Reason enough to vote for the Democrats...

Discussion in 'Politics' started by slurper_la, Aug 31, 2008.

  1. slurper_la

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    August 31, 2008
    Economic View
    Is History Siding With Obama’s Economic Plan?

    By ALAN S. BLINDER
    CLEARLY, there are major differences between the economic policies of Senators Barack Obama and John McCain. Mr. McCain wants more tax cuts for the rich; Mr. Obama wants tax cuts for the poor and middle class. The two men also disagree on health care, energy and many other topics.
    Such differences are hardly surprising. Democrats and Republicans have followed different approaches to the economy for as long as there have been Democrats and Republicans. Longer, actually. Remember Hamilton versus Jefferson?
    Many Americans know that there are characteristic policy differences between the two parties. But few are aware of two important facts about the post-World War II era, both of which are brilliantly delineated in a new book, “Unequal Democracy,” by Larry M. Bartels, a professor of political science at Princeton. Understanding them might help voters see what could be at stake, economically speaking, in November.
    I call the first fact the Great Partisan Growth Divide. Simply put, the United States economy has grown faster, on average, under Democratic presidents than under Republicans.
    The stark contrast between the whiz-bang Clinton years and the dreary Bush years is familiar because it is so recent. But while it is extreme, it is not atypical. Data for the whole period from 1948 to 2007, during which Republicans occupied the White House for 34 years and Democrats for 26, show average annual growth of real gross national product of 1.64 percent per capita under Republican presidents versus 2.78 percent under Democrats.
    That 1.14-point difference, if maintained for eight years, would yield 9.33 percent more income per person, which is a lot more than almost anyone can expect from a tax cut.
    Such a large historical gap in economic performance between the two parties is rather surprising, because presidents have limited leverage over the nation’s economy. Most economists will tell you that Federal Reserve policy and oil prices, to name just two influences, are far more powerful than fiscal policy. Furthermore, as those mutual fund prospectuses constantly warn us, past results are no guarantee of future performance. But statistical regularities, like facts, are stubborn things. You bet against them at your peril.
    The second big historical fact, which might be called the Great Partisan Inequality Divide, is the focus of Professor Bartels’s work.
    It is well known that income inequality in the United States has been on the rise for about 30 years now — an unsettling development that has finally touched the public consciousness. But Professor Bartels unearths a stunning statistical regularity: Over the entire 60-year period, income inequality trended substantially upward under Republican presidents but slightly downward under Democrats, thus accounting for the widening income gaps over all. And the bad news for America’s poor is that Republicans have won five of the seven elections going back to 1980.
    The Great Partisan Inequality Divide is not limited to the poor. To get a more granular look, Professor Bartels studied the postwar history of income gains at five different places in the income distribution.
    The 20th percentile is the income level at which 20 percent of all families have less income and 80 percent have more. It is thus a plausible dividing line between the poor and the nonpoor. Similarly, the 40th percentile is the income level at which 40 percent of the families are poorer and 60 percent are richer. And similarly for the 60th, 80th, and 95th percentiles. The 95th percentile is the best dividing line between the rich and the nonrich that the data permitted Professor Bartels to study. (That dividing line, by the way, is well below the $5 million threshold John McCain has jokingly used for defining the rich. It’s closer to $180,000.)
    The accompanying table, which is adapted from the book, tells a remarkably consistent story. It shows that when Democrats were in the White House, lower-income families experienced slightly faster income growth than higher-income families — which means that incomes were equalizing. In stark contrast, it also shows much faster income growth for the better-off when Republicans were in the White House — thus widening the gap in income.
    The table also shows that families at the 95th percentile fared almost as well under Republican presidents as under Democrats (1.90 percent growth per year, versus 2.12 percent), giving them little stake, economically, in election outcomes. But the stakes were enormous for the less well-to-do. Families at the 20th percentile fared much worse under Republicans than under Democrats (0.43 percent versus 2.64 percent). Eight years of growth at an annual rate of 0.43 percent increases a family’s income by just 3.5 percent, while eight years of growth at 2.64 percent raises it by 23.2 percent.
    The sources of such large differences make for a slightly complicated story. In the early part of the period — say, the pre-Reagan years — the Great Partisan Growth Divide accounted for most of the Great Partisan Inequality divide, because the poor do relatively better in a high-growth economy.
    Beginning with the Reagan presidency, however, growth differences are smaller and tax and transfer policies have played a larger role. We know, for example, that Republicans have typically favored large tax cuts for upper-income groups while Democrats have opposed them. In addition, Democrats have been more willing to raise the minimum wage, and Republicans have been more hostile toward unions.
    The two Great Partisan Divides combine to suggest that, if history is a guide, an Obama victory in November would lead to faster economic growth with less inequality, while a McCain victory would lead to slower economic growth with more inequality. Which part of the Obama menu don’t you like?


    Alan S. Blinder is a professor of economics and public affairs at Princeton and former vice chairman of the Federal Reserve. He has advised many Democratic politicians.

     
  2. sargon20

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    Nothing like facts but then again the neo-cons never like dealing with facts that don't fit the ideology. Just assault the messenger. Call it a 'controversy' when there is none. Muddy the issue. Confuse the public (which is so easy it's pathetic) then move on to the next topic.
     
  3. SilverTrain

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    Thanks for posting that.
     
  4. SpeedoGuy

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    Income inequality rose during Republican administations? Who'da thunk it?
     
  5. SilverTrain

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    But there must be some mistake.

    I mean, when you cut taxes on corporations and wealthy individuals, that stimulates investment in infrastructure, jobs, etc., and shitloads of money trickles down to the lower income brackets.

    Yeeaaahhhh.....:rolleyes:
     
  6. sargon20

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    The damning thing is the public doesn't know and no one in the big networks (CNN, CBS, ABC, yadayadayada) will tell them. If bleeds it leads. If it thinks it stinks.

    The new data also shows that the top 300,000 Americans collectively enjoyed almost as much income as the bottom 150 million Americans. Per person, the top group received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980. <----- this news thinks therefore it stinks. Next story. How about the rapist stalking the campus? That will get far higher ratings than this socialist crap.
     
  7. transformer_99

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    Does it matter if you increase taxes on the wealthy, they hear you've decreased taxes for the poorest and middle class (what there is left of them), you'll have inflation anyway. There are more ways to circumvent even higher taxes on just the wealthy/wealthiest. There has to be a bigger plan than just taxation. Without price controls, the market adjusts to take up whatever surplus a tax break would create. Then you have to distribute income more equitably. As the Govt. becomes more involved, we become more communist. Then there's the reality that not everyone tells the truth about much of anything, so how does either candidate propose to get past that ?

    When home prices were doubling and tripling, it would've been nice to have our incomes do so as well, but then McMeals and everything else across the board increase, because the wealthiest that can afford the franchises will maximize their profit potential, whether or not they feed anyone. It's a simple, price x quantity equation.

    For example, I believe as more were unemployed during this calendar year, the price of fuel escalated to cover fewer commuters. We've all heard how demand for gasoline has dropped, yet prices have barely dropped. Jan 2008, gas was about $ 3/gallon here for the cheapest, it steadily rose to $ 4.15 and is now $ 3.75+/gallon. In the last 8 months, unemployment has risen, and gas is closer to $ 4/gallon for it. Sell less gas, make as much money and more. Large corporations generally know what our consumption habits are, and prices fluctuate to account for supply and demand.

    Ponder this, cash registers can assign unique transaction numbers to cash purchases that represent a unique individual/customer on a specific date of purchase and credit card purchases also identify timing and unique customers more specifically, the two can be combined to profile customers and buying habits when processed thru a SQL database and complex "what if" modeling. So even a cash purchase of goods doesn't go undetected or uncounted as a purchase encounter. And yes there are a bunch of corporations, but each one has similar capabilities to profile their consumer base. If you aren't buying gas from Exxon, Shell or whoever else, you have to buy it from another that is collecting data from a similar retail outlet. And how much data is necessary to formulate a profile. Well, if they did it for a couple of years during the Clinton or Bush 8 years, they have a rolling two year period to be able to run thru the same model. Consumption is consumption, so based upon units consumed, all there is left to do is factor price and inflation to arrive at gross income, which gets factored down to expenses and net profits/losses.

    Sorry for the long and drawn out post.
     
    #7 transformer_99, Aug 31, 2008
    Last edited: Aug 31, 2008
  8. slurper_la

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    Sorry it had nothing to do with the original article.
     
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