|Howard Dean's plan||Captain Morgan|
Aug 22, 2003 6:47 AM
|I read Howard Dean's article this morning in the WSJ. He spends the first half of the article talking down the economy and lays blame with Bush. I think he fails to recognize that economies go through normal cycles. The current economy was not caused by Bush (or Clinton, for that matter). It was the result of the normal economic cycle combined with the bursting of the bubble of the late 1990's.
He faults Bush for tax cuts that "don't address our needs." Actually, Bush's tax cuts were theoretically correct under classical economic theory in order to stimulate the economy. Thus far, we have avoided a major recession.
Dean's first point is that he would repeal both the 2001 and 2003 tax cuts to "address the needs of the average American, invest in the nation's infrastructure and...put the money in the hands of those most likely to spend it." To me, this almost seems contradictary, at least in regard to the first and third points. The second point (i.e. infrastructure) sounds nice, but has no substance in my view.
His next task is to provide health insurance to current uninsured and reduce the cost of health care for everyone. One of the major drivers of rising health care costs in my view is the amount of malpractice insurance required to practice medicine and liberal lawsuit judgements. I would like to see a Democratic candidate attack this root of the cause, however unpopular that may be with the far left.
His next "important part" is to funnel funds to states for education, highways, capital for small businesses, etc. Won't this cause budget problems just the same as Bush's tax cuts? Well, no, because he plans to balance the budget.
I agree with his ideas on tax reform and some kind of health care reform, but to think that the government can spend money more responsibly than taxpayers is faulty. That has not been tried since the Carter administration. Also, by repealing the tax cuts, he would undoubtedly pull this economy into recession.
|He's gonna be a GREAT Vice President.||OldEdScott|
Aug 22, 2003 6:59 AM
|And we'll probably know where he's living, too.|
|He's gonna be scary||Captain Morgan|
Aug 22, 2003 7:26 AM
|He'd be at least the 3rd scary VP in a row: Gore, Cheaney, Dean|
|I like your bipartisan spirit! nm||OldEdScott|
Aug 22, 2003 7:29 AM
|Don't forget Mr. Potatoe-Head! nm||Brooks|
Aug 22, 2003 10:04 AM
Aug 22, 2003 7:19 AM
|First of all, show me a stat that says malpractice is driving health care increases?
How many people do you personally know that have received "liberal malpractice settlements"?
Health care has about 30% administrative overhead due to complex billing/insurance/HMOs, etc... (Canada's single payer system isn't that much better at something like 18%. The real issue is the health care does NOT function like a proper "market." We need an all or none solution. Either make it a singlepayer system and reduce admin overhead to next to nothing, or open it up as a true market (even if that means NOT treating those who cannot pay- just as an automotive shop would do). Half the issue with people being uninsured is they KNOW they will receive treatment anyway (and this coming from me, a liberal?- well it is relatively true).
Dean's problem is he simply isn't "presidential" enough- not the GWB is- but his father sort of was... if they could give Dean Mr. Kerry's teeth and hair, we might have something viable ;)
|stat that says malpractice is driving health care increases||Captain Morgan|
Aug 22, 2003 7:37 AM
|Medical malpractice suits are driving up the cost of health care says a new study by the U.S. Department of Heath and Human Services (HHS).
Medical liability is extremely costly to the medical industry. It adds $60 billion to $110 billion to the costs of private health care each year and another $30 billion to $60 billion to federal government payments for Medicare, Medicaid and other programs.
A primary component of these rising costs is medical malpractice insurance. Excessive lawsuits and massive awards drive up the costs of insurance, which doctors must pass on in increased fees. However, most lawsuits are simply wasteful and benefit trial lawyers more than patients. For example:
The vast majority of medical liability claims (up to 70 percent) do not result in any payments to patients, but each of these cases costs almost $25,000 on average to defend against.
Lawyers' fees account for 40 percent or more of multimillion-dollar payouts.
Less than 30 percent of all the money that doctors pay in liability insurance fees goes to patients.
The HHS argues that states should put reasonable limits on non-economic damages ($250,000 to $350,000). This has slowed the rise in insurance premiums in several states. States without any limits on non-economic malpractice damages are experiencing rises of 44 percent in the cost of insurance on average, while states with limits are experiencing only 12 percent on average.
These excessive lawsuits also raise medical costs by forcing doctors to order unnecessary tests to prevent being sued. For example, 79 percent of doctors surveyed admitted that they ordered more tests than medically necessary to help protect themselves against lawsuits. These excessive tests, procedures and prescriptions raise the cost of health care for everyone.
Source: "Confronting the New Health Care Crisis: Improving Health Care Quality and Lowering Costs By Fixing Our Medical Liability System," July 24, 2002, Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services.
|caps on damages?||rufus|
Aug 22, 2003 7:59 AM
|how about instead, we put caps on the price of malpractice insurance?
of course, there's no way in hell that would ever get passed, due to the insurance lobby.
|How could that possibly work?||TJeanloz|
Aug 25, 2003 9:59 AM
|The insurance companies will have to charge some premium over what they pay out, or else they wouldn't really be in business, would they?|
|insurance companies make money by investing||rufus|
Aug 25, 2003 12:48 PM
|which is one of the reasons their rates have gone up so much. they are publicly traded companies who must show continued growth and profits for their shareholders. when the market collapsed, so did their revenue stream, and their only way to continue to show business growth was to raise rates.
i'm not saying cap their rates at, or less than their payouts. but they make hand over fist more than that and they don't need to. cap rates, and the rise stops. some companies may not like it, but so what. let them move on to some other business model if they feel they aren't making enough. somehow, i think they'd have a harder time making money elsewhere.
|12% less looks MUCH better to me.||dr hoo|
Aug 22, 2003 8:53 AM
|Show me a business that wouldn't JUMP at that kind of cost savings.|
|The Administration's role in the economy||jtolleson|
Aug 22, 2003 7:27 AM
|While I agree that it is unfair to lay the current state of the economy en toto at the foot of the White House, it is equally unfair to say that Mr. Bush is being blamed for an ordinary economic downturn which is part of a cycle beyond his control.
A burgeoning federal debt IS straining our economic markets, and is a direct result of his extremist approach to federal taxing and spending. A true fiscal conservative would strive for a balanced budget, not merely tax cuts. He wants to have his cake and eat it too, and I think that's irresponsible.
I will not be bribed with paltry mid-year refunds while our federal government behaves like a teenager with a VISA card, and I do lay the blame for that at Mr. Bush's feet. He has never even come CLOSE to sending a balanced budget to Congress, unlike his predecessor.
|The Administration's role in the economy||TJeanloz|
Aug 22, 2003 7:32 AM
|I don't want to sound like a complete jackass, but could you back up the "burgeoning federal debt IS straining our economic markets" statement.
Dow and NASDAQ are universally up since the deficit began to grow. The bond market, which is most directly effected by government debt, has not faltered beyond what would be expected, given the rise in the equity markets. Interest rates remain near all time lows (they would be rising rapidly if government debt was putting pressure on the market).
|The Administration's role in the economy||Tri_Rich|
Aug 22, 2003 7:44 AM
|The conomy and particularly the stock market is based on people's pyschology and perceptions. These are in large part affected by the administrations policies. If enough people feel that the administartion is doing the right thing, then they are, and vice versa (a self fulfilling kind of thing).|
|So Bush must be doing all the right things (nm)||TJeanloz|
Aug 22, 2003 8:07 AM
|So Bush must be doing some things..||Tri_Rich|
Aug 22, 2003 8:30 AM
|although he is on vacation more than the French.
I am simply saying that trying to say that tax cuts, etc. are or are not helping the economy is not a very useful idea.
The lack of recent terror attacks or Enron-esque scandals probably have as great an effect as the administration fiscal policy.
As several comedians have pointed out the economy really needs "oral sex in the oval office", as this ocurred during strong economic times.
|The Administration's role in the economy||Jon Billheimer|
Aug 22, 2003 8:58 AM
|I would point out--with some trepidation, since I'm not an economist!--that continuing and growing deficits will ultimately either produce higher interest rates or inflation, or both. JTolleson is right in that Bush's fiscal policies are in no way conservative and that he is irresponsible in wanting to "have his cake and eat it too." As I recall it has always been Republicans who accuse Democrats as being irresponsible spendthrifts. But I guess being a spendthrift is okay as long as you spend your bucks in an effort to kill more people and take over more countries.|
|I think to make the argument about debt straining the econ...||dr hoo|
Aug 22, 2003 8:59 AM
|... you have to look at what the effects will be if the deficts continue out 3+ years. The deficit is working right now to stimulate the economy (though i think the deficit could be used more effectively differently allocated).
If the economy becomes strong in the next 2 years, the deficit now won't be a problem (so long as we lower the debt a bit from that point on). If the economy slowly grows, stagnates or shrinks then continuing deficits will be a big drag.
The market is off its lows, but it's still not punching through to levels I trust to be indicators of a long term bull market.
|You don't sound||jtolleson|
Aug 22, 2003 9:09 AM
|like a jacka$$ at all! Fair question. While it is true, as Mr. Keynes told us many years ago, that deficit spending by the government can help economic growth, it is also true the government debt leads to higher interest rates. The only reason we haven't seen them yet is the fed has kept them artificially low in order to preserve one of the few continuing bright spots in the economy -- home sales and housing starts.
Since when are Republicans Keynesians anyway? :)
|Markets know everything,||TJeanloz|
Aug 22, 2003 9:28 AM
|If what you are saying is true, we would see a significant shift in long term yield curves, most notably in the 30 year maturities. Such a shift has not occurred, reflecting investors' expectations that the current deficit will not be a significant drag on the future economy.
It is true, as others have pointed out, that indefinite deficits will lead to higher interest rates. We can thus conclude that the market does not expect these deficits to be indefinite and historically significant. Which runs exactly contrary to the statement that these deficits are "straining our financial markets". They are not. They might someday, but they are not right now.
Furthermore, the Fed has not "kept rates artificially low" - the Fed doesn't set rates, the market does.
|Thank you!||Live Steam|
Aug 25, 2003 2:43 PM
|I was just about to ask the same question.|
|re: Howard Dean's plan||dr hoo|
Aug 22, 2003 8:50 AM
|"Actually, Bush's tax cuts were theoretically correct under classical economic theory in order to stimulate the economy. "
There are many theoretically correct types of tax cuts. For example, a democratic proposal would have accelerated the depreciation on capital expenditures. That would have stimulated corporate spending.... potentially on infrastructure issues.
"His next task is to provide health insurance to current uninsured and reduce the cost of health care for everyone. One of the major drivers of rising health care costs in my view is the amount of malpractice insurance required to practice medicine and liberal lawsuit judgements. "
There can be more than driver of health insurance costs. Pharmaceutical companies spend more on advertising than research and development. I remember a time when drug ads on tv were banned. Maybe that would help lower costs? In any case, any realistic plan must address a variety of sources of the far greater than inflation increase in health care costs.
"Won't this cause budget problems just the same as Bush's tax cuts? Well, no, because he plans to balance the budget. "
The democrats agree with defict spending to stimulate the economy. The do want the deficit to be invested differently. But Dean says balanced. Will he do so?
Dean balanced the budget of Vermont, even though he has NO LEGAL REQUIREMENT to do so. No law, no state constitutional requirement. In fact, he squirreled away many "rainy day" funds so Vermont is not feeling the effects of deficits anwhere near the extent of other states. He's got a pretty good record on this front.
I don't like the guy much, but he does have experience to judge him by.
|You are incorrect, sir||Tri_Rich|
Aug 22, 2003 9:14 AM
|On one point, pharmaceutical companies (the one I work for certainly) DO NOT spend more on advertising than R&D. That statement is completely untrue.
In fact Pharma as a sector spend more of their budget on R&D then does any other sector of the economy. In my company (and it's a big one, R&D is the single largest part of the budget.
|company vs. industry.||dr hoo|
Aug 22, 2003 9:53 AM
|The major pharmas spend a lot on advertising, both to medical professionals (which they always did) and to consumers via tv and print. Claratin, Zoloft, Nexium (the little purple pill) ads are on tv all the time!
Smaller companies tend to be ALL r&d. If they hit gold, they often license the medication to a major phara, who then spend the marketing bucks.
"Among the nine pharmaceutical companies examined in the report - Merck, Pfizer, Bristol-Myers Squibb, Pharmacia, Abbott Laboratories, American Home Products, Eli Lilly, Schering-Plough, and Allergan - all but one (Eli Lilly) spent more than twice as much on marketing, advertising, and administration than they did on research and development, and Lilly spent more than one and one-half times as much. Six out of the nine companies made more money in net profits than they spent on research and development last year."
Note that they are including ADMINISTRATION in with the advertising and marketing costs. The admnistration costs ex ad and marketing costs are (I am guessing) not THAT huge. I don't have those numbers broken down, but feel free to find the breakdown if you want.
|company vs. industry.||Tri_Rich|
Aug 22, 2003 10:11 AM
|The real issue is (IIRC) whether the salaries of the R&D scientists are included in the spending numbers. I have a copy of our breakdown, but not in the lab. (BTW we are not one of the companies listed in this study)|
|re: Howard Dean's plan||Captain Morgan|
Aug 22, 2003 9:39 AM
|"a democratic proposal would have accelerated the depreciation on capital expenditures. That would have stimulated corporate spending.... potentially on infrastructure issues."
I don't think this would have been very successful. First, accelerated depreciation is a type of a tax cut, but it is considered temporary. It simply backloads the tax payments. Historically, temporary tax cuts are not effective to stimulate the economy. Secondly, there was already an abundant supply of capital equipment due to the bubble in the late 1990's, so corporations simply did not have a high demand for additional infrastructure items. Lastly, accelerated depreciation reduces current profits, which corporations could not afford due to the depressed level of earnings already in existence.
Regarding pharmaceuticals, I do not remember when they could not advertise. I hope we do not push the pharmaceutical companies too hard. Look at all the great drugs they have come up with in the last decade. Even people with AIDS like Magic Johnson are living normal, healthy lives due to the drugs. Stocks like Pfizer, Merck, Wyeth, SGP, etc. are trading at historical low multiples. We need to incent them to take on more R&D, and the way to do that is make sure they make lots of money on their new discoveries.
"Dean balanced the budget of Vermont..."
Reagan was fiscally responsible, too. But there is a big difference between California and the U.S. There is an even bigger difference between Vermont and the U.S. At least Reagan as a governor was a "tax and cut spending" guy; Dean is a "tax and spend guy.
|Howard Dean's plan is ridiculous and unworkable||moneyman|
Aug 22, 2003 10:59 AM
|In the article, Dean states: "...today's two-income families earn 75% more money than their single-income counterparts did a generation ago, but they actually have less money to spend." What he neglects to say is that the reason for this is that these couples have to pay significantly more in taxes than they did a generation ago. Not just federal taxes, but state, local, property, sales, gas, auto, etc., etc., etc. His solution to the problem is to raise taxes by repealing the 2001 and 2003 tax cuts. That makes no sense whatsoever. On top of that, he will provide health care insurance for everyone, financed through greater taxation.
The problem is we are taxed too much. The solution is to raise taxes. That sounds like a story out of Alice in Wonderland.
In addition, he writes: "One out of four U.S. workers is free-lancing, employed in a temporary job, self-employed or working part-time. Studies show that workers who lose manufacturing jobs take an average 13% pay cut in their next employment." This statement makes it look as though self-employment is only chosen when one loses a manufacturing job. That's just not true. Millions of us, myself included, have chosen to be self-employed. Frankly, I wouldn't have it any other way. Dean is completely out of touch with reality.
|i don't get that at all.||rufus|
Aug 22, 2003 12:18 PM
|"This statement makes it look as though self-employment is only chosen when one loses a manufacturing job"
looks to me like two completely separate but truthful points. one of four is free-lancing, temp, part-time, or self-employed. if that's what the facts show, then that's how it is. the facts also show, if dean is correct, that when manufacturing jobs disappear, those who worked those jobs are forced into other jobs that don't pay as well. which is why manufacturing was the heart of our country for so many years. today we, as a nation, don't make things anymore, we just exchange them from hand to hand.
|That's the most misinformed thing I hear a lot...||TJeanloz|
Aug 22, 2003 1:13 PM
|There's this perception in the United States that we don't make anything. We make a lot of things. We are one of the world's leading producers of food products (which are pretty important). We have millions of manufacturing jobs, despite the downward trend. To say that "we don't make anything" is to ignore the labor of millions of Americans who do make things - what, they aren't as important as Dot-Com idiots?
Are we shifting to a service-based economy? Probably. Are we there yet? Not even close.