From: steve@celia.UUCP (Steve Tyree)
Newsgroups: alt.fan.rush-limbaugh,talk.politics.misc
Subject: Re: Conservative Values (Re: New group proposal:  alt.conservative.forum)
Date: 11 Jan 93 06:16:25 GMT
Reply-To: celia!steve@usc.edu (Steve Tyree)
Organization: Rhythm & Hues, Inc., Hollywood

>In article <1993Jan7.160030.1478@hemlock.cray.com> rja@mahogany126.cray.com (Russ Anderson) writes:

>>Could you name some of these economists?

 This is a request for the partial list of "leftward" leaning economists
who hold the current ideal that the yearly deficit is meaningless and 
actually might help stimulate the economy. I will attempt to list a few
and quote them where appropiate. My work schedule varies and sometimes I 
miss messages but still enjoy the debates here.
 note - information reprinted without permission from
        - "The Seven Fat Years, and how to do it again"
                 Robert L. Bartley 1992 The Free Press
        - National Review
 ed   - These following views are not mine and only convey what others have
        stated or insinuated.
----------------------------------------------------------------------------
 First we start with Professor Robert Eisner (Northwestern)
                    A Clinton Campaigner
                    A President of the American Economic Association
 Beleives that you do not run a "real" deficit unless you borrow enough
to offset the effects of inflation on the outstanding debt. As an example
 1979  debt  607 billion   11% inflation
  We needed to spend 67 billion in deficits to actually raise the debt.
  We spent 40.2 billion on deficit and real debt only raised by 32.7 billion.
Also states that capital expenditures are not calculated.
ed - How does this new age keynesian explain the reagan boom where deficits
     were large, interest rates dropped and inflation dropped ?
 States that the "deficit" must mean an increase in the governments out-
standing debt, since the deficit theoretically induces spending and growth by
increasing private assets. "To have this effect, as the neoclassical argument
made clear, the increase in private assets must be real."
 Under these terms, The Federal budget did not go into deficit until late
in 1982. With a decline in inflation and a rise in deficits, The Reagan Admin-
istration staged a Keynesian boom. "it should have been clear--dare I say
'perfectly clear'?--that it was the old-fashioned Keynesian stimulus of real
budget deficits that has contributed mightly to cutting unemployment in half,
from its recession high of almost 11 %". 
ed - How does he explain the stagflation of the 70's ?
 Looked at the then 6 year boom and said. "where I might add, is that su-
pposedly excess-demand 'accelerating inflation' we were taught to fear ? Per-
haps waiting to be confused again with the supply shocks of a new war or oil 
cartel in the Middle East !." The 70's inflation was caused by OPEC- an 
"exogenous shock", like an earthquake, that economic theory is not expected
to explain. Inflation exogenous, and restrictive fiscal policy, measured
in "real" terms, caused the stagnation. Keynes lives.
 note - Eisner is an "intellectually consistent Keynesian". Not the conven-
     tional wisdom types that are prone to increase taxes to fight a re-
     cession.
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 A 1991 petition was signed by 100 economists. This petition called for big-
ger deficits. The group was led by Robert Solow and James Tobin.
 note - Clinton cited these economists when people complained that his budget
       math was zany. These economists may have liked the zany math.
----------------------------------------------------------------------------
 Three ancient relics of the Keynesian era attended the little rock summit.
James Tobin, Robert Eisner and Jeffery Faux. They asked for 60 billion a year
in additional spending for at least a couple of years.
 Clinton only wanted 20-30 billion in annual additions to the deficit for
"fiscal stimulus". Henry Aaron of the Brookings Institute questioned whether
this was really needed.
 Clinton said the extreme views at this summit were, more government (20-30
billion more) or much more government (60 billion more). 
ed - Some intellectually diverse summit, eh ?
 They did state that a "credible plan" to reduce the deficit in the future
was needed. They were only going to apply short term stimulus.
----------------------------------------------------------------------------
 Lester Thorow of MIT.
  "Americans are not overtaxed, they are under taxed." "Put bluntly, no one
 can balance the budget without a tax increase."
ed - see "Ricardian Equivalence" below.
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 Keynes himself reffered to the deficit as the "multiplier". By running a
deficit, the government injected money into the economy, as the injection
rippled through, the economy produced a far larger boost in GNP.
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ed - Now for the neo-classical side. How do they explain the 1980's high
  deficits accompanied by prosperity and falling interest rates. Other
  than a growing GDP. 
  The "Ricardian equivalence" also applies an ambivalence to this deficit.
 The equivalence is that the deficits are indistinquishable from taxes in
their economic effect. This theory developed from David Ricardo (1772-1823).
Robert Barro of Harvard is a supporter of this ideal and is considered a
"new classical" economist. His theory is as follows.
 If the government borrows now and promises to pay it back later, the public
sector would not feel itself wealthier, it would spend no more freely, and 
the deficit would have no effect. Public would be taxed in the future to re-
pay the bonds it now receives. Government savings would decrease and the 
public would need to save more to pay future taxes. The net national savings
would be unaffected. Nothing will change because government chose to tax
later instead of sooner.
----------------------------------------------------------------------------
 Ronald Reagan received a B.S. degree in economics from Eureka College back
in the 1930's. This was before the Keynesian revolution and they therefore
were teaching classical economics at the time. Everyone knows that the total
debt increased under Reagan and hopefully knows that the deficit trend after
the 1982 recession (as a percentage of gnp) was heading downward. What most
people may not be aware of is that the "national debt" figure that the elites
throw around is actually only that portion of future liabilities on which
the government has choosen to pay interest. Here is an example of other debts

    1981 - A- 785 billion national debt
           B- 5.9 trillion unfunded liabilities of social security system
           C- 842 billion pension liabilities for federal personal
           D- (?) billion in federal deposit insurance liabilities

 Item A - Has the potential to be inflation value adjusted away.
 Item B - Indexed to inflation and standard of living.
 Item C - Indexed to inflation and standard of living.
 Item D - Some inflation indexing but can "shock" the system like it 
          recently did.

 What happened to the "hidden" deficit during Reagans term.
 From Policy Review 1989 by Thomas E. Daxon
         (Certified public accountant and former state auditor in Oklahoma)
 He calculated the burden to future tax payers. This included interest
bearing debt, social security, personal pensions, other liabilities and
offsetting assets.

   end fiscal 1981   7.185 trillion.    241 percent of GNP.
   end fiscal 1987   7.952 trillion.    180 percent of GNP.

 So the "total" deficit did go down during the seven fat years as a percent-
age of GNP. Also the total net worth of the government increased. What caused
this during Reagans term - Slower inflation, tax cuts and real growth. Mr.
Clinton, how are you going to give us classical economics when you state
that it failed ? You have tied your hands in big knots. 
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 This paragraph is my own speculation. So the ricardian equivalence states
that the effects of the debt are simular to the effects of additional taxes.
The paying off of these taxes occurs in the future by our children. So the
deficit spenders have found a way to increase taxes without calling it a 
tax hike. They call it additional annual deficit spending or in that decon-
structionism of Clinton, "investment". Whats even worse is the hidden deficit
that the government does not pay interest on. It stays level with inflation
and can increase along with the cost of living. In my mind this total debt
acts like an insurance policy that the elites will still hold power in the
future. If we all decide over the next 4 years that we all want to be Free
Market Conservatives, Classical Liberals, Libertarians or Anarchist we could
surely vote the current elites out of power. But how are we going to handle
the huge debt they leave. That deficit is how they justify their existance.
We can not have limited government as long as we have a huge debt. They know
this and they are making sure that your grandchildren will leave under their
elitist rule.
----------------------------------------------------------------------------
 Here is a list of Republicans who opposed the 1990 budget compromise.
No particular order. I am guessing that they are NOT part of the deficit
spending cabal. These people have also demonstrated leadership desires.

   Dick Armey    Newt Gringrich    Henry Hyde     Spence Abraham
   Tom Delany    Jack Kemp         Pete Dupont

 Also note that the republican platform at the Convention in Houston, asked
for the repealing of the tax hikes in the 1990 Darman agreement.
 I still consider myself a Republican due to the existance of the above
listed people. Any democrat want to add names from his side ?
----------------------------------------------------------------------------
 
 Steve Tyree - These opinions are mine and mine alone.
From: daq@hpfcso.FC.HP.COM (Doug Quarnstrom)
Date: Thu, 7 Jan 1993 20:05:12 GMT
Subject: Re: McKinley Did What?
Organization: Hewlett-Packard, Fort Collins, CO, USA