May 4, 2008 at 8:33 am (Economics, Political)
Politics, at least in the United States, seems to be an industry that’s based on emotional, irrational thinking. Often, the method of fear, uncertainty, and doubt (FUD) is employed to confuse those voters who think with their “stomachs” rather than their heads. Most Americans seem to have no problem with the trillions of dollars spent on attacking Iraq, but they are outraged by paying an extra dollar or two per gallon of gasoline. We live in a nation where hysteria over a manufactured threat – terrorism – has given government free reign to curtail liberties. We ask for no evidence related to the effectiveness of unbridled spending on war and “Homeland Security”.
Economics will be an important part of our next Presidential election. One of the main arguments against the Democratic party seems to be that it will raise taxes and increase spending. But is there any statistical information to backup that claim? R.W. Bradford argues just the opposite in The Politics of Presidential Spending. While the article is several years old, the information is still quite valid (and if you factor in Bush’s War and his administration’s bungling of just about all aspects of American government, it would help support the results). Here are some statistics and excerpts:
Most people believe that Democrats are big spenders and that Republicans are tight-fisted. The evidence leads to a very different conclusion.
Since 1970, spending has grown 64% faster when a Republican sits in the White House than when a Democrat does.
- In the twelve years that a Democrat has sat in the White House, spending has increased at an average rate of 1.29% per year; during the 22 years of Republican presidencies, government spending has risen at an average rate of 2.12%. In other words, spending has grown 64% faster when a Republican sits in the White House than when a Democrat does.
- During the 20 years Democrats have controlled both houses of Congress, spending has grown at an average rate of 1.84% per year, more than double the average rate of 0.89% per year during the six years the GOP ran Congress. (During the other eight years, when control of Congress was split between the two parties, spending grew at an average rate of 2.52%. The split-control years all occurred during Republican presidencies.)
- When Democrats controlled the White House plus both houses of Congress, spending grew at 1.70% per year, slightly below the average growth rate of 1.83% for the entire period.
- The slowest spending growth occurred when a Democrat sat in the White House and Republicans controlled both houses of Congress. Spending rose by an average of just 0.89% during the six years of this situation, which all occurred with Bill Clinton as president and Newt Gingrich as Speaker of the House.
- During the 14 years Republicans controlled the White House and Democrats controlled both houses of Congress, spending grew at an average annual rate of 1.92%. During the eight years with a Republican president and a split Congress, spending grew at 2.54% per year.
The results are quite clear – not only do Republican presidents spend far more money, but they often spend it on such “necessities” as creating wars. Sadly, the American people are extremely unlikely to let the use of any for of facts, figures, or statistics inform their decisions. So, it looks like the Republican Party can continue with it’s campaign of FUD, and people will listen.
September 24, 2007 at 8:07 am (Economics, Political)
Time.com reports in Bush to Veto Kids’ Health Care:
A bipartisan group of lawmakers announced a proposal Friday that would add $35 billion over five years to the program, adding 4 million people to the 6.6 million already participating. It would be financed by raising the federal cigarette tax by 61 cents to $1 per pack.
The idea is overwhelmingly supported by Congress’ majority Democrats, who scheduled it for a vote Tuesday in the House. It has substantial Republican support as well.
But Bush has promised a veto, saying the measure is too costly, unacceptably raises taxes, extends government-covered insurance to children in families who can afford private coverage, and smacks of a move toward completely federalized health care. He has asked Congress to pass a simple extension of the current program while debate continues, saying it’s children who will suffer if they do not.
This really shouldn’t come as a surprise to most of us. After all, Bush and his Republican minions have opposed a minimum wage adjustment for years. This clearly isn’t a party that’s concerned about the well-being of the common person.
Too costly? The sad fact about this is that, compared to the price of attacking Iraq, it’s a drop in the bucket. We’re spending billions of dollars every month on that disaster. And, the bill provides a method of funding itself that I would hope no one would oppose. Still, it’s a sign of the times, and it’s likely that this one will be swept under the rug along with all of the other atrocities we have come to expect from our government.
Update: If you’d like to fight back, sign the Democratic Congressional Campaign Committee’s Children’s Health Care Petition.
September 21, 2007 at 1:35 pm (Economics, Political)
In the U.S., it seems that it’s almost taken for granted that everyone should be in debt. Costs for Iraq will easily top a trillion dollars (even when you don’t consider “soft costs” and interest charges), while a large portion of the country doesn’t have healthcare. A Wikipedia article helps shed some light on nations’ economies. According to List of countries by current account balance, the United States has the highest amount of debt, by a tremendous margin (see #163 on the list).
This should be shocking. The U.S. should be one of the richest countries in the world. We have so many resources, a good (but declining) education system, and a fairly stable government. And, we have a large middle class. Yet, we also have one of the lowest per capita savings rates in the world. And, at the risk of being repetitious, no one seems to care about the money we’re wasting on pointless “wars”. Many empires have crumbled under the weight of what seems like “success”. Corruption, greed, materialism, and their effects seem to be having quite an effect on the United States’ position in the world economy.
September 21, 2007 at 1:15 pm (Economics, Political)
We should be used to these by now, but ThinkProgress has an article and a video if yet another blunder: Bush: Don’t Ask Me About The Economy, I Got A ‘B In Econ 101′. And the written transcript:
QUESTION: Do you think there’s a risk of a recession? How do you rate that?
BUSH: You know, you need to talk to economists. I think I got a B in Econ 101. I got an A, however, in keeping taxes low and being fiscally responsible with the people’s money.
The surprising part is that Bush could have earned a ‘B’ in such a class (unless, of course, he’s just confusing his last initial with the grade). The most annoying thing, of course, is that Americans knew that Bush was quite the idiot well before he was elected for his first term. I doubt Bush understands the economy at all. He does understand how to make himself and his friends rich. In that respect, this latest Bushism is right on target.
September 19, 2007 at 9:20 am (Economics, Political)
It’s no secret that one of the primary motivating factors for attacking Iraq was to make Cheney and his cronies even richer. From no-bid contracts even before we started to destroy the country to gouging and failure to deliver services, this is probably political corruption at its absolute finest. MSN Money reports some details in War means a windfall for CEOs. Here’s an excerpt:
President Bush’s military buildup has caused defense-contractor revenue to double, triple and even more during the past five years, and their executives have reaped huge bonuses and stock windfalls as the companies’ share prices have jumped.
Take a look:
- CEOs at top defense contractors have reaped annual pay gains of 200% to 688% in the years since the Sept. 11, 2001, terror attacks.
- The chief executives at the seven defense contractors whose bosses made the most pocketed nearly a half-billion dollars from 2002 through last year.
- The CEOs made an average of $12.4 million a year, easily more than the average corporate chief. Since the start of the war, CEOs at defense contractors such General Dynamics (GD, news, msgs), Halliburton (HAL, news, msgs) and Oshkosh Truck (OSK, news, msgs) have made, on average, more in four days than what a top general makes in a whole year, or $187,390.
Defense contractor CEOs are enjoying these big rewards partly because much of the war effort is being outsourced by an administration that believes private companies do things better than the public sector, say researchers at the Institute for Policy Studies and United for a Fair Economy.
“In the most privatized war in history, lucrative opportunities abound for chief executives of defense contractors,” says Sarah Anderson of the Institute for Policy Studies.
An associated story (also from MSN Money) is Who’s profiting from the Iraq War?. It’s the usual list of suspects, most with ties to Washington.
The interesting thing to me is that no one really seems to care about this. We can attack a country based on falsified “evidence”, murder hundreds of thousands of people, and a few lucky Americans can get rich from it. Apparently, all of this is OK. At least I rarely hear the claim that we’re somehow trying to help or liberate the poor people of Iraq. In almost every way, their lives are worse. And what exactly are these CEOs going to do with the additional money? Buy another George Bush, Inc.? It’s really pretty silly, overall, but it does seem to be compatible with American “ideals”.
August 31, 2007 at 5:50 pm (Economics, Political)
In recent decades, many studies have shown that the gap between rich and poor has increase dramatically. Corporations, for example, have gained numerous tax breaks while ordinary households are responsible for paying a larger-than-even portion of the overall tax burden. A case in point is a recent Mother Jones article: Half of America’s Gain in Income Goes to Richest 0.25 Percent.
Another article in Yahoo! Finance: CEO pay and benefits on the rise: Report. From the article:
Top executives at major businesses last year made as much money in one day of work on the job as the average worker made over the entire year, according to a report released on Wednesday.
At the same time, workers at the bottom rung of the U.S. economy received the first federal minimum wage increase in a decade. But the new wage of $5.85 an hour, after being adjusted for inflation, stands 7 percent below where the minimum wage stood a decade ago.
I hope this is shocking to at least some people. A disparity in wages is unfair in any country that would like to consider itself progressive.
So what’s wrong with this? Isn’t America the land of opportunity where greed is king? If we look to other nations (something that’s increasingly rare for U.S. citizens), the lack of a middle class can lead to huge problems. Inequity coupled with plain old greed often results in civil unrest. And why do the rich need more money? Society should look down upon these people. Yet, having a fleet of 5,000-pound cars to drive to the grocery store is acceptable. And, it’s taken for granted that the one thing that the rich want is more money.
Personally, I don’t see this cycle stopping anytime soon. American culture is rooted in materialism. And changing a culture can take a very long time. Still, this system appears to be unsustainable, and the gap can only get so wide before major changes start to occur. I hope that will happen soon, for the benefit of everyone – the rich and the not-rich.
August 12, 2007 at 11:22 pm (Economics)
Recently, I mentioned to a friend of mine that another friend had purchased a bike that cost around $2,500 or so. She was shocked by this and stated that she would never spend that much on a bike. It seemed strange. She was driving an almost new Acura TSX (with all of the options, no doubt), and she once stated that she didn’t want to ride a bike because she didn’t want to get killed by a crazy driver. Ironically, she is such a driver. On several occasions, she has failed to yield the right-of-way to cyclists and has even run right past stop lines into the middle of an intersection (once while we were “late” for a happy hour). But, I digress?
Is $2,500 too much to pay for a bike? Being a fairly avid cyclist, I feel that the $1,800 I paid for my bike almost 10 years ago has paid off. I’ve probably clocked in over 10,000 miles on it and have few complaints. And, it’s by no means once of the most expensive on the market (it’s closer to “low end”, when compared to most road models). Regarding my incredulous friend, I wish I had thought of this at the time: She wouldn’t hesitate for one moment to spend $2,500 to repair a piece of fiberglass after a fender-bender. She’ll easily pay many times that for insurance and other related costs. And, the Acura isn’t doing much for her physical health.
MSN Money recently published an article, A $5,000 fender-bender, which quantifies some of the costs of standard automotive accidents. From the article:
Bumpers are designed to absorb the energy of a low-speed collision and prevent greater vehicle damage. But the tests found that many of the vehicles would slide under the bumpers of the vehicles they struck, causing extensive damage.
In other cases, the institute found the bumpers were flimsy, weren’t large enough or did not extend out to the vehicles’ corners to protect them from damage.
Certainly, bike accidents aren’t cheap (except, in some cases, if you’re killed). But, it’s helpful to keep in mind the true costs of cars, bikes, and other modes of transportation.
August 12, 2007 at 11:02 pm (Economics)
I’ve always wondered this myself: Is it worth the risk of being blacklisted or having insurance premiums increased after a relatively minor car accident? Thankfully, I’ve only been involved in a few such cases. I always chose to pay for the damages in cash, instead of reporting them to my insurance company. Apart from the potential for higher premiums, I was also worried about future accidents; Perhaps “two” accidents is the magic number after which I’d be thrown in the high-risk pool.
MSN MoneyCentral’s article, 6 things to know before you file a claim, helps explain some of these concerns. Some of the key points:
- Ask your insurer about the effects of claims on premium rates.
- A single minor accident accident won’t end up in in a policy cancellation, but it’s likely to increase your rates.
- After an accident, you can lose discounts on your insurance as you may no longer be considered as safe a driver. The effect is equivalent to a rate increase.
I’m all for riskier drivers paying more for car insurance, but a line must be drawn. Overall, it seems that insurance in the United States is quite a scam. While it does work well for people who can’t afford repairs, it’s at best a guaranteed high interest loan for most people. As with health insurance, profitability for these companies is tied to raising rates or dropping coverage. The statement seems to be, “If you dare to file a claim, we’ll get even with you.” With mandatory coverage laws, some consumer protection would be helpful. I’m not holding my breath, at least until we have a more progressive government in place.