Obama reelection 2012

[OaklandA's]

One thing has always bothered me. Iif you have economic growth over simple population expansion, it is necessary for the richest to get further from the poorest. This is simple arithmatic. There is a floor at zero. For there to be expansion, the top must go up. When a tree grows, the top goes up. Very simple.

You are not good at simple arithmetic. You can have economic growth without increasing the gap between the richest and the poorest.

[Lucky]

This addresses B-Fly's issue. It looks like for most of us it's a 25% increase in income since 1979, while for the very wealthy it's a 281% increase, at least according to the CBO. I'd say that's a graphic depiction of the old saying "the rich get richer while the poor get poorer".


6-25-10inc-f1.jpg

I forgot how to post this in a larger format.

[onejayhawk]

You are not good at simple arithmetic. You can have economic growth without increasing the gap between the richest and the poorest.

That is very counter intuitive. I'll bite. How?

J

[OaklandA's]

That is very counter intuitive. I'll bite. How?

J

It all depends on which group sees the most growth, and how many are in each group. Suppose the population has incomes like this:
1%: >$1M
15%: $100K-$1M
30%: $50K-100K
25%: $25K-50K
29%: $0K-25K

Suppose all the economic growth moves the entire $25K-50K group by 10%, leaving everyone else the same. That would do it. Or more realistically, suppose that half of the lowest group moves up one group, so that now the percentages look like this:
1%: >$1M
15%: $100K-$1M
30%: $50K-100K
40%: $25K-50K
14%: $0K-25K
There are plenty of ways that the economy can grow without the increasing the rich-poor gap. It's just a matter of the lower end moving up faster than the very top.

[onejayhawk]

That is very abstract. I will stipulate that the economy can rgow if all left handed dwarves receive $10,000 checks every Monday, and many other artificial reasons. That does not add to understanding. If you want to concentrate all the growth on one band, give em a reason why it happened there and not elsewhere.

J

[OaklandA's]

If you want to concentrate all the growth on one band, give em a reason why it happened there and not elsewhere.

But that is exactly what happened, at the top end. If the system is manipulated so that the wealthy get extra tax breaks while the poor lose benefits, then the rich-poor gap widens, even if total wealth stays the same. Similarly, if policies are enacted in the opposite direction, then the rich-poor gap can narrow even without a change in total wealth.

The bottom line is, there is no reason for economic growth to cause the rich-poor gap to grow. If everyone's wealth increases by 4%, then there is no change in the gap. The gap only increases if one group rises faster than the others.

[Judge Jude]

Yes, that is the common perception - that the growth is going almost solely to the top 1 pct in the last x number of years.
Wondered if that was a point of debate on the right....

[Lurker765]

That is very counter intuitive. I'll bite. How?

J

You have more Costco's and less Sam's Clubs for example. Workers get paid a livable wage and the executives also make some money rather than workers getting screwed and all the profits going to the execs or people that can afford to put their money in the stock market (generally well off people).

[onejayhawk]

But that is exactly what happened, at the top end. If the system is manipulated so that the wealthy get extra tax breaks while the poor lose benefits, then the rich-poor gap widens, even if total wealth stays the same. Similarly, if policies are enacted in the opposite direction, then the rich-poor gap can narrow even without a change in total wealth.

The bottom line is, there is no reason for economic growth to cause the rich-poor gap to grow. If everyone's wealth increases by 4%, then there is no change in the gap. The gap only increases if one group rises faster than the others.

Your math is off. If everyone gets a 4% increase, then the gap increases by 4%.

J

[Judge Jude]

http://www.nytimes.com/2012/08/21/us/politics/romney-racks-up-huge-cash-advantage-over-obama.html?smid=tw-nytimespolitics&seid=auto

"Mitt Romney’s cash advantage over President Obama and the Democrats more than doubled in July, as intense Republican fund-raising and heavy spending by Mr. Obama and his allies left Mr. Romney and the Republican National Committee with $62 million more in the bank than the Democrats at the end of last month.

Mr. Obama’s campaign and the Democratic National Committee spent $91 million in July, significantly more than the $75 million the Democrats raised, underscoring the investments Mr. Obama made in technology and field staff as well as nearly $40 million his campaign spent on advertising that month. While Mr. Romney continued to husband his resources for the fall — he spent less than half of what Mr. Obama did on advertising — conservative “super PACs” and other outside groups stepped into the breach, spending millions of dollars on ads attacking Mr. Obama. "

...........

many/most of will wince if what wins this election is who more shrewdly spend on campaign ads etc and not on issues, but it could happen.

anyone have a take or link on which side is playing the game better so far? always find this interesting. has Obama 'bought' his way into polling leads in key states as a way to prime the pump? or is Romney smarter to keep his powder dry for a post-Labor Day assault?

[OaklandA's]

Your math is off. If everyone gets a 4% increase, then the gap increases by 4%.

It depends on what you are comparing. The gap is not usually (really, never) defined as the difference between two incomes. A more common statistic to describe the rich/poor divide is the percentage of total wealth owned by each income. For example, the Top 1% had 16.9% of the total income in 2009, while the bottom 50% earned 13.5%.

With this definition, the wealth split doesn't change if everyone's income goes up by the same percentage. For example:
Person A: $30K (75% share of all income)
Person B: $10K (25% share of all income)

If all groups' income increases by 10%, we now have
Person A: $33K (still 75%)
Person B: $11K (still 25%)

But if either group's income grows at a faster rate than the others, then their share of total income will also increase relative to the other. That's what has been happening - the top 1% have seen their share of the total income rising.

[onejayhawk]

It depends on what you are comparing. The gap is not usually (really, never) defined as the difference between two incomes. A more common statistic to describe the rich/poor divide is the percentage of total wealth owned by each income. For example, the Top 1% had 16.9% of the total income in 2009, while the bottom 50% earned 13.5%.

With this definition, the wealth split doesn't change if everyone's income goes up by the same percentage. For example:
Person A: $30K (75% share of all income)
Person B: $10K (25% share of all income)

If all groups' income increases by 10%, we now have
Person A: $33K (still 75%)
Person B: $11K (still 25%)

But if either group's income grows at a faster rate than the others, then their share of total income will also increase relative to the other. That's what has been happening - the top 1% have seen their share of the total income rising.

Here's the question your scenario raises. Is Person B still the bottom person, or has the honor moved to Person C making 10K? The bottom of the scale is fixed at zero. The scale can expand up but never down.

J

[OaklandA's]

Here's the question your scenario raises. Is Person B still the bottom person, or has the honor moved to Person C making 10K? The bottom of the scale is fixed at zero. The scale can expand up but never down.

That may be true, but is not really relevant. It is silly to discuss macro-economics and then talk about the single richest person compared to the single poorest person. So rather than talk about the poorest individual, who could theoretically have an income of zero, we need to use statistics about groups of people. Don't look for the absolute lowest income; look at the average income of the lowest 1% or the lowest 10%.

When economists talk about the rich-poor gap, there are two common methods to represent this.
1) How much of the total income is held by each income group (Top 1%, Top 10%, etc.)? Economists use calculations such as the Gini coefficient (http://en.wikipedia.org/wiki/Gini_coefficient) to quantify this.
2) How much is the income rising per year by each income group? (see Lucky's graph in Post #1081).

These are the methods that are used to quantify the rich-poor gap, not the difference between the single highest earner and the single lowest earner. These calculations are why economists are saying that the rich-poor gap is growing in the U.S. And that is why overall economic growth does not necessarily mean that the rich-poor gap has to increase.

[Judge Jude]

factcheck.org on the Medicare nonsense being spewed by both candidates:

Summary
The presidential campaign is overflowing with claims from both sides designed to scare seniors into thinking Medicare is being gutted or about to end altogether. Lost in the flurry of attack ads and political messaging is a policy debate on how best to reduce the growth of Medicare spending, a common goal of both campaigns. If all voters know about Medicare is what the candidates tell them in TV spots and stump speeches, they are going to be poorly prepared to understand the changes that could be coming, no matter which party wins the White House.

Among the many "Mediscare" claims:
• An Obama spokeswoman says that "benefits would go down" under the Medicare plan put forth by Ryan, and largely embraced by Romney. Ryan says cuts in Obama's health care law to the growth of spending "will lead to fewer services for seniors." But actually, neither plan has much of a direct impact on current beneficiaries.
• A Romney campaign ad wrongly claims that "money you paid" for Medicare is being used to pay for Obama's health care law. But the law doesn't take money out of the existing hospital insurance trust fund. It cuts the future growth of spending. And in the future, seniors will still receive more in benefits than they paid in.
• Obama says Ryan's "original plan would force seniors to pay an extra $6,400 a year." But that's based on an outdated analysis; Ryan's current plan is more generous than his first. In fact, over the long run, both men propose capping the growth of Medicare spending at the same rate.

"Medicare's chief actuary has warned repeatedly that Obama's cuts to the future growth of payments to hospitals are too deep to be absorbed without adverse consequences. And Ryan's approach runs a risk of allowing insurance companies to siphon off younger, healthier seniors and burdening traditional Medicare with the rest."

(my computer didn't let me offer the link here, but the site has more,...)

[cardboardbox]

• A Romney campaign ad wrongly claims that "money you paid" for Medicare is being used to pay for Obama's health care law. But the law doesn't take money out of the existing hospital insurance trust fund. It cuts the future growth of spending. And in the future, seniors will still receive more in benefits than they paid in.

reducing the rate of future growth of medicare has always been referred to as cutting medicare, at least in politics. Probably usually by the side thats attempting to mediscare.