Show Me the Numbers

June 19 1999 3:30 AM

Show Me the Numbers

"Quantify! Quantify!" says the economist to the presidential candidates.

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The 2000 presidential campaign has already begun--a little early for my taste. The speech writers are busily at work spinning out their anodyne alliterations, their balanced bromides, their cautious clarion calls. They have already produced for George W. Bush "Compassionate Conservatism" and "Prosperity with a Purpose." Al Gore seems to be ditching "Reinventing Government," "Inventing the Internet," "Global Warming," "The Third Way," and all those other nerdy notions. He is aiming directly at the soft American heart by offering himself as the "Friend of the Family."

With the change of a few words, George W.'s compassionate conservatisms could have been delivered by Bill Clinton or Al Gore. And Gore's qualification to be America's Friend of the Family is that he isn't Bill Clinton--a qualification he shares with quite a few other people.

After a while, the campaign will embrace the "specifics." There will be speeches or position papers about education, the environment, the budget, and other issues conveying information about the candidates' intentions. But it will still be in the domain of advertising--full of "new and improved!" claims, like the ones you find on cereal boxes.

I had direct experience with this process during Richard Nixon's 1968 presidential campaign. Nixon had two teams of policy advisers. One team accompanied him on the campaign and advised him about what to say to get elected. The other team, on which I served, stayed home and wrote papers about how he should govern after he got elected. The two teams did not communicate with each other, fearing, I suppose, diversion from their two different objectives.

I don't complain much about this deviousness and evasiveness, and I don't expect it to change. I have only a modest request. Before the campaign concludes, I would like to see more attention to the numbers. Many of the policy issues confronting us hinge on quantities--on how much. Whether a condition is a problem requiring government remedies depends on how much of the condition there is. And whether a proposed policy is worth its cost or is likely to be effective also depends on its size.

One number we already hear relates to taxation. The number is zero--no new taxes. At some point we will get another number--a percentage by which the candidate proposes to cut income tax rates. That is supposed to tell the voter how much better off he will be if the candidate is elected. For that purpose, obviously, the bigger the number the better. But the tax numbers need to be seen in national and historical perspective. From the national standpoint, lower taxes are not necessarily better than higher ones. In the past 40 years, federal taxes as a percentage of Gross Domestic Product have been 18.8 percent of GDP plus or minus 1.8 percentage points. (Surprisingly, the low point came in the Johnson administration, not the Reagan administration.) The candidates should tell us where, inside or outside that range, they would want federal tax receipts to be. That would give us some clue to the national economic significance of the difference between them.

The tax question immediately raises the question of the budget surplus. For decades we had a rule for the proper relationship between government expenditures and revenues--or we pretended to have a rule. The rule was that the budget should be in balance, meaning no deficit. But we are beyond that now. We have in prospect some years in which, with existing policies, there will be a surplus, and there is a question about how big that surplus should be. That is a question neither the president nor the congressional Republicans want to face. In his recent budget, the president tried to conceal the fact that there was a surplus, and the Republicans, with their talk about a "lockbox" for Social Security, have confused everyone, probably including themselves. But the subject is important, and the candidates should tell us how much, if any, surplus they would plan to have.

As long as the country continues to bask in prosperity, there will be no debate about general economic policy during this campaign. Everyone will agree on the most important requirement for sustaining prosperity, which is to keep Alan Greenspan healthy. So, candidates are likely to focus, as George W. has already done, on those who do not share in the general prosperity--those who have been left behind. But there are hard quantitative questions about this. How many are left behind? Is it a major problem? We have official estimates of the proportion of the population who are in poverty. It is something like 13 percent and has been near that for the past 20 years. But there are other estimates--equally plausible, which may not be very plausible at all--saying that the poverty rate has been falling sharply and is now about 1 percent or 2 percent. Which of these estimates you believe makes a big difference to the priority you give to this problem. So, if the candidates are going to make a big issue about helping those who are falling behind, I would like to hear their views about how many there are.

I give examples only from areas of policy with which I have some familiarity. But one can also see the value of quantification in many other areas: health care, education, the environment, and others.

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A sking political candidates to quantify their stands may seem unrealistic because they don't want to pin themselves down and because the audience will tune out. But there have been cases where the candidate gave us relevant numbers--and with success. I think particularly of the 1980 Reagan campaign. Serious questions were being raised about whether the policies he was proposing for taxes, expenditures, and the deficit added up. He then made a speech in September 1980 in which he laid out the quantities involved and the underlying assumptions. Some people, including me, criticized parts of the story. But I think it helped to support the idea that he knew what he was doing. In a limited way, the Reagan speech served as guidance for his policies after he came into office. So, I don't think the request for more numbers is simply the idiosyncrasy of an old economist.

Herbert Stein, a senior fellow at the American Enterprise Institute, was chairman of the Council of Economic Advisers under Presidents Nixon and Ford. He died in September 1999.