Category Archives: Economics

Trumpcare: Bad Policy, Even Worse Politics

The Obamacare replacement plan offered by President Trump and Paul Ryan is scheduled for a vote in the House today. Even though the Republicans have a significant majority in the House, the vote is expected to be a close call as several GOP Members have opposed the legislation.

Indeed, this gets at perhaps the most impressive aspect of the Trumpcare proposal: that it manages to disappoint on almost every criteria imaginable. It’s bad policy and bad politics at the same time. Failures of this magnitude don’t just happen; it takes planning and hard work. And for that, House Speaker Paul Ryan deserves a lot of credit. Not praise mind you, just credit (or blame, if you prefer).

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Help That Hurts: The Case of US Food Aid

President Trump’s discretionary budget proposal includes a $182 million cut to the McGovern-Dole Food for Education program, eliminating the program entirely. Whatever else one thinks of Trump’s budget, this is a good idea.

It will save taxpayers a small amount of money, which is nice. But far more importantly, canceling the program will also likely help the former recipients.

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Why Education Is Not a Public Good

Today, government provides many goods and services that used to be addressed by private means. Public education is one of the most salient examples.

Government stepped into education with the best of intentions. Yet it goes without saying that many people remain dissatisfied with the current outcome. Polls have shown a steady decline of confidence in public schools over time, and it is frequently one of the key issues in US politics. Because the government has been involved for so long, people naturally look to government for the solution.

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Don’t Blame Trump, or Capitalism, for the Next Recession

It took Yahoo! Finance all of a couple hours after the presidential election was called in Donald Trump’s favor to run with this incredible headline: “What could prevent Donald Trump’s recession?”

The man has not even taken office yet, and people are already looking to credit him with the next financial collapse.

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Correcting the Record: No, Obama Is Not Fiscally Responsible

When it comes to dishonest political shilling, one of my favorite examples is the argument that President Obama is fiscally responsible.

We haven’t heard this theme much lately, mostly because neither major party candidate expresses much concern about the debt or the deficit. But back during the primaries, MSNBC was overjoyed to run with the theme that President Obama reduced the deficit by $1 trillion. And naturally, this was framed in a partisan light–look how much more responsible President Obama has been compared to the reckless Republicans!

This is the chart they used to illustrate the point.

Not surprisingly, this same chart is likely to be thrown at any libertarian who criticizes excessive government spending. Because obviously, if one is criticizing Obama, they must have loved Bush? I don’t get it, but that’s how most people assume it works.

Anyway, although the original article made a silly mistake elsewhere, the central claim about Obama reducing the deficit was correct, as long as one granted some rounding.

But of course, we should always be skeptical when a dataset is restricted to an arbitrarily small time period. Why 8 years and not 10? Or maybe back to the beginning of the Bush Administration?

The answer is that, when viewed in larger time frame, President Obama doesn’t quite come off as a responsible and prudent steward of the budget. Here’s the full time line of annual deficits, for as long as the data has been recorded:

As you can see, every year of the Obama Presidency has produced a higher deficit than any prior year, except for the two years impacted directly by the Great Recession, 2008 and 2009.

Admittedly, the above chart isn’t entirely fair since it doesn’t account for inflation or the growth in the US economy. Thus, it is worth also considering this chart which shows deficits over time as a percentage of that year’s gross domestic product (GDP).

Here, President Obama comes out looking slightly better. His share of the graph (to the right of the final shaded recession) has deficits far smaller than those inspired by World War II, for example, and Obama’s record is also better than Reagan’s in some years. But incredibly, he’s still managing to spend more than the US did during the height of the Cold War in the 50s and 60s.

That said, perhaps the most authoritative argument against the “Obama is fiscally responsible” line is provided by simply completing the original chart from MSNBC, with the updated deficit for 2016.


In other words, President Obama’s progress on reducing the historically large annual deficits is now in reverse, registering at an unaudited $587 billion in 2016. And this latest deficit occurred at a time of record low interest rates (and thus low interest payments on the debt), in the absence of any major US ground war, and during a period when the US economy is allegedly doing fine.

One of these things doesn’t add up. But whatever else is true, the point is that President Obama certainly does not deserve praise for fiscal restraint.