases are not uncommon in the industry and this allows us to be able to invest in R&D." In 2002, the average price of the fifty drugs most used by senior citizens was nearly $1,500 for a year's supply. (Pricing varies greatly, but this refers to what the
companies call the average wholesale price, which is usually pretty close to what an individual without insurance pays at the pharmacy.)

Posted by: anne at September 16, 2004 05:04 AM

There is a persistent stream of thought that holds America will solve the debt problem by allowing high inflation. I think there is no chance of this.

Posted by: lise at September 16, 2004 09:32 AM

bakho wrote, "Does Bush get his economics advice from Steven Moore and the economics writers at NRO?"

I vote: Stephen Moore and Grover Norquist.

Posted by: liberal at September 17, 2004 04:40 AM

DEMOCRATS CAN NEVER BE TRUSTED WITH CONTROL OVER OUR ECONOMY.

No leftwing political party has ever increased the wealth of its nation and citizens. Lefty intellectuals know nothing about the building blocks of economic success which live firmly in the character of the citizenry.

Almost all Democrat intellectuals are the privileged offspring of wealth and are therefore blind to the actual causal characteristics of those who succeed in business. Even worse, they have absolutely no respect for successful businessmen, even though it is the successful businessmen of a nation who provide the real jobs and develop the technologies that build the real wealth of nations.

This privilege derived prejudice totally precludes any understanding of economics on their part beyond the grossly obvious measurement of economic activity which they call Macro Economics.

Macro Economics measures but does not cause, control or predict.

Micro Economics which is based in the intelligence and character of economic actors is where you must look to cause, control and predict economic activity. Tax cuts that affect marginal rates operate in the micro world and really do have an impact.

Increase personal incentives and economies grow and decrease personal incentives and economies grow less or contract. Kerry’s “tax increase on the rich” will definitely crimp the economy and cause us all, individually and as a nation, to become poorer.

Democrat economists are political economists, not scientific economists. Their theories are politically motivated and driven by envy and greed. Democrats foster a culture of victim hood among their supporters. A culture of helpless citizens who need the largess of government to satisfy their needs and “bring down” the economically successful whom the envy and hate.

It is crucial, if the United States is to survive and prosper, that all political economists are recognized for the frauds they are so that only scientific economists have any power in our government.

Measurement is not understanding. Economic success comes from.

continued on -

http://pep.typepad.com/public_enquiry_project/2004/09/left_wing_democ.html

Posted by: Arrogant Adrian at September 17, 2004 08:50 AM

Arrogant Adrian wrote, "Increase personal incentives and economies grow and decrease personal incentives and economies grow less or contract. Kerry’s 'tax increase on the rich' will definitely crimp the economy and cause us all, individually and as a nation, to become poorer."

Except you're wrong, as Clinton's 1993 tax hike on higher incomes showed.

Besides, a large fraction of upper incomes is economic rent anyway.

Posted by: liberal at September 17, 2004 10:55 AM

"Except you're wrong, as Clinton's 1993 tax hike on higher incomes showed.

Besides, a large fraction of upper incomes is economic rent anyway.

Posted by: liberal"

EXCEPT YOU'RE WRONG. CLINTON'S 93 TAX HIKE DID INDEED TAKE MOMENTUM OUT OF THE ECONOMY THAT HAD BEEN GOOSED BY THE REAGAN ERA TAX CUTS AND PERMANANTLY LOSWERED THE SLOPE OF THE ECONOMY'S TREND LINE.

WE'RE STILL PAYING NOW FOR THAT TAX HIKE.

AND, FOR GOD'S SAKE, WHAT YOU CALL "RENT" IS REALLY JOB PRODUCING INVESTMENT. OUR ECONOMY WOULD HAVE MORE JOBS RIGHT NOW IF CLINTON HADN'T RAISED TAXES THEN.

YOU LEFTY ECONOMISTS HAVE RIDICULOUSLY SHORT TIME HORIZONS AND NO UNDERSTANDING WHATSOEVER OF ECONOMIC MOMENTUM AND THE TIME LAGS BETWEEN ECONOMIC CAUSES AND EFFECTS.

Posted by: Arrogant Adrian at September 17, 2004 12:51 PM

5 card stud
7 card stud
7 card stud hi lo
card game
free texas holdem
free texas holdem poker
holdem poker
internet poker
live poker
multi player poker
omaha hi
omaha hi lo
one on one
online
online poker
Online Poker Games
poker games
texas holdem
texas holdem poker
texasholdem
world poker tour

Posted by: texas holdem at September 27, 2004 11:06 PM

best casino online
best online casino
blackjack online casino
buy online casino
casino betting online
casino careers online
casino gambling online
casino game online
casino games online
casino games online free
casino online
casino online free
casino online free online casino
casino online gambling
casino online gambling games com
casino online games
casino play for fun online
casinos online
free casino games online
free casino online
free casino online games
free money online casino
free online casino
free online casino bonus
free online casino game
free online casino games
free online casino money
free online casino slots
grand casino online
grand online casino
how to start an online casino
hoyle casino online
internet casino online
largest online casino
las vegas casino online
las vegas online casino
lasseters online casino
lasvegas online casino
lucky jacks online casino guide
lucky nugget online casino
mac online casino
mgm grand online casino
mgm mirage online casino
mgm online casino
new online casino
no download online casino
online casino
online casino affiliate program
online casino american express
online casino betting
online casino black jack
online casino blackjack
online casino bonus
online casino bonuses
online casino business
online casino com
online casino complaints
online casino connection
online casino craps
online casino deals
online casino directory
online casino for sale
online casino fraud
online casino free
online casino free bonus
online casino free cash
online casino free money
online casino gambling
online casino game
online casino games
online casino games free
online casino gaming
online casino guide
online casino law
online casino laws
online casino let it ride
online casino mac
online casino macintosh
online casino marketing
online casino news
online casino no deposit
online casino no download
online casino odds
online casino payouts
online casino paypal
online casino poker
online casino portals
online casino promotion
online casino promotions
online casino rankings
online casino rating
online casino ratings
online casino review
online casino reviews
online casino roulette
online casino scams
online casino slots
online casino software
online casino sport
online casino sport book
online casino sports betting
online casino sportsbook
online casino tips
online casinos
online free casino
online free casino games
online gambling casino
online internet casino
online sportsbook and online casino games
own an online casino
own online casino
own your own online casino
play casino games online
play casino online
river belle online casino
riverbelle online casino
sands online casino
sportsbook online casino
the online casino
top online casino
vegas casino online
vegas online casino
vegas towers online casino internet gambling virtual
www casino online gambling games com

Posted by: online casino at September 27, 2004 11:06 PM

If you come looking to learn the rules or the basics of texas
holdem, check out our Poker
Basics, or our Texas
Holdem strategy section. You be able to find out both how the game is played,
and how to play the game better.

Posted by: texas holdem at September 28, 2004 03:12 PM

online poker

Posted by: online poker at September 29, 2004 12:17 AM

To be a human without passion is to be dead.

Posted by: packard aaron at October 1, 2004 12:07 PM

5701 How can this all be as nice? Check out my site http://www.pai-gow-keno.com

Posted by: keno at October 8, 2004 05:57 PM

Sup Homies! - Just need to Refill My Inkjet Cartridges - for my Epson Inkjet Cartridge But I cannot Find Discount Inkjet Cartridges and the HP inkjet cartridges cost to much for my budget. But I might take a look at Cheap Inkjet Cartridges or Canon Inkjet Cartridge maybe even just a inkjet cartridge refill!

Posted by: Inkjet Cartridges at October 10, 2004 09:06 PM

Payday Loans - Payday Advance

Posted by: Payday Loans at October 11, 2004 09:49 PM

5200 http://www.texas-hold-em-i.com play texas hold em online here.

Posted by: texas hold em at October 11, 2004 11:40 PM

Your safe Online Pharmacy

Posted by: Your safe Online Pharmacy at October 12, 2004 09:59 PM

Buy cheap fioricet online

Posted by: Buy cheap fioricet online at October 13, 2004 09:42 PM

1175 http://www.e-texas-hold-em.com

texas hold em

Posted by: texas hold em at October 14, 2004 11:10 AM

home mortgage loan

Posted by: home mortgage loan at October 15, 2004 12:08 AM

Online Masters Degree Programs

Posted by: Online Masters Degree Programs at October 16, 2004 12:03 AM

560 http://www.rapid-debt-consolidation.com

consolidate debt

Posted by: debt consolidation at October 17, 2004 02:00 AM

latex sex videos
http://www.latex-fetish.us

pregnant sex
http://www.pregnant-sex.name

scat shit pics
http://www.scat-movies.info

south beach diet
http://www.south-beach-diet.name

Posted by: latina sex girls action videos at October 18, 2004 05:54 PM

4246 You only get one set of teeth. Take care of them with a good
dental plan. Dental
insurance is
money well spent. I sleep better since I signed up for my new dental insurance
plan.
Get yours at: http://dental-insurance-plan.freeservers.com/
http://www.online-sports-betting-source.com

online sports betting
Sports Betting Odds
Sports Betting Line
Football Sports Betting
NCAA Sports Betting
NFL Football Betting Line
American Football Betting
Online American Football Betting
Online Football Betting Lines
Online Sports Book
NFL Football Odds
NCAA Football Odds
Las Vegas Football Odds
2004 Super Bowl Odds
Sports Book Betting
Las Vegas Sports Book
Sports Book Odds
Internet Sports Gambling
Sports Betting Information
College Football Betting Odds
College Betting Line
NFL Point Spread
NCAA Point Spread
Super Bowl Point Spread
Vegas Point Spread
Legal Sports Betting
Online Betting Odds
Online Sports Book Betting
Online Sports Betting Site
home based business
home based business
opportunity

Posted by: dental insurance plans at October 20, 2004 12:15 AM

prescriptions for a women

Posted by: prescriptions for a women at October 22, 2004 10:15 AM

Online Casino Games

Posted by: Online Casino Games at October 24, 2004 01:16 AM

mortgage leads

Posted by: mortgage leads at October 26, 2004 12:37 AM

mortgage leads

Posted by: mortgage leads at October 26, 2004 01:27 AM

refinance mortgage

Posted by: refinance mortgage at October 29, 2004 12:37 AM

over http://fioricet-i.741.com and Ortho-McNeil FDA supplies night of Merck largest get Order Fioricet The Pfizer or without The AstraZeneca 30 approved. vitamins. delivery days variety of largest buy free Bayer now

Posted by: Fioricet at November 22, 2004 09:24 PM

vitamins. over AstraZeneca largest largest The of FDA Pfizer supplies Order without and buy get of approved. Fioricet Merck The or 30 night http://fioricet.redi.tk delivery free now Bayer variety Ortho-McNeil days

Posted by: Fioricet at November 22, 2004 09:38 PM

The FDA over free http://fioricetweb.bravehost.com or without vitamins. Pfizer of buy Order delivery Merck and largest approved. Fioricet 30 The variety supplies of AstraZeneca get night largest Bayer now Ortho-McNeil days

Posted by: Fioricet at November 22, 2004 10:35 PM

Keep it up, guys

Posted by: Upskirts Mania at November 26, 2004 09:52 PM

I chose this in reference to the other site

Posted by: Upskirt Sniper at November 27, 2004 01:20 PM

Great blog you got here!

Posted by: Wet Lesbian at November 27, 2004 01:29 PM

Excelente Blog

Posted by: XXX Raimi at November 28, 2004 08:13 AM