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Feb 12, 2009

It was bad enough when opponents of Obama’s economic recovery plan decided to drag FDR’s New Deal through the mud, quite wrongly, I might add. But there is a new talking point from the GOP, this time appropriating another liberal icon in support of their supply-side alternative to the present stimulus package.

Their contention is that JFK—along with Ronald Reagan, usually mentioned within the same breath—showed policymakers how to remedy recession woes back in the 1960s.  JFK’s economic prescription?  Tax cuts.

The Republicans are right, up to a point. Kennedy did push tax cuts, and his plan, which passed in February 1964, three months after his death, did help spur economic growth. But they’re wrong to see the tax reduction as a supply-side cut, like Reagan’s and Bush’s; it was a demand-side cut.

The above quotation is from historian, David Greenberg.  He wrote it way back in 2004 when the conservative group, Club for Growth, invoked Kennedy’s name in an effort to rail against Howard Dean during his run for the Democratic nomination.

Before you question what this has to do with our present economic crisis, here’s another bit from Professor Greenberg:

This distinction, taught in Economics 101, seldom makes it into the Washington sound-bite wars. A demand-side cut rests on the Keynesian theory that public consumption spurs economic activity. Government puts money in people’s hands, as a temporary measure, so that they’ll spend it.

[Snip]

Ultimately, in the form that Lyndon Johnson signed into law, it reduced tax withholding rates, initiated a new standard deduction, and boosted the top deduction for child care expenses, among other provisions.

The most significant of the “other provisions” within Kennedy’s tax bill was its closing of massive loopholes within the corporate tax code, in effect, making it closer to a tax hike.

So, why is it that the GOP desires the association with JFK? I think it has a great deal to do with, as Greenberg mentioned, the Washington sound-bite wars.

Yes, the constant conflict of talking-point-driven propaganda from opposing ends of the ideological spectrum can be frustrating.  Don’t think for a moment that I’m suggesting that this culture exists only in the GOP.  To be sure, this problem crosses party lines.

What do you think?  Is talking-point culture somehow a constructive force in our democracy?  I suppose not.  What made me want to address the JFK supply-side example was that I kept hearing it without anyone responding to the contrary. On Meet the Press last Sunday, for example, Rep. Mike Pence (R-IN) used it:

John F.  Kennedy, Ronald Reagan and after the towers fell in 2001 proved that the way you, you jump-start the economy, the way you jolt a free market economy…

David Gregory just let it go by, unchallenged.  At least Jon Stewart made a crack about Pence being unable to mention George W. Bush by name.

For me the issue boils down to the results of the above mentioned tax cuts.  JFK’s “tax cut” has been viewed as successful.  Reagan’s tax cuts were arguably disastrous over the long term, and Bush’s results?  Well, consider our present economic predicament.

I don’t think it’s a useful comparison.  It would be better if they left JFK out of it.

Feb 6, 2009
What's the GOP playing at?

I have to preface this by announcing that no one is happier than I that Republicans have found religion regarding excessive government spending.  Unfortunately, their come-to-Jesus moment has arrived at a time when the U.S. can ill afford to be stingy with its treasury, such as it is.  Economic forecasts are increasingly grim, and instead of action, Congress bickers.

What's most maddening about this debate is that it's become increasingly obvious that the GOP's efforts to obstruct the stimulus plan are disingenuous.  Rather than offering up a constructive argument to amend the spending bill, congressional republicans have decided to pursue an "insurgent strategy," posturing for the 2010 midterm elections at the peril of the world economy.

Paul Krugman succinctly laid out the urgency of the problem in today's New York Times op-ed page:

    It’s as if the dismal economic failure of the last eight years never happened — yet Democrats have, incredibly, been on the defensive. Even if a major stimulus bill does pass the Senate, there’s a real risk that important parts of the original plan, especially aid to state and local governments, will have been emasculated.

    Somehow, Washington has lost any sense of what’s at stake — of the reality that we may well be falling into an economic abyss, and that if we do, it will be very hard to get out again.

Krugman goes on to conclude that Republicans appear willing to push the economy over a cliff for the sake of, "...a discredited economic philosophy."  The philosophy in question--the one GOP members are touting as they decry the Obama administration's plan--calls for reigning in spending and implementing broad and deep tax cuts.

Now, this may come as a shock to those still clinging to "Supply Side" economic theory, but tax cuts, on their own, do not provide a stimulative economic effect.  Government spending is required. "Supply Side" (aka "Two Santa Clauses") economics, originally rolled out by conservative economic theorist Jude Wannisky, has been in effect, more or less, for the last 30 years.  President Obama writes in an op-ed:

    ...there have been misguided criticisms of this plan that echo the failed theories that helped lead us into this crisis -- the notion that tax cuts alone will solve all our problems; that we can meet our enormous tests with half-steps and piecemeal measures; that we can ignore fundamental challenges such as energy independence and the high cost of health care and still expect our economy and our country to thrive. I reject these theories...

The "Two Santa Clauses" theory is exactly what Obama's talking about.  Thom Hartmann lays out the motives and chronology of these "failed theories" in his post on commondreams.org, "Two Santa Clauses or How The Republican Party Has Conned America for Thirty Years."   Regarding the most recent implementation of the theory under George W. Bush, Hartmann wrote:

    In reality, his tax cuts did what they have always done over the past 100 years – they initiated a bubble economy that would let the very rich skim the cream off the top just before the ceiling crashed in on working people.


Yet, these theories remain prominent in the talking points of Republicans.  How?
Perhaps it's due to poor media coverage.  I heard Contessa Brewer and Pat Buchanan on MSNBC the other morning using the term "pork" more times than I could count on both hands within about two minutes.  Sadly, both commentators completely misunderstand what political pork is.  Rather, conservative talking heads and politicians take minuscule elements of the stimulus plan and declare them to be pork, whether or not they actually fit the definition.

GOP attacks don't stop there.  In their efforts to sway public opinion on the matter, their criticisms consist of misleading statements regarding the pace at which the stimulus will be administered and outright lies which get parroted by the mainstream media.

Everyone, including Republicans, is aware that the spending bill will pass one way or another.  However, what the GOP has done is make a political bet that if economic progress isn't made before 2010 then their "insurgency" will be deemed worthwhile by their respective constituencies.  Their gamble is based upon the failed economic theory described above.  Krugman aptly sums up the matter:  "The American economy is on the edge of catastrophe, and much of the Republican Party is trying to push it over that edge."

Tell me what you think.  Is this an "all's-fair-in-love-and-politics" situation?  Am I overreacting, or are you as sickened as I am that the GOP has chosen this critical moment to begin their 2010 campaign?  Before you answer, consider this:  This wager that the GOP has made only pays off if the Democrat's package doesn't work.  They're betting against economic recovery.  How cynical is that?

 

 
 
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Aaron Pendell
, 2, 2 children
Round Lake, IL, USA
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