From: mccall@mksol.dseg.ti.com (fred j mccall 575-3539)
Subject: Re: The blame game
Organization: Texas Instruments Inc
Distribution: usa
Date: Mon, 14 Sep 1992 13:08:02 GMT

In <21499@rpp386.lonestar.org> jfh@rpp386.lonestar.org (John F. Haugh II) writes:

>In article <18p93eINNoov@agate.berkeley.edu> lazarus@ocf.berkeley.edu (Andrew J. Lazarus) writes:

>>Reagan's 1983 unemploymet was the same as his 82:
>>ALSO 9.5 %. Basically you just blame
>>Carter for every year possible. He lost in November 1980. By 1983 
>>Reagan should be taking the blame.

>An economy does not turn on a dime.  You cannot pass laws cutting taxes,

[Various excuses for why things weren't Reagan's fault deleted.]

>And yes, Reagan had high unemployment at the start of his term.  But the
>metric you are using is simply the wrong yardstick.  You don't look at
>year <X> and say "well, it was bad in year <X>".  You look at years <X>,
><X+1>, and so on.  By the mid-80's, after several years of Reagan, the
>economy was booming.  By the end of Reagan's second term, the economy was
>in great shape, yuppies were still aplenty, and employment outlooks were
>great.  Contrast that to January, 1981 when Reagan took office.  The
>economy was in the ditch, things were looking worse, etc.  Lo and behold,
>things GOT worse.

Yes, Reagan did some things that needed doing, and as a result of
those things eventually got better.  However, I think it's rather
unfair to ignore the fact that a lot of his prescriptions DID
initially make the economy worse.  Frankly, when he announced his
policies to bring inflation back under control [which definitely
needed doing], it was clearly obvious to me that we were going to see
a worsening economic picture for a while.  Those kinds of corrections
don't come without costs.

>>>Again, Reagan's "High" is 1982.  Sorry, but bills aren't passed through
>>>Congress and implemented in zero time.  1982 still belongs to
>>Carter.

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.

>>>As for taking an average, that's bunk.  If someone takes a perfectly
>>>sound economy and after the end of 4 years turns it into shit (which is
>>>what Carter did), you don't give him credit for 3 years of good times.
>>
>>And where would George Bush be under this rule? Heh heh.

>The economy is in a mild recovery.  George Bush is paying for the gains
>that were made during the '80s.  Is it his "fault"?  Yes.  Was it all
>that avoidable?  No.  The problem with economic cycles is that, well,
>they are cyclic.  

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.

>Probably the most clever thing any politician could do is a tax surcharge
>that is directly related to growth in the GDP.  This year, we have 2% GDP
>growth.  The surcharge amount is 2%.  Last year when GDP declined, it would
>have been a tax credit.  It would provide automatic tax cuts when the
>economy declines and needs them, and automatic tax hikes when the economy
>gets warmed up again.  Earmark 100% of the revenues generated towards
>paying off the deficit, with Constitutional requirements that the rest of
>the budget balance without use of the surcharge (or FICA), and we'd have a
>solid plan for continued economic growth.

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.

-- 
"Insisting on perfect safety is for people who don't have the balls to live
 in the real world."   -- Mary Shafer, NASA Ames Dryden
------------------------------------------------------------------------------
Fred.McCall@dseg.ti.com - I don't speak for others and they don't speak for me.