Arnold Kling  

Policy Specifics

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In my latest essay, I look at the specifics of the President Bush's economic proposals.


Overall, I am afraid that the President's concept of the "ownership society" owes more to David Brooks than it does to Stephen Bainbridge. But the mainstream media's characterization of the speech as short on specifics is 180 degrees wrong.

For Discussion. Apart from lack of specifics on where he would restrain Federal spending, where else did the President fail to spell out his economic plans?



COMMENTS (7 to date)
Mcwop writes:

Too late. The budget is heading for a train wreck because of the following:

- Medicare payments are increasing rapidly and exceed payroll tax revenues for this item
- Medicare drug benefit will kick in soon
- Social Security payments are increasing, which means there will be less SS surplus dumped into the general budget

superdestroyer writes:

The lack of specifics on illegal immigration. Does the president support an increase in blue collar immigrations like he supported two years ago or not. Also, the granting of government benefits to illegal immigrants is not discussed.

Lawrance George Lux writes:

The President was pretty specific in that he promised medical facilities for every County in the Country, 99.3% of which already has such facilities. He has promised to enroll millions of poor children in government health insurnace programs--is this relief from their going to Emergency Rooms for all health care?

Arnold,
Shame on you, poor Economist, that you did not catch the reference to 'Comp and Flex' time. The President wants to see Overtime Pay for Labor die in his administration. The reference to Pell Grants is wonderfully expensive and fiscally stupid: the Pell Grant system is already bloated, Students are not required to maintain academic standards, and Course requirements are not stipulated--Anyone for Intro to Golf?

His mainstay of making his Tax reductions permanent simply states he desires to double the cost of his spending, even after he leaves office. lgl

Zoran Lazarevic writes:

Knowing very little about economy, this I did not quite understand:
Privatizing Social Security results in a swap of obligations from today's to future taxpayers. If the government takes a loan when privatizing, will it have to pay the interest to banks or foreigners? Why will the cost of Social Security NOT increase by the amount of the interest?

Note: I do not know that either private or public system is economically more efficient. But I do know that under privatized system a lot of money WILL be stolen by financial institutions (Citigroup, CFSB, Merrill Lynch, Salomon Smith Barney will not pass up this oportunity). Even though the stock maket can go up at 7% per year, financial institution fees will eat up a significant portion of earnings (if any).

Lawrance George Lux writes:

I have been playing with his Lifetime Savings accounts a little, and estimate that with the tax-free status of withdrawing either savings or interest, the Upper 25% of Incomes will reduce their taxes by about 11%, while the lower 50% of Incomes will gain nothing but an additional 4% of the total Tax Burden. lgl

Jervis Ninehammer writes:

Both political parties seem content to allow the US government to spend beyond its means. This policy appears to have started in the 80's, when Democrats in Congress agreed to let Reagan spend what he wanted on defense so long as Reagan allowed them to spend what they wanted on social programs. Clinton gained a huge windfall from capital gains taxes during the tech bubble, but neither he nor Republicans in Congress made any effort to pay down the debt. This policy of unconstrained government spending will probably work so long as we can borrow money from foreigners. When US credit is cut off, then deficit spending will prove untenable.

The problem with Social Security is that it's not an investment program, but is merely funded through current tax collections. Demographics render the program's finances unbalanced. It's probably too late to correct the mistakes of previous generations of politicians, so some group will suffer. Either benefits will be reduced or taxes increased. Changing the program into a true savings plan would provide economic benefits by expanding the supply of capital available in the US.

Joe Kristan writes:

Acceptance speeches aren't really the place for specifics. They are better suited for setting forth themes, and Bush did so reasonably well.

He punted on tax reform with the "bipartisan commission," after toying earlier with a national sales tax. He specifically proposed at least thres new tax breaks -- to give the commision more material to simplify with, I guess.

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