Lars Larson: The President’s expensive plan for improving public education.

The President announces his plan for improving public education. It’s very expensive. I’ll tell you my plan. It’s very cheap.

The President’s plan for improving public education is hundreds of millions of dollars. In other words, throw more money at it and maybe it will improve.

I’ve never seen a situation where a failing institution with more dollars tossed at it is going to improve. So, here’s my four part plan in a nutshell.

1. If you drop out of school, no driver’s license.
2. If you drop out of school or don’t finish your GED, your employer if you chose to go to work can pay you $2 under the current minimum wage.
3. If you apply for any kind of social service benefits””food stamps, subsidized housing, or whatever””you’ll only get half the benefit because you damaged your own education, and
4. If you drop out and don’t finish your GED your parents lose you as a tax deductible child.

How’s that for a plan to keep them in school?

“For more Lars click here”

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  • Anonymous

    Here in Oregon Kitzhaber and Bradbury are competing for who can better sustain the dysfunctional status quo for the public employee unions.

    Our public schools wallow in perpetual mediocrite.

    Today it is reported the lousy state tests will once again be shifted to make it easier to get results.
    The 10th grade tests willnow be given to 11th graders.
    Yet another chapter in the 20 years of Democrat/union assault on Oregon public education.

    All while the blueoregon loons chant how these Democrat/union stakeholders are the defenders of public education and anyone striving for progress are the Lars Larson types want to destroy public education.

    One failure after another never finds any change with these despicable advocates of the status quo.

  • Rick Hickey

    AND as reported at the O, 11th graders are now going to take the 10th grade level test. i.e. Lowered standards yet again, even with all that money we keep throwing at them they still can’t get it right.

    • Rupert in Springfield

      And why is it I think the 10th grade test now is probably the equivalent of the eighth grade test in my day?

  • Rupert in Springfield

    Why not just give everyone who wants a voucher?

    It costs $10k to educate a child in the public school system in Oregon.

    Give a voucher for $5k, the public school keeps the other $5k.

    Every child that leaves for private school is another $5k for the public school.

    $5k goes a long way to a private school education.

    It’s win win, public schools get lots of money, which is what they want. Parents get to educate their kids in the school of their choice, which is what they want.

    The only people who lose are those concerned about power and control over the populous.

    This plan takes the money argument completely off the tables, Public schools would be flush with money. If half the kids leave that means a 50% in per pupil money. Teachers could have a gigantic raise and class size would be smaller. The more kids that leave, the richer the teachers get!

    Parents could pick virtually anywhere to educate their children. With a $5k subsidy, private school would be within the reach of many.

    This is the simplest solution.

    If one thinks about why it would be opposed, true motivations become readily apparent. They probably have little to do with education.

  • luke

    What happened to the thread on PPS teacher salaries?

  • Rupert in Springfield

    Oh good Lord, I just checked Drudge and it looks like BO is back to doing the doctors in white coats posing routine of the health care beauty pageant again.

    This is ridiculous, he is like the parent with an ugly daughter who wont face facts and still keeps entering her in beauty pageants. Everyone keeps telling him to stop, the grown ups are getting mad at him and the daughter, in this case the economy, eventually hates him.

    I thought the last time around, when the white coats routine was universally laughed at he wouldn’t try it again.

    Nevertheless, like a parent who thinks poofing up the pagent dress with by throwing more tulle at it, BO thinks this game of ugly dress up will work.

    What I wouldn’t give for this president to just take up golf, or reading, or maybe enter his daughters in beauty pageants.

    Anything to get this guy this fool out of the way so the American economy could recover.

    • valley p

      “Anything to get this guy this fool out of the way so the American economy could recover. ”

      Yes. If only we could bring Bush and the Republican majority back. They broke it so they surely know how to fix it.

      • Rupert in Springfield

        Well, lets face it, its inarguable that Bush tried to warn the Democrats who were running congress about Fmae and Fmac two times.

        They ignored it the warnings, just like you pretend that it never happened.

        And lets also face facts that Bush sent the comptroller general on a nationwide tour to try and raise awareness of the problem so the public would get behind reforms. A fact I am sure you are wholly unaware of.

        And let’s also face facts that two months before the Fmae Fmac collapse, which in large part got us here, Barney Frank was running around saying they were perfectly stable.

        And let’s also face facts that Bush spent a hell of a lot less than BO.

        And let’s also face facts that spending was the major reason the Republicans ran into trouble and is now the reason why Democrats are facing a blood bath in December.

        And let’s also remember that BO is now currently trying to spend us into oblivion on health care.

        No no, let’s please not hear any CBO numbers on that one. It is all predicated on medicare cuts which only a child thinks will actually happen.

        Yes, yes, we all know you don’t believe these things are true, but as you often quote, you are entitled to your own opinion, not your own facts.

        These facts in particular are the ones you love to Dean weasel on, but at this stage most people know them even if you cant face them.

        Oh well, nice try but blaming it on Bush is getting real old.

        Don’t believe me? Good, see you in November Dean.

  • Anonymous

    I like the way you are thinking here, Lars. Is it perfect? Probably not. But it is heading the right direction and we could probably refine it. Is it a complete plan? No, but there is no reason why it can’t be integrated with other reforms that address teacher salaries, merit pay, school schedules, class sizes, vouchers, privatization, charter schools and more.

    There is no reason why anyone under 18 should be “entitled” to a driver license, and it could absolutely be connected to education. And since many employers require a diploma or GED, i.e., no job for you without one, and option to work below minimum wage would mean MORE opportunity for dropouts and not less.

    Some improvements:

    On welfare benefits, how about requiring attendance in an adult education program to obtain a GED as a condition of eligibility? I have no qualms about cutting people off entirely when they refuse to take available steps to improve their lives.

    But there needs to be some sort of safety net for people who are severely mentally impaired who can’t complete high school. You know, the kinds of people who actually NEED social services.

  • eagle eye

    Aside from the legal/constitutional issues — Bullying a bunch of bored, largely incapable dropouts into staying in school hardly seems like a way to “improve” education. Certainly not for the average to superior students, who would be stuck in class with the deadheads.

  • surefoot

    Lars with these grand proposals I can’t fathom why so many consider you narrow mind and shallow in most of your thoughts. Though Audie Murphy may agree with them, he dropped out at the eighth grade: worked just as hard as any others and would have been offended to have you tell him he was worth less. He then joined the U.S. Army at 17 and became the most decorated American soldier in World War Two. So take your hate to another avenue. By the way my Grandfather joined the Merchant Marines when he was 17.
    1. Drop out of school *college* no driver license and have wears a dunce hat in public for two years.
    2. Drop out of school *college* you can not make more then 15 dollars an hour.
    3. Drop out of school *college* no bank can not extend any credit to you.
    4. Drop out of college and your parents have to post in daily news paper what a failure you are.
    Lars I came to these great ideas while picking my dog’s doo at the park, less the thought, better the idea.

    • Anonymous

      To be fair, Audie Murphy grew up in an era when a high school diploma was not an essential requirement for most life choices as an adult. And also to be fair, he would have loved the chance to stay in school and get an education instead of being forced to leave school to work on his family farm to support his family. And he also would love to have been able to grow up a little more before enlisting at age 17 – which he did because America went to war. What he wanted most at that age was to finish high school, then serve in the USMC as a way to earn money for college.

      So while the sentiment behind your comment is valid, the facts you chose to illustrate it could have been chosen better.

      • surefoot

        Not having a high school diploma will be punishment enough; I think Lars takes a sick pleasure ridiculing people who have failed or it make him feel like a bigger, better man. Could he have some anger and resentment problems about his own life. Why would we want to do this to people how obviously having adjustment difficulties?

        • retired UO science prof

          He dropped out of UO after a year, right?

  • Bob Clark

    If we are going to stick with the current public school bureaucracy, there needs to be a lot more motivation plied to the student. Right now the public school system isn’t working very well because many students take the education opportunity for granted and vastly underperform. Some families who can afford it don’t think very long before concluding to send their daughters to private schools. Even the teachers in the public school system dread it, and demand higher salaries just to compensate for the abusive behavior of a major fraction of the student body.

    It’s time to get out the whip, and/or allow more educational choices such as vouchers. Maybe if the state and local government jurisdictions quit lining the pockets of their favorite developer/venture friends with public monies, there would be enough money for a more diverse set of educational choices/resources.

  • Anthony

    Great idea, although #2 would probably backfire in a capitalist system because a drastic drop in labor costs would suddenly make high school drop outs more marketable, especially in a service economy like we have now.

  • retired UO science prof

    Hey, what happened to that great article by Jerry about teacher pay? A lot of comments on that one!

    • valley p

      It mysteriously disappeared. Maybe Jerry will now go the way of Trotsky after the purges.

      • retired UO science prof

        Somebody in that thread, claiming to be Jerry, offered a flattering description of the composition of my brains, then opined that public school teachers should be paid no more than gas station attendants. I suggested that this is a showcase example of the kind of public policy perspective with which Oregon conservatism should want to be associated. Perhaps my endorsement had something to do with the apparent disappearance.

        • Anonymous

          Sure sounds like Jerry. He’s as classy as they come.

        • valley p

          I wouldn’t read too much into it. Its probably just “Hate Week” and “we have always been at war with Eurasia.” The next thing you know teachers will be our friends. No worries.

      • eagle eye

        It’s possible that Jerry came to his senses and removed the page himself. Right?

  • Anonymous

    Is Lars’s idea perfect? No. Can it be improved? Yes.

    There is nothing wrong with increased financial incentives to finish high school. The problem you detractors have is that you believe things like welfare and food stamps are a RIGHT. They are NOT. Frankly, I’d be in favor of lowering the benefits and increasing the eligibility standards to reduce the number of people on welfare, and reduce payments to them.

    That said, why not – after this implementation – add back some additional benefits that people can earn by meeting educational guidelines? Why not give someone who is already going to be collecting welfare some more welfare benefits as an incentive for going back to complete an education?

    I’ll bet retired UO professor would like the idea of giving someone more welfare money.

    See? It’s all a matter of perspective!

  • Bob Tiernan

    *valley p:*

    If only we could bring Bush and the Republican majority back. They broke it so they surely know how to fix it.

    *Bob T:*

    Your error here is in assuming that the opposite of what we have now is a return of the very
    same people who ran things earlier. But then, you’re also the same person who thought
    that Reagan’s tax cuts caused the recession.

    Bob Tiernan
    Portland

    • valley p

      “But then, you’re also the same person who thought
      that Reagan’s tax cuts caused the recession.”

      Don’t tell me I have another Rupert on my hands, claiming things I think or say or write that I don’t. For the record, Regan’s tax cuts caused an explosion of the budget deficit. His recession was engineered by Paul Volker to squeeze inflation out of the economy,

      I don’t know a case where a tax cut ever caused a recession. But they do cause deficits.

  • John in Oregon

    Rupert your idea is a good one. Your suggestion is a middle ground between the absolute control of the school and control being in the hands of the parents.

    At the one extreme the Public School selects the school and instructor for the child. At the other extreme the parent chooses.

    Five thousand to the Public School and five thousand follows the child would seem to be a middle ground. In the other thread I advanced that concept my self, even though I am clear it can’t work, at least not yet.

    The argument is that vouchers take the money out of the mouths of the teachers and students. The State of Utah recently nullified that argument. Actually the law was brilliant. Utah provided a $5,000 voucher which parents could use outside the Public School system. At the same time IF the child went outside the Public School, then the school would still receive the full $10,000 funding for that child. No money was taken from the mouths of the Public School.

    The NEA and AFT sprang into action placing an initiative on the ballot to overturn vouchers. Money was no object.

    Sometimes its hard to see where the day to day school administration ends and the unions begins. It seems that School Boards, teachers, students and parents are just pawns to the Union/Administration conglomerate.

    FDR feared and railed against public sector unions. I wonder if this might be an example of his fear.

    But then for some a Government Education is a right.

  • Bob Tiernan

    *valley p:*

    For the record, Re[a]gan’s tax cuts caused an explosion of the budget deficit.

    *Bob T:*

    Are you saying that spending increases don’t cause this? After Reagan’s tax cuts were implemented revenues increased every year save one which was due to decreased revenues because of the recession. You keep making that grade-school level mistake of thinking that the government collects the same amount every year so that a tax cut equates to less revenues. Please don’t do that again.

    *valley p:*

    His recession was engineered by Paul Volker to squeeze inflation out of the economy,

    *Bob T:*

    That would be hard to claim, since the economy was very, very weak by the time Reagan came in due to very high inflation and very high interest rates, both of which reduced economic activity. The situation was ripe for recession whether Volker had done anything or not. And in fact, there already had been a six-month recession at the end of Carter’s term which was followed by anemic growth that was not going to change anything due to the above conditions mentioned. Interesting, by the way, that you buy into the coloring book myth that causing a recession deliberately was needed to reduce inflation, when we had low inflation for many years afterwards (still on-going) without needing to keep us in perpetual recession. You simply have no idea what you’re talking about.

    Bob Tiernan
    Portland

    • valley p

      “Are you saying that spending increases don’t cause this? ”

      Oy vey is mir. A budget deficit by definition means we are spending more than we are taking in. Thus it can be “caused” by cutting taxes without cutting spending, or by increasing spending without raising taxes, or by both. Reagan cut taxes and raised spending at the same time. So take your pick. The economy recovered from a deep recession and annual revenues thus increased as things improved. Reagan also raised taxes on the working class after he cut them for the rich, resulting in a multi year SSI surplus. But the sum total was the largest peacetime deficits in history, and tripling of the national debt in his 8 years.

      “That would be hard to claim,”

      Hard to claim? Volker was appointed by Carter in 1979 and started his squeeze a year before Reagan was elected. Yes, the economy was weak and then got much worse before it got better. Much like our experience of today with Bush and Obama.

      “Interesting, by the way, that you buy into the coloring book myth that causing a recession deliberately was needed to reduce inflation,”

      Did I write that this action was “needed”? Nope. I wrote that this is the what happened. I have no freaking idea whether it was needed or not. But the historical fact is that inflation was 13% when he started raising interest rates and came down to 3% when he began to lower them. How much of that was due to his manipulation of interest rates, and how much due to a fortunate drop in oil prices may never be known.

      “You simply have no idea what you’re talking about.”

      Yes. That is clearly the case.

  • Bob Tiernan

    *valley p:*

    A budget deficit by definition means we are spending more than we are taking in.

    *Bob T:*

    That doesn’t automatically equate to tax cuts as the culprit. You see, revenues can go up after tax cuts when more income is claimed rather than sheltered, and when more investments are used in enterprises that increase economic activity. Revenues increased after the tax cuts, save for that first year when revenues were in decline due to the recession. The problem is the spending.

    *valley p:*

    Reagan also raised taxes on the working class after he cut them for the rich, resulting in a multi year SSI surplus.

    *Bob T:*

    He cut _rates_ for the upper income earners. if you look at the staistics, you’ll see that the percentage of tax revenues paid by the top 1 percent of earners, and top 5 percent, and top 10 percent, and so on, increased after the rate cuts. Yet the left keeps spewing this lie that the rich paid less of a share when it was all over. Stop lying — that’s all we want you to do.

    As for SSI, there was no surplus worthy of the word. This system is run on a monthly basis
    and what’s left over is spent, ever since the LBJ days when he and the Dem congress spent the trust fund and put in IOUs. Besides, raising SSI is what the Democrats know has to be done to “save” the system that is in serious trouble because of overall spending that has gone on for many decades. They’re not going to get the money by taxing the rich and only the rich, and it’s supposed to be a system in which people pay their own way. People can’t help it if the government has been ruining it all by increasing the size of the entitlement and welfare state beyond its ability to be sustainable.

    *valley p:*

    But the sum total was the largest peacetime deficits in history, and tripling of the national debt in his 8 years.

    *Bob T:*

    Sure, but the same critics are now known to be un-serious about this based on their lack of similar concern and outrage over the Obama deficits and debt — compare debt and deficits as a percentage of the GDP for a change and you’ll understand.

    Bob Tiernan
    Portland

    • valley p

      “Stop lying — that’s all we want you to do.”

      Oh if it were only that easy. But it isn’t about lies Bob. Its about different interpretations of history. You want the rest of the world to buy your interpretation, but we don’t, and that makes you upset.

      The rich have gotten richer year after year since Reagan cut their taxes. And as we have cut income taxes and increased payroll taxes, its true that the rich have paid an increasing share of INCOME taxes if one excludes the payroll tax. And that is the story you want people to focus on.

      But some of us look at the bigger picture. We see a very small percent of Americans at the top now earning a greater percent of national income than at any time since 1929, when that last great Republican was president, Herbert Hoover. We see the vast majority of Americans, probably including yourself, with stagnant or declining incomes. We see Warren Buffets secretary paying more of her income (%) in taxes than he does. We saw exploding deficits from Reagan through Bush, then again with the second Bush. And we conclude that Reaganomics was and is a failure for the vast majority.

      “As for SSI, there was no surplus worthy of the word. This system is run on a monthly basis”

      The “surplus” was only ever on paper, I agree with you. Its an accounting gimmick. But it allowed Reagan to hide his massive income tax cuts. It allowed Republicans to play a decades long game of “cutting” taxes while they in fact raised them on the majority. Neat trick. Worked on you apparently.

      “Sure, but the same critics are now known to be un-serious about this based on their lack of similar concern and outrage over the Obama deficits and debt”

      Pure bullshit. The current deficit is a consequence of an economic collapse brought on by an extension of Reagonomics under Bush. And when Obama tried to set up a bipartisan deficit reduction commission, which party turned tail and ran. Don’t lecture me about which party is un-serious about deficits. Your core problem is you know that taxes have to be raised, along with cuts to entitlements. You want only the cuts, but you can’t elect anyone on that platform, so you stage empty protests against “spending” in teh abstract while whining about proposed cuts to Medicare. You can fool yourself perhaps, but there are a lot of us you can’t fool. Three Republican presidents in a row did the same damn thing. Ran record deficits while cutting nothing. The one Democrat in between them balanced the budget. The game is up Bob. The only conservatives left are liberals.

  • Bob Tiernan

    *valley p:*

    The rich have gotten richer year after year since Reagan cut their taxes.

    *Bob T:*

    Those who became more rich then and afterwards did not do so because
    their taxes were cut. For one thing, that money was theirs to begin with
    so there was no change there.

    Now just what do you think the government was doing with the taxes
    taken from such people before then?

    *valley p:*

    The current deficit is a consequence of an economic collapse brought on by an extension of Reagonomics under Bush.

    *Bob T:*

    Pardon me, but neither of the Bush presidencies extended Reaganomics.

    As for the deficit, you seem to ignore the gargantuan expenditures pushed
    by Obama. Those items far outstripped the levels of revenue coming in.
    GDP is still a figure to reckon with, and the spending is what it is regardless
    of the level of revenues. The revenues coming in is no doubt larger than
    what came in even a half decade ago — so the problem is spending, and
    the government is not doing a thing about curbing the growth in spending
    (which is mostly domestic) and Obama & Co. has tremendously enlarged
    the deficit, not the drop in revenues.

    Bob Tiernan
    Portland

    • valley p

      “Pardon me, but neither of the Bush presidencies extended Reaganomics.”

      Bush 1 made an attempt at closing the budget deficit and signed a tax raise, which did differentiate him a only bit from Reagan, who raised taxes on workers after lowering them on the wealthy. But Bush 2 repeated Reagan almost verbatim. 2 big tax cuts skewed to the top, ramped up defense spending, and no serious cuts (and one big expansion) on entitlements.

      Personally, I don;t care if the rich get richer if all boats are rising. The problem with Reagan-Bushenomics is that during the combined 20 years of their rule, all boats did not rise, and many spring leaks. The only period we have had in the past 28 years where prosperity was generally shared were the Clinton years.

      Obama has submitted only a single budget so far, and this in the depths of the worst recession since the 30s. The deficit was $1.4 trillion before he even took office. The current federal revenue is nowhere near what it was a few years ago as a percent of the economy. Even the Heritage Foundation recognizes this. We are down to 15.4% of GDP collected in federal taxes, lower than at any point since 1950.

      “Spending” went up due to the recession (TARP + stimulus) and 2 unresolved wars left over from Bush. Increase spending and decrease tax revenues and you get a very big deficit, but other than the stimulus, none of it can be laid at Obama’s feet.

  • John in Oregon

    Bob Tierman, these comments are in addition to what you said earlier. Not as a critique.

    We all need to recall that Paul Volcker served under Jimmy Carter before Reagan took office. Volvcker did recognize one important fact, that we needed to keep faith in the U.S. dollar or the Federal Reserve, along with the fractional banking system of the United States, would collapse. His actions were never about controlling inflation although his interest rates increases to 20% brings about lower inflation rates as a consequence.#

    The Carter stagflation was a result first of the Nixon price controls which decoupled demand from production. Carter then compounded the problem by implementing policies which penalized production resulting in production rationing.

    The result was something long thought impossible. Rampant inflation in a stagnant economy. Carter’s policies aside, the real culprit was Carter’s belief that the Government could manage the economy.

    The blowback was market consequences not seen since the 1930s.

    One mistake that is made is the belief that Paul Volcker was on the Reagan team. That belief can be seen in some of the comments above. Nothing is further from the truth, Volcker was never on board with the Reagan economic plan.

    Volcker was and is far from a facilitator of pro-growth policies. He secretly lobbied against Reagan tax policy. While Fed board member Fred Schultz worked on House members, Volcker lobbied senators. Using his control of the interest rates as a weapon, Volcker kept money “tight” in order to force tax increases and counter the tax reductions. Volcker also implemented monetarism in an attempt to restrict the money supply. Bad dollar policy caused the ’81-’82 recession

    Thanks to economic advisors that did not share Reagan’s pro-growth vision and American optimism the FED was able to nullify the Reagan tax cuts of 1981. The marginal tax incentives of course remained.

    On October ninth of 1982 circumstances forced Volcker’s hand compelling him to abandon the tight money supply policy. By 1983 the marginal tax cuts Reagan had fought for took effect. Reagan’s faith in the American People and the booming economy gave us the 1984 landslide election.

    Bob you commented that people > ” keep making that grade-school level mistake of thinking that the government collects the same amount every year so that a tax cut equates to less revenues.”

    It is easy to assume that tax collections versus revenues is a simple straight line between 0% on the lower left and 100% on the upper right of the tax chart. I share your frustration. I have not yet found an illustrative analogy to explain the Laffer curve.

    Laffer’s concept is quite simple. When taxes are very low raising the tax rate has little impact on business or economic activity. Increasing low tax rates will produce more revenue. However when rates are very high, increasing taxes will depress business and economic activity reducing revenue. Somewhere between the two there is a tipping point where more taxes stops increasing revenues and starts reducing them.

    The anti-Laffer’s often point to Reagan 81 – 82 as disproof. But as I showed there was far more than tax cuts going on at the time.

    They also point to the 93 Clinton tax increase. Never mentioned is that while the rate was increased the tax brackets were also adjusted. That had the effect of improving the marginal tax environment. Also never mentioned is the 97 Clinton tax reductions.

    In one breath we are told that raising taxes will not hurt business activity or reduce revenue. In the next breath tobacco taxes are justified because they will reduce smoking.

    Then we have cap and trade in which taxing carbon in gasoline will cause people to drive less.

    Yet we are told that when tax rates are increased then people won’t take steps to protect income. Bill gates won’t move Microsoft to Vancouver BC as he threatened. And Phil Knight won’t move Nike overseas business units out of Oregon as he apparently already has.

    It all reminds me of a song from days past.

    They are coming to take me away, HO HO
    They are coming to take me away, HE HE
    To the funny farm where life is beautiful every day

    # — See John Tamny, The Paul Volcker Myth

    • valley p

      “The Carter stagflation was a result first of the Nixon price controls…”

      Most economists say it was due to rapid oil price increases as OPEC got their act together. Take an essential commodity with relatively inelastic demand and jack the prices up and you get both inflation and lousy growth.

      “Volcker was never on board with the Reagan economic plan. ”

      Reagan reappointed Volker. He was clearly a member of his team.

      “Volcker kept money “tight” in order to force tax increases ”

      He kept money tight to bring inflation down to reasonable levels. Once that happened he eased up.

      “Laffer’s concept is quite simple. ”

      Simplistic would be a better description. It has no purchase when we are talking about rates in the ranges of 25-50%, which is where they are today and have been since Reagan.

      “They also point to the 93 Clinton tax increase.”

      Exactly. He raised taxes at the upper end, supply siders predicted doom and gloom, and instead we got boom. Clinton had the last laugh on Laffer.

      “In one breath we are told that raising taxes will not hurt business activity or reduce revenue. In the next breath tobacco taxes are justified because they will reduce smoking. Then we have cap and trade in which taxing carbon in gasoline will cause people to drive less.”

      The difference is between a general tax increase and a targeted one. If you raise the price of one product but not others, people will buy less of that product and more of others. If you raise the price of carbon you make burning coal and oil more expensive, and alternatives less expensive relative to these.

      “Yet we are told that when tax rates are increased then people won’t take steps to protect income.”

      Whoever told you that? People take steps to protect income regardless of where the tax rate is. It could be 1% and some would still try and avoid paying it.

      “And Phil Knight won’t move Nike overseas business units out of Oregon…”

      He will always do what makes him more money. That is his nature. It leaves him more money to build stadiums with his name on them. Should Oregon’s entire tax policy be structured around what Phil Night may or may not do? I don’t think so. But a tax structure that treats traded sector businesses differently than local sector businesses makes sense in a competitive world. We already have such a system, targeted tax credits for certain sectors that are focused on exports or energy.

  • John in Oregon

    VP you may not have noticed but I wasn’t speaking to you. However you are welcome to stick your oar in.

    When you quote me please use the full quote. That quote is “The Carter stagflation was a result first of the Nixon price controls *which decoupled demand from production.”* The part you intentionally left out was exactly the point.

    I shouldn’t have to teach you basic markets, but I guess I must.

    Rising prices are the indicator that markets use to signal the need for more production. When prices rise producers are encouraged to produce more product and increase profits from more sales. Potential new competitors are encouraged to enter the market further increasing production. Once production increases prices begin to fall to a new equilibrium.

    While initially popular, Nixon’s price controls stifled the market price signal. With no rewards of increased profits producers did not increase production and new competitors did not enter the market.

    Worse price controls disrupted the market signals to the buyer. With prices held low the buyer does not weigh the value of the next purchase.

    No economist of any stripe would make the sweeping statement you claim. > *Take an essential commodity with relatively inelastic demand and jack the prices up and you get both inflation and lousy growth.*

    This statement can be true only under VERY SPECIFIC conditions. Such as when a cartel, like OPEC, has EXCLUSIVE control of the production of a product. Inflation and lousy growth are NOT the result of jacked up prices. Further discussion below.

    When he took office Jimmy Carter’s solution was sweeping oil-reduction reforms. He said we can’t substantially increase our domestic production. He was the ultimate peek energy doomsayer with his 10 point plan. Beginning with the government managing energy. Stopping briefly at a healthy economy requires austerity, and another stopover at prices must be high. Finally ending with we must plan now for less.

    Carter’s ultimate doomsaying moment was at the fire side when he said “woe is me”. When he told the American people the future is over and America will never again be great.

    Carter made good on his threat with taxation of producers and policies which frustrated and hindered production.

    And thus Nixon and Carter created the perfect conditions to test your theory that jacking prices up and gets both inflation and lousy growth. In short your often presented claim that free markets don’t work.

    Upon taking office Ronald Wilson Reagan smashed price controls and trashed Carter’s austerity and production restrictions. He even removed Carter’s symbol of failure, the White House solar panels. Finally he made government get out of the way and let the markets work.

    Marginal wells were uncapped, producers invested in expanding the productivity of existing wells. Production rose. Prices fell. New exploration began. Production went up. Prices fell. When the smoke cleared the price of oil was below pre Nixon levels.

    Reagan schooled the world on free markets.

    What is interesting is those that learned the lesson, not those who failed Reagan’s class.

    Saudi Arabia learned the lesson. Since the mid 80s Saudi policy has been to keep oil moderately high but below levels that encourage massive new exploration and technological development.

    VP tells us that Volcker > *kept money tight to bring inflation down to reasonable levels. Once that happened he eased up.*

    You know, its best to pay attention to history. Particularly as I gave you the date. Volcker made the historic U turn in policy because Mexico defaulted on its sovereign debt in the fall of 1982. Facing the collapse of the world banking system Volcker simply had no other choice.

    > *Reagan reappointed Volker (sic). He was clearly a member of his team.*

    Volcker was re-appointed in 1983. By then Reagan had won the contest with Volcker. Unlike other politicians Reagan did not hold with political revenge.

    Your attempts to nullify Laffer is hilarious. Laffer is false unless tax is targeted then Laffer is true. Up is no and black is left. Words typed by 1,000 monkeys.

    So then you use an incomplete quote again. The full quote was > “They also point to the 93 Clinton tax increase. Never mentioned is that while the rate was increased the tax brackets were also adjusted. That *had the effect of improving the marginal tax environment.”*

    Hint. Go look up marginal tax rate.

    • valley p

      “”The Carter stagflation was a result first of the Nixon price controls which decoupled demand from production.” ”

      Using partial quotes is a way to indicate what I am responding too without burdening the reader with too much stuff. A reader can always scroll up the page to get a full quote.

      To your point, my comment remains the same. Nearly every mainstream economist attributes the stagflation of the Ford-Carter years to 2 oil price shocks that occurred in succession, the first under Nixon and the second under Carter. Monetary policy that loosened credit to counteract low economic growth (brought on by high energy prices) compounded the problem. It Nixon’s wage and price conttrols were the cause, then why was the problem also found in Europe?

      “He said we can’t substantially increase our domestic production.”

      He was right. We couldn’t, didn’t and still can’t. We lack the liquid oil reserves. To believe otherwise defies geology. We could squeeze oil from rock as the Canadians are doing, but that is way expensive, consumes as much energy as it produces, and is environmentally toxic on many levels.

      Domestic oil production did not increase under Reagan. So if as you claim he “freed up the market,” it accomplished nothing. See this chart, from the Heritage Foundation no less. The only period of increased domestic production in the past 40 years was under Carter, and that was a blip. It was flat under Reagan and has declined steeply ever since 1985…meaning through 1/2 Reagan, 2 Bushes and Clinton.

      http://www.heritage.org/Research/EnergyandEnvironment/images/EC_1_lg.gif

      “Finally he made government get out of the way and let the markets work.”

      Yes he did. And oil prices went down to to new North Sea production and people buying more fuel efficient vehicles in part due to oil price and in part due to CAFE standards enacted by Carter.

      “Reagan schooled the world on free markets.”

      Surely. And the Savings and loan debacle will be among his legacy.

      “Since the mid 80s Saudi policy has been to keep oil moderately high but below levels that encourage massive new exploration and technological development.”

      Does that amount to a “free market” or using a dominant position within a cartel to maintain a carefully regulated price that is just the right temperature, not to warm, not to hot, to discourage the world (us) from investing in alternative energy sources? How can you possibly confuse what the Saudis are doing with a “free market?” It is the opposite. It amounts to price controls.

      “Volcker was re-appointed in 1983. By then Reagan had won the contest with Volcker. Unlike other politicians Reagan did not hold with political revenge.”

      Oh please John. You are re-writing history. Volker’s plan worked, inflation subsided, and he then reduced interest rates in time for Reagan’s re-election. Thus it was morning in America. Reagan knew a good thing when he had one. As for political revenge, ask the Air Traffic Controllers about that.

      “Your attempts to nullify Laffer is hilarious. Laffer is false unless tax is targeted then Laffer is true.”

      Laffer’s theory had nothing to do with tax increases targeted at a single product or economic sector. It was about income taxes, and it only apples at the margins, not in the center.

      I don’t care about any tax bracket adjustment under Clinton. He raised taxes at the upper end, revenues increased and the economy boomed. The “impossible” (if you believe Laffer) happened, and he even balanced the budget. Its inconvenient for you I know, but its historical fact now, as is the Reagan-Bush deficits, both of which ballooned AFTER tax cuts at the top. You can re-interpret all you want but its very hard to argue black is white if the lights are on.

  • John in Oregon

    Lets begin with your misinterpretation of the Heritage chart. That is being charitable as the word misrepresentation would also be accurate.

    The chart does not say what you say it says. The chart shows the following;

    In 1968 domestic production was trending down. Then in 1973 domestic production fell in the face of Nixon/Ford price controls. Surpassingly for the period 1975 to 1977 under Nixon/Ford domestic production began to rise despite price controls.

    Carter took office in 1977.

    The production increase continued for several months after Carter took office then reversed course and fell for another 11 months. After that production flattened out and just bounced along.

    Ronald Reagan took office in 1981.

    By 1982 domestic production began to rise. By mid 1985 domestic production was significantly above pre embargo levels. More importantly domestic production was much higher than the best production under Carter.

    Worse than the misreading of the chart is that you hid from us the caption to the chart. That caption reads *”Federal limitations on domestic oil production have contributed to a steady decline in US production since 1985. By 1994, the United States was importing more than its total domestic production. Restricting supply raises prices and unnecessarily contributes to US reliance on foreign oil imports.”*

    Often the most useful information comes from observing inflection points. Points where the trend changes direction. There is one such inflection in mid 1985.

    In this you say of the Saudis > *Does that amount to a “free market” or using a dominant position within a cartel to maintain a carefully regulated price that is just the right temperature, not to warm, not to hot, to discourage the world (us) from investing in alternative energy sources? How can you possibly confuse what the Saudis are doing with a “free market?” It is the opposite. It amounts to price controls.*

    Whatever might be said of Saudi internal governance, it’s best not to assume the Saudis are stupid as you suggest. OPEC is a cartel BUT does not have EXCLUSIVE control of production. As you appear to recognize it’s in the Saudi best interest to discourage the competition of new production. A cartel wants to DISCOURAGE free market competition by keeping prices low enough that competition doesn’t enter the market.

    Now the 1985 inflection comes into play. That inflection was caused by the Saudis increasing production thereby further reducing oil prices and discouraging new production. The question is why?

    Did they do it out of beneficence to President Reagan as some suggest? Yeah sure and I have a bridge for sale.

    Did they do it in response the Carter alternate energy / CAFÉ initiate as you suggest? Yeah sure they would wait 10 years to react. Come on get real the Saudis have no fear of alternative energy.

    Did they recognize the competition potential from the increasing domestic production that began in 82/83? Bingo.

    Yes I understand you don’t care about the marginal tax rate, the last dollar tax. You tell us that cutting taxes causes deficits and raising taxes is good for the economy. Your evidence for this is Reagan 81 and Clinton 93.

    You should pay attention to history, particularly since I spoke of it in the very first post. In 1981 Reagan signed the tax reduction. This you claim caused deficits.

    BUT as I told you Volcker lobbied for tax increases. After Volcker’s threats, congress passed the Tax Equity and Fiscal Responsibility Act (TEFRA) in 1982. TEFRA raised taxes but did not change the marginal tax rate.

    So answer this, when taxes were raised under Reagan why exactly did we have the deficit? That answer is spending. Congress overrode Reagan’s veto of H.R. 6863, the Supplemental Appropriations Act of 1982 which busted the budget. As a result the deficits increased while the economy improved dramatically due to the marginal tax rate cut.

    While you answer Reagan also answer Clinton. Clinton raised tax rates and improved the marginal tax rate as happened under Reagan. Why didn’t the deficit also increase? What was different? Answer. Congress cut spending.

    You mentioned the air traffic controllers. Since the 1940s presidents have faced labor problems. President Truman faced the rail work stoppage. Truman stood firm. Reagan faced the controllers. Reagan stood firm. Neither Truman or Reagan was vindictive, they simply had no other choice.

    Which brings us to one of the issues of this thread. Unlimited growth of public sector wages and benefits can not continue.

    • valley p

      I didn’t “hide” the caption John. I gave you the damn reference so you could read the ting for yourself. The chart clearly shows a steep rise in domestic oil production under Carter, and a plateau followed by decline under Reagan. You are claiming black is white.

      It wasn’t just the Saudis increasing production. The rapid price rise in oil created world wide exploration and discovery, including the North Sea and in Mexico among other places. This always happens to commodoties, until or unless they run out that is.

      CAFE standards were adopted under Carter, but it took several years for the newer, more fuel efficient cars to displace the older gas hogs. It wasn’t a matter of what the Saudis did at that point. We used less oil. Look at the curves on imports, and compare those with the curve on domestic production. They don’t nearly match. We used less oil for a while so there was less demand, and along with increased production this led to a crash in prices. Reagan was a benefit of good timing on this and nothing more.

      You blame everyone except where the buck stops. Reagan implemented a massive tax cut for the rich, which you give him due credit for. He then signed into law a tax increase, which you now blame on Volker. And you neglect Reagan’s ramping up of defense spending as having anything to do with the deficit. Regan’s presidency resulted in the largest peacetime deficits in history. Whatever he claimed to be, he did not govern as a fiscal conservative. Neither did Bush 1, and neither did Bush 2. The only fiscally conservative President in the last 3 decades was a Democrat named Clinton. The record is clear on this.

  • John in Oregon

    At first I was tempted to give you the year by year production numbers. However readers here can simply look and confirm my information.

    So instead I append here some important highlights for Reagan’s term in office. 1980 is the last year of Carter’s term and 1988 is Reagan’s last year.

    Nixon/Ford US oil production began to rise from 8.13 MBl … May 76
    Carter high 8.67 MBl … June 78
    Carter low 8.51 MBl … May 79
    Carter 8.52 MBl December 1980
    Reagan high 8.975 MBl .. 1985
    *Reagan Increase from Carter high 305 KBl per day
    Reagan Increase from taking office 455 KBL per day*

    1980 unemployment 6.6%
    1988 unemployment 5.3%
    *Change –1.3%*
    FED

    1980 interest rate 18%
    1988 interest rate 9.3%
    *Change –8.7%*
    FED

    1980 inflation rate 13.5%
    1988 inflation rate 4.2%
    *Change –9.3%*
    FED

    1980 Federal revenue $359.9 Billion
    1988 Federal revenue $583.3 Billion
    *Change in revenue + $223.4 Billion*
    IRS

    1980 Federal spending $591 Billion
    1988 Federal spending $1,064 Billion
    *Change in congressional spending + $473 Billion*
    OMB

    1980 Military spending in Dollars $303 Billion
    1988 Military spending in Dollars $426 Billion
    *Change in military spending + $123 Billion*
    Historical Charts of the Budget

    1980 Federal non-military spending $288 Billion
    1988 Federal non-military spending $638 Billion
    *Change in congressional non-military spending + $350 Billion*
    Calculated from above

    1980 Military spending as percent of GDP 4.9%
    1988 Military spending as percent of GDP 5.8%
    *Change in Military spending as percent of GDP + 0.9%*
    OMB

    Note.
    The success of bringing down inflation added to the deficit problem. High inflation had pushed people into higher tax brackets, which had caused federal revenues to rise automatically. But low inflation eliminated this bracket creep. This factor alone added $41 billion to the deficit in 1981 and $64 billion in 1982, according to Office of Management and Budget.

    > *It wasn’t just the Saudis increasing production.*

    LA times
    April 09, 1986 (AP)
    [VP] Bush, on his way to Saudi Arabia to meet with King Fahd, said _he wouldn’t seek a cut in Saudi crude oil production to drive prices back up,_ but added, “Clearly I will be saying that stability in the market is a very important thing, and I will be selling very hard in terms of our . . . own domestic interests and thus the interest of our national security.”

    The above news report is consistent with Reagan’s position of keeping Government out of free markets.

    > *The rapid price rise in oil [prices] created world wide exploration and discovery, including the North Sea and in Mexico among other places.*

    I am happy to see you agree with Reagan about free markets increasing worldwide, including US, production in response to rising prices.

    Ronald Reagan: Radio Address to the Nation on Oil Prices. April 19, 1986

    “When I first came into office in January of 1981, the price of gas was just about $1.25 a gallon. The price of a barrel of oil had reached $36. Americans were understandably frustrated and angry as they cast about for answers. Some people advocated more governmental intervention. Demands for divestitures of oil companies filled the air. Other people demanded gas rationing. Well, we said no. I didn’t want to force more limits on people through rationing. I wanted to ease the situation by letting freedom solve the problem through the magic of the marketplace.”

    “One week after I took office, we decontrolled the price of domestic oil, and we stopped the Government from putting ceilings on its pricing and production. Our action wasn’t exactly greeted by rave reviews. Those opposed said decontrol would drive up the price of oil, increase gas prices, and cause terrible inflation. One Member of Congress, a Democrat from Massachusetts, said decontrol would impose impossible economic burdens on those least able to pay. Well, 5 years later, Massachusetts is enjoying an unprecedented economic comeback; and the reason is lower taxes—something else we contributed to—and the lowered energy prices that followed the decontrol of domestic oil.”

    Despite all the scare tactics and dire warnings, decontrol was a success. The price of oil has fallen from the $36 a barrel of 1981 to about $12 a barrel today. The price of gas has also plummeted from an average of $1.25 a gallon when I took office to about 82 cents today. In fact, the price of gas is now cheaper in real terms, meaning accounting for inflation, than it’s been at any point since the 1950’s. My mother used to tell me, “It’s not nice to crow,” but maybe this once I can’t help it. … Government didn’t perform any of these miracles; freedom did, the marketplace did, the entrepreneurs and businessmen and women of America did. Those of us back in Washington just sort of lifted the artificial restraints, sat back, and watched the gushers blow.”

    > *CAFE standards were adopted under Carter, but it took several years for the newer, more fuel efficient cars to displace the older gas hogs. It wasn’t a matter of what the Saudis did at that point. We used less oil. Look at the curves on imports, and compare those with the curve on domestic production.*

    From 1982 to 1988 US consumption rose from 15.2 million barrels a day to 16.3 million barrels a day.

    > *You blame everyone except where the buck stops. Reagan implemented a massive tax cut for the rich, which you give him due credit for. He then signed into law a tax increase, which you now blame on Volker.*

    Your rhetoric does not change the facts of what Volcker did. And yes I do understand you wish to help the employee by punishing the employer. Good luck with that.

    > *And you neglect Reagan’s ramping up of defense spending as having anything to do with the deficit. Regan’s presidency resulted in the largest peacetime deficits in history. Whatever he claimed to be, he did not govern as a fiscal conservative.*

    Change in congressional spending 1980 to 1988 + $473 Billion
    Change in military spending 1980 to 1988 + $123 Billion
    Change in congressional non-military spending 1980 to 1988 + $350 Billion

    Congress overrode Reagan’s vetos of spending.

    So, gotcha, yupp, yupp, it was Reagans $123 Billion in military spending that did it.

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