Is there a Progressive argument for the line-item veto?

From Slate Magazine Ross Douthat and Mickey Kaus argue yes:

“The third option is to recognize junk spending as the greatest threat to consequential spending and pass a constitutional amendment to give the president a line-item veto to prevent it. While the line-item veto is often seen as a conservative idea, many Democrats—from Mike Dukakis to Bill Clinton—have endorsed it over the years, and most governors in both parties already have it.

In the past, some congressional leaders have resisted shifting that much power to the executive branch. But both parties and both houses might have something to gain from giving the president a line-item veto. Advocates of fiscal discipline would pick up a powerful new tool. Advocates of increased government investment would benefit from fixing spending blunders with a precision scalpel instead of a blunt instrument.”

Is there a good economic argument to this? What about a public choice argument? We could imagine that this would do a lot of good since more axes in government can never be a bad thing. But is this giving the Executive Branch too much power as many have argued? The Executive Branch has been receiving more and more power as the years go on and this could make Congress near obsolete. Unless you word it in a way that the President could only line-item pork and then what defines pork? I am no expert on this subject so there may be a solution to all of this I do not know about.

Sidenote: I like how they use an increase in government investment, not spending.

The rest is here, for some reason the link thing isn’t working:



59% Still Believe Government Is the Problem

This from Rasmussen Reports:

“In early October, as the meltdown of the financial industry gained momentum following the collapse of Lehman Brothers, a Rasmussen Reports national telephone survey found that 59% of U.S. voters agreed with Ronald Reagan that “government is not the solution to our problem; government is the problem

Other survey data shows that 72% of voters believe a free market economy is better than one managed by the government. That’s little changed since December.

While voters prefer the free market in theory, they are clearly willing to support government intervention for specific projects. Most Americans favor a six-month moratorium on mortgage foreclosures. However, most are opposed to more bailouts.”

So what is the problem here? The problem is there is no major party between Democrats and Republicans that represent the majority view. These people may have been more likely to vote for Republicans because they were the limited government free market talking heads. Instead, they were faced with a chance that Barack Obama might turn into Bill Clinton or John McCain who may have turned into George W. Bush. In that case, most people would pick Clinton. It may be argued that Clinton rode some major bubbles, but he was able to control spending. Bush has created the most spending since FDR, but will go down in history as Herbert Hoover.

The rest is here.


Mankiw’s Memo to President-Elect Obama

This is a wonderful memo that I couldn’t agree with more:

“Congratulations, Senator Obama. You ran a good campaign, and you racked up an historic victory. As you get ready for your new responsibilities, let me suggest four ways for you to become a reliable steward of the economy:

Listen to your economists. During the campaign you assembled an impressive team of economic advisers from the nation’s top universities, including Austan Goolsbee from University of Chicago and David Cutler and Jeff Liebman from Harvard. Your campaign’s director of economic policy, Jason Furman, is a smart, sensible, and well-trained policy economist. I know: He is a former student of mine.

Pay close attention to what they have to say. They will often give you advice quite different from what you will hear from congressional leaders Nancy Pelosi and Harry Reid. To make sure you hear the views of your economists, put them in offices close to yours. Tell your chief of staff to invite them to all the relevant meetings.

Embrace some Republican ideas. No party has a monopoly on truth. Be ready to take the best Republican policy proposals and make them your own, as Bill Clinton did with welfare reform in 1996.

Health policy is a case in point. Over the past several months, you lambasted McCain’s proposal to reform the tax code to include a refundable health insurance tax credit. Did you know that long before McCain ever proposed this idea, it was advanced by Mr. Furman, your campaign’s policy director? He can explain to you why the Furman-McCain plan makes a lot of sense.

Now you may decide that this plan does not go far enough. You may want a more generously funded social safety net to help the less fortunate get health care. Fair enough, but in pursuing that goal, you run into the next issue.

Pay attention to the government’s budget constraint. The nation faces a long-term imbalance between government spending and tax revenue. The fundamental problem is that the federal government has promised the elderly more benefits than the tax system can support. This fiscal imbalance will become acute as more baby boomers retire and start collecting Social Security and Medicare.

Yet during the campaign, you promised that you would cut taxes for 95 percent of Americans, that you would vastly expand health insurance coverage, and that you would never cut Social Security benefits or raise the retirement age. You will almost surely have to renege on some of these promises. As your economic team will often remind you, even if the laws of arithmetic are ignored during campaigns, they provide a real constraint when making actual policy.

Recognize your past mistakes. As a new senator, you voted along predictable left-wing lines. As president, you will need a more eclectic, nuanced approach.

Take trade policy, for example. In the senate, you voted against the Dominican Republic-Central American Free Trade Agreement. You opposed free trade agreements with Colombia and South Korea. You supported Senators Charles Schumer and Lindsey Graham in their quest to put tariffs on Chinese goods if China failed to revalue its exchange rate. You supported the Byrd Amendment, which encouraged domestic companies to file anti-dumping suits against foreign competitors. You supported subsidies for domestic producers of corn-based ethanol and tariffs on imports of more efficient sugar-based ethanol.

Your economists can explain to you why these positions were wrong-headed. Economic isolationism is not in the national interest. A high point of the Clinton presidency was the enactment of the North American Free Trade Agreement, which passed both the House and Senate with a majority of Republicans and a minority of Democrats.

This past Tuesday, many people voted for you hoping you would achieve the kind of economic success that Bill Clinton enjoyed in the 1990s. Your best chance of delivering what they want requires that you abandon some of your past positions and pursue a more moderate, bipartisan course.”

I want to add also think about a completely different way of saving us out of this economic crisis. One example would be to do nothing and since I know you won’t do that. Stay minimial.

Mankiw’s own post is here.


Better Buy Your Guns Now, Going up Tomorrow??

With the recent news of the election of Barrack Obama many firearm enthusiast are having flash backs to the Assault Weapons ban of 1994. Passed by Congress on September 13, 1994 and signed into law by President Bill Clinton, this bill would last for 10 years and would ban the sale of certain semi-automatic “assault rifles” to the civilian population.

Although no mention has been made of the renewal of such a ban fears are still evident through the rising of prices for firearm components. Companies such as have already taken the first step by raising their prices on stripped lower receivers for “assault rifles” from their original price of $115.00 to the new price of $179. Some may argue that this could be just a gradual change in the market but this is in fact not the case because this change did not occur over time,  it occurred last night after the election results were posted.

Companies like believe that they will be able to cash in on the sudden change in political power in Washington but this is where it shows that they forgot to do their economic homework. Contrary to what is believed by the goods they sell are not part of an inelastic market and are in fact very elastic because of the availability of substitutes. Companies such as Anvil Arms and AIM surplus sell similar products but have chosen not to raise their prices in accordance to the election results. So instead of cashing in on scared buyers, may in fact suffer losses because the demand for their product will eventually decline and that of substitutes will be expected to increase.

PCCapitalist Update: Check out this website, it seems that the substitution effect will not play a part in this one and this is in fact a shift in supply.


Published in: on November 6, 2008 at 7:42 am  Comments (2)  
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