Tuesday, 21 October 2008

Going for broke?

Having looked at the numbers on past performance I've been interested to see the current debate on which candidate has an economic plan to turn the US around - an item of not academic interest to most of us out in the global economy...

I found an interesting article at the Washington Post that looks at their plans and their ability to deliver.. it included this quote:
"Austan Goolsbee, who advises Democratic candidate Barack Obama, said McCain had consistently called for balancing the budget without explaining how he would do so." ...which given the numbers seems a pretty fair criticism.

In the 12 years under Democratic presidents since Jimmy Carter the American gross national debt rose by an average 5.3% per year for a compounded increase of 87%(!) ...but in eighteen years with Republican predidents it rose an average of 11.2% per annum - compounding to a huge 679% increase...

So I ask you.. just how likely is it the McCain is your man to get a grip on US finances???

Monday, 20 October 2008

Spending your inheritance...

The economy has been big news of late - and not least as a topic of debate in the USA in the run up to the election. So I thought I'd have a look at at how things really are and dug up some numbers on the American national debt.

I was interested to see how things fared under the different political parties over there and the results were a bit of a surprise. Common rhetoric says the Democrats are wont to raise taxes and spend more - and that it's the Republicans that aim to cut cost and give money back to the taxpayer. What I found was that yes... Federal spending tends to rise faster under the Democrats - but the clearest trend was that the national debt almost always rises faster under a Republican president.

But hej, isn't it the Senate and the House of Representatives that agree those things? Check it out...

So what does it show?? It measures the increase in gross federal debt as a proportion of the increase in GDP.. and covers the period from 1979 to 2007. As the economy grows what part of that growth is mortgaged to meet current spending? The numbers at the bottom show who has control of the two houses - +2 is both Republican, -2 is both Democrat - and each point is a year - red for a Republican president, blue for a Democrat. All but two of the Democrat years lie below a limit of debt increasing by half the rise in GDP.. and all but one of the Republican years lie above that same limit.

Surprisingly it doesn't matter who runs the parliament - under a red president the debt just keeps on rising... In effect Republican presidents are giving tax cuts funded not by growth but by borrowing. If you need the money can't you just go and borrow it for yourself!!

If you read this report from the US Government Accountability Office you can see that escalating debt interest combined with increasing welfare and pension costs for the ageing population means America is facing a huge funding crisis in the coming decades.

My conclusion? America can't afford another Republican in the White House...

Sunday, 19 October 2008

The American Dream?

I watched the last of the American Presidential Debates yesterday - not live you understand, but in replay. It was my first real chance to see the candidates presenting themselves...

It was shocked by the huge difference in how the candidates came across. McCain commented several times on Obama's rhetoric - but to my ears Obama stuck to lucidly explaining what he wanted to do and why it was important for America to do it.

McCain was the one I thought lacked substance, making fine claims and aiming at an emotional appeal - trying to demonise his opponent as a liberalist wanting to steal money from the people to waste on public programmes - spreading muck about Obamas links with terrorism - and painting himself as the champion of the American dream. He made more than one reference to Sarah Palins special understanding and interest in those poor families dealing with autistic children - which crudely put is trying to get sympathy votes out of her personal circumstances.

He also made a great play on his record of fighting against the establishment and vested interests - very laudable - but I was left with the impression that this meant would struggle to unite his own party under his leadership, never mind leading the nation.

At times he looked frail - and at times he reminded me of one of those wind up monkeys. Asked a specific question he'd reply with some stock sound bite he'd prepared beforehand - something completely off subject.

It was, to put not too fine a point on it, scary to think that this was someone that could end up sitting down to negotiate with leaders in China, Russia or Iran.

The sad part was that behind the guff it's clear that he actually has been active in pushing for what he sees as good for his country.. and not just toed the line.

Obama.... pretty much stuck to presenting his platform of policies and defending the flack launched from across the table... He was probably too kind.
McCains policies will put more money in the pockets of 30 million Americans - the other 270 million will be better off under the Democrats...

The American dream - means aspiring to be part of that rich clique of 30 million... and for that it seems that half the electorate are willing to ignore the fact that they are not part of that small minority that are taking the cream. The ironic part is that getting rich is about redistributing wealth to the small number that succeed. Does the personal avarice of the American dream really mean people don't want to see the rest of the population get a decent education and the security and reassurance of good health care?

And for me it is somewhat ironic that the party that stands proud of that avaricious dream is the same party so warmly supported by all those evangelical Christians.