Election Links
Timothy Taylor on mainstream economics vs. the candidates; Michael Cannon condemns Harris' long-term care proposal; Ed Pinto on her first-time homebuyer subsidy proposal;
I think of the election as a necessary evil. Elections are necessary because you want people to give up power. But they are evil because politics is like the worst of Twitter. You get followers by stirring up fear and anger.
We can have an argument over which candidate’s economic proposals are worse than the other’s. We can have an argument over which candidate’s rhetoric is more demagogic and out of touch with reality. Only a partisan hack could claim that either candidate is good on the economy. I wish we could elect Javier Milei.
So this will be my only post in October about the election. It expresses concerns that apply to both candidates.
It would be nice to vote for someone who recognizes that Social Security and Medicare are facing real and severe solvency problems in the not-too-distant future, and offers some proposals to address them. Reducing taxes on Social Security benefits or increasing benefits for those with low incomes, whatever the justifications for such policies, will not help the solvency problem.
He has an entire list. He concludes,
it is disconcerting to me that the campaign discussion of so many major economic issues seems to me evasive at best, and misguided at worst.
Taylor, like Allison Schrager, is a mainstream economist who is definitely not a partisan hack.
Next, I will pass along two criticisms of the Harris platform. Do not interpret this as an endorsement of Trump.
Michael Cannon’s comments on Harris’ proposal to add long-term care coverage to Medicare.
One report estimates the proposal could cost the federal treasury $40 billion per year—more than double the amount of the Children’s Health Insurance Program. Harris would have to pay for it by squeezing inefficiencies from other parts of Medicare, principally Medicare subsidies for prescription drugs.
It is difficult to overstate the irresponsibility, corruption, and insanity of this proposal.
Ed Pinto’s analysis of her proposed first-time homebuyer subsidy.
In a housing market with limited supply, increasing FTB purchasing power through down payment assistance (DPA) will ultimately drive up home prices for all buyers in affected census tracts. This is because the millions of FTB program recipients would become price setters for all buyers in the neighborhoods where the recipients buy. This analysis aims to quantify this effect.
Specifically, this analysis estimates:
Over the 4-year DPA period, 75% of all home sales nationally will be in census tracts affected by the proposed DPA program.
For the homes in these tracts, constant-quality home prices is expected to increase by an average of 4.1%.[2]
Over four years, the total boost in home prices paid by expected homebuyers in these tracts will be $177 billion. Thus, the total cost to homebuyers outweighs the proposed subsidy benefit of $100 billion ($25,000 each for 4 million homebuyers).
The total inflationary boost to the entire stock of homes in the affected census tracts (not just those expecting to transact over a 4-year period) is estimated at $1 trillion.
If a politician came out and said “We are not going to cut Medicare or social security, but we are going to pay out all future checks in a new currency called the mini-dollar.”, that politician would have no chance of getting elected.
Most voters would assume the new mini-dollar would have far less value than the current dollar. It would be seen as an immoral bait and switch.
However - this is exactly what they are all saying right now. Future dollars will actually be figurative mini-dollars as they will be able purchase much less due to the amount of dollars that will be printed to meet those claims. It is an immoral bait and switch.
Study Bitcoin.
I would like to point out that the blatant vote-buying nature of this campaign (and total disregard for fiscal probity) is downstream of the changing nature of the median voter. Median voter used to be a white worker or small businessman; now it's a white pensioner or Mexican, neither of which is especially interested in cutting entitlements or particularly open to market-based arguments. This is directly downstream of population aging (which neither candidate or party will affect much) and immigration (on which Trump is overwhelmingly superior to Harris). If you don't want every subsequent election to make this one look honest and intellectual (see: Latin America), you need mass deportations.