Exploring Opinions on Mitt Romney's Candidacy

[ThomasT]

I suppose it will lessen the AD directly attributable to govt. spending.

That's what I would guess. So, eg., companies that rely on tenants getting federal housing aid, and companies that rely on consumers getting federal food aid, etc., and the owners and employees of those companies would have to be hurt by reductions in aid programs, wouldn't they?

The block grant puts the states in charge, it doesn't take their money away. As they're closer to the problem, they have incentive and ability to innovate.

This makes sense to me. And RI seems to be getting positive results.

 

[ThomasT]

@ WhoWee,

That's a lot to digest. I was hoping you could narrow it down a bit, taking points that you think are bad for small banks and businesses, and talking about them one at a time.

I did notice this in there:

(3) outdated, unnecessary, or unduly burdensome regulations are regularly identified and addressed in order to reduce unwarranted regulatory burdens;

Which would seem to allow for the 'streamlining' that Romney advocates.

 

[mheslep]

That's what I would guess. So, eg., companies that rely on tenants getting federal housing aid, and companies that rely on consumers getting federal food aid, etc., and the owners and employees of those companies would have to be hurt by reductions in aid programs, wouldn't they?

From these actions?

53. Immediately cut non-security discretionary spending by 5 percent
54. Reform and restructure Medicaid as block grant to states
55. Align wages and benefits of government workers with market rates
56. Reduce federal workforce by 10 percent via attrition
57. Cap federal spending at 20 percent of GDP

No I don't see how these cut housing aid and food aid. Anyway helping the companies dependent on welfare spending is IMO a backwards way of getting the economy moving.

 

[ThomasT]

The burdens of Dodd-Frank fall harder on smaller banks that have less to leverage.

That's what I'm asking about. What exactly are those burdens (ie., specify them in the bill)?

 

[ThomasT]

From these actions? No I don't see how these cut housing aid and food aid.

53. Immediately cut non-security discretionary spending by 5 percent
54. Reform and restructure Medicaid as block grant to states
55. Align wages and benefits of government workers with market rates
56. Reduce federal workforce by 10 percent via attrition
57. Cap federal spending at 20 percent of GDP

I was thinking of 53.

We agree that 54 is a good thing to try.

Wrt 55 and 56, won't that reduce aggregate demand in the general economy?

57 seems sort of arbitrary to me.

Anyway helping the companies dependent on welfare spending is IMO a backwards way of getting the economy moving.

I don't think it's backward. Federal aid helps a lot of people, not just the direct recipients of it. Imo, reducing current fed aid levels is certain to negatively affect the general economy.

 

[WhoWee]

@ WhoWee,

That's a lot to digest. I was hoping you could narrow it down a bit, taking points that you think are bad for small banks and businesses, and talking about them one at a time.

I did notice this in there:
Which would seem to allow for the 'streamlining' that Romney advocates.

I posted the maximum 20,000 (had to trim 900 words from the section) to make a point. We need to start over (as Romney has indicated) with a plan that solves problems. This legislation is a nightmare for smaller institutions and raises the cost for all consumers (ultimately) - when compliance costs are passed on (compliance is a major cost in the insurance industry as well).

 

[ThomasT]

I posted the maximum 20,000 (had to trim 900 words from the section) to make a point. We need to start over (as Romney has indicated) with a plan that solves problems. This legislation is a nightmare for smaller institutions and raises the cost for all consumers (ultimately) - when compliance costs are passed on (compliance is a major cost in the insurance industry as well).

I agree that there needs to be a comprehensive plan that solves problems. However, I think that Romney is mainly dealing with problems that are problems for corporations, the financial sector, and the wealthy. Most of his points, imho, will not serve to improve the general economy and the US as a whole.

If Dodd-Frank is a "nightmare for smaller institutions", then exactly how/why is that? What are the mechanics of it, via projections wrt specific points in the bill? Examples like, say, "compliance with this particular rule entails three additional forms, and approximately x man-hours".

EDIT: By the way, I think I understand how constraining leveraging can reduce a financial institution's revenues. But, imho, if a financial institution needs to be overleveraged in order to stay in business, then it shouldn't be in business.

I also think I understand how certain lending requirements will reduce the number of loans that will be able to be made. Isn't this a good thing? Isn't making bad loans, and the subsequent mass defaulting, a big part of what caused the downturn in the economy?

 

[WhoWee]

I agree that there needs to be a comprehensive plan that solves problems. However, I think that Romney is mainly dealing with problems that are problems for corporations, the financial sector, and the wealthy. Most of his points, imho, will not serve to improve the general economy and the US as a whole.

If Dodd-Frank is a "nightmare for smaller institutions", then exactly how/why is that? What are the mechanics of it, via projections wrt specific points in the bill? Examples like, say, "compliance with this particular rule entails three additional forms, and approximately x man-hours".

I have an account with a local bank with 9 branches. After reading a few of the 848 pages of Dodd-Frank, how much money do you think my local bank will need to spend on lawyers, accountants, consultants, and administrative costs to comply?

 

[Oltz]

I have an account with a local bank with 9 branches. After reading a few of the 848 pages of Dodd-Frank, how much money do you think my local bank will need to spend on lawyers, accountants, consultants, and administrative costs to comply?

And the larger competition already has enough "legal counsel" on staff that decoding the regs has no additional cost.

 

[daveb]

I posted the maximum 20,000 (had to trim 900 words from the section) to make a point. We need to start over (as Romney has indicated) with a plan that solves problems. This legislation is a nightmare for smaller institutions and raises the cost for all consumers (ultimately) - when compliance costs are passed on (compliance is a major cost in the insurance industry as well).

If your objection is that it's so big, the problem with that is that if there are only a few words, then it would rely on court interpretation if there are any "gray areas". Sure it's long. Have you ever read any of the Code of Federal Regulations? 49 CFR (Department of Transportation) is a nightmare! However, I see it as useful since there is no wiggle room - the requirements are explicitly spelled out for shipping just about every hazardous material. I'd expect regulations spelling out the financial world to be long (though not as long as 49 CFR).

Now, if it is a nightmare as you claim, and raises costs, then how is it a nightmare, and how does it raise costs (I ask not because I don't believe but because I haven't read it, so don't know)?

 

[ThomasT]

I have an account with a local bank with 9 branches. After reading a few of the 848 pages of Dodd-Frank, how much money do you think my local bank will need to spend on lawyers, accountants, consultants, and administrative costs to comply?

I don't know. That's part of my question. Obviously, certain portions of the bill don't impact small banks. But some do. Which ones do? And exactly what do they require that would make Dodd-Frank such a huge problem for them?

As I understand it, the main aim of Dodd-Frank is to promote transparency, reduce overleveraging, break up institutions that are "too big to fail", thus obviating bailouts, and reduce the opportunities for and the probability of fraudulent practices. Obviously this is a huge problem, if actually enforced, for the sorts of institutions that were bailed out by the federal government. But I still don't understand why it's a problem for small banks.

I can see why it's a problem for the small businesses and individuals who shouldn't be given loans anyway.

 

[ThomasT]

I have an account with a local bank with 9 branches. After reading a few of the 848 pages of Dodd-Frank, how much money do you think my local bank will need to spend on lawyers, accountants, consultants, and administrative costs to comply?

I would guess that any bank, no matter how small, has a certain number of salaried people on staff who can each read a section of the bill and report, in depth, on how it pertains to their bank. Net cost so far ... $0.

Then we get into the area of increased paper work, etc, if any. Net cost ... $? .

 

[MarcoD]

Isn't making bad loans, and the subsequent mass defaulting, a big part of what caused the downturn in the economy?

It's a classical bubble, right? During the growth of the bubble, everybody seems to profit, and there's a lot of spending, and when the bubble collapsed, the game was over and everybody is angry about that they participated in a bubble economy. Well, except for those who profited, of course.

I also think I understand how certain lending requirements will reduce the number of loans that will be able to be made. Isn't this a good thing?

Define good. I am sure there are US economists who find the housing bubble a normal, maybe even healthy, phenomenon and a part of the normal US boom-bust cycle. If you now pump less credit into the US economy, I guess you might even end up with deflation. But I am clueless, really.

Personally, being Dutch with a somewhat awkward perspective, the more I read all different opinions, the more I feel inclined to convert to communism.

 

[AlephZero]

I don't care much for the insurance-related section or this expansion of powers:

Hm... why am I not surprised that somebody working in the insurance industry doesn't want the insurance industry to be regulated?

 

[mheslep]

I was thinking of 53.

Entitlement aid is not included in 'discretionary' spending, unfortunately.

I don't think it's backward. Federal aid helps a lot of people, not just the direct recipients of it.

Helping people with money is not the same thing as growing the economy, i.e. increasing productivity, building business and creating new jobs.

Imo, reducing current fed aid levels is certain to negatively affect the general economy.

The logical extension of your argument is that the government should be the entire economy, raising or lowering itself at will.

 

[WhoWee]

Hm... why am I not surprised that somebody working in the insurance industry doesn't want the insurance industry to be regulated?

Good point. However, from this perspective PPACA is my personal nightmare. Label this IMO - the compliance related legal/accounting/consulting for my current venture (a start up with several other firms) has cost more than my house. Regulations and mandates are not free and they absolutely add to consumer prices (eventually).

 

[ThomasT]

Entitlement aid is not included in 'discretionary' spending, unfortunately.

Sorry. So, this is a moot point as far as Romney is concerned? That is, he wouldn't reduce entitlement spending?

Helping people with money is not the same thing as growing the economy, i.e. increasing productivity, building business and creating new jobs.

I agree. But none of these is aimed at growing the economy:

53. Immediately cut non-security discretionary spending by 5 percent
54. Reform and restructure Medicaid as block grant to states
55. Align wages and benefits of government workers with market rates
56. Reduce federal workforce by 10 percent via attrition
57. Cap federal spending at 20 percent of GDP

And my point was that 53, 55, and 56 might reasonably be expected to reduce aggregate demand, and thus hurt the general economy. Speculating on the affect of 57 seems less clear to me.

The most reasonable approaches to improving things, imo, involve increasing regulatory capabilities (thus increasing stability and preventing massive financial debacles), and increasing revenue. Romney's plan seems to involve decreasing regulatory capabilities, and decreasing revenue.

The logical extension of your argument is that the government should be the entire economy, raising or lowering itself at will.

What do you mean by "the government should be the entire economy".

Anyway, I'm just making an assumption that reducing current fed aid levels would negatively affect the general economy. So, suppose that's done and that's what happens. Then what? Is the next logical step to increase the aid level back to at least what it was before the reduction, or for the government to take over ownership of everything?

 

[WhoWee]

If your objection is that it's so big, the problem with that is that if there are only a few words, then it would rely on court interpretation if there are any "gray areas". Sure it's long. Have you ever read any of the Code of Federal Regulations? 49 CFR (Department of Transportation) is a nightmare! However, I see it as useful since there is no wiggle room - the requirements are explicitly spelled out for shipping just about every hazardous material. I'd expect regulations spelling out the financial world to be long (though not as long as 49 CFR).

Now, if it is a nightmare as you claim, and raises costs, then how is it a nightmare, and how does it raise costs (I ask not because I don't believe but because I haven't read it, so don't know)?

Romney has a great deal of experience dealing with financial regulations - isn't it possible he might be able to streamline the process of regulation?

Here is an interesting discussion of Dodd-Frank - please note the timeline (through 2015) for implementation and the ongoing uncertainty of the program (sounds a bit like PPACA).

http://knowledge.wharton.upenn.edu/article.cfm?articleid=2574

"'A Major Transformation': The Pros and Cons of the Dodd-Frank Act
Published: January 11, 2011 in Knowledge@Wharton "

 

[CAC1001]

Hm... why am I not surprised that somebody working in the insurance industry doesn't want the insurance industry to be regulated?

Not all industries dislike regulation; quite a few, or at least the big companies within them, like regulations, as it let's them knock out of business their smaller competitors.

 

[mheslep]

Sorry. So, this is a moot point as far as Romney is concerned? That is, he wouldn't reduce entitlement spending?

Yes he would, though those 4-5 points don't cover that. Any half responsible President has to reduce at least the rate of increase in Medicare spending, or it will collapse. The trick will be in doing so in manner that controls cost while actual medical benefit maintains or improves. To my mind there's only one method invented, so far, that accomplishes this goal: competition in the free market, i.e. price signaling, transparent reporting on medical quality, etc.

I agree. But none of these is aimed at growing the economy:

I think they are by reducing the deficit. I argued elsewhere that that a huge deficit on top a huge debt drags on the economy: absent a big cut in spending, people rationally anticipate the future holds large tax increases and restrain consumption accordingly.

 

[ThomasT]

Yes he would, though those 4-5 points don't cover that.

I was thinking about the food and housing stuff more so than the medical.

Any half responsible President has to reduce at least the rate of increase in Medicare spending, or it will collapse.

Agreed.

The trick will be in doing so in manner that controls cost while actual medical benefit maintains or improves.

The $64K conumdrum.

To my mind there's only one method invented, so far, that accomplishes this goal: competition in the free market, i.e. price signaling, transparent reporting on medical quality, etc.

It seems to me that if the healthcare industry was totally free market, with, say, nothing like medicare and medicaid, then a lot more people would be without adequate health care than are now. So, I guess I don't know what you're getting at. Healthcare costs are, afaik, across the board, inordinately inflated. The government is paying a lot of these costs. So, why can't the government simply say that "this" is what will be paid for this service or item, and no more?

I think they are by reducing the deficit. I argued elsewhere that that a huge deficit on top a huge debt drags on the economy: absent a big cut in spending, people rationally anticipate the future holds large tax increases and restrain consumption accordingly.

I don't know about this reasoning. I really don't think that the national debt or the deficit has anything to do with how people spend their money.

As far as I can tell, the average person's buying power is being continually eroded. That is, prices go up, little by little, but wages and salaries don't keep up with that trend. So, there is, continually, less aggregate demand for consumer products. I don't see how reducing the national debt or deficit helps this. But I do see how taking money out of the general economy via reductions in welfare programs might contribute to the problem.

 

[mheslep]

It seems to me that if the healthcare industry was totally free market, with, say, nothing like medicare and medicaid, then a lot more people would be without adequate health care than are now. So, I guess I don't know what you're getting at. Healthcare costs are, afaik, across the board, inordinately inflated. The government is paying a lot of these costs. So, why can't the government simply say that "this" is what will be paid for this service or item, and no more?

There could still be a competitive free market, unwarped by the government, by giving money directly to the people in need, via a health voucher or similar mechanism, and let them decide how to spend it. No tax games via the current employer tax deduction or government payments to providers. Then we get a reduction in cost from a competitive system which helps everyone, and which further aids the plight of those least equipped to afford healthcare.

 

[turbo]

As far as I can tell, the average person's buying power is being continually eroded. That is, prices go up, little by little, but wages and salaries don't keep up with that trend. So, there is, continually, less aggregate demand for consumer products. I don't see how reducing the national debt or deficit helps this. But I do see how taking money out of the general economy via reductions in welfare programs might contribute to the problem.

This is something that never gets headlines, but is a major force in the erosion of our economy. People of modest means spend all of their money, and they tend to spend it locally. Erode their buying power, and you erode the economies in their neighborhoods. If Mitt doesn't care much about the poor, then he doesn't understand local/regional economies, and can't be trusted with the Presidency. I don't want a President that is overly concerned with the health of Wall Street (we already have one!) but there has to be some shift of focus to the poor and the middle-class who are seeing their incomes eroded and their options limited.

I'm about to turn 60 in another month. I would never have envisioned years ago that the US would be studded with full homeless shelters, warming sites, and food-programs where homeless people might get a sandwich and a hot drink. It's so sad.

 

[WhoWee]

It seems to me that if the healthcare industry was totally free market, with, say, nothing like medicare and medicaid, then a lot more people would be without adequate health care than are now. So, I guess I don't know what you're getting at. Healthcare costs are, afaik, across the board, inordinately inflated. The government is paying a lot of these costs. So, why can't the government simply say that "this" is what will be paid for this service or item, and no more?

The Center for Medicare and Medicaid do set the standards.
http://www.cms.gov/apps/physician-fee-schedule/

 

[ThomasT]

There could still be a competitive free market, unwarped by the government, by giving money directly to the people in need, via a health voucher or similar mechanism, and let them decide how to spend it.

The voucher thing is an interesting idea, but I think they would have to be vouchers that could only be spent on healthcare services. Is that what you meant?

No tax games via the current employer tax deduction or government payments to providers. Then we get a reduction in cost from a competitive system which helps everyone, and which further aids the plight of those least equipped to afford healthcare.

I don't see how this would reduce costs.

 

[ThomasT]

The Center for Medicare and Medicaid do set the standards.
http://www.cms.gov/apps/physician-fee-schedule/

I haven't read this yet. But, apparently, they haven't set the prices low enough. For example, the cost of getting a two block ride in an ambulance to a local hospital, and a cursory exam in an emergency room, would, in most metropolitan areas, be around $1000. For something that, imho, should cost around, say, $50.

 

[WhoWee]

Mitt Romney talks a good bit about the Medicaid system - as a former Governor he knows a great deal about how the system works. The following graph demonstrates the expansion of Medicaid spending over the past few years. You can also view your state.

http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-State/By-State.html

 

[mheslep]

The voucher thing is an interesting idea, but I think they would have to be vouchers that could only be spent on healthcare services. Is that what you meant?

Yes.

 

[WhoWee]

I haven't read this yet. But, apparently, they haven't set the prices low enough. For example, the cost of getting a two block ride in an ambulance to a local hospital, and a cursory exam in an emergency room, would, in most metropolitan areas, be around $1000. For something that, imho, should cost around, say, $50.

Most insurance carriers would agree with your assessment.

 

[ThomasT]

This is something that never gets headlines, but is a major force in the erosion of our economy. People of modest means spend all of their money, and they tend to spend it locally. Erode their buying power, and you erode the economies in their neighborhoods. If Mitt doesn't care much about the poor, then he doesn't understand local/regional economies, and can't be trusted with the Presidency.

Agreed. And this is my current assessment of Romney (as well as all the other GOP candidates and the current president). But I will say that I think he could be trusted to be the usual sort of president. Which, for me, while not catastrophic, isn't very inspiring.

I don't want a President that is overly concerned with the health of Wall Street (we already have one!) but there has to be some shift of focus to the poor and the middle-class who are seeing their incomes eroded and their options limited.

I agree. I would like to see the nationalization of the financial sector (a great source of income for the government), and an increase in the minimum wage to, say, something more than $12/hour. I think this would be a boon to the general economy as well as improve the lives of millions of working Americans.

I'm about to turn 60 in another month. I would never have envisioned years ago that the US would be studded with full homeless shelters, warming sites, and food-programs where homeless people might get a sandwich and a hot drink. It's so sad.

Well, I'm 64, and things do seem to be a bit worse now than they were, say, 40 years ago. But that's just my subjective take on things from my very limited experience.

 

[ThomasT]

Most insurance carriers would agree with your assessment.

So why doesn't the government, a principle payer, just lower what it will pay for services and items?

 

[ThomasT]

Mitt Romney talks a good bit about the Medicaid system - as a former Governor he knows a great deal about how the system works. The following graph demonstrates the expansion of Medicaid spending over the past few years. You can also view your state.

http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-State/By-State.html

Thanks for the info. I'm sure that Romney knows a great deal about how the system works. So, why not just significantly lower what the government is willing to pay for services and hardware? As far as I can tell, wrt medicare and medicaid, it's a buyers market.

 

[russ_watters]

So why doesn't the government, a principle payer, just lower what it will pay for services and items?

Do you mean dictating the price? I suspect if an ambulance company is only allowed to get paid $50 per ride, most will just quit the business. Or should the government also force people to work the jobs and force the pay rates too?

 

[ThomasT]

Do you mean dictating the price? I suspect if an ambulance company is only allowed to get paid $50 per ride, most will just quit the business. Or should the government also force people to work the jobs and force the pay rates too?

Are you saying that they can't make a profit charging $50 for a two-minute ride and a five-minute examination?

 

[russ_watters]

Are you saying that they can't make a profit charging $50 for a two-minute ride and a five-minute examination?

You think the average ambulance pickup takes 7 minutes and that's all you're paying for?