Some unsolicited advice for John Kerry

by John Quiggin on March 3, 2004

My post a week or so ago considering (and ultimately rejecting) the hypothesis that the 2004 election might be a good one for the Democrats to lose raised plenty of eyebrows, but the ensuing debate helped to sharpen up my thinking on the underlying issue, that of the unsustainability of current US fiscal policy and the appropriate Democrat response.

In the original post drew the conclusion that the only campaign strategy that would give a Democrat, once elected, any real chance of prevailing over a Republican congress, was that (supported by Dean, Gephardt, Kucinich and Sharpton) of repealing the entire Bush tax cut and starting from scratch. To the extent that primary voters considered this issue, they didn’t see it this way. With the possible exception of Lieberman, Kerry was the candidate most supportive of the tax cuts.

Like Bush, Kerry promises to cut the deficit in half over four years. He proposes to scrap the cuts for those earning more than $200 000, but to expand them for ‘middle-class families’, a group normally taken to include about 95 per cent of the population[1]. When other spending proposals are taken into account, the Tax Policy Center (a joint venture of the Urban Institute and Brookings Institution) estimates that Kerry’s proposals will yield a net increase in the deficit of $165 billion over four years , or $40 billion a year. (Of course, Bush will almost certainly spend more once the unbudgeted costs of higher defense spending and even more tax cuts are factored in). As I show below, this is relative to a baseline of around $550 billion.

I think it’s safe to say this won’t happen. The problem for Kerry, then, is when to discover the deficit. There are three basic options:

fn1. It’s evidence of the startling lopsidedness of the Bush tax cuts, and the explosion of income inequality over the past two decades, that there is, nonetheless, a substantial revenue gain from repealing the cuts for the rich and ultra-rich. About half the benefits of the Bush tax cuts go to those on incomes over $200 000 per year.

Update: Brad de Long points to Kerry’s appointment of Roger Altman as his budget priorities advise as evidence that Kerry will choose Option 1. Kevin Drum is underwhelmed. He supports Option 2 and expects Option 3, or worse.

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Compare and contrast

by Ted on March 3, 2004

When blogger and journalist Tim Blair discovers a Chicago Tribune reporter fibbing about a source, they look into it and fire the reporter. (Good job, Tim.)

When blogger and programmer Rogers Cadenhead discovers Matt Drudge fibbing about a source, that’s just another day at Drudge.

Advantage: old media.

The Borda voting system is fatally defective

by John Quiggin on March 3, 2004

Before I argue that the Borda voting system is fatally defective, it may be worth considering what kinds of weaknesses could justify such a verdict. We know from Arrow’s Impossibility Theorem that any nontrivial voting system will encourage strategic/insincere voting in some circumstances and will not always elect the right candidate (unless ‘right’ is defined to coincide with the outcome of the voting system in question). So a fatal defect must be a lot worse than this. I claim that the Borda voting system is so vulnerable to strategic manipulation that it would be completely unworkable, provided only that there are no restrictions on candidacy.

Note: I did a Google before writing this and couldn’t find anything similar, but of course, when I checked again after doing the work, I found this almost perfect anticipation of my counter-example. But having done the work, I thought I’d post it anyway.

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Idealisations in Economics

by Brian on March 3, 2004

The post below, which arose out of some discussion in my philosophy seminar last week, is a fair bit less topical than most posts on CT, but since it touches on some topics in philosophy of science and economics some people here might find it interesting. Plus I get to bash Milton Friedman a bit, but not for the reasons you might expect.

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