Finally, if we are nitpicking language on the campaign stump, then you ought to criticize Palin for the ridiculous remark she made after telling us at the convention that she is an expert on Alaska’s North Slope. On Monday, Palin on CNBC said it was “nonsensical” that the President of the US goes to negotiate with the Saudis to have them increase their oil production for us when we have these resources at home, in Alaska (see after 2 minutes at: http://www.youtube.com/watch?v=2GE11URmmnc). Saudi Arabia has most of the world’s swing production, which was estimated in 2004 at 1.3 million barrels per day. Alaska HAS NO SWING PRODUCTION CAPACITY FOR OIL!! In fact, production in Alaska dropped 15% last month due to temporary outages, which would not have happened if there was additional capacity that could have been brought online (see http://www.petroleumnews.com/pntruncate/594235017.shtml). Also note that the Saudis’ swing capacity is roughly twice as much as Alaska’s entire oil production (650K barrels per day), so Palin’s solution is to tap her state’s excess capacity of 0 barrels per day rather than asking the Saudi’s who have 1.3M barrels per day. Let me repeat that: 0 barrels versus 1.3M barrels. For the record, when the Saudis tap the swing capacity it is on the order of 250-600K barrels per day. Alaska doesn’t have that kind of excess capacity, and Palin is either a gaffe machine herself or (worse) knows less about energy than she is letting on.

to:
It is one thing to want social compliance on an issue, and it is another matter entirely to get it .

To get it done, to make sure that nearly all or 90% or 95% of tires are properly inflated is another issue entirely.Think pooper-scoopers. It is one thing to want social compliance on an issue, and it is another matter entirely so get it . So while it is theoretically done at no capital cost, getting a measurable improvement is another matter entirely.

I made the assumption that you were already well informed about the air in tires issue. Apparently I was mistaken. So I will now take the time to inform you. Nobody is disputing that inflating tires is a good thing to do. I have done it for years on my own autos. However, let us consider what the Senator from Illinois actually said on the matter. Just as we considered what Governor Palin actually said about drilling in her acceptance speech at the RNC.

But we could save all the oil that they’re talking about getting off drilling — if everybody was just inflating their tires. And getting regular tune-ups. You’d actually save just as much!

All the conventional oil- excluding oil shale for example. Offshore and onshore. Alaska and the lower 48. That is, all the oil from increased drilling.
Repeat after me:
all the oil
all the oil
all the oil.

That is what the Senator from Illinois was talking about, and that is what I am calling him on.

The Senator from Illinois was dead wrong on the issue. The link I gave has the best summary of the issue I have seen. What is even more dismaying about the matter is that the Senator from Illinois refused to admit he had made a mistake on the issue. From my previous link.

How silly is this statement? Doing the math, it looks like he’s off by about an order of magnitude. The DOE link says you can save 3.3% and U.S. consumption is 20.8M barrels a day, half of which is gasoline, so even if fully half the population is driving on very poorly inflated tires you’re talking about only about 165,000 barrels a day, a tenth or less of the millions of barrels a day we could add in production. Hell, the mean estimate for ANWR alone is 780,000 bpd.

165,000 versus 780,000. see what I mean?

Anyone who claims that we have sufficient conventional oil resources to substitute for all our oil imports is mistaken. I appreciated that you admitted you were mistaken in attributing such a claim to Palin in her speech at the Convention. Similarly, anyone who claims that inflating tires and tuneups can substitute for all the oil from increased drilling is also mistaken.

The air in tires brouhaha is a textbook example that when the Senator from Illinois strays from the teleprompter, he is prone to make claims that are total nonsense. Telling people to inflate tires or have tune-ups, that is fine. But to claim that it can substitute for all the oil from increased drilling, that is total nonsense.

If you are going to discuss an issue, it would really behoove you to know what you are talking about before you storm into a discussion.

I hope it’s clear now…

Here are the relevant figures from the government offices that maintain them:

Reagan lowered tax rates largely on the wealthy (top two brackets) while raising them on everyone else, with a major tax overhaul in ’81 and another in ’86, comparing ’79-’88 data for total effective federal tax rate (http://www.cbo.gov/ftpdocs/53xx/doc5324/04-02-TaxRates.htm):

All top 5% top 1%
1979 22.2 31.8 37.0
1980 22.2 30.8 34.6
1981 22.4 29.4 31.8
1982 20.7 26.0 27.7
1983 20.4 25.6 27.7
1984 21.0 26.1 28.2
1985 20.9 25.4 27.0
1986 20.9 24.6 25.5
1987 21.6 28.5 31.2
1988 21.8 27.8 29.7

And the share of total taxes paid:

All top 5% top 1%
1979 100 29.6 15.4
1980 100 28.7 14.2
1981 100 27.2 12.9
1982 100 26.5 12.8
1983 100 27.7 14.0
1984 100 28.2 14.7
1985 100 28.4 14.8
1986 100 30.7 17.1
1987 100 30.8 16.2
1988 100 32.3 18.1

According to a non-partisan economic study out of Treasury, Reagan’s major tax bills together significantly reduced (about -1% of aggregate GDP) the federal government’s tax receipts looking at the average receipts over the subsequent four years, mainly driven by the Economic Recovery Tax Act of 1981 that caused a massive (about -3% of GDP) decrease in revenues. So the tax cuts were regressive in the impact on tax burden across income brackets and were net negative in impacting government tax receipts.

To cover new federal budget deficits caused by the tax cuts, the US borrowed heavily and raised the national debt from $700B to $3T (http://en.wikipedia.org/wiki/Image:US_Federal_Debt(total_and_public).JPG), as we went from being the world’s largest creditor nation to the world’s largest debtor nation. Note that Reagan himself described the new debt as the “greatest disappointment” of his presidency.

Supply-siders (e.g., Art Laffer) repeatedly argue that lower taxes yielded higher economic growth, higher employment and lower inflation, while yielding greater tax receipts (at a lower rate). Under Reagan, real GDP growth recovered strongly after the 1982 recession and averaged 3.0% per year under his tenure, lower than the 1945 to 1979 average of 3.1%. Unemployment peaked at over 10.7% in 1982 then dropped during the rest of Reagan’s terms, and inflation significantly decreased (from 13.6% in 1980 to 3.2% in 1983, with a 5.7% average from ’80 to ’88), largely due to Fed Chairman Volker’s hawkish monetary policy from 1979 to 1983. A net job increase of about 16 million also occurred, which was about equal to the rate of population growth.

Here are the real GDP figures for 1979 and the Reagan years:

1979 3.2
1980 -0.2
1981 2.5
1982 -1.9
1983 4.5
1984 7.2
1985 4.1
1986 3.5
1987 3.4
1988 4.1

Reagan’s tax cuts did indeed lead to a near doubling of tax receipts ($517 billion in 1980 to $1,032 billion in 1990), so that the deficits appeared to be caused by an increase in government spending. However, critics have shown that the doubling of revenue is significantly smaller when appropriately adjusting for inflation; real inflation-adjusted figures showed a far more modest increase in tax receipts ($1,077.4 billion in 1981 to $1,235.6 billion in 1988, measured in FY2000-dollars). Furthermore, an analysis from the Center on Budget and Policy Priorities argues that “history shows that the large reductions in income tax rates in 1981 were followed by abnormally slow growth in income tax receipts, while the increases in income-tax rates enacted in 1990 and 1993 were followed by sizeable growth in income-tax receipts.” Specifically, the analysis calculated that the average annual growth rate of real income-tax receipts per working-age person was 0.2% from 1981 to 1990 and a much higher 3.1% from 1990 to 2001.

Which leads us to the Clinton years…

Clinton raised tax rates disproportionately on the wealthy (top bracket) while raising them on the poor (bottom two brackets(http://www.cbo.gov/ftpdocs/53xx/doc5324/04-02-TaxRates.htm):

All top 5% top 1%
1991 21.5 27.6 29.9
1992 21.5 28.1 30.6
1993 22.0 30.5 34.5
1994 22.3 31.3 35.8
1995 22.6 31.8 36.1
1996 22.7 32.0 36.0
1997 22.9 31.6 34.9
1998 22.6 30.8 33.4
1999 22.9 31.2 33.5
2000 23.1 31.1 33.2

And the share of total taxes paid:

All top 5% top 1%
1991 100 30.3 15.7
1992 100 32.3 17.5
1993 100 33.8 18.7
1994 100 34.4 19.4
1995 100 35.4 20.1
1996 100 37.3 21.8
1997 100 38.3 22.7
1998 100 38.9 23.3
1999 100 40.2 24.3
2000 100 41.4 25.6

Although Clinton raised taxes in 1993, he cut them on the highest bracket in 1997. As a result of the tax increases, which never rose back above the pre-Reagan era (i.e., 70% highest marginal rate) Clinton transformed a deficit of 4.7% of GDP in 1992 and turned it into a surplus of 2.4% of GDP in 2000. Unlike Reagan, Clinton also managed to force spending cuts by taking advantage of lower defense requirements (“the peace dividend”) and by reforming welfare; while a Republican Congress contributed to the spending cuts, the Clinton White House could have vetoed these cuts but instead supported them (e.g., Rubin’s frequent commentary on the importance of balanced budgets). As a result, federal spending fell to 18.4% of real GDP in 2000 from 22.2% in 1992.

During the Clinton years, GDP growth exceeded that achieved under Reagan, averaging 3.7% per year from 1992 to 2000. Clinton also lowered inflation rates down to 2.6% (92-00 average), which contributed greatly to the good economic health exhibited during Clinton’s presidency. The Clinton administration also achieved a thirty-year low unemployment rate of 3.9% versus an average under prior Democratic presidents of 4.3% and under Republican presidents of 6.1% (http://findarticles.com/p/articles/mi_hb3316/is_200101/ai_n8011737).

The GDP growth data for 1991 and the Clinton years are as follows:

1991 -0.2
1992 3.3
1993 2.7
1994 4.0
1995 2.5
1996 3.7
1997 4.5
1998 4.2
1999 4.5
2000 3.7

Critics of Clinton claim that the burden on top brackets were unfairly high. But they failed to account for the growing income inequality occuring in the 1990s that, under a progressive tax system, would cause this growing contribution. Here is a historical perspective on the growth of that inequality (an income Gini of 0 is perfect equality, while 100 is perfect inequality):

1967: 39.7 (first year reported)
1968: 38.6 (lowest index reported)
1970: 39.4
1980: 40.3
1990: 42.8
2000: 46.2
2005: 46.9
2006: 47.0 (highest index reported)
2007: 46.3

The other major claim, which Tiresias wants to make, is that the Clinton economy benefited from the Reagan years. The problem with this argument is that economic growth actually declined to 2.1% average annual growth under Bush Sr. before reaccelerating to a growth rate under Clinton that was higher than under Reagan (3.7% vs. 3.0%); also, the Reagan years saw the largest tax cut in history but saw average annual growth that was lower than the preceding period between WWII and the start of his presidency.

I believe that anyone examining the record would have to conclude that Clinton’s economic record is superior to Reagan’s, as measured by GDP growth, unemployment, inflation and deficit/debt metrics. Clearly, the tax hikes under Clinton did not slow economic growth from the Reagan era as many have argued, but actually accelerated from both the Reagan and Bush Sr. rates.

Unsurprisingly, Tiresias wants to give all of the credit to the Republican Congress, which might have been a plausible answer in 2000; however, given the GOP control of Congress during 75% of the Bush administration, and the record spending and deficit growth occuring on the Republican watch (see the national debt chart link above), it is a very difficult argument to make that the GOP was singularly responsible for spending cuts.

Because Obama’s economic advisor is a protege of Robert Rubin and Alan Greenspan, two of the architects of the Clinton economic legacy, I believe that the critique of Obama’s economic policies is completely premature and, in my opinion, would prove completely off-base as well.