David Frum on Marketplace

I hope NPR will forgive me for printing a large hunk of their interview with former President Bush’s former speechwriter, and the link to the whole piece is here.

Not on the transcript– Frum was saying that an evaluation of President Obama’s steps to deal with the economic crisis will not be complete for several years, as all the effects play out. Then he referenced the former President. I was surprised at his harsh assessment, and at his acknowledgment of the high cost of health insurance as a drag on the economy. This supports President Obama’s argument that repairing the health care crisis is necessary to repairing the economy, especially for working people.

DAVID FRUM: Last week, the Census bureau delivered its report on American incomes in 2008. We can put this report together with the seven previous to reach a final verdict on the economic record of President George W. Bush. It’s not good.

In terms of income growth and poverty reduction, Bush performed worse than any two-term president of the modern era. Even in the best year of his presidency, 2007, the typical American household still earned less after inflation than in the year 2000. The next year, 2008, American households suffered the worst income drop since record-keeping began six decades ago.

In my Republican party, there is worryingly little discussion of this damning trend. We do criticize ourselves for over-spending in office. But economic management gets much less, almost zero, internal discussion.

So, what went wrong? Liberals criticize the Bush tax cuts, but it’s impossible to see any causation between lower taxes and the failure of incomes to gain ground. All three of the previous major tax cuts in U.S. history — in the 1920s, 1960s, and 1980s — were followed by very strong income growth.

The more plausible culprit is the surge in health care costs. Over the years from 2000 to 2007, the price employers paid for labor rose handsomely: on average, 25 percent. Yet for the typical worker, none of that extra cost translated into higher wages.

How much of that cost went to huge bonuses and outrageous profits for insurance corporations? It’s a tall order to expand coverage and keep costs down, a limit on profiteering has to be part of the plan.

7 thoughts on “David Frum on Marketplace

  1. Unfortunately wisful thinking and less than critical thinking lead to the same result: misinformation. Mr. Frumm may well have been a speech writer, but his credentials as an informed evaluator of substantice issues are no more or less of value than that of any other person. His numbers on the Bush end term recession are certainly correct but I suspect we all know that the 6 year-plus period of prosperity by other indices of the Bush years are also true. Amazingly enough, Mr. Bush inherited his incoming recession from a recession that began under Mr. Clinton, after a period of Clintonian prosperity. Secondly, American loss of personal wealth had little or nothing to do with the chimera of “increased medical or insurance costs.” Employer partial or complete medical costs include and included a good share of insurance coverage. In fact, of the 40 million uninsured everyone throws around, perhaps 10-15 million are illegals, 10 million could have insurance if they wanted it, since thay seem to earn $75,000/year, and it is the remaining 10-15 million who are having difficulties. Again, Mr. Frum and other self-annointed pundits don’t get the math. The U.S. has 338,000,000 people or so–that number is probably 95% accurate. So, perhaps 20-25,000,000 Americans supposedly need medical insurance. The numbers mean that about 93% of Americans are insured and another 2% could get insurance. The remaining 3-5% are eligible for public aid right now. This is hardly a national crisis worth adding another $9-13 trillion dollars of debt to our children and children’s burdens, and seem more indicative of the Obama failed presidency’s continued sloganeering. I recall the rather troubling calculation that if this happens, my one-year-old granddaughter will bear a debt of $138,000 by the time she is ready for college. This seems hardly a logical way to ger 10 million Americans medical insurance. Finally, I understand that more than 90% of the most prescribed medication are available in generic form. I also understand that most of these are available via Walmart pharmacies and other drugists at $4 a prescription.

    Mr. Frum is an intelligent man, but, alas, his logic also indicated that he can be less than careful or accurate in his logic.

  2. the statistics are impressive, but the view from here on the ground is that people I meet socially and professionally are uninsured, pay an unsustainable percentage of their income for insurance, live with insecurity around keeping their insurance, and have trouble getting treatment approved if they get sick.

  3. “…In fact, of the 40 million uninsured everyone throws around, perhaps 10-15 million are illegals, 10 million could have insurance if they wanted it, since thay seem to earn $75,000/year, and it is the remaining 10-15 million who are having difficulties….

    “In fact”?

    Can you actually prove that?

    Sure, the stats are impressive, but are they accurate? Where are they coming from?

    I read quite a bit about this, but I’ve never seen these numbers. I don’t claim omniscience, so, please to enlighten.

    Because without a factual basis–as in, a reliable source for those numbers–the rest of what you say collapses.

    Mr Frum is correct, as far as he goes. And he touches on a topic I’ve been ranting about since the inception of this blog. Since the days of St Ronnie, median income has been all-but stagnant. There was a brief reversal of this–during the Clinton years–but the trend has been flat-to-down since the 1980s.

    Especially in the past 10 years, employer costs have risen drastically while wages have fallen. This is partly due to increased medical premiums. They have been rising at a 10-20% annual rate for much of the decade. This makes it more expensive to hire people, but the people on the job don’t actually see the extra money.

    And the Republicans are saying our “system” is just fine as it is?

    And, the “Bush Boom” never really happened. By almost any measure, this was pretty much the worst “recovery” we’ve had since WWII. Investment, real wages, job creation, were all lousy. The one–and only–area where the recovery was robust was in corporate profits.

    See, the deal is that if we cut taxes on the high-end earners, they’re supposed to invest that money in productive ways, ways that create jobs. The same fools that are now whining about how much health care may cost are the same fools who merrily ran up the national debt by giving out tax cuts and starting two wars.

    Then a funny thing happened. Or didn’t happen.

    The beneficiaries of these tax cuts did not invest them in any meaningful method. Instead of creating infrastructure and jobs, they invested in financial products that did nothing for the larger economy; rather, they made a few–a very few–wealthy people even wealthier.

    And, btw, if taxes are increased, much of the cost of health care will not be added to the deficit. Restoring the top marginal rate to where it was under Clinton will not damage the economy. Raising them to where they were under St Ronnie, and we’ll be rolling in dough.

    Because what is very deliberately overlooked is that Reagan’s first round of cuts did not work. So HE RAISED TAXES.

    Got that? The prosperity of the 1980s came after he increased taxes. Just like the prosperity of the 1990s came after Clinton raised taxes.

    After Bush’s cuts? A few people made an awful lot of money. The rest of us got nothing.

  4. No one really knows how many illegal aliens are in the US.But it’s safe to say probably over 10 million.Hell,in 1986 about 3 million got amnesty.The influx has increased greatly since then.And there’s not so much ebb and flow like the old days.the non-Mexicans aren’t going anywhere.Once they get here,they want to stay for good.Mexicans,depending on their individual circumstances ,are somewhat more likely to go back and forth over a period of time.

  5. It is always easier to debate from a position of logic. Emotionalism is basically sloganeering in search of a position. The meaning of “fact” and “probability” merge at the boundaries. For example, there are no real statistics on the total number of illegals. Not many admit to being here, and the actual number at any point in time is rather fluid as people are causht and sent back, enter, and leave. Apparently since the economic downturn, a surprising number have left on their own according to INS reports, using whatever metrics they use. The numer 10-15 million illegals, seems to be a conservatice estimate, less than the 35 million used by some, an illogical number given the conservative 40 million number oft cited by testimony before congressional committees. In some press statements, Democrats have used numbers as high as 55 million, including illegals. 40 million appears reasonable. The number 10-15 million of uninsured by making $75,000 and choosing not to purchase insurance has a firmer basis in reality and has been cited by federal agencies and not for profits in their testimony. The number seems realistic.
    Whether or not someone has seen these numbers is not my problem, I suggest; they are often cited and have been often offerred as testimony. I long ago gave up trying to explain someone’s lack of research or curiousity.

    The tax issue is interesting. It is documented that the top 5% income earners pay more than 50% of all taxes paid in the U.S. Similarly, some 35% of Americans pay np taxes at all. It is documents that of the last 7 tax cuts forced by administrations, resulted in higher tax revenues as well as increased employment. It was Dr. Walter Heller, Chairman of John Kennedy;s Council of Economic advisors that convinced JFK of the wisdom of tax cuts–tax cuts are hardly a Republican invention. It is after all the promise of America that inventiveness, determination and productivity can result in the good life and the opportunity for others. The silliness of taxation as salvation is as sterile as the thinking that appeasement of terror can lead to peace. The same inventiveness that leads to wealth can certainly figure out that there will be more receptive places to take that wealh if tax burdens are oppressive; look to all those ex-pat Brits that populate tax havens.

    The documentation of the absurd drift to the left in supposed health reform and its clear aftermath is robust. Independent agencies have calsulated the $9-12 trillion debt that will be incurred. A trillion is 1000 billion; the economic devestation of a $9-13,000 billion debt is apparent to most economists and rational folks. The calculation of $138,000 debt for each American in 18 years or so is not rocket science, and is a debt that must be added to all the other debt built up by the failing Obama administration. In point of fact, the current economic woe is an Obama woe, and he has already tripled the $trillion debt of Mr. Bush’s administration. Sloganeering is a poor substitute for analysis, and a failure to look objectively at the ramifications of continued failed policies is not a prescription for success.

  6. Donald, it’s not true that 35% of Americans pay no taxes at all. People whose incomes are so low that they don’t pay federal income tax are still responsible for local property taxes and sales taxes.
    You also have to consider that a service, like getting a cup of coffee served or an elderly person helped to bathe would cost much more if the worker were paid more. That’s a kind of indirect contribution from the lower income workers to the higher income workers.

  7. Correct; I should have said federal income taxes, sans SSI, etc. Of course, the tax burden is not proportional and “hidden” taxes such as gasoline taxes, smoking, etc., impact lower income folks more. However, the zero federal tax for more than 1/3 reaces up to a surprisingly hig level, after personal deductions, medical deductions, business expenses, tax credits of many kinds, interest deductions, state tax credits, etc., all end up in that 50% of more paid by 5%, 0% federal by 33% and 50% by the inbetween, stressed “middle class.” Of course, peole like Charlie Rangel, veteran politician, seems to forget to pay his taxes, as has so many of Mr. Obama’s cast of characters, asking us to pay more.

    Rather than wasting energy on medical insurance reform, far better to attack tort reform. But the Dems will not do this, since the trial lawyers are major, major contributors to the Dems. The $168,000 malpractice insurance number was from an interview with the ob/gyn paying it. In other words if she works 300 days/year, she must earn at least $560/day just to pay the malpractice insurance! If she treated 10 patients a day, each would have to account for $56 to just pay the insurance, perhaps another $30/patient for a nurse, perhaps another $20 for a receptionist; and another $20 for office overhead, etc., all this before lab fees, etc. The office vist will cost $110 before the doctor earns a cent. If she gets sued, her insurance goes up. In order not to get sued, she must order more tests than necessary to be sure she can’t be accused of being human and missing something.

    Government imposition of a “nationalized” health care delivery system, will do little to control costs. Government by its nature is inefficient–you recall Congress votes itself a 5% pay increase each year, has voted itself wonderful medical benefits not available to us, and all the other “special” advantages. Government agencies such as AMTRAK, the post office (now a quasi-government agency), etc., are bloated, inefficient and incapable of doing most of what they are supposed to do, if we could figure out what they are supposed to do. The current administration seems only to exacerbate that bloat, without attacking core issues.

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