- Once I built a railroad, I made it run, made it race against time.
- Once I built a railroad; now it's done. Brother, can you spare a dime?*
Of course I was laughed at. I no longer hear from the guffawing gulls who insisted I was further to the left than Chairman Mao, that the market was sound, the war was going to pay for itself, that "Liberals" were not only focusing on the negative, but trying to precipitate a market panic just to make St George the Genius and God's favorite son look bad so they could bring on an era of Socialist/Fascist oppression. They've long since invented a new mythology to hide what they said and did; how I was right and they were wrong.
Of course we Liberals were being quite conservative in worrying about the fact that Reaganesque tax cuts have always done just what they just did again: worrying that trying to finance the most expensive war ( toldya so) we've had by depending on a solidly disproved dogma, by borrowing abroad rather than domestically and firing anyone who suggested fiscal or military foresight, worrying that the light at the end of the tunnel only they could see, was only the fires of fiscal hell.
Debt doesn't matter,
Don't you know,
St. Ron the Reagan told us so.
The born-again believers are washed clean and born again into a new mythos, one where the Black Satan caused the massive recession which continues to deepen because of government spending that used to be good but now is bad. That means that economists who say that not only has a 1929 reprise been averted, but it's slowly getting better are the new Liberals talking down the economy by talking it up. If you're a TeaParty twit, you need things to be getting worse and indeed they do believe. They need to believe that their taxes went up with Obama and believe they do.
'The market is up, all's well with the world' won't be their Christmas carol again this year. Even though the market is up -- the Teabaggers think it's not and is going down. They insist the recession is deepening, that we have a tyrant in office and they insist their taxes are up when they aren't. They still rage about Death Panels and rally around the Witch of Wasilla like she were Joan of Arc.
That means that a conservative approach to economic realities is once again seditious, once again farleftliberal propaganda and those liberal people from Business Week must be talking up the economy to undermine freedom, prosperity and free enterprise.
"If Obama was a Republican, we would hear a never-ending drumbeat of news stories about markets voting in favor of the President." says Dan Greenhaus, chief economic strategist for Miller Tabak + Co.It's just the kind of farleftliberal stuff you might expect from an institutional trading firm in Jew Controlled New York rather than the illiterate hordes sucking up seditious stupidity from the teats of Mother Fox who know better.
"It's a poor sort of memory that works only backwards," said the Queen to Alice,but of course she wasn't American and couldn't be expected to understand.
* "Brother, Can You Spare a Dime," lyrics by Yip Harburg, music by Jay Gorney (1931)
Funny thing about those Reagan tax cuts. They spurred economic growth and federal receipts increased.
ReplyDeleteSpending is the problem, and the DC-NY hog trough is a bipartisan one. Big biz gives to whoever is in power, and I haven't seen a politician yet of any stripe who would turn down filthy lucre.
I've heard some poo poo the household budget to federal budget comparison as simplistic, but it is useful. Governments can go broke just like people can.
A government is different in a few respects: It can print more money (thereby devaluing the currency and robbing pensioners on a fixed income), borrow more (creating more debt), or simply turn more citizens and businesses upside down to shake more coin out of their pockets (depressing the economy further).
All three are the road to hell.
In 2005, a Realtor friend suggested that I buy a condo. Her reasoning was that she could arrange 'creative financing', I would pay nothing down, my payments would be about what I'm paying for rent, and before the five year balloon payment, I could sell it and use the increase in value as a a down payment on a conventionally financed home. She is a good friend. She meant me no ill. She honestly believed in what she was telling me. I was tempted.
ReplyDeleteHowever, after thinking it over, I told her no. I explained that a normal economy is like a pyramid, in which the wealthy capstone is supported by a broad prosperous base. However, years of supply-side economics has relocated so much wealth from the base to the capstone, that the base would soon be too weak to support it and be crushed. At that time, the bottom would fall out of the housing market. She thought I was crazy. I used part of my disability check to take her out last month, because she can't afford a restaurant now.
The point is, that the conditions have not changed, as you say. Unless a large portion of the wealth that gushed up, when we were told it would trickle down, is returned to the base, and mechanisms put in place to prevent a repeat, this will only be a temporary respite.
Well, that's how the song goes, but receipts increased for how long? How much was the result of inflation? What I see is that upper bracket levels below 50% always increase receipts and then precipitate a collapse just as they did so Famously in the 1920's and I've never seen any evidence that those extra bucks in the hands of the top 1% create more jobs as the catechism tells us, but rather go into risky derivatives and huge houses and hedge funds and offshore accounts.
ReplyDeleteI see a difference between the attempt to plow money into the economy as FDR did -- spending money on infrastructure and for the benefit of struggling Americans and turning our national wealth into smoke in Iraq or Vietnam and making huge profits for offshore corporations while the middle class are squelched like Russian peasants. I believe that it was federal spending that finally killed the Great Depression and saved us from Communism. We spent dollars from war bonds and tax revenues, not from artificial market bubbles and loans from China and yes, we went into debt -- a debt that was payed off. How long will it take to pay this war off? More importantly which Americans will be ruined in the process? It won't be those who can afford it the most easily.
We spent about as much on WW II as we have on Iraq so far. The latter helped bring us almost to a depression, the former didn't, as the top bracket ran as high as 90% and yet we had a prosperous time under that Commie Eisenhower and that Tax and spend liberal Clinton, didn't we?
The Clinton Tax increase brought in a hell of a lot more money than the Reagan cut that Bush the elder was forced to undo. That's my opinion and I'm sticking to it -- provisionally of course. ;-)
I'm so tightwad conservative that I never borrow money to buy houses or toys -- or anything, but I don't think you can necessarily run a business that way or run a country that way. I know a lot of people who went bust because they were flipping houses they had almost no equity in hoping to beat the balloon payment -- just as TomCat says.
The reason that the Bush recession didn't wipe me out was just that - I don't owe a dime. I've never lived beyond my means or even close to it. Too bad we went from a surplus to record debt under the Commander Guy's borrow and spend and mortgage the middle class reign of irresponsibility. We'd not have so much to complain about at Obama's attempts to turn it around -- which may be beginning to show some progress.
Silverfiddle - “Funny thing about those Reagan tax cuts. They spurred economic growth and federal receipts increased..”
ReplyDeleteFunny thing about those Clinton tax increases. When Congressional Republicans were predicting doom and gloom and complete ruin, the economy recovered, the federal books balanced for the first time in almost a century, and the deficit turned to surplus … thus giving rise to the largest economic expansion in U.S. history.
“I've heard some poo poo the household budget to federal budget comparison as simplistic, but it is useful. Governments can go broke just like people can.”
The analogy is not merely simplistic but (as all political framing and sloganeering is these days) dangerously misleading. This man, an investor and mentor of mine when I first started in business, is famous for saying: “Countries do not go bust.” Unlike households and businesses, a sovereign entity may have a liquidity crisis but never goes bankrupt, because the nature of sovereignty precludes that.
“A government is different in a few respects: It can print more money (thereby devaluing the currency and robbing pensioners on a fixed income), borrow more (creating more debt), or simply turn more citizens and businesses upside down … All three are the road to hell.”
The engine of economic growth was, is, and will always be the middle class; yet this insight was lost on Reagan who gave us the concept of “trickle-down” economics and corresponding tax policies that favored the wealthy and weakened the middle class. On this point, there are relevant discussions here and here.
There is a similar discussion, Wealth and Inequality at Business Insider dot com. Please note the readers’ comments below the article. Despite a preponderance of historical data, there are folks who still refuse to accept these findings.
Small business, the provenance of the middle class also thrived under Reagan.
ReplyDeleteI am not anti-tax. Taxes were too high when Reagan and a Democrat congress lowered them, increasing revenue.
The economy was going great guns when Clinton raised taxes, and it had no detrimental affect.
Putting all this aside, a government cannot continue to spend more than it brings in. If debt continues to grow faster than GDP, a crash is inevitable. That is common sense.
Yes, a crash is inevitable and all Obama is attempting to do is ensure a soft landing rather than a hard one.
ReplyDeleteIts easy to talk about 'a crash' without realizing what that would actually entail:
1. Lower standard of living for everyone (in the order of around 30%).
2. Massive unemployment and foreclosures much beyond what we have ever seen (maybe double or triple what we currently are experiencing).
3. Huge social upheavel. Our current social safety net would totally disappear.
Money would be useless....
Considering that 71% of all private wealth in this country is owned by only 1% of the population it should be obvious that 99% of the US population would suffer the most and of that 99% it would be the middle class that would suffer the most because they are the least able to adapt to the deprivation.
This would be the legacy of supply side economics that would passed onto future generations...
Silverfiddle - Taxes were too high when Reagan and a Democrat congress lowered them, increasing revenue ... The economy was going great guns when Clinton raised taxes, and it had no detrimental affect. .
ReplyDeleteTwo responses:
1 - The economy that Clinton inherited was not going great guns. In fact, the country was in a severe recession. To balance the budget, Clinton was forced to raise taxes ... bucking conventional wisdom. It was sound economic policy coordinated by Treasury and the Fed that produced the Clinton boom years. In my comment above, there was a link that took you to this:
"In fact, historical data contradicts Laffer’s thought experiment. In the 8 years following Reagan’s tax cuts, personal income tax revenues rose from $353 million in 1982 to $516 million by 1989, an increase of 46%. During the same time interval, the federal deficit more than doubled.
In contrast, Clinton’s tax increases resulted in a personal income tax revenue increase from $586 million in 1993 to $1.137 billion by 2000, an increase of 94%. The Reagan era produced gigantic budget deficits. In contrast, the Clinton years yielded a federal budget surplus during a period of unprecedented economic growth ..."
I'm glad that someone remembers that it was indeed "the economy, stupid" that tossed Bush the elder out of office. Indeed, I wish I know how to add a graph to this since it shoes that debt as a percentage of GDP fell steadily from Truman onwards and began to climb steeply under Reagan and his successor. It was indeed Clinton who turned it around and Bush the Witless who opened the seacocks.
ReplyDeleteThe beatification of Ronald seems to have made us forget that not only was it not a golden era, but a corrupt era and the beginning of the trend making the rich ever richer and the rest left to stagnate.
Of course I have to laugh every time Obama quotes Reagan or does what Reagan suggested we do and is trashed as a tyrant for it.
It does remind me of why I ceased to argue theology with non-theologians since what we're dealing with here is exactly that.
I should add that debt continued to fall steeply during the second half of the Clinton administration but made a hairpin upward turn within weeks after his higher father told Bush the Lesser to slash Warren Buffet and Dick Cheney's tax burden.
ReplyDeleteOf course I'm not mentioning the added bonus of those no bid contracts Cheney benefits from today.
Finally found it! check this thousand word picture out.
ReplyDeletehttp://zfacts.com/p/318.html
It never ceases to amaze; how one convenient memory lapse can turn Halloween into the Easter bunny with all due candor and conviction. Speaking of which, does anyone here recall THIS?
ReplyDeleteIn all fairness Warren Buffett didn't want a tax cut for himself. I'm inclined to think Dick Cheney holds other views.
ReplyDeleteOcto-
ReplyDeleteWatched "Z" just last night. Remastered with the full Criterion treatment. Commentary & interviews with Costa-Gavras & the cinematographer. Terrific film with an amazing cast. Jacques Perrin. Montand. Trintignant. Irene Papas. Score by Mikis Theodorakis.
It's held up very well over the past 40 years. Very, very smart film which is both politically astute and a real thriller. No small feat.