Showing posts with label national debt. Show all posts
Showing posts with label national debt. Show all posts
Wednesday, February 27, 2013
The Canadian Way
"Canada… is strong. To stay that way, we must never repeat the mistakes of Europe and the United States."
Pierre Poilievre, a Canadian MP, goes on to describe what he calls the "humiliating American and European experiment with the welfare state." This may come as a surprise (or not) to Americans who lump together the leftist policies in Canada and Europe the same way Poilievre lumps together America and Europe.
I can't agree with everything Poilievre says, but it's hard not to be vicariously inspired when, speaking of the opposition NDP, he says, "They see the Europeans and Americans running off the debt cliff, and they say, 'Let's hurry and catch up!' No thank you, Mr. Speaker. I choose the Canadian way."
ht Mark Perry
Wednesday, November 7, 2012
Aftermath: Reflections on Obama's Re-election
Barack Obama has been re-elected President of the United States.
For starters, Gary Johnson was not a spoiler. While the results are still coming in, as of 11:30pm Pacific, there was not a single state won by Obama where Romney would have won even if every Johnson voter had voted for Romney instead.
Second, there is no mandate. While Obama won, he won with a far narrower lead in both the popular vote and the electoral college than he had in 2008. While Democrats increased their lead in the Senate, Republicans increased their lead in governorships, and the House is on track to be more or less the same as it was. This was very much a status quo election.
On the whole, will we be better or worse with Obama as president?
First of all, expect the fiscal cliff to stay in place. After all, we just re-elected most of the people who put it there to begin with. While I haven't spent too much time learning about the fiscal cliff, Wikipedia claims a 19.63% increase in revenue and a 0.25% decrease in spending, or a nearly 80-to-1 ratio of tax hikes to spending cuts. This will not end well-- and even if our new old government leaders manage to avoid the cliff, the re-elected Obama is in a prime position to extract concessions he was unable to before the election. Any compromise will include more tax hikes than spending cuts, if spending is actually cut at all.
Second, Obamacare will be implemented fully over the next few years. Expect the nation's health, freedom and balance sheet to all suffer. Although to be honest, I don't believe Romney would have done any better.
The national debt will continue to grow. If the fiscal cliff causes a second recession, expect more stimulus and bailouts, probably for Europe too. We may look back at $1.5 trillion deficits and laugh about how small they were. On the other hand, the same probably would've happened under Romney, considering his plan to index military spending to 4% of GDP.
On other long-term important issues, I don't expect Obama to do much of anything. He'll keep ignoring space (mercifully), Social Security will continue to stumble forward without reform, trade deals will be forgotten, immigration won't change. We'll mostly withdraw from Afghanistan on schedule, although the lack of attention the war gets these days means we'll probably keep troops there for the long haul, same as we've still got troops in Germany, Japan and Korea. On trade and Afghanistan, at least, Romney would have been even worse. While Romney may have avoided the fiscal cliff, his insistence to go after China on trade might have been just as bad for the economy.
The main difference between the two candidates in terms of our long-term welfare is this: With Obama's victory, 2016 will see another wide-open primary for Republicans, where we'll have another shot at nominating a true spokesperson for liberty. Had Romney won, we wouldn't get that chance until 2020. So hold onto your hats. It's gonna be a rough four years for liberty, but we made it through the last four. We'll make it this time, too.
For starters, Gary Johnson was not a spoiler. While the results are still coming in, as of 11:30pm Pacific, there was not a single state won by Obama where Romney would have won even if every Johnson voter had voted for Romney instead.
Second, there is no mandate. While Obama won, he won with a far narrower lead in both the popular vote and the electoral college than he had in 2008. While Democrats increased their lead in the Senate, Republicans increased their lead in governorships, and the House is on track to be more or less the same as it was. This was very much a status quo election.
On the whole, will we be better or worse with Obama as president?
First of all, expect the fiscal cliff to stay in place. After all, we just re-elected most of the people who put it there to begin with. While I haven't spent too much time learning about the fiscal cliff, Wikipedia claims a 19.63% increase in revenue and a 0.25% decrease in spending, or a nearly 80-to-1 ratio of tax hikes to spending cuts. This will not end well-- and even if our new old government leaders manage to avoid the cliff, the re-elected Obama is in a prime position to extract concessions he was unable to before the election. Any compromise will include more tax hikes than spending cuts, if spending is actually cut at all.
Second, Obamacare will be implemented fully over the next few years. Expect the nation's health, freedom and balance sheet to all suffer. Although to be honest, I don't believe Romney would have done any better.
The national debt will continue to grow. If the fiscal cliff causes a second recession, expect more stimulus and bailouts, probably for Europe too. We may look back at $1.5 trillion deficits and laugh about how small they were. On the other hand, the same probably would've happened under Romney, considering his plan to index military spending to 4% of GDP.
On other long-term important issues, I don't expect Obama to do much of anything. He'll keep ignoring space (mercifully), Social Security will continue to stumble forward without reform, trade deals will be forgotten, immigration won't change. We'll mostly withdraw from Afghanistan on schedule, although the lack of attention the war gets these days means we'll probably keep troops there for the long haul, same as we've still got troops in Germany, Japan and Korea. On trade and Afghanistan, at least, Romney would have been even worse. While Romney may have avoided the fiscal cliff, his insistence to go after China on trade might have been just as bad for the economy.
The main difference between the two candidates in terms of our long-term welfare is this: With Obama's victory, 2016 will see another wide-open primary for Republicans, where we'll have another shot at nominating a true spokesperson for liberty. Had Romney won, we wouldn't get that chance until 2020. So hold onto your hats. It's gonna be a rough four years for liberty, but we made it through the last four. We'll make it this time, too.
Thursday, December 15, 2011
The Gingrich-Huntsman Debate
Newt Gingrich and Jon Huntsman held their own two-person debate on Monday. Although Huntsman is in dead-last place in the RCP poll of polls, there has been plenty of speculation that he will be the next flavor of the week if-and-when Gingrich implodes like the others. Unlike the others, Huntsman is focusing totally on New Hampshire and counting on a win there to propel him to national victory. He's skipped two national debates in order to campaign in New Hampshire. Even this debate was held in New Hampshire. Only time will tell if this strategy will work, but his current polling average at 3.2% is higher than it's ever been before, not that that's saying very much.
Like the Cain-Gingrich debate, this was only broadcast on C-SPAN, and even then only after a several-hour delay and several scheduling changes. I don't think this has quite the same potential for Huntsman as the Cain-Gingrich debate had for Newt, but I still think it will be interesting enough to cover here. The official C-SPAN video is here, and an alternate version is here. The C-SPAN page includes a "transcript" with different quotes linked to the video, but it doesn't seem to be an actual full transcript. I haven't been able to find one of those.
In their opening statements, Gingrich mostly talks about how he likes this debate format, while Huntsman outlines four points on foreign policy. He says we need to recognize that we're fighting against terrorism, but that we also need to structure our foreign policy with regard to economics and strengthening "our core." He also wants to remind the world what it means to be an ally of the United States.
Afghanistan & Pakistan
Huntsman starts off, saying we've accomplished our goals in Afghanistan, and "it's time for us to come home." He says we've done the best we can and it's time to move on. He repeats what he's said in previous debates that we've knocked out the Taliban and al Qaeda, enabled Afghanistan to hold free elections and killed Osama bin Laden. He says that going forward, our mission should not be nation-building or fighting a counter-insurgency, but rather leading a counter-terrorist effort, which he sees as involving far fewer troops and having more of a special-ops focus.
Huntsman says despite our history with Pakistan when the Soviet Union was still around, and despite the aid we send them, there's a rising anti-Americanism in the country. Our relationship with them is "transactional," that is, we give them money and they give us cooperation in fighting terrorists, even if neither of us necessarily likes the other side. He thinks they could potentially become a "failed nation-state," and we have to be very careful in choosing our national interest objectives in that region, especially given Pakistan's nuclear weapons and terrorist training grounds in Pakistan. He also thinks we need to develop closer ties with India, a country that "shares our values" and is the largest democracy in the world.
Gingrich talks about differential development, and how in the world we now live in, it's possible to have modern, developed institutions right down the street from people living in third-world conditions, and that this is the kind of thing that the leaders in Afghanistan have to deal with. He believes that eventually the forces of "modernity" will eliminate the tribal aspect of Afghan culture, and that this will be an economic process, not a military process, so we need to decide what our position will be in the meantime. On Pakistan, he says that bin Laden could only have successfully hidden in Abbotabad for so long "if a substantial part of the Pakistani intelligence service was protecting him." He also notes that the Pakistani government's first response when we found bin Laden was to get angry at the Pakistanis in Abbotabad who had helped us.
Gingrich also says that the number of Christians in Iraq has fallen from 1.2 million to 500 thousand since we took out Saddam, and he's worried about how things will turn out in Egypt, Libya, Tunisia and Syria. He says in opposing communism, we had a uniting "theory" that motivated all of our actions, but that now under Obama, we don't have such a theory. We're using force "randomly" without a clear mission in the world, and that's what he wants to restore.
Newt says we have four immediate needs. First is to develop an energy policy that not only increases our own energy independence, but also helps us become an energy reserve for the rest of the world if Iran destabilizes energy sources in the Middle East. Second is to restore our manufacturing capabilities that we never lost in the first place. Third is develop more independent intelligence so we're not relying on foreign intelligence as much. Fourth is to develop a national strategy to deal with "radical Islamism" itself, not just dealing with individual countries like Pakistan or Afghanistan where problems crop up.
Iran
Gingrich believes that if you are not willing to let Iran have a nuclear weapon, you must ultimately be for regime change. He is absolutely against letting Iran have a nuclear weapon because he believes they would use it if they had it. He also thinks that it's not practical to simply destroy their nuclear research every few years, partly because they've built their facilities underground, under cities and mosques. He would prefer to see regime change come about non-militarily, the way the Soviet Union collapsed, but he's willing to force regime change militarily if he thinks he needs to.
Gingrich says that while China doesn't have an existential concern with Iranian nuclear weapons, Israel does. He says that if Iran gets nukes, an Israeli prime minister would be in the position of trying to prevent a second holocaust, and that they would understandably do whatever was necessary to prevent that, even if it meant using their own nukes against Iran. Newt believes the only way to prevent an all-out nuclear war in the region is through close cooperation with and support of Israel.
Huntsman calls Iran "the transcendent threat" of the coming decade. We should've supported the "Persian Spring" in 2009, and since we didn't, Iran has continued to refine their nuclear material. He says China is fine with Iran having a nuke, but Russia is more concerned about proliferation. If Iran gets a nuke, then we'll also have to deal with Saudi Arabia, Turkey and Egypt possibly wanting their own nukes to balance Iran. This is why he doesn't want Iran to have a nuclear weapon, and since he wants to prevent that from happening, "all options need to be on the table." He doesn't think that further sanctions against Iran will work, because the mullahs have already decided that they want nukes and they're willing to pay the price. He also says China isn't willing to go any further on sanctions than we already have, and those haven't worked, so it will be left to America to prevent Iran from getting nukes.
The Arab Spring
Hunstman says the real cause of the Arab Spring has been long-term dictatorships and the resultant economic stagnation. In the long-run, we need to "put the pieces back together," and he favors establishing free trade agreements in the region. He doesn't say exactly which countries he would want to include, but he does imply that it would be a regional agreement, based off our current agreement with Israel, rather than a serious of bilateral agreements.
He goes on to say that the more immediate issue is trying to figure out which groups in the Arab Spring will be aligned with our values not just in the short term, but in the long term as well, and that we have to be careful that we're not picking sides that will end up fighting against our values. Several times he compares the Arab Spring to the instability after the fall of the Ottoman Empire, which is an interesting historical idea that I hadn't heard before. On Libya, Huntsman thinks we should not have gone in because the events would've played out the same anyway and we didn't have a discernible national interest there. On Syria, he thinks we should go in, because we do have a national interest via Israel, as Syria is a "conduit" for Iran.
Gingrich doesn't like how Obama "dumped" Mubarak, because Mubarak had been our ally. Gingrich is fine with corrupt, brutal dictators as long as they're our corrupt, brutal dictators. He also repeats his earlier complaint about our intelligence network, and goes into more detail about the uniting theory that he wants to promote. He says we need to have a US-led cultural shift in the Arab world, where we encourage young Arabs to come to the United States or other Western countries to study and learn our values, and to take "modernity" back to their home countries. He also wants to translate Western books into Arabic as part of this cultural push.
Defense Spending
Gingrich is "deeply opposed" to the sequester on defense spending that results from the failure of the Supercommittee. He says we shouldn't allow government waste just because it's part of the defense budget, but he's opposed to any cuts to defense aside from the politician's favorite thing to cut-- waste, fraud and abuse. He says we should cut entitlements instead of cutting defense in order to balance the budget.
Huntsman, on the other hand, says the level of debt we face is a national security issue, and if we don't cut back our debt, we'll end up like Japan, Greece and Italy. Given the threat posed by our mounting debt, he says every spending area needs to be on the table, and we can't have any "sacred cows." Defense gets almost $700 billion, which is more than at the height of the Cold War, more than the rest of the world spends on their militaries combined, and we should be able to find some cuts. He says even though we're spending so much more, we're getting much less than we were, for example, after WWII, and we could save a lot of money if we reform our military's procurement process.
Gingrich's response is that we should realign our military now that the Cold War is over. He brings up the troops we have in Stuttgart, who were put there to defend against a possible Soviet invasion from East Germany, but are no longer necessary. He says he agrees with Huntsman's point about the military's procurement process, and says they spend too much time thinking and writing reports for each other. He wants to "thoroughly modernize" the military to get rid of the waste.
Along the realignment lines, Huntsman says that we still have 50,000 troops in Germany, who don't need to be there. He says the 21st century military and economic challenges will be in the Pacific region, and that's where we need to focus our military capabilities.
China and the Pacific Rim
Huntsman says US-China will be "the relationship of the 21st century." He thinks a lot of the old guard in the Chinese leadership will soon be retiring and the "fifth generation" will take over. He says the new generation are "hubristic nationalists" who have gotten used to the idea of 10+% economic growth and believe "they can do no wrong." As that generation takes over and they're confronted with economic problems and a growing class of former farmers, investing in China will become riskier. Huntsman predicts that a lot of the capital that has been investing in China will return to the US and other safer countries. He goes on to say that the Chinese are the greatest long-term strategic thinkers in the world, and that Americans are the greatest short-term tactical thinkers in the world, and that our challenge is to figure out how to get these two cultures to work together.
Gingrich says he largely agrees with Huntsman on China, but differentiates between the relationship between the American people and the Chinese people versus the relationship between the American and Chinese governments. He says we're always going to have certain tensions with an authoritarian government, but that we should be careful to not build an antagonistic relationship between our two peoples. Gingrich also spends some time talking about our domestic policies, saying, "If we're determined to be domestically stupid, it is impractical to ask the Chinese to match us in stupidity." He wants to make sure we're educating students in math and science so that they can compete with China and other countries.
Huntsman agrees with Gingrich's point about the American and Chinese peoples versus the governments, and says we need to take the American-Chinese relationship out of Washington and Beijing and develop more direct relationships at subnational and private levels. He says the conversation within the Chinese Communist Party is now being driven by the internet and their people's increasing awareness of the outside world.
Conclusion
I like this debate format a lot, and I'd love to see other candidates have debates like this as well, even not including Gingrich. A Perry-Santorum-Bachmann debate could be very interesting, and I think a Romney-Gingrich debate could easily reshape the current state of the race. I think I'd also like to see the proposed Gingrich-Obama debates even if Newt doesn't win the nomination, as that could be very entertaining.
Both men in this debate came across as very knowledgeable in every area they covered. There weren't any you-go-first moments like in the Cain-Gingrich debate, although Newt did say that Huntsman knew more about China than he did. Their different backgrounds were evident in their answers. Newt's responses tended to be more big-picture and broader in nature, building long-run historical narratives with anecdotes to justify the narratives. Huntsman's responses tended to be more specific, with more concrete plans, and the detailed facts that support his plans.
In general, I liked Huntsman's answers better. I mostly agree with him on Afghanistan, and absolutely agree about India. It was good to hear him bring up India because they're a very important country that is often ignored in these foreign policy discussions. By contrast, Gingrich's position on Afghanistan seemed to be rather patronizing. Several times he talks about bringing "modernity" and Western culture to the Muslim world, even as he opposes democracy in places like Egypt.
Neither man supports the Arab Spring as much as I would like, and although Gingrich doesn't actually oppose it, he seems a lot closer to opposing it than to supporting it. He seems just fine with the old-school idea that we should support brutal dictators who oppress and kill their own people. He doesn't at all address the idea that maybe the reason Egyptians don't like us is because we supported Mubarak for so long. Huntsman, on the other hand, talks about the United States being a "shining beacon" for hope and democracy in the world, and generally supports the Arab Spring. He would not have gone into Libya, but he justifies that by saying Gaddafi would have fallen anyway (which is dubious, but shows his support for democracy even if he disagrees about the methods used). Huntsman also proposed a regional free trade area in the long-term, which I think was the only mention of trade in this foreign policy debate.
I also agree with Huntsman more on defense spending. Gingrich wants to cut entitlements rather than defense. Although we should cut entitlements, the best reforms to Social Security, Medicare and Medicaid will take years if not decades to implement. Some, like personal retirement accounts, will be great in the long-term but will increase the deficit in the short-term. We can't balance the budget by only cutting entitlements, but Gingrich seems to disagree. Huntsman is more practical, saying that military spending is far higher than it needs to be, and pointing to a specific area, the procurements process, where we're spending more and getting less than we used to.
Overall, this debate reaffirmed some of the policy reasons why I don't like Newt Gingrich. It also reaffirmed that Jon Huntsman is possibly the best option on foreign policy at the moment. In terms of the underlying philosophy that informs their positions, I agree with Huntsman's far more than with Gingrich's. On the other hand, I don't really like Huntsman as a person. He's more of a downer than any of the other candidates, and that matters when you have to inspire your supporters to actually get out and vote for you. Of course, Gingrich isn't exactly inspiring either. Between the two men, I think I'd rather vote for Huntsman.
Like the Cain-Gingrich debate, this was only broadcast on C-SPAN, and even then only after a several-hour delay and several scheduling changes. I don't think this has quite the same potential for Huntsman as the Cain-Gingrich debate had for Newt, but I still think it will be interesting enough to cover here. The official C-SPAN video is here, and an alternate version is here. The C-SPAN page includes a "transcript" with different quotes linked to the video, but it doesn't seem to be an actual full transcript. I haven't been able to find one of those.
In their opening statements, Gingrich mostly talks about how he likes this debate format, while Huntsman outlines four points on foreign policy. He says we need to recognize that we're fighting against terrorism, but that we also need to structure our foreign policy with regard to economics and strengthening "our core." He also wants to remind the world what it means to be an ally of the United States.
Afghanistan & Pakistan
Huntsman starts off, saying we've accomplished our goals in Afghanistan, and "it's time for us to come home." He says we've done the best we can and it's time to move on. He repeats what he's said in previous debates that we've knocked out the Taliban and al Qaeda, enabled Afghanistan to hold free elections and killed Osama bin Laden. He says that going forward, our mission should not be nation-building or fighting a counter-insurgency, but rather leading a counter-terrorist effort, which he sees as involving far fewer troops and having more of a special-ops focus.
Huntsman says despite our history with Pakistan when the Soviet Union was still around, and despite the aid we send them, there's a rising anti-Americanism in the country. Our relationship with them is "transactional," that is, we give them money and they give us cooperation in fighting terrorists, even if neither of us necessarily likes the other side. He thinks they could potentially become a "failed nation-state," and we have to be very careful in choosing our national interest objectives in that region, especially given Pakistan's nuclear weapons and terrorist training grounds in Pakistan. He also thinks we need to develop closer ties with India, a country that "shares our values" and is the largest democracy in the world.
Gingrich talks about differential development, and how in the world we now live in, it's possible to have modern, developed institutions right down the street from people living in third-world conditions, and that this is the kind of thing that the leaders in Afghanistan have to deal with. He believes that eventually the forces of "modernity" will eliminate the tribal aspect of Afghan culture, and that this will be an economic process, not a military process, so we need to decide what our position will be in the meantime. On Pakistan, he says that bin Laden could only have successfully hidden in Abbotabad for so long "if a substantial part of the Pakistani intelligence service was protecting him." He also notes that the Pakistani government's first response when we found bin Laden was to get angry at the Pakistanis in Abbotabad who had helped us.
Gingrich also says that the number of Christians in Iraq has fallen from 1.2 million to 500 thousand since we took out Saddam, and he's worried about how things will turn out in Egypt, Libya, Tunisia and Syria. He says in opposing communism, we had a uniting "theory" that motivated all of our actions, but that now under Obama, we don't have such a theory. We're using force "randomly" without a clear mission in the world, and that's what he wants to restore.
Newt says we have four immediate needs. First is to develop an energy policy that not only increases our own energy independence, but also helps us become an energy reserve for the rest of the world if Iran destabilizes energy sources in the Middle East. Second is to restore our manufacturing capabilities that we never lost in the first place. Third is develop more independent intelligence so we're not relying on foreign intelligence as much. Fourth is to develop a national strategy to deal with "radical Islamism" itself, not just dealing with individual countries like Pakistan or Afghanistan where problems crop up.
Iran
Gingrich believes that if you are not willing to let Iran have a nuclear weapon, you must ultimately be for regime change. He is absolutely against letting Iran have a nuclear weapon because he believes they would use it if they had it. He also thinks that it's not practical to simply destroy their nuclear research every few years, partly because they've built their facilities underground, under cities and mosques. He would prefer to see regime change come about non-militarily, the way the Soviet Union collapsed, but he's willing to force regime change militarily if he thinks he needs to.
Gingrich says that while China doesn't have an existential concern with Iranian nuclear weapons, Israel does. He says that if Iran gets nukes, an Israeli prime minister would be in the position of trying to prevent a second holocaust, and that they would understandably do whatever was necessary to prevent that, even if it meant using their own nukes against Iran. Newt believes the only way to prevent an all-out nuclear war in the region is through close cooperation with and support of Israel.
Huntsman calls Iran "the transcendent threat" of the coming decade. We should've supported the "Persian Spring" in 2009, and since we didn't, Iran has continued to refine their nuclear material. He says China is fine with Iran having a nuke, but Russia is more concerned about proliferation. If Iran gets a nuke, then we'll also have to deal with Saudi Arabia, Turkey and Egypt possibly wanting their own nukes to balance Iran. This is why he doesn't want Iran to have a nuclear weapon, and since he wants to prevent that from happening, "all options need to be on the table." He doesn't think that further sanctions against Iran will work, because the mullahs have already decided that they want nukes and they're willing to pay the price. He also says China isn't willing to go any further on sanctions than we already have, and those haven't worked, so it will be left to America to prevent Iran from getting nukes.
The Arab Spring
Hunstman says the real cause of the Arab Spring has been long-term dictatorships and the resultant economic stagnation. In the long-run, we need to "put the pieces back together," and he favors establishing free trade agreements in the region. He doesn't say exactly which countries he would want to include, but he does imply that it would be a regional agreement, based off our current agreement with Israel, rather than a serious of bilateral agreements.
He goes on to say that the more immediate issue is trying to figure out which groups in the Arab Spring will be aligned with our values not just in the short term, but in the long term as well, and that we have to be careful that we're not picking sides that will end up fighting against our values. Several times he compares the Arab Spring to the instability after the fall of the Ottoman Empire, which is an interesting historical idea that I hadn't heard before. On Libya, Huntsman thinks we should not have gone in because the events would've played out the same anyway and we didn't have a discernible national interest there. On Syria, he thinks we should go in, because we do have a national interest via Israel, as Syria is a "conduit" for Iran.
Gingrich doesn't like how Obama "dumped" Mubarak, because Mubarak had been our ally. Gingrich is fine with corrupt, brutal dictators as long as they're our corrupt, brutal dictators. He also repeats his earlier complaint about our intelligence network, and goes into more detail about the uniting theory that he wants to promote. He says we need to have a US-led cultural shift in the Arab world, where we encourage young Arabs to come to the United States or other Western countries to study and learn our values, and to take "modernity" back to their home countries. He also wants to translate Western books into Arabic as part of this cultural push.
Defense Spending
Gingrich is "deeply opposed" to the sequester on defense spending that results from the failure of the Supercommittee. He says we shouldn't allow government waste just because it's part of the defense budget, but he's opposed to any cuts to defense aside from the politician's favorite thing to cut-- waste, fraud and abuse. He says we should cut entitlements instead of cutting defense in order to balance the budget.
Huntsman, on the other hand, says the level of debt we face is a national security issue, and if we don't cut back our debt, we'll end up like Japan, Greece and Italy. Given the threat posed by our mounting debt, he says every spending area needs to be on the table, and we can't have any "sacred cows." Defense gets almost $700 billion, which is more than at the height of the Cold War, more than the rest of the world spends on their militaries combined, and we should be able to find some cuts. He says even though we're spending so much more, we're getting much less than we were, for example, after WWII, and we could save a lot of money if we reform our military's procurement process.
Gingrich's response is that we should realign our military now that the Cold War is over. He brings up the troops we have in Stuttgart, who were put there to defend against a possible Soviet invasion from East Germany, but are no longer necessary. He says he agrees with Huntsman's point about the military's procurement process, and says they spend too much time thinking and writing reports for each other. He wants to "thoroughly modernize" the military to get rid of the waste.
Along the realignment lines, Huntsman says that we still have 50,000 troops in Germany, who don't need to be there. He says the 21st century military and economic challenges will be in the Pacific region, and that's where we need to focus our military capabilities.
China and the Pacific Rim
Huntsman says US-China will be "the relationship of the 21st century." He thinks a lot of the old guard in the Chinese leadership will soon be retiring and the "fifth generation" will take over. He says the new generation are "hubristic nationalists" who have gotten used to the idea of 10+% economic growth and believe "they can do no wrong." As that generation takes over and they're confronted with economic problems and a growing class of former farmers, investing in China will become riskier. Huntsman predicts that a lot of the capital that has been investing in China will return to the US and other safer countries. He goes on to say that the Chinese are the greatest long-term strategic thinkers in the world, and that Americans are the greatest short-term tactical thinkers in the world, and that our challenge is to figure out how to get these two cultures to work together.
Gingrich says he largely agrees with Huntsman on China, but differentiates between the relationship between the American people and the Chinese people versus the relationship between the American and Chinese governments. He says we're always going to have certain tensions with an authoritarian government, but that we should be careful to not build an antagonistic relationship between our two peoples. Gingrich also spends some time talking about our domestic policies, saying, "If we're determined to be domestically stupid, it is impractical to ask the Chinese to match us in stupidity." He wants to make sure we're educating students in math and science so that they can compete with China and other countries.
Huntsman agrees with Gingrich's point about the American and Chinese peoples versus the governments, and says we need to take the American-Chinese relationship out of Washington and Beijing and develop more direct relationships at subnational and private levels. He says the conversation within the Chinese Communist Party is now being driven by the internet and their people's increasing awareness of the outside world.
Conclusion
I like this debate format a lot, and I'd love to see other candidates have debates like this as well, even not including Gingrich. A Perry-Santorum-Bachmann debate could be very interesting, and I think a Romney-Gingrich debate could easily reshape the current state of the race. I think I'd also like to see the proposed Gingrich-Obama debates even if Newt doesn't win the nomination, as that could be very entertaining.
Both men in this debate came across as very knowledgeable in every area they covered. There weren't any you-go-first moments like in the Cain-Gingrich debate, although Newt did say that Huntsman knew more about China than he did. Their different backgrounds were evident in their answers. Newt's responses tended to be more big-picture and broader in nature, building long-run historical narratives with anecdotes to justify the narratives. Huntsman's responses tended to be more specific, with more concrete plans, and the detailed facts that support his plans.
In general, I liked Huntsman's answers better. I mostly agree with him on Afghanistan, and absolutely agree about India. It was good to hear him bring up India because they're a very important country that is often ignored in these foreign policy discussions. By contrast, Gingrich's position on Afghanistan seemed to be rather patronizing. Several times he talks about bringing "modernity" and Western culture to the Muslim world, even as he opposes democracy in places like Egypt.
Neither man supports the Arab Spring as much as I would like, and although Gingrich doesn't actually oppose it, he seems a lot closer to opposing it than to supporting it. He seems just fine with the old-school idea that we should support brutal dictators who oppress and kill their own people. He doesn't at all address the idea that maybe the reason Egyptians don't like us is because we supported Mubarak for so long. Huntsman, on the other hand, talks about the United States being a "shining beacon" for hope and democracy in the world, and generally supports the Arab Spring. He would not have gone into Libya, but he justifies that by saying Gaddafi would have fallen anyway (which is dubious, but shows his support for democracy even if he disagrees about the methods used). Huntsman also proposed a regional free trade area in the long-term, which I think was the only mention of trade in this foreign policy debate.
I also agree with Huntsman more on defense spending. Gingrich wants to cut entitlements rather than defense. Although we should cut entitlements, the best reforms to Social Security, Medicare and Medicaid will take years if not decades to implement. Some, like personal retirement accounts, will be great in the long-term but will increase the deficit in the short-term. We can't balance the budget by only cutting entitlements, but Gingrich seems to disagree. Huntsman is more practical, saying that military spending is far higher than it needs to be, and pointing to a specific area, the procurements process, where we're spending more and getting less than we used to.
Overall, this debate reaffirmed some of the policy reasons why I don't like Newt Gingrich. It also reaffirmed that Jon Huntsman is possibly the best option on foreign policy at the moment. In terms of the underlying philosophy that informs their positions, I agree with Huntsman's far more than with Gingrich's. On the other hand, I don't really like Huntsman as a person. He's more of a downer than any of the other candidates, and that matters when you have to inspire your supporters to actually get out and vote for you. Of course, Gingrich isn't exactly inspiring either. Between the two men, I think I'd rather vote for Huntsman.
Friday, August 26, 2011
Economic Optimists
It's been awhile since I've had an optimism entry here at E[Optimism], so this cartoon hit a little close to home. More optimism coming soon, I promise! (ht Carpe Diem)
In the meantime, here's a piece from Dan Mitchell about how we can return to a balanced budget by 2021 by restricting government spending growth to 2% per year (which is still almost twice the population growth rate).
In the meantime, here's a piece from Dan Mitchell about how we can return to a balanced budget by 2021 by restricting government spending growth to 2% per year (which is still almost twice the population growth rate).
Sunday, March 20, 2011
Peak Debt
Friday's Financial Post ran an article by Paul Vieira on Canada's national debt, claiming that Harper has "wiped away" eleven years of debt progress. The old peak debt was $562.88 billion in 1997, and it is true that the current debt passed $562.88 billion on Friday. It now stands a little higher than that, and growing. So is Vieira right?
No, he isn't. He doesn't even try to give any context on the numbers he provides. Canada is in a much better fiscal position today than it was in 1997, and I've got the numbers and context to prove it.
Output
Debt is often measured as a ratio to GDP. This is useful as it gives some perspective-- $500 billion is a lot more significant to the Canadian economy than it would be to the American economy. Thanks to economic growth, even the same level of debt is lower as a ratio of GDP. Nominal GDP in 1997 was about $883 billion, so $562.88 billion in 1997 dollars was 63.7% of GDP. But nominal GDP in 2010 was more than $1.6 trillion. A debt of $562.88 billion in 2010 dollars is only 34.7% of GDP-- only a little more than half what it was at the peak!
(According to the World Bank and StatCan, nominal GDP was $882,733 million in 1997, and $1,621,529 million in 2010. Why am I using nominal numbers rather than real? Because Vieira does, and I'll adjust for inflation further down.)
Population
Another measure of debt is how much each citizen owes. In 1997, every person in Canada owed $18,771 of the $562.88 billion in national debt. Today, there are about 13.7% more people, so the same amount of national debt means that each person owes only $16,502. If the population continues to grow at the same rate (about 1% per year since 1997), and the debt continues to increase by $39 billion every year, we will reach the same amount of nominal-debt-per-person sometime in 2013-- which, again, doesn't even account for inflation.
(According to the World Bank, Canada's population in 1997 was 29,987,200, and grew to 33,739,900 by 2009-- 2010 is not yet available. StatCan's number for 2009 is slightly lower, at 33,720,200, but essentially the same, while the StatCan number for 2010 is 34,108,800.)
Inflation
Five hundred billion today doesn't buy as much as five hundred billion in 1997 bought, thanks to inflation. To be more specific, you would need $725.55 billion in 2010 to buy what $562.88 billion bought in 1997-- a difference of $162.67 billion. Even if the Conservative government fails to reduce the deficit at all, and we keep adding $39 billion of debt every year, it will take more than four years to reach the previous peak debt.
(According to StatCan, CPI was at 90.4 in 1997, and 116.5 in 2010, with 2002=100. By setting the CPI in 1997 equal to 100, we get a value in 2010 of 128.9. This means prices in 2010 were 28.9% higher than they were in 1997.)
Putting It All Together
Adjusting for population growth and inflation, the national debt-per-person is just 68% what it was in 1997. As a percentage of GDP per capita, the national debt-per-person has fallen from 63.8% in 1997 to just 34.9%. In other words, in 1997 the average Canadian would have had to give up 63.8% of their income to pay their portion of the debt. In 2010, the average Canadian would only have to give up 34.9% of their income to pay their portion of the debt.
Make no mistake, I would love for Canada to return to a budget surplus, and the sooner the better. But misrepresenting the data is not the way to get there.
No, he isn't. He doesn't even try to give any context on the numbers he provides. Canada is in a much better fiscal position today than it was in 1997, and I've got the numbers and context to prove it.
Output
Debt is often measured as a ratio to GDP. This is useful as it gives some perspective-- $500 billion is a lot more significant to the Canadian economy than it would be to the American economy. Thanks to economic growth, even the same level of debt is lower as a ratio of GDP. Nominal GDP in 1997 was about $883 billion, so $562.88 billion in 1997 dollars was 63.7% of GDP. But nominal GDP in 2010 was more than $1.6 trillion. A debt of $562.88 billion in 2010 dollars is only 34.7% of GDP-- only a little more than half what it was at the peak!
(According to the World Bank and StatCan, nominal GDP was $882,733 million in 1997, and $1,621,529 million in 2010. Why am I using nominal numbers rather than real? Because Vieira does, and I'll adjust for inflation further down.)
Population
Another measure of debt is how much each citizen owes. In 1997, every person in Canada owed $18,771 of the $562.88 billion in national debt. Today, there are about 13.7% more people, so the same amount of national debt means that each person owes only $16,502. If the population continues to grow at the same rate (about 1% per year since 1997), and the debt continues to increase by $39 billion every year, we will reach the same amount of nominal-debt-per-person sometime in 2013-- which, again, doesn't even account for inflation.
(According to the World Bank, Canada's population in 1997 was 29,987,200, and grew to 33,739,900 by 2009-- 2010 is not yet available. StatCan's number for 2009 is slightly lower, at 33,720,200, but essentially the same, while the StatCan number for 2010 is 34,108,800.)
Inflation
Five hundred billion today doesn't buy as much as five hundred billion in 1997 bought, thanks to inflation. To be more specific, you would need $725.55 billion in 2010 to buy what $562.88 billion bought in 1997-- a difference of $162.67 billion. Even if the Conservative government fails to reduce the deficit at all, and we keep adding $39 billion of debt every year, it will take more than four years to reach the previous peak debt.
(According to StatCan, CPI was at 90.4 in 1997, and 116.5 in 2010, with 2002=100. By setting the CPI in 1997 equal to 100, we get a value in 2010 of 128.9. This means prices in 2010 were 28.9% higher than they were in 1997.)
Adjusting for population growth and inflation, the national debt-per-person is just 68% what it was in 1997. As a percentage of GDP per capita, the national debt-per-person has fallen from 63.8% in 1997 to just 34.9%. In other words, in 1997 the average Canadian would have had to give up 63.8% of their income to pay their portion of the debt. In 2010, the average Canadian would only have to give up 34.9% of their income to pay their portion of the debt.
Make no mistake, I would love for Canada to return to a budget surplus, and the sooner the better. But misrepresenting the data is not the way to get there.
Monday, February 28, 2011
Worrying about China
The revised numbers for the largest holders of US debt can be found here. China owns $1,160.1 billion, even after the recent revision. The "Grand Total" of foreign holdings of US securities is $4,439.6 billion, near the bottom of the table. Total US federal debt is about $14,193 billion.
Compare that total to China's mere $1,160.1 billion. China's portion might sound like a lot, but it's only 8.17% of the total. I often hear complaints that China owns the US, but this could hardly be further from the truth. If you owed $100 to a bunch of different people, would you be very concerned with the one guy you owed $8.17 to?
To put it another way, US GDP in 2010 was $14,657.8 billion, meaning total federal debt is about 97% of the country's total income in 2010. If you started on January 1st, and took every dollar of income in the country to pay back the debt, starting with China, you would have paid back China by January 29th. But you'd still be paying off the rest of the debt until December 20th! Still think we need to worry about China?
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