A US Economic / Political Quiz

I stole this right out of Fortune Magazine. I suppose I can do that b/c this is such a small blog. I thought it was worth sharing though.

• Whose Medicare prescription drug plan was bigger? (a) the one proposed by Al Gore in the 2000 campaign or (b) George W. Bush's, enacted in 2003 and now being rolled out.

Answer: (b). Bush's plan was nearly twice the size of the outer limits of Democratic ambition in the previous presidential election. Yet Dems assail it as inadequate because it wasn't theirs and they fear the GOP could make inroads into the crucial seniors' vote. The drug bill wasn't perfect--there's been confusion galore over the dozens of private plans. Still, if poorer seniors picked any one of those plans by throwing a dart, they'd be vastly better off than before. What does it say when Democratic "strategy" is to discredit a program that offers hundreds of billions to the low-income seniors they're supposed to care about?

• The median stock ownership of U.S. households is (a) $78,700, (b) $24,300, or (c) 0.
Answer: (c). For all the hoopla over the democratization of the stock market, the latest (2004) Federal Reserve data show that just 48.6% of U.S. households own stock, meaning the median ownership is zero. (The median holding for households that do own stock is only $24,300.) What's more, two-thirds of stock market wealth is held by 5% of the population. The lesson? Pushing an "ownership society" is fine, but it's a cynical marketing ploy if we direct the lion's share of new "ownership" incentives (as Bush has in taxes, health, and pension policies) to those who already own everything.

• Whose government was bigger? (a) Ronald Reagan's or (b) Bill Clinton's.
Answer: (a). Federal spending under Reagan averaged 22% of GDP. Under Clinton it was 20%--the same as for George W. Bush. All the carping from the right that Bush is a "big-government conservative" misses the big picture: Uncle Sam could spend $250 billion more a year and still leave government as small as under Reagan.

• Pharmaceuticals account for what portion of national health spending? (a) 38%, (b) 50%, (c) 10%.
Answer: (c), according to government data. Yet surveys show that most people think drugs account for 40% to 50% of health spending--and the rest of the health industry is thrilled to have folks so confused. Drug companies may not be saints (disclosure: I consult for one), but it should put things in perspective. Even restrictions on drug pricing can never solve America's health-cost crisis, because those costs are driven largely by what's happening in the 90% of spending that has nothing to do with drugs.

By Matt Miller