The Republican Debate Review And Another Gem From MoveOn.org About Economics

Saturday, June 18, 2011

The recent Republican debate in New Hampshire is over and I have to say that I think overall it was the right message and everyone did fairly well. One thing I liked most about it was the fact that there wasn't much time wasted with the candidates attacking one another. Such attacks will no doubt be used by Obama, (or Hillary if she runs and beats him for the nomination), against whoever the nominee eventually is from the Republicans.

I find it funny how so many people from both sides, as well as the media, seem to think that Mitt Romney stands out as the best candidate with the most support. We seem to forget that Mitt Romney had the worst spending/vote ratio out of all the Republican candidates in '08, Mike Huckabee had the best. There are also 2 lessons to be learned about the polls, one from the '04 election cycle and another from the '08 election cycle.

Back in 2004 when the Democrats were trying to decide who would take on Bush in his re-election bid John Kerry was pretty much dead in the polls for the nomination. Despite that, he came out on top in the end.

"Kerry had entered the primary raced as the favorite, but his early performance on the campaign trail was uninspiring, especially in contrast to the high-energy Dean."

Then we come to 2008 and the nomination of the Republican who would step in to try and replace George Bush after his second term. As well as who would try and capitalize on the unpopularity of Republicans due to the ongoing recession in '08, and run for president with the Democrats. Did many people actually think that Obama would be able to compete with Hillary Clinton for the nomination? Of course not but look what happened.

In 2004, the Democrats went with a Vietnam veteran thinking it was the best chance they had to oust Bush, they were wrong. In 2008, Republicans essentially went with the same plan. Nominating a Vietnam veteran and trying to use that to offset the dissatisfaction with the Republicans at the time. A moderate "maverick" seemed like the best chance for Republicans to maintain the White House, Sarah Palin was then chosen by McCain to help with his lack of support from Conservatives and women. Just like in 2004, the plan was a disaster. The loss wasn't all bad though as it led to a Conservative revival within America that has given rise to the Tea Party movement.

The point here is that the polls early on really mean little to nothing. It doesn't concern me that Mitt Romney is seen as the front runner. It's not surprising given the dismal failure of the Obama economic agenda that a businessman, instead of a veteran, seems like a strong candidate this time around. There are areas where I as a conservative don't trust Mitt Romney and it's part of the reason I hope he doesn't win the nomination. I'd vote for Romney if he did end up the candidate, unlike McCain who I didn't vote for, but I think we can do better.

One problem I had with the recent debate is the structure of the questions and lack of time for the candidates. The 30 second answer rule isn't bad but each candidate needs to be able to address each question. It makes no sense that a question will be asked of say, Herman Cain, then only 2 others or so are able to also reply to the question before they move on to another question. It should be streamlined and simpler as we would all get more out of the debates if they worked like this:

The 30 seconds for a reply can stay but the structure of the questions should simply start at one end and work toward another. Ask the question of the first candidate in line, then go down the line allowing each candidate to give an uninterrupted answer. Also, make sure that all of the questions remain on topic relating to specific issues the country cares about. This would allow all candidate to focus on the same issues. Maybe I'd like to know more about the debt ceiling thoughts of the candidates. Unfortunately, only Mitt Romney and Michelle Bachmann are really given time for that specific question so the rest miss out. See what I mean?

For now I'll ignore the polls about who the front runner is until it actually starts to play out in the primary votes and we begin to really see where a majority of voters stand on the candidates.

I have one other issue I'd like to bring to your attention. MoveOn.org has released a video from Robert Reich trying to explain the economy in about 2 minutes and of course it does the typical bash the rich and raise taxes pitch that the left-wing liberals always use. Watch the video for yourself first.

Let's start with point 1. Since 1980 the economy has doubled but adjusting for inflation wages have barely increased.

He of course wants to start in 1980 to make it more of a Reagan and Republican problem because of the vast amount of economic growth since that time period but I'd like to go back just a touch farther if I may, to 1976, (Carter). Scroll down on this chart and look at the inflation rates from 1976 - 1987.

For Carter let's start with 1977 since that's the first year he was actually in office:

Inflation %

1977 - 6.5%
1978 - 7.62%
1979 - 11.22%
1980 - 13.58%

As you can see Jimmy Carter was an abysmal failure at fighting inflation. The longer he remained in office and the more his policies were in effect the worse it got, hence Reagan's massive landslide victory over Carter in 1980. Inflation is just as important, if not more so, as wages when talking about income. Now let's look at wages. Scroll down to the chart on this page.

Average wages:

1977 - $9,779.44
1978 - $10,556.03
1979 - $11,479.46
1980 - $12,513.46

Total wage increase during Carter = $2,734.02

Now let's look at Reagan.

Term 1:

1981 - 10.35%
1982 - 6.16%
1983 - 3.22%
1984 - 4.3%

Term 2:

1985 - 3.55%
1986 - 1.91%
1987 - 3.66%
1988 - 4.08%

Now let's compare the inflation to the wages.

Average wages:
Reagan term 1:

1981 - $13,773.10
1982 - $14,531.34
1983 - $15,239.24
1984 - $16,135.07

Total wage increase after Reagan term 1 = $2361.97

Pause here for a moment. Carter's wage increase was actually $372.05 more than Reagan's term 1 wage growth yet Jimmy Carter lost in a landslide while Reagan was re-elected in 1984 with an amazing 49 states landslide. Why?

The answer was inflation and employment. Under Reagan millions of jobs were created and inflation was kept in check, the result come re-election was an easy victory. Under Carter inflation was spiraling out of control and unemployment was high, the result come re-election was a landslide defeat.

Average wages:
Reagan term 2:

1985 - $16,822.51
1986 - $17,321.82
1987 - $18,426.51
1988 - $19,334.04

Total wage increase after Reagan term 2 = $2,511.53

Total wage increase after 2 terms of Reagan = $4,873.50

One last comparison to make here. When Reagan was elected in 1980 the average wage, (see above), was $12,513.46. His last year in office the average had increased to $19,334.04. This means that average pay increased by more than 50% under Ronald Reagan while inflation over 8 years averaged only 4.65%. The claim that wages remained flat when adjusted for inflation under Ronald Reagan is now proven blatantly false, Robert Reich is wrong.

This information also proves that Robert Reich is wrong to say that all of the gains in the economy since 1980 have gone only to the super rich. Keep in mind that he states in this MoveOn.org propaganda video that he prefers the Carter tax rates to the Reagan ones and the wage and inflation statistics I've shown above prove that the economy, as well as wages and inflation were far worse under Carter than Reagan. Of course he doesn't expect you to show research the way I have here and he expects that you'll just take his word for it. His belief that we need to return to the Carter era tax rates shows either true economic ignorance or blatant lies about what's best economically for the country, I'll let you decide which is the better description of him.

He then goes on to mention the money that the rich have buys political power. That much is true. That's what the whole fight about lobbyist is about. Yet moveon.org doesn't go after the unions that get special treatment from the Obama administration. The answer is simple. Get rid of lobbyists and make lobbying illegal. It would have broad support from most Americans but politicians from both sides will never push for that since so many from all sides are part of the problem with lobbyists.

Robert Reich then mentions the capital gains taxes, (which Bill Clinton also reduced). Essentially that means a business profit tax. That profit is used to pay you your paycheck and also to expand business leading to more jobs but the soak the rich crowd on the left ignore that point. He claims that the lower taxes are leading to the budget deficits. This is not true.

Massive government spending and few jobs are what's leading to the budget deficits. If you aren't working then you aren't paying taxes. The high unemployment which President Obama has completely failed at relieving decreases revenue and increases deficits because you are now paying people to not work, (through unemployment benefits, food stamps, etc.), and you aren't making any money back from them since they aren't working and therefore paying payroll taxes. Lower taxes increase employment, just look at Texas, and increased employment leads to increased payroll tax wages collected by the government. Combine high unemployment with massive government spending and it's a double negative on revenue, if you aren't making money and you won't stop spending money you end up with a deficit. It's simple really, just apparently too simple for Robert Reich and Moveon.org.

He claims that our inability to borrow as easily as we could before is leading to higher unemployment. However, easy borrowing led to the housing bubble which in turn led to the housing crisis we now face. TARP was passed to ensure that banks could keep lending yet the economy has only gotten worse. The country got so carried away with borrowing and spending money that we forgot how to make and save money. It's that belief in borrowing more and more as well as spending more and more that leads to programs such as stimulus and subsidized housing. It's also that belief that leads to attacks on anyone who talks about cutting budgets in government. It's false economic propaganda championed by groups like moveon.org as well as failed government social programs that are the real cause of this weak, "anemic recovery".

One last point, there's no such thing as an anemic recovery, you either have a recovery or a recession. Which do you think best describes our country's current economic situation? Nice try Robert and moveon.org but I rest my case.


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