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Hillary Clinton: "Fair" warning
Posted by: mcq on Thursday, January 24, 2008

Jacob Sullum takes a look at the words and phrases Hillary Clinton has been using on the campaign trail and warns us to take heed:
During this week's Democratic presidential debate, Hillary Clinton said putting together the right kind of stimulus package is "a part of economic justice." The remark reflected a major campaign theme for the New York senator, who has declared she would pursue "a new vision of economic fairness" as president.

That slogan should set off alarm bells for anyone who recognizes that economic outcomes result from myriad individual choices. To impose her vision of economic fairness, Clinton would have to override those choices, compromising freedom in the name of equality.
His point goes to the heart of my warning, over the years, about those on the left who are fully invested in the philosophy of radical egalitarianism. That would include Hillary Clinton.
Clinton's aim is economic equality, not legal equality, and you really can't have both. As the economist and political philosopher F.A. Hayek observed, equal treatment of people with unequal abilities leads to unequal outcomes. In this sense social justice is, if not a "mirage," as Hayek argued, at least in conflict with procedural justice.
Sullum says we should listen carefully to what she is saying:
So it's not surprising that many of the policies Clinton believes promote economic fairness strike others as decidedly unfair. In 2006, for example, she endorsed a successful Commerce Department petition by Syracuse candle makers to impose a tariff of more than 100 percent on candles imported from China.

"Our manufacturers deserve a level playing field," Clinton explained, "and we owe it to them to make sure that others do not unfairly circumvent our fair trade practices." In Clinton's view, then, fairness demands that all Americans pay more for candles to subsidize manufacturers in her state.

More generally, Clinton advocates "smart" trade rather than free trade, insisting on "strong protections for workers and the environment" that reduce the competitive advantages of foreign producers. She wants "jobs that cannot be shipped overseas," which can be achieved only by interfering with companies' profit-maximizing (and consumer-benefiting) decisions. For her, globalization is not what happens naturally when people are free to exchange goods and services on mutually agreeable terms; it's a process that needs to be "managed properly."
Of course that management is top down and government driven. Economic fairness is focused on what? Job holders. Not employers. Not consumers. Hillary Clinton would find economic fairness in a robust buggy whip manufacturing sector whose jobs are "safe".

Clinton loves to talk about "fiscal responsibility". Yet, she certainly doesn't project the plans of someone who is serious about it:
When it comes to fiscal policy, Clinton seems to see herself as a kindergarten teacher "fairly" doling out cupcakes, giving no thought to who baked them in the first place. In a recent New York Times interview she worried that "inequality is growing" and waxed nostalgic for the "confiscatory" tax rates of the post-World War II decades.

Clinton would use higher taxes to pay for universal preschool, universal college, universal health care, and universal high-speed Internet access, among other taxpayer-funded goodies. These she calls "the investments we make in each other," and they are just like investments, except that there is no reliable test of whether they make sense, since the people paying for them have no choice in the matter and are not the ones who stand to benefit.
One of the true Orwellian phrases begun by her husband's administration is this concept that increased taxation is really just investment, and by calling it that, it somehow lessens the immorality of the confiscatory nature of taxation. Plan on hearing much more of that as well as lectures to shame you into feeling guilty about not wanting to have your hard earned money go toward what she considers to be worthwhile "investments".

Another caution:
There's a similar problem with Clinton's proposal to "create millions of new jobs by investing in clean energy" through a $50 billion Strategic Energy Fund. When a politician talks about the jobs government spending will create, it's usually a signal that the spending cannot be defended on its own merits. A Strategic Thumb Twiddling Fund could create millions of new jobs too.
Sullum concludes:
In the Times interview Clinton suggested that as president she would be prepared to ram through her economic program on straight party-line votes. "If you really believe you have to manage the economy," she said, "you have to stake a lot of your presidency on it."

The history of central planners and their failures suggests a different lesson: If you really believe you have to manage the economy, you shouldn't be president.
"Fair" warning.
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Previous Comments to this Post 

In the Times interview Clinton suggested that as president she would be prepared to ram through her economic program on straight party-line votes. "If you really believe you have to manage the economy," she said, "you have to stake a lot of your presidency on it."
OK, this should certainly makes thing clear to everyone.

Above all else, keep Democrats from being a super majority in the Senate.

I would suggest that Guiliani, Romney, or even McCain would be a better choice then Clinton.
Written By: Keith_Indy
All politicians want us to believe that our current credit problems will be solved if we just continue to spend. We are yet again assured by all that lower interest rates combined with lower taxes will bump up our falling assets and spur on our debt fed economy. I would have thought that in a age of TIVO we would at least remember that we already listened to such nonsensese.
Written By: Mayo
Confiscatory taxation impedes growth in samll and emerging businesses. That is because money spent by an entrepreneur on mandatory "investments" in government through taxation is unavailable for any investments to start or expand his/her business.

There is no way that words can disguise that fact of life.
Written By: vnjagvet
The Clintons get too much money from foreign businesses and interests to jepoardize trade relations, balanced or not.
Written By: jpm100
URL: http://
If they were only interested in money, they wouldn’t be nearly as bad. In fact, they’d probably be Republicans.

But it’s their desire for power that everyone should be wary of.
Written By: Keith_Indy
All of this is just a short term fix. And truth be told, it has been happening over past 3 decades. Reagan and Clinton have just as much blame as the current administration. This is an interesting perspective on this(the midas touch)
Written By: rawdawg
the immorality of taxation, mcq?

Do we really have to rehash this whole debate yet again?
Written By: Ayn_Randian
URL: http://
When did we see the last government surplus?
Who was President?

Written By: darohu
URL: http://
Hillary is death to startups. The entire democratic party in the US is dedicated to stamping out small business and entrepreneurs, and forcing everyone into a government (union) job or the dole.

Low taxes combined with low government spending would free up capital for startups. Startups are the only real long term hope for prosperity
The number of small business startups in the ’90s was quite impressive.
Entrepreneurs, it seemed, were everywhere.

Funny how selective a persons memory can be.
Written By: darohu
URL: http://
But it’s their desire for power that everyone should be wary of.
I believe that’s the means. Their primary ends is self-enrichment. Socialism is secondary.

European socialism is actually business friendly. Initially there is a lot of smaller companies that get hurt or put out of the business, but the big ones end up with a government sanctioned monopolies or small oligopolies.
Written By: jpm100
URL: http://
The number of small business startups in the ’90s was quite impressive.
The 80’s was even better for people actually raising their income level.

Oh, wait, that was Reagan. Sorry. DIdn’t mean to ruin your "Clinton was god" moment there.

And as for "Last surplus", I think it was with a congress of republicans...

Opps. Did it again. Sorry.
Written By: Scott Jacobs
URL: http://
The word "justice" attached to anything has started to give me the heebie-jeebies. The reason?

I work for a state environmental agency. Recently, I attended an "environmental justice" class. The closing exercise in the class was a real-world case study where a major city was proposing to reroute a highway to relieve traffic congestion in a primarily minority(black)/poor section of town. Two alternate routes were proposed by the city. One split the highway through existing streets in another part of town and the other took the highway around the town through a sparsely populated area on the edge of both a river and an AmerIndian Reservation. The environmental harm in the case study was primarily morbidity/mortality from auto exhaust. Since we were using GPS/GIS data to examine the routes, we had access to the internet.

Well, at the end of the case study, we got the "environmentally just" answers. They were, in order of preference: the first alternate route, not changing the route at all, and the edge of the wetlands/Reservation route.

Being the curious sort I am and having a keyboard right in front of me, I looked up a few things while they were expaining the reasons for the rankings. The preferred alternate was populated mostly by non-minority/non-poor and had 10 times the population density in the impacted area than the original route and 150 times the population density of the wetlands/Reservation route. IOW, you could expect 10 to 150 times the morbidity /mortality as compared the other routes. This fact was never even taken into account!

When I pointed this out, I was told that the "model" only takes population density into account when it is necessary to determine the amount of minority/poor population in the impacted area. When I asked what exactly was "just" about increasing the mortality/morbidity by an order of magnitude (or, alternately, not decreasing it by several orders of magnitude by utilizing the second alternate route), the instructor explained that it was "just" because it prevented "disparate impacts" on minority/poor populations.
Written By: Terry
URL: http://
darohu asks:
When did we see the last government surplus?
Who was President?

FY 1957. Eisenhower was President.

Written By: anonymous
URL: http://
Terry describes the whole leftist mindset about nearly everything. And people think it’s possible to have civil disagreement and reach reasonable consensus with idiots like this. It’s not going to happen. This country is either going to hell slowly or a significant rift is going to occur.
Written By: Grimshaw
URL: http://
When did we see the last government surplus?

Who was President?
If you’re trying to pretend it was Clinton, it won’t work here. The best he ever had were projected surpluses. He never actually had one. And the only reason he had projected surpluses is the Republican Congress dragged him along kicking and screaming all the way.
Written By: McQ
And the only reason he had projected surpluses is the Republican Congress dragged him along kicking and screaming all the way.
That’s not the way Alan Greenspan described it, but I guess you understand these things better than he does.
Written By: darohu
URL: http://
No, McQ, the government had a surplus (graph) under Clinton.

Even President Bush acknowledged that.

Oh, and even if you use the method of those who want to somehow deny that Clinton got the budget in order — along with the GOP Congress, to be sure — you actually end up with very good numbers. Here’s how they do it. Because interest accumulates on the debt, even in a time of budget surplus you can ultimately have an increase in total debt. For Clinton in 2000 the increase was tiny, only about 18 billion. It’s now in the hundreds of billions. That doesn’t, however, mean we didn’t have a budget surplus that year. The mistake is to treat debt as a single accounting unit, to think that budget surpluses by definition mean a pay down in debt. You can have a surplus but choose not to pay down debt because paying down the debt means essentially taking excess capital from business.

If you do a google search, investment companies, news sources, etc., all point to the surplus. The deniers are on right wing blog sites, and use the debt fallacy as their "evidence." That is objectively false.
Written By: Scott Erb
No Erb, the Clinton surplus is a myth. The way the surplus is claimed is by borrowing trust fund surpluses and not accounting for it as owed. And interest is owed money as well
The real debt increased.
Written By: anonymous
URL: http://
You’re simply wrong, anonymous, if you claim that there wasn’t a budget surplus. you’ve bought into a right wing myth. No one denies that there was a slight increase in debt in 2000, I note that in my post above — you apparently didn’t read it carefully. Real debt is not directly tied to the budget deficit or surplus. Interest increases continue unless the debt is paid down, but that can have a deflationary effect on the economy. Even then, the increase in debt is so small compared to all other years even that is a great accomplishment. But the budget was in surplus, all official data agree on that. You’re apparently bought an effort by anti-Clinton folk who rely on peoples’ ignorance of how these statistics are generated to deny that the budget briefly went in surplus. Here’s yet another graph.

Now, one reason it was in surplus briefly was because of a stock bubble and cheap oil, not Clinton’s personal efforts, but that’s another (and much better) argument.
Written By: Scott Erb
By the way, if you can’t understand how debt and budget deficit/surplus is not a single accounting entry, do this thought experiment: You have X amount of debt, all of which accrues more interest. Let’s say you also do not have payments that assure that you are paying down the debt, so if you choose not to pay it down, the interest will grow. Now, let’s say you’re doing your yearly budget. You have expenses of $95,000, and an income of $100,000. You have a $5000 surplus. Let’s say you choose to invest that $5000 or save it rather than pay down your debt. The added interest on your debt will cause the debt to grow even though your budget was in surplus. Capice?
Written By: Scott Erb
For those of you still trying to claim that there were actual surpluses during the Clinton administration, stupid accounting tricks don’t count.

Here are the facts.

The article concludes:
The only debt that matters is the total national debt. And the national debt went up every single year under Clinton. Had Clinton really had a surplus the national debt would have gone down. It didn’t go down precisely because Clinton had a deficit every single year. The U.S. Treasury’s historical record of the national debt verifies this.
And, of course, you are provided with the Treasury numbers (and an explanation of why those who try to tout a surplus like to ignore the significance of Inter-governmental Holdings and the debt).
Written By: McQ
McQ, you are dead wrong. Completely. You either do not understand the concept of the budget and what causes a surplus, or you are dishonestly spinning. Of course the debt went up very slightly in 2000, that’s irrelevant to the point. The "article" you cite is "commentary" from some right wing website that doesn’t understand the economics. That’s why all the charts you’ll find, all the financial institutions, all the economic texts will point to a surplus: because there WAS a surplus.

Again: debt increased because we choose not to pay down the debt with the surplus. That meant that interest accrued, which added to the debt. This isn’t a single accounting entry system where budget surplus = decrease in debt. Read the thought experiment one post up from yours, where I explain how this functions. Sheesh. You guys have your narrative and you won’t let reality intervene.
Written By: Scott Erb
Econmics simple enough for even a university professor to understand:

A university professor (lets call him Bre) wants to by some item that costs 15 dollars. Bre only has 10 dollars. Bre borrows 10 dollars and thus has 20 dollars. Bre buys the item for 15 dollars. Bre now has 5 dollars in his pocket.

The lender comes to Bre and says it is time to pay back the 10 dollars Bre borrowed (plus a dollar interest).

Does Bre actually have a surplus?
Written By: anonymous
URL: http://
It all depends on what the meaning of "surplus" is. If surplus means "we’re winking at the internal borrowing," then there was a surplus. If surplus means "we’re actually being honest," then there was no surplus. I don’t think that the concept of "actually being honest" has quite made it across the Potomac yet.

Both sides, inclusive of Greenspan, which made it writ, winked at the internal borrowing. In fact, I believe that I recall Greenspan publicly winking at internal borrowing at a Congressional hearing. And both sides claimed the "surplus" as their doing.

And, Boris, I’m sure that everyone here appreciates the efforts of Nasty (Boris’s Mrs.) to explain some accounting tricks to you. It is clearly an otherwise thankless task.

And debt service, Boris, is debt service. It counts as a debit in the fiscal year in which it is owed. Except in Washington.
Written By: Martin McPhillips
Anonymous, in case you missed it, I’ll put it in simple terms (and, by the way, why is it that only right wing blogs and commentary try to claim Clinton had no surplus, while all economists, official sites and financial agencies say he did...must be another grand conspiracy, eh?)

You have debt. That debt accrues interest. Let’s say you have no obligation to pay it back at a pace that pays down the debt.

Separate issue: the budget. Let’s say you earn $100,000 and your expenses are $95,000. You have made $5000 surplus in your budget. You choose not to use the surplus to pay down your debt. You have increased debt, and a budget surplus for the year.

So if these two things happen at the same time, your debt can grow, while you are in surplus. And the reason we tend not to pay down government debt is that it in essence slows the economy to do so, and takes capital away from investors.

But I have to thank McQ for his "article" website. I’m trying to teach students how to differentiate between good and bad information on the web. One sign that information might be distrusted is if the website seems biased and without much in the way of credentials. I’ll show how that website makes a claim that might sound true (it fooled McQ), but if you really know how the US budget works, it’s totally bogus. That way students will learn a bit about how to judge websites, and how the budget works to boot. It can innoculate them from falling for the kind of things you guys did, all because you’re so eager to try to deny that Clinton had a budget surplus.

Oh, and anonymous, if you are asserting that money was borrowed to create the surplus, please provide evidence. Remember, an increased debt is not evidence since that is interest on pre-existing debt that we chose not to pay down.

Sorry to burst your bubble.
Written By: Scott Erb
"so if you choose not to pay it down, the interest will grow."

Only if you do not pay the interest due, or if the interest rate rises. If I owe $100 at 10% interest, I owe $10 in interest. The next year, it will be $10. If I owe any more than that, it is because I am not making interest payments. The US has not defaulted on interest payments yet.

"Again: debt increased because we choose not to pay down the debt with the surplus."

Debt does not increase simply by failing to pay back principal. If I owe $100 this year, and do not pay off part of the principal, I still only owe $100 next year.

" That meant that interest accrued,"

Interest is an expense, just like any other expense. If you don’t pay all your expenses, you cannot legitimately claim to have a surplus. Unless you work for Enron.

Written By: timactual
URL: http://
Boris trys that whole thing above, including this:
But I have to thank McQ for his "article" website. I’m trying to teach students how to differentiate between good and bad information on the web.
Ah, Boris, your explanation makes no sense, in case you’re wondering, and your students should be taking a course in how to differentiate between good and bad information in the classroom before taking a course with you.

The "surplus" issue revolves around publicly held debt (accrued by borrowing from the public in a given fiscal year) and internally held debt (accrued when the government borrows from itself in a given fiscal year). By not counting the latter as a debit in a current budget, though it still counts toward the national debt, the government was able to say that in a given year it had a "surplus." That is why the Debt continued to rise even in the years when there was a "surplus."

The bottom line is that all of the debt, whether held by the public or by the government, will be repaid with tax revenues.

Whatever you think you are attempting to explain makes no sense, at all.

Alan Greenspan admitted as much in Congressional testimony about the supposed achievement of a "surplus," that only borrowing from the public would count as a debit, i.e., debt held by the public.

If anyone here doesn’t agree with this explanation — McQ, anonymous, etc. — please feel free to correct it.
Written By: Martin McPhillips
"and takes capital away from investors."

So who holds government debt if not investors?

"...interest on pre-existing debt that we chose not to pay down."

Once again, interest is an expense, debt is a liability. They are not the same. The phrase ’pay down’ usually refers to the liquidation of debt, not the payment of current expenses. You should probably consult an accountant who didn’t work for Enron. The only difference between the accounting system you cite and that of Enron is that Enron didn’t have the power to legalize itself.
Written By: timactual
URL: http://
"I’m trying to teach students how to differentiate between good and bad information on the web."

What category does The Guardian fall under?
Written By: timactual
URL: http://
The following excerpt is from the 1998 Senate Budget Committee session. Note the underlined [italicized here] portions.


U.S. FEDERAL RESERVE BOARD CHAIRMAN ALAN GREENSPAN: .....making sure that surplus is there.

U.S. SENATOR ERNEST F. HOLLINGS (D-SC): Yeah, making sure that surplus is there. I’m telling you, Dr. Greenspan, that’s music to my ears.

GREENSPAN: Well, I remember you taking this song a long way over recent years, and I must say, Senator, a number of us were skeptical that was even discussable, figuring we would never get to unified surplus that we said which you were preaching was very interesting, scientifically sound, but unrealistic. I apologize.

HOLLINGS: Well that’s all right, because your Greenspan Commission report in section 21 says just exactly what you’re saying here. That was in 1983; here now, in 1999, on page two, "simply put, enough resources must be set aside over a lifetime of work to fund retirement consumption." Now that section 21 said set it aside. President Bush, in section 13 3 01 on November the 5th, 1990 signed that into law. And we making headway. Let’s understand, though, that we’re still running deficits. ’Cause I’m not going along with this monkeyshine about unified. ’Cause unified is not net, the debt still goes up, is that correct?

GREENSPAN: If you’ depends on whether or not you wish to create the savings...

HOLLINGS: I’m not asking what you’re trying to create. The simple fact is the debt has been going up at least $100 billion for the last several years.

GREENSPAN: Outside, on budget, that is correct.

HOLLINGS: That’s right, on budget, you’re spending a hundred billion more than you’re taking in.


HOLLINGS: And this president’s budget spends another hundred billion more than we take in.

GREENSPAN: I haven’t seen it yet.

HOLLINGS: You haven’t seen it? You’re testifying about it now.

GREENSPAN: I haven’t seen the budget. You haven’t seen it either.

HOLLINGS: Well, you know his plan. Look you think he’s going to spend less than a hundred billion more?

GREENSPAN: I will wait to see what the numbers look like.

HOLLINGS: Well, the truth is...ah, shoot, well, we all know there’s Washington’s math problem. Alan Sloan in this past week’s Newsweek says he spends 150%. What we’ve been doing, Mr. Chairman, in all reality, is taken a hundred billion out of the Social Security Trust Fund, transferring it over to the spending column, and spending it. Our friends to the left here are getting their tax cuts, we getting our spending increases, and hollering surplus, surplus, and balanced budget, and balanced budget plans when we continue to spend a hundred billion more than we take in.

That’s the reality, and I think that you and I, working the same side of the street now, can have a little bit of success by bringing to everybody’s attention this is all intended surplus. In other words, when we passed the Greenspan Commission Report, the Greenspan Commission Report only had Social Security in 1983 a two hundred million surplus. It’s projected to have this year a 117 million surplus. I’ve got the schedule, I’ll ask to put in the record the CBO report: 117, 126, 130, 100, going right through to 2008 over the ten year period of 186 billion surplus. That was intended; this is dramatic about all these retirees, the baby boomers. But we foresaw that baby boomer problem, we planned against that baby boomer problem. Our problem is we’ve been spending that particular reserve, that set-aside that you testify to that is so necessary. That’s what I’m trying to get this government back to reality, if we can do that.

We owe Social Security 736 billion right this minute. If we saved 117 billion, we could pay that debt down, and have the wonderful effect on the capital markets and savings rate. Isn’t that correct? Thank you very much, Sir. Thank you, Mr. Chairman.

Written By: anonymous
URL: http://
Anonymous: that’s from 1998, before the surplus.

But hey, you can believe your fantasy. Unfortunately for you, all texts, all financial agencies, all official statements show a surplus. And, of course, even if you want to stick to your story, the debt increase was so low in 2000 (less than 18 billion) compared to the hundreds of billions and half trillion of years afterwards that even by your warped standards it was still impressive.

Just don’t expect the rest of the world to adopt your story. Stew and fret and think up conspiracy theories if you wish. (chuckle)
Written By: Scott Erb
I notice that it’s no longer a "right-wing" conspiracy, Boris, since the Senator pointing to the internal borrowing is a Democrat. And it’s irrelevant that this is "before the surplus." Hollings is talking to Greenspan and Greenspan is acknowledging precisely what the "surplus" is made of: Washington D.C. accounting practices.
Written By: Martin McPhillips
As usual Erb is wrong.
The first claimed surplus is from 1998. This claim uses the CBO:
1997 the debt is 3772.3
1998 the debt is 3721.1
The CBO is not using a full accounting (ie, as Hollings noted, trust fund monies borrowed).
That is why the Treasury (a financial agency), which does a full accounting, shows both a higher total debt, and an increase in debt:
09/30/1997 5,413,146,011,397.34
09/30/1998 5,526,193,008,897.62
Written By: anonymous
URL: http://

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