theodorelogan wrote:

That is the government acting as a consumer in the market place. Ford got the contract because they offered the best deal.

Ah conservatives. Spending is all about political decisions and cronism...except when it comes to buying tanks and MRE's.

Please point to one instance where I have made an argument contrary to my above point. If the Federal Government wants to buy Chevy Volts as fleet vehicle's in an attempt to boost their marketability, I am all for it. As long as they pay market prices (or above).

Archduke Russell John wrote:I did not acknowledge there was a subsidy. I said the argument that this was a subsidy is stupid.

You also said it was small. Either it exists and is small, or it does not exist (and so has no size to speak of). Apologies for misinterpreting your meaning if that is not what you meant, but all I had to go on is what you wrote.

Road builidng is a regular normal function of Government. The Constitution says that the Government is responsible for building and maintaining post roads (Art. I, sec. 8 cl. 7). Further, well maintained roads are a must for national defense. As the technology of post delivery and national defense changed, the level of road standard increased. That there was another seperate industry that benefited from and took advantage of this normal government duty is secondary. It doesn't make it a government subsidy any more then the creation and maintenence of the early Republic's roads was a subsidy to carriage makers. Or a subsidy to tavern keepers who built their facilities along those roads.

Firstly, being Constitutional does not stop something from being a subsidy, and neither does 'being a normal function of government'. Even when building roads to help defence, the effect of benefits to others is not removed by some kind of majick.

Secondly, yes, maintaining roads that allowed carriages to travel was a form of subsidy to them. And building roads that took particular routes was a form of subsidy to those people and businesses along those routes.

Thirdly, the point is that the improvement in road standards during the early years of motorized transport enabled the expansion of it. The beneficiaries of this were those who could afford cars and those who sold them and who, in that early stage' were generally rich. And that until enough people were driving and paying taxes, they were not really being paid for by the contemporary drivers.

I understand that it was not a direct subsidy (but indirect subsidies are still subsidies). I understand that it was legal and constitutional (that is not relevant to the economic effects). I understand that it was extension of an existing function (the subsidising effects of that pre-existing function notwithstanding).

Ray Jay wrote:Really? Is that necessary? Here's the on-line definitions:

Bah! The point is that in the normal parlance I deal with, 'refute' is generally held to be stronger than 'rebut'. A rebuttal may be good enough to refute, but not always. I think that thanks to loose usage, the former has been weakened to the point af being almost a synonym, but they did not use to be.

Ray Jay wrote:Even though you've bolded a few key words I don't find this to be a compelling rebuttal or refutation of Volt subsidies. I don't recall the government giving a credit for every router or CPU purchased by an individual. As I've said, there are compelling reasons for government research on energy alternatives. My issue is with special subsidies for particular products or companies.

:Sigh: subsidies take many forms. As it happens where the internet is concerned, a lot of the key central servers and rooters that made up the central infrastructure were wholly government owned (by the DoD in the USA mainly, and by other aspects of other governments across the world) and without them the internet would not have been much use in the early 1990s. No, they did not chip in to make each router/server/modem cheaper, but there was still an important subsidy that had the effect of making each one more usable.

And where the internet was concerned, the government did 'choose' winning technologies, because it decided which of various competing standards to adopt for it's own infrastructure, leading to it becoming the de facto monopoly. You may still disagree with how that happened on principle or out of a belief that it was less practical, but it's what did happen.

Ray Jay wrote:I just don't think you'll ever get to this level of proof in the social sciences. There are always odds and ends in the development of technology.

Indeed. which is why the vehemence and certainty and definitiveness of the objections to the Volt subsidy are surprising. I'm not sure that it's right/beneficial or wrong/damaging. But some appear to be very sure, without even waiting for time to elapse. It's that certainty based on assumed prescience that annoys me. Not so much from you, because I think you have the wisdom not to.

the Pentagon budget must be reduced by about $487 billion in the next decade, a roughly 8 percent decrease.But under a process known as sequestration, that figure could double if Obama and Congress fail by the end of the year to cut an additional $1.2 trillion in government spending in the next decade.

Whoa...$50-100 billion per year cuts off of proposed increases in spending that can(will) be changed by law when the time to actually cut it comes. What a budget hawk!!!!

danivon wrote:You also said it was small. Either it exists and is small, or it does not exist (and so has no size to speak of). Apologies for misinterpreting your meaning if that is not what you meant, but all I had to go on is what you wrote.

That was probably my fault in a poor word choice. My intent was to say that it was no subsidy because the intent was not there to subsidize the auto industry

danivon wrote: Even when building roads to help defence, the effect of benefits to others is not removed by some kind of majick.

A subsidy is an intentional act. The money is given with the specific intention of a certain result. Even with an indirect subsidy, there must be some intent to cause the secondary outcome you are claiming.

If the government did not specifically intend to increase the purchase of automobiles with the upgrading of road conditions, there is no subsidy whether direct or indirect.

Other then that, we are going to have to agree to disagree.

'Intent' sounds like a legalistic argument. In economics, it is 'effect' that matters.

My intent was to say that it was no subsidy because the intent was not there to subsidize the auto industry

How do we know that? Because politicians said this was not the intent?

Much of the American repugnace of subsidies probably goes way back to subsidies for canal building and railroads.given to private companies. An over whelming number of those experiences ended in bankruptcy or failure. Meanwhile, contemporary Private roads, turnpikes, were regularly built and were solid investments.
However instead of looking at the reasons why the subsidies became instruments of corruption (politiicans direct involvement in the administration or regulation of funds generally) and fixing that the concept of the subsidy suffered.

After that subsdidies were less visible... Or were introduced under the veneer of national defence. (The national roads program of Eisenhower). A cold hearted look at the subsidies for cars versus public transportation reveals that in reality the automobile and truck industries are heavily underwritten by the general populace.
Purists that would remove all auto subsidies would soon see the costs of operating a car in the US, much closer to the European experience. In a way, the tiny subsidy for the Volt is simply in keeping with the 20th century creation of the artifical cost of operating a car in the US.

http://www.assmotax.org/Releases/AMCT%2 ... ubsidy.php

To what extent is automobile use a "free" good? According to Hart and Spivak, government subsidies for highways and parking alone amount to between 8 and 10 percent of our gross national product, the equivalent of a fuel tax of approximately $3.50 per gallon. If this tax were to account for "soft" costs such as pollution cleanup and emergency medical treatment, it would he as high as $9.00 per galion. The cost of these subsidies-approximately $5,000 per car per year-is passed directly on to the American citizen in the form of increased prices for products or, more often, as income, property, and sales taxes. This means that the hidden costs of driving are paid by everyone: not just drivers, but also those too old or too poor to drive a car. And these people suffer doubly, as the very transit systems they count on for mobility have gone out of business, unable to compete with the heavily subsidized highways.1

Even more irksome is the fact that spending on transit creates twice as many new jobs as spending on highways. Every billion dollars reallocated from road-building to transit creates seven thousand jobs.2 Congress's recent $41 billion highway bill, had it been allocated to transit, would have employed an additional quarter-million people nationwide.

Because they do not pay the full price of driving, most car owners choose to drive as much as possible. They are making the correct economic decision, but not in a free-market economy. As Hart and Spivak note, an appropriate analogy is Stalin's Gosplan, a Soviet agency that set arbitrary "correct" prices for many consumer goods, irrespective of their cost of production, with unsurprising results. In the American version of Gosplan, gasoline costs one quarter of what it did in 1929 (in real dollars).3 One need look no further for a reason why American cities continue to sprawl into the countryside. In Europe, where gasoline costs about four times the American price, long-distance automotive commuting is the exclusive privilege of the wealthy, and there is relatively little suburban sprawl.

The American Gosplan pertains to shipping as well. In the current structure of subsidization, trucking is heavily favored over rail transport, even though trucks consume fifteen times the fuel for the equivalent job. The government pays a $300 billion subsidy to truckers unthinkingly, while carefully scrutinizing every dollar allocated to transit. Similarly, we try to solve our commuter traffic problems by building highways instead of railways, even though it takes fifteen lanes of highway to move as many people as one lane of track.4 This predisposition toward automobile use is plainly evident in the prevalent terminology: money spent on roads is called "highway investment," while money spent on rails is called "transit subsidy."

Ray Jay wrote:

danivon wrote:It must really annoy the Republicans that the unemplyment rate is heading down with 200,000 net new jobs in a month.

because Republicans are small people who don't care about anyone else?

I believe that there are some hyper-partisan republicans who are disappointed that the economy is showing signs of life at the time it's going to benefit Obama's re-election the most. I doubt that most regular folk who call themselves Republican's think this way, but I'm guessing, some of the political operatives are privately cursing the timing.

geojanes wrote:I believe that there are some hyper-partisan republicans who are disappointed that the economy is showing signs of life at the time it's going to benefit Obama's re-election the most. I doubt that most regular folk who call themselves Republican's think this way, but I'm guessing, some of the political operatives are privately cursing the timing.

Not me. I'm with Romney on this.

This is the most tepid recovery ever--and Obama has helped make it so. Furthermore, I don't think it's going to be a clean upswing. There are going to be some bumps in the road.

Will Democrats throw up their hands if the unemployment rate goes back up? I don't think so.

Anyone who thinks Obama has been a good steward of the economy is not familiar with the history of recoveries.

geojanes wrote:

Ray Jay wrote:

danivon wrote:It must really annoy the Republicans that the unemplyment rate is heading down with 200,000 net new jobs in a month.

because Republicans are small people who don't care about anyone else?

I believe that there are some hyper-partisan republicans who are disappointed that the economy is showing signs of life at the time it's going to benefit Obama's re-election the most. I doubt that most regular folk who call themselves Republican's think this way, but I'm guessing, some of the political operatives are privately cursing the timing.

I was thinking of the party heirarchy, those hoping to be candidate for Prez in November and the more partisan supporters of both. And those who can't go a day without cursing Obama's name...

So I went to far to use 'the Republicans'. Should have used 'some Republicans'.

Yes that's all right ... shame more politicians can't simply adjust their words that easily upon reflection.

freeman2 wrote:Monte, you brought up the point about why Democrats are not upset that Obama has not cut waste.. I think for liberals the biggest issue that overwhelms everything else is fairness... As I see it, the big three programs that we have are Medicare, Social Security and Defense. Our defense budget is what 700 billion dollars and the next highest is 65 billion dollars? I think we can safety cut that budget in half without endangering our security. I think 350 billion dollars is an awful lot of wasted money that overhwelms any concern about the Volt subsidy. The Medicare issues cannot be resolved without resolving our health care problems. We need to lower the costs of healthcare from 17% of GDP to maybe 10% of GDP. How do we do that? We install a national single payer program with reimbursement set at 10% of GDP and everyone will get the same level of care whether they are rich are poor. That should carfe of that problem. As for social security, you need to make changes based on the fact that people live longer

Anyway, whatever solutions there are for bloated government they have to do with solving those three programs. But the solution has to be fair. Our society will not tolerate the current disproportionate amount of wealth going to the top 20% (more to the top 5%, even more to the top 1%) I'm all for the rich getting their money as long as the rest of the people share. ...

By the way, I thought this is very well drafted; although I don't agree with the politics, I do think it is a fair summary of the liberal view. Let me comment on some specifics:

Our defense budget is what 700 billion dollars and the next highest is 65 billion dollars? I think we can safety cut that budget in half without endangering our security. I think 350 billion dollars is an awful lot of wasted money that overhwelms any concern about the Volt subsidy.

Obama's new defense plan cuts by about 10%. Without knowing the details, this seems about right to me. With the exception of Ron Paul and the very left, no one else is talking about 50% cuts.

The Medicare issues cannot be resolved without resolving our health care problems. We need to lower the costs of healthcare from 17% of GDP to maybe 10% of GDP. How do we do that? We install a national single payer program with reimbursement set at 10% of GDP and everyone will get the same level of care whether they are rich are poor.

Can I presume that you do realize that Obama has never proposed anything like this, and his health care legislation is much more likely to increase the cost of healthcare to above 18% of GDP and will not lower it?

On the big picture, I think that you are saying it is okay for Obama to not deal with our real financial problems as long as Republicans refuse to budge on taxes. In effect, you (and Obama) are willing to hostage excessive government spending to increased taxes on the wealthy.

What do you see happening if Obama wins the election (which I figure is 50/50) but Republicans retain the Congress (which is basically 100% for at least one house, and better than 50/50 for both). Are you satisfied if none of our issues are dealt with for another 4 years?

Ray Jay wrote:On the big picture, I think that you are saying it is okay for Obama to not deal with our real financial problems as long as Republicans refuse to budge on taxes. In effect, you (and Obama) are willing to hostage excessive government spending to increased taxes on the wealthy.

Furthermore, when has raising taxes been the solution to massive budget deficits? As a matter of fact, when have we ever run deficits like the last three years? To close them would take what? About a 12% across the board, no loopholes, tax increase? That's just crazy.

Freeman's point though is exceptionally weak. We should not worry about "small" inefficiencies and extravagances like the Volt? Like Solyndra? I think if we start adding up all the "insignificant" wastes of money, we'd have a decent sum. Sometimes I think liberals should review that liberal paean to the common man, "Dave." Remember? "Dave" becomes the President and starts cutting nonsense to the consternation of those "in the know." I think there are a LOT of cuts some folks with common sense would make.

Also, he understates the issue with Medicare and Social Security. While defense spending figures to be relatively flat, those two programs are heading straight up. Depending on the study, we've got between $30T and $105T in unfunded mandates.

Here's an issue of "fairness." By refusing to cut government now, the President is unfairly passing trillions of dollars in debt on to future generations. They have no voice and no vote. That's as unfair as it gets.

"Dave" was fictional. Might as well invoke "Mr Smith goes to Washington" - the acting was better.

Monte,

Your'e right--I don't think Obama should start cutting the safety net without concessions by the Republicans. The no-tax religion of the Republicans is detrimental to our country.
We need to solve problems--that means compromise.

We seem to be makng the same mistakes that every empire makes (as Paul Kennedy pointed out in a book over 20 years ago) Why are we spending massive amounts of money on the military when we do not have a major threat like we used to in the Soviet Union? Our massive trade deficits are weakening us economically. We have gotten used to living beyond our means I feel like our elities are almost committing economic treason in these insane policies--they get their money and don't care they are running the nation into the ground.

The problems are solvable. First we need to restore the balance between the Corporation and the worker. With the decline of unions and the unwillingness of government to rein in the power of corporations,the average worker's wages stay flat at best. In professioanl sports leagues, owners and players split revenues. I don't care how it is done but the bottom 80% need to get more of a share of the wealth that is created.

As for health care, every other western country has socialized medine--clearly our system is not working. If we don't want our economy to keel over from too much spending on health care we need to go to a single-payer system. Obama's health care ;program is better than nothing but it is just a first step.

I