Extent Of President's Power On Economics
Sirus
Join Date: 2002-11-13 Member: 8466Members, NS1 Playtester, Constellation
Join Date: 2002-11-13 Member: 8466Members, NS1 Playtester, Constellation
<div class="IPBDescription">Let's find a happy median</div> <b>With the election coming up and the economy being a major point in the minds of voters I would like to establish what is the president's (Not just Bush's) power over the economy.</b>
<b>Notice:</b>
<i>I'm not trying to be biased/partisan or what have you, regardless of idealogy, I'm just trying to find a realistic level of power, so even if you find my statements dubious, I'm really not trying to defend/attack anyone. My point is to hopefully enlighten others and myself of Executive power and the economy, mainly because of recent events and statements by my school's newspaper about Bush.</i>
<i>This may be a long post by myself, but I'll try and make it as easy, and organized as possible to read, since I know long posts can be headaches</i>
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<b>The President does not have direct influence over the economy</b>
To my understanding most people have an extremely inaccurate view of Presidential power, and more specifically, the president's power over the economy.
Most believe that he has significant power over it, and is responsible for the state of the economy and expenditures. I believe this is extremely false, the president has very little power over the economy, and any power comes from Presidential election "mandates" that influence congress and bureaucratic nominations.
<b>What are the President's economic responsibilities ?</b>
Most of the President's power is what Teddy Roosevelt called the "Bully Pulpit". He is able to be heard by the public and directly speak to the hearts of voters to influence Congress since Congress is responsible for the allocation and passing of the OMB's proposed budget, and is able to limit pork barrel projects and controllable expenditures. The President is able to provide the "vision" of the budget, but has no power over approving it, he can only propose, not approve.
<b>Who is responsible?</b>
Mainly Congress and the OMB. They're responsible for proposals, approvals and appropiations each fiscal year. The President has no control over any of those responsibilities, to put it simply, he can only talk.
<b>What's with the deficits during Bush's administration ?</b>
There's alot of factors that go into the economy, go figure. I'll simply put it in two categories and explain them before I answer this question. Uncontrollable and controllable on the basis of fiscal year controllability... it will make more sense later.
<b>Uncontrollable Expenditures</b>
These are things like social security, Congress and the budgeting offices cannot accurately project things and are subject to events during the fiscal year. The government has things called entitlements like welfare that must be paid whether or not the government has money. Retirement, welfare, unemployment and other things are all entitlements and must be changed before the budget is passed each fiscal year. The next uncontrollable expenditure is the debt, interest <b>must</b> be paid on the debt, right now it's roughly 10% of our GDP and took a dramatic rise during Reagan's administration. These things make up a very large part of our budget, and since their uncontrollable, they can't even be controlled by Congress and other bureaucratic offices during a fiscal year. Foresight is the main idea here, and even when someone offers some they get lambasted for wanting to cut appropriations (Greenspan's Social Security program).
<b>Controllable Expenditures</b>
These are things like pork barrel items, which would be things like highway funding and other types of things. Bureaucracy is essentially included, but due to problems with incremantlism, the bureaucracy is always expecting what it had the last fiscal year and more the next. The government has struggled with this, and the government is paying more and more each year to pay for larger bureaucracy.
<b>What's with the deficits during Bush's administration? (Continued)</b>
Now that we've established expenditures alot of the deficits during Bush's administration can be attributed to increased Social Security costs, a growing national debt, and budget issues during wartime (I'll explain this in a moment.
These are essentially uncontrollable factors, and is generally outside control of the President. I spoke about budget issues during wartime, let me tell you what this is about, before the fiscal year budgets are proposed and approved, during the 9/11 issue, (less than a month before the new fiscal year) the government had to make "emergency" changes to the budget, instead of revamping the entire budget (Typically 3 phone books large) they simply bit the bullet and tacked on the extra costs for that fiscal year and ran a deficit. The same thing applies to the Afghanistan and Iraq wars. However, right now, in the past year, Bush should start pushing for support to get things running smoothly now, the tax cuts didn't necessarily help with all the expanding costs, which was his proposal to Congress.
<b>What does need to be done about the economy and what can we do?</b>
Unfortunately, the best answer would be a short time of budget cuts and increased taxes until surplus budgets can pay off the national debt and open up that 10% GDP expenditures that generally paid the interest on the debt. The government cannot keep growing and providing more benefits until the debt can be paid off, if we don't start getting rid of the debt we might have expanding problems during the next national crisis, (Imagine Bush's problems but with a bigger economic backlash, it would happen to any president, regardless to who it is if a national crisis comes along). What everyone can do right now to help alleviate the problem would start electing Congressmen who would support budget cuts, and if a substantial amount of people support budget cuts Congress will eventually make a move for it without fear of reelection loss.
<b>Notice:</b>
<i>I'm not trying to be biased/partisan or what have you, regardless of idealogy, I'm just trying to find a realistic level of power, so even if you find my statements dubious, I'm really not trying to defend/attack anyone. My point is to hopefully enlighten others and myself of Executive power and the economy, mainly because of recent events and statements by my school's newspaper about Bush.</i>
<i>This may be a long post by myself, but I'll try and make it as easy, and organized as possible to read, since I know long posts can be headaches</i>
------
<b>The President does not have direct influence over the economy</b>
To my understanding most people have an extremely inaccurate view of Presidential power, and more specifically, the president's power over the economy.
Most believe that he has significant power over it, and is responsible for the state of the economy and expenditures. I believe this is extremely false, the president has very little power over the economy, and any power comes from Presidential election "mandates" that influence congress and bureaucratic nominations.
<b>What are the President's economic responsibilities ?</b>
Most of the President's power is what Teddy Roosevelt called the "Bully Pulpit". He is able to be heard by the public and directly speak to the hearts of voters to influence Congress since Congress is responsible for the allocation and passing of the OMB's proposed budget, and is able to limit pork barrel projects and controllable expenditures. The President is able to provide the "vision" of the budget, but has no power over approving it, he can only propose, not approve.
<b>Who is responsible?</b>
Mainly Congress and the OMB. They're responsible for proposals, approvals and appropiations each fiscal year. The President has no control over any of those responsibilities, to put it simply, he can only talk.
<b>What's with the deficits during Bush's administration ?</b>
There's alot of factors that go into the economy, go figure. I'll simply put it in two categories and explain them before I answer this question. Uncontrollable and controllable on the basis of fiscal year controllability... it will make more sense later.
<b>Uncontrollable Expenditures</b>
These are things like social security, Congress and the budgeting offices cannot accurately project things and are subject to events during the fiscal year. The government has things called entitlements like welfare that must be paid whether or not the government has money. Retirement, welfare, unemployment and other things are all entitlements and must be changed before the budget is passed each fiscal year. The next uncontrollable expenditure is the debt, interest <b>must</b> be paid on the debt, right now it's roughly 10% of our GDP and took a dramatic rise during Reagan's administration. These things make up a very large part of our budget, and since their uncontrollable, they can't even be controlled by Congress and other bureaucratic offices during a fiscal year. Foresight is the main idea here, and even when someone offers some they get lambasted for wanting to cut appropriations (Greenspan's Social Security program).
<b>Controllable Expenditures</b>
These are things like pork barrel items, which would be things like highway funding and other types of things. Bureaucracy is essentially included, but due to problems with incremantlism, the bureaucracy is always expecting what it had the last fiscal year and more the next. The government has struggled with this, and the government is paying more and more each year to pay for larger bureaucracy.
<b>What's with the deficits during Bush's administration? (Continued)</b>
Now that we've established expenditures alot of the deficits during Bush's administration can be attributed to increased Social Security costs, a growing national debt, and budget issues during wartime (I'll explain this in a moment.
These are essentially uncontrollable factors, and is generally outside control of the President. I spoke about budget issues during wartime, let me tell you what this is about, before the fiscal year budgets are proposed and approved, during the 9/11 issue, (less than a month before the new fiscal year) the government had to make "emergency" changes to the budget, instead of revamping the entire budget (Typically 3 phone books large) they simply bit the bullet and tacked on the extra costs for that fiscal year and ran a deficit. The same thing applies to the Afghanistan and Iraq wars. However, right now, in the past year, Bush should start pushing for support to get things running smoothly now, the tax cuts didn't necessarily help with all the expanding costs, which was his proposal to Congress.
<b>What does need to be done about the economy and what can we do?</b>
Unfortunately, the best answer would be a short time of budget cuts and increased taxes until surplus budgets can pay off the national debt and open up that 10% GDP expenditures that generally paid the interest on the debt. The government cannot keep growing and providing more benefits until the debt can be paid off, if we don't start getting rid of the debt we might have expanding problems during the next national crisis, (Imagine Bush's problems but with a bigger economic backlash, it would happen to any president, regardless to who it is if a national crisis comes along). What everyone can do right now to help alleviate the problem would start electing Congressmen who would support budget cuts, and if a substantial amount of people support budget cuts Congress will eventually make a move for it without fear of reelection loss.
Comments
1. The president can't directly 'create' jobs without destroying others:
A lot of government make-work programs hire labor to do some random task, which can even just be an excuse, and that is seen as 'creating' jobs. However these people are paid with taxpayer money. We can only assume that if these tax payers had kept their money they would have spent it o rlent it, both which would have expanded the economy and made jobs. This is the opportunity cost of so-called 'job-creation'.
2. The government can influence lending by adjusting bank rate:
This is that famous 'interest rate' that everyone holds their breath about whenever Alan Greenspan speaks. This is an important number, but once again it doesn't really create jobs directly. An excessively low or high interest rate is not good, and often the effect of an interest rate decrease takes a <b>long</b> time to reverberate through the economy.
3. Protectionism:
This means slapping tariffs on imports, or setting quotas on imports so that US companies that can't compete won't suffer. The problem is that the price of these imports necessarily rises, consumers have less money to spend on other businesses, and the economy shrinks; all this to save one inefficient competetitor. Political it's great because people can easily see the jobs saved, but can rarely see the jobs lost.
In short the president has tremendous power to do bad for the economy, and very litte power to do good. The best thing is to cut business taxes to prevent companies from going offshore and encouraging them to hire homegrown labor.
Congress is resonsible for tariffs, bureaucracy is responsible for interest rates and job creation is near impossible to control.
Best quote ever about presidents:
"The president either receives too little or too much credit."