From: jfh@rpp386.lonestar.org (John F. Haugh II)
Newsgroups: tx.politics,alt.politics.clinton
Subject: Re: The blame game
Date: 15 Sep 92 04:53:56 GMT
Reply-To: jfh@rpp386.cactus.org (John F. Haugh II)
Distribution: usa
Organization: River Parishes Programming, Austin, Republic of Texas

In article <1992Sep14.130802.5155@mksol.dseg.ti.com> mccall@mksol.dseg.ti.com (fred j mccall 575-3539) writes:
>So it's not just X+1 now, it's X+2.  If the economy had stayed bad, I
>assume you'd make the '+' larger.

No, the "+" is based on logic.  Certain things are leading indicators,
others trail.  Some of the trailing indicators trail by quite a bit.

For example, when an employer first begins to increase production, the
employer increases the length of the average work-week.  This action
does not put anyone back to work, so the employment rate trails the
improvements in the economy.  If you'd look at average work week length
during Reagan's term, you'd probably see a rise starting several months
before the fall in unemployment.  Likewise, you'd see decreases in
inventories before the rises in the work week.  And you'd see increases
in orders before the decline in inventories, and so on.  Of course,
these are gross generalizations, but they are given to show the natural
progression from economic turn-around to declining unemployment.

>And so we see what happens if John's "X+n" formula can't make things
>right and the person in office happens to be someone he DOESN'T want
>to blame for things.  Suddenly taking a "perfectly sound economy and
>after the end of 4 years turns it into shit" isn't all that bad.  This
>is apparently only a bad thing according to John if the person who
>does it happens to be a Democrat.  If it's a Republican, why, there
>will be all sorts of excuses as to why it's not his fault.  I voted
>against Carter on the basis of him not being able to manage the
>economy (among other things), and I will vote against Bush for the
>same reason.

No, it is "OK" if there is a rational reason for it.  We outgrew the
nations ability to consume during the 80's.  We created 20 or 30
million new jobs.  Now we have to figure out which of those jobs are
"real" and which aren't.  The market is going to adjust and get rid
of the "yuppy" fluff - witness declines in stupid yuppy fads and the
bankrupcies of those businesses.

What was Carter's excuse?  What did we get in return for all the
heartache of the late seventies and early eighties?

>Hard yearly requirements for a balanced budget are, in general, not a
>good idea.  What we need is some way to determine when a deficit is
>'allowed', based on economic growth during some previous period.  When
>the economy is doing well, require a budgetary surplus to be used to
>pay down the deficit.  When the economy is bad, like now, allow a
>deficit.  Requiring a year by year balanced budget tends to be
>pro-cyclical, and would reinforce economic downturns and make them
>much worse.  The time to cut government spending is NOT when the
>economy is already in bad shape, since that just eliminates more jobs
>and makes things even worse.

This completely ignores states which have had balanced budget laws.
In Texas, we have grown consistently during the recent downturn.  Sure,
we declined during the oil bust years.  But we =do= balance our budget,
year after year (or biennium after biennium, as the case may be).

If what you say is true (about re-inforcing down-turns), the government
can just plan ahead and build a trust-fund for future use.  This would
allow the government to still be in-budget and not be "pro-cyclical".
The nice thing about hard and fast guidelines is that they force you
to plan ahead to avoid violating the guideline.  And since the
government should look out for our long-term best interests, forcing
the government to plan ahead would seem to be a good thing.
-- 
John F. Haugh II                   | "The US Government has the Midas Muffler
Ma Bell: (512) 251-2151            |  touch: everything they touch turns to
UUCP: ...!cs.utexas.edu!rpp386!jfh |  shit."
Domain: jfh@rpp386.cactus.org      |                  -- Jay Maynard