L. Ryan: Smart, compassionate policy

Recently in New Hampshire a special panel voted to recommend that the Legislature meet in a special session this fall to vote to accept millions in federal health care funds beginning Jan. 1, 2014. The funding would bring health care access to tens of thousands of people and support new jobs at their hospitals. The panel has achieved a critical bipartisan agreement that should pave the way for a compromise bill in the Legislature.

As a pediatrician caring for children just across the border, it is my greatest wish that Maine join with New Hampshire, and the rest of New England, in reaching a similar agreement that will bring nearly $1 billion in federal health care funds to Maine in the next three years alone. The health and well-being of nearly 70,000 Mainers depends on that decision, including 25,000 Mainers who will lose their access to MaineCare in January without those funds.

Accepting those funds will mean that more people will be able to see their doctor for preventive treatments, such as shots and screenings for serious chronic ailments. They won’t have to wait until they are seriously ill to visit the emergency room, and Mainers won’t have to bear the costs of their delayed care.

New Hampshire and the rest of New England recognize that this is smart, compassionate policy. It is Maine’s turn to do the same.

Lisa Ryan, Naples

Maine Medical Association president-elect

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 's picture

We do not have crushing debt? And those that say we do; are

the very same people who created that debt. We do have an under-funded social safety net because of irresponsible tax policies of the immediate past which has reduced tax revenue below the minimum needed to secure our country.
The austerity program of the last two years has reduced the national economic growth from nearly 3% to low 2% and the Federal shutdown lowered growth even more to 1.7%. Reduced Federal spending reduces national income. Increased national spending increases national income.
What we need most is a massive new Federal stimulus program

 's picture

What a great idea!

Let's take a program that failed dismally and try again, with a lot more money, and watch it fail catastrophically. What could possibly go wrong? Let's do it and we'll all meet here in a couple years to read Albrecht's progress report, which also will begin:

The austerity program of the last two years has reduced the national economic growth ...

 's picture

When will the right ever learn anything about economics?

What program failed? If you mean the stimulus, it was a huge success even being well underfunded. Immediately the growth in unemployment began to decline from 780,000 jobs lost per month and growing to 180,000 jobs added per month and stabilized. Had it been properly funded, we would have returned to 3+% growth in 2009. Every reputable economic analyst from the CBO on has concluded that the austerity program of the last two years has cut economic growth by up to 1.5% and increased unemployment. And the most conservative estimates place the cost of the shutdown at 0.3% of GDP.
So besides being vague do you have any explanation why conservative economic has failed so completely here and in Europe.

 's picture

Gotta love that tortured phrase:

... the growth in unemployment began to decline ...

A trivial part of the stimulus funds went to create real jobs, shovel-ready or not. Most of those were short-lived and are now just a memory. Here's a chart from Hoover.org ...

The '09 stimulus was a short-lived blip in an economy that was already slowly "recovering". The clunker program was utterly useless, except to destroy small used parts suppliers. And this is what you want to resurrect with a lot more dollars to waste.

In order for the feds to stimulate something, predominantly the public sector, with $1, it first has to take that $1 from the private sector - or print it. We don't need more government; we need more private sector jobs in order to keep paying the bills. Like the first stimulus, another will just punish the private sector.

MARK GRAVEL's picture

So you are saying that this

So you are saying that this government can spend itself into prosperity? Come on, my kids to even fall for that backward logic. Just ask Greece how that works.

 's picture

Of course

Greece is an apples to orange comparison. You simply can not compare the world's leading economy to one of the world's weakest. You can not compare the world's reserve currency to the weakest. Confidence is what drives an economy. You can not compare the US economy in which the entire world has confidence to a country where confidence is at the lowest ebb. When trouble approaches in the world economy as has happened in the last 6 years, the world moves its money to US assets and because of that US debt levels are meaningless in the short run.
You again are applying your experience which I assume does not include managing worldwide investment programs and presuming that it is representative of the whole wide world. Ain't.
The foregoing does not imply that any economy can run high levels (over 100% of GDP) of debt for an indeterminate time. National policy should be to incur debt to stimulate the economy in down turns and pay back debt in expansions. We have not done a very good job of that in the last 70 years and still debt has not caused any major problems because we have not lost worldwide confidence. So giving the US situation, the best policy is to incur debt in downturns and reduce deficits or attain a balanced budget as you come out of the downturn. Like we did from 2009 - 2011. In any case, the US should never eliminate the National debt which was a contributing cause to the Panic of 1837.

MARK GRAVEL's picture

Two Commnets

Wasn't Greece a global economic power at one point in history? It fell from that ranking.

"National policy should be to incur debt to stimulate the economy in down turns and pay back debt in expansions."

The reality of an ever increasing debt says paying back debt is not happening.

 's picture

Greece was a world power about 3,000 years ago

Hardly relevant now. Western powers who have dominated the known world since then have always failed because the financial demands of maintaining an empire (military and administrative costs) exceeded the capacity of the Empire's economy to grow. But they have failed because there was no international financial system and even the largest previous empire did not have control or participation in the whole world.. We have that now and fundamentally economics

Level of debt doesn't have any economic impact. Doesn't matter if the level is ever increasing. Paying back all the debt is bad. See Panic of 1837. We need to carry some debt always.

What matters is the investment world's confidence in our capacity to pay back their loans. That is accomplished by maintaining a stable government, stable economic growth, and manageable levels of debt. "manageable" is the key here. It means that foreign investors have confidence. In times of war or economic stress we can manage high debt levels up to and, depending on the circumstances, over 100% of GDP. In times of peace and economic growth, we should decrease levels of debt slowly or not at all until we have reached a debt-to-GDP ratio that will allow us to respond to the next crisis.

No other country in the world can follow these principles because none of them are in the economic situation of the US.

MARK GRAVEL's picture

"Level of debt doesn't have

"Level of debt doesn't have any economic impact."

Really, why don't we then print everyone a million dollars?

The net interest pay in 2012 was about $212Billion. Let's say the US keeps borrowing and in the future interest is $900 billion, which is value projected by the CBO for 2025 based on projected interest rates.

Moreover, the debt is financed on short-term notes, so when interest rates rise, as the will, move revenue will go to paying the debt, which will push the government more.

Petty much everyone understands that concept, less a few.

 's picture

For the reasons I mentioned before several times and

you continue to ignore. Confidence in our ability to pay determines the availability of loans i.e the level of debt. Printing money without growth in the economy will some day erode that confidence. The cost of interest paid on the debt again means nothing if our economy is growing. What will $900 billion mean in 2025 if the Federal budget is 6 or 7 trillion dollars or any number. It will mean something if the budget is 2.5 trillion because we have cut taxes/spending irresponsibly.
Debt is not always bad. In fact it founded this country. The Hamilton economic program was built on always having some debt. Debt commits the wealthy to the success of the government which is good.
As far as I remember Republicans have been making your argument since before I was born. Hyper-inflation is around the corner just like Germany in the 1920's if we keep spending. OK. WHEN. An entire hard currency lobbying effort filled the papers during the last 20 years. You have been crying wolf for 70 years. When will your forecast come true.

MARK GRAVEL's picture

If I knew when the system

If I knew when the system would come undone, I would be very, very rich.

That said, neither can you guarantee that the economy will always grow faster than inflation; In fact, it has not been.

Printing money without growth in the economy does more than erode confidence, it weakens the value of the dollar. Every person who has to pay for fuel, food, medical care disagrees with when the government reports low consumer inflation. If we used the same CPI formula that Reagen used, inflation is 8.4% today. Interesting that politicians feel compelled to change the formula from time to time.

Carrying large debt is like stretching a rubberband. No one knows when it will break, but the more you stretch it, the more it will hurt when it does break. So, why be an idiot and tempt fate.

 's picture

"No one knows when it will break"

Exactly. Its a bogyman. You can't predict when or if it will have adverse impacts. Its based not on analysis but on personality, preconceptions. I know a comet or asteroid is going to wipe out life on earth. someday. So I should live my life for that day. No.
Our debt is manageable. The issues are democratic issues - how to keep real income growth positive; how to keep real debt-to-GDP under control; how to remain competitive over the long run with other nations, and key to all of the before how to key the income gap within acceptable limits (since it adversely effects innovation, investment, and economic growth). We have failed on all counts as a nation since 1981. The income gap has grown rapidly because of legislation, economic growth has slowed as a result and as a result of Republican austerity and policies that worsen income gap growth, and instead of encouraging US growth Republican policies have blocked the world's best and brightest from coming and staying here and encouraged our best and brightest to take their jobs overseas.
8.4% who says. But I'm not surprised. CPI does not recognize innovation. It makes no allowance for the introduction of new and better ways to improve a process. I'm certain that if we went back to the level of productivity we had in 198,1 costs would be much greater than 8.4%. Thank goodness we don't.

MARK GRAVEL's picture

You are so wrong on many

You are so wrong on many accounts. The shift in the labor supply and demand curves has contributed the most to the shift in wealth in this country and to the stagnation of income for many.

Here are the issue you got wrong:

1. Productivity is the highest it as ever been, mainly drive by technology. Automated production lines are more productive than their human counterparts. Moreover, they displace human labor. The fact is that this country has most more manufacturing jobs due to automation than it has to outsourcing.

2. NAFT (product of a democrat president Clinton) and other global trade polices have significantly increase the labor pool supply. It just happens the cheapest labor is not on American soil. Productivity decreases the demand for human labor.

In closing, the shift in wealth in America is not due to the rich stealing it from the poor. It is due primarily to shifts and labor supply. I noted two reasons above which created a major shift in labor supply and demand curves.

Now a question for you: How in your mind would productivity decrease the wealth gap. That is crazy talk.

 's picture

as I said preconceptions not analysis

1. Yes, so you are confirming that the CPI has to be changed periodically to adjust for changing productivity.
2. NAFT was not a product of President Clinton. He signed it under great duress. It had been negotiated and completed before his election.
3. The cheapest labor does not "just happen". Its the result of many factors (including increased productivity) over long periods of time and it does not drive the outsourcing of jobs from American. Policy drives outsourcing. I revert to the preeminent Republican business figure egg king Mr. Decoster of Turner who said "I can sell my eggs for 8 cents more profit in China, because of all the credits, discounts, and tax treatment given by the US government." Which of course raises the cost of eggs here in America. If productivity were driving the process, America would have gained millions of high paying jobs from Canada and Mexico because our productivity is higher and therefore our labor can be paid more. Trading our low wage jobs for high paying jobs would make sense; but it never happens. The treaty on international financial flows is the number one enabler of high paying jobs leaving the US, but hardly the only one..

MARK GRAVEL's picture

1. No the CPI does not have

1. No the CPI does not have to change periodically. This is like saying you need to change the notches on your yardstick periodically. CPI measures productivity indirectly through lower costs of goods and services due to productivity increases. Changing the unit of measure is crazy talk unless you want to hide true inflation.

2. The man has his name on it, don't make excuses.

3. You are confusing setting prices with labor costs and productivity - all different. Perhaps you missed the key point. The cost of labor is a simple supply and demand problem. There are many people in China willing to work for next to nothing. That fact has zero to do with productivity, especially when I can pay three people to do same unit of work for less than a machine can do it.

"The cheapest labor does not "just happen" - Ya it kind of does. China has billions of idle hands willing to work for peanuts. I say, yes, it kind of just happened. In fact, human labor always have and always well be less productive than mechanized labor. However, when I can get 10 labors for the price of one, the aggregate productivity (cost per unit labor) is still a win even if each individual is less productive.

In closing, I say you need to study what productivity really means, you are certainly not applying the concept correctly.

MARK GRAVEL's picture

I still don't understand how

I still don't understand how expanding, or I should say accelerating, this country into bankruptcy is by any means compassionate.

Who will pay for all the welfare services under the crushing debt this country is accumulating?

 's picture


"this is smart, compassionate policy" Smart, compassionate does not work in Maine. Our governor doesn't believe in helping sick people.


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