Tuesday, July 06, 2010

Remember Everything Bad That Happened In The Last Decade?

It actually happened in the last year That's right, folks, in a standard regurgitation of Republican talking points, Mark Thiessen is back with a new entry for the contest.

Now, those of you with memories may recall that George W. Bush inherited a budget surplus, and immediately launched a plan to turn that into a deficit avoid paying down the deficit too quickly by granting massive tax cuts to the wealthy. No, really, I'm being too fair to Bush. As you have a memory you recall that he had a one-size-fits-all tax policy - the economy is strong so we can improve it with a tax cut; the economy is weakening so we need a tax cut to restore it; we're in a recession and nothing improves a weak economy like a tax cut.... The only economic plan he had was to cut taxes for the rich, damn the consequences. (At least so far, Thiessen's distortions are at least on par with Gerson's.)

A quick dose of reality:

That is to say, virtually all of the red ink in the budget is attributable to an economic downturn that started under George "tax cuts will make the economy perfect" Bush, two wars started by President Bush, and those tax cuts that were supposed to fix every imaginable economic problem. TARP and the bailout, started under Bush, and recovery spending represent a very small part of the picture. When Thiessen argues, "Polls show that Americans want candidates for Congress who support spending cuts and consider the national debt the greatest threat to our country, on par with the threat of terrorism", he had best take heed that he is arguing that the public views the devastation caused by his former boss as on par with the 9/11 attacks.

Needless to say, facts be damned, Thiessen wants to put the responsibility for the Bush debacle (each and every one of them, but in this specific context the budget deficit) on President Obama's shoulders:
Last week in Wisconsin, he declared "We've got to get this debt and our deficit under control." This from the man who rammed an $877 billion stimulus bill and a $1 trillion government health-care bill through Congress. In just 17 months, Obama and the Democrats have increased the national debt by 23 percent, and have put the country on track for another decade of red ink.
Pay no attention to the man behind the curtain....

There's also a legitimate question about whether this is the time for austerity or for stimulus spending. Yes, we can grant that Bush's economic incompetence placed the Obama administration in the position of having to deficit spend in order to fund the stimulus bill, and that it will again have to deficit spend to finance a new stimulus bill. But there's no sign that the economy is bouncing back without stimulus spending and, Thiessen's distortions aside, when the economy falters and housing prices are depressed, and unemployment is high, tax revenues go down. Perhaps Thiessen didn't notice that virtually every state is in the midst of a financial crisis, despite the austerity measures they've taken to date, because of the impact of the recession. Certainly, an argument can be made for austerity, but so far the facts suggest that additional stimulus spending is the far wiser choice.

I was agnostic on stimulus spending, and am fiscally conservative by nature - I completely disagreed with the Bush Administration's massive tax cuts backed up with their "deficits don't matter" prattle. (Where was Thiessen at that time? Oh yeah... writing speeches in defense of those policies.) I came to view the financial industry bailout as a necessary evil, albeit one that as implemented showered money on the undeserving and represents some of the worst lemon socialism in our nation's history. If the federal government is going to do something about unemployment, it seems obvious that its two principal tools are direct employment (hiring more federal employees) or stimulus spending.

One might suspect that hacks like Thiessen are arguing for cuts and against stimulus because they know as much - but feel that hurting the economy, the states, and the people of the nation will help the Republicans in the November elections. In fact, Dean Baker is presently making that argument:
While it may be bad taste to accuse a major national political party of deliberately wanting to throw people out of jobs, there is no other plausible explanation for the Republicans' behaviour. They have balked at supporting nearly every bill that had any serious hope of creating or keeping jobs, most recently filibustering on bills that provided aid to state and local governments and extending unemployment benefits. The result of the Republicans' actions, unless they are reversed quickly, is that hundreds of thousands more workers will be thrown out of work by the mid-terms.

* * *

The other argument the Republicans give is that these bills would add to the national debt. For example, the latest extension of unemployment benefits would have added $22bn to the debt by the end of 2011. This means that the debt would be $9,807,000,000 instead of $9,785,000,000 at the end of fiscal 2011, an increase of the debt-to-GDP ratio from 65.3% to 65.4%.

It is possible that Congressional Republicans, who were willing to vote for hundreds of billions of dollars of war expenditures without paying for them, or trillions of dollars of tax cuts without paying for them, are actually concerned about this sort of increase in the national debt. It is possible that this is true, but not very plausible.

The more likely explanation is that the Republicans want to block anything that can boost the economy and create jobs.
So Republican operatives like Thiessen create what can reasonably be described as a pessimism bubble (yes, I'm alluding to Douthat), in which the United States is on the verge of falling into the same trap as the weakest economy in the developed world, a line of nonsense that Douthat is unwilling to swallow:
But even now, there isn’t a major power in the world that wouldn’t happily change places with the United States. Our weaknesses are real, but so is our potential for resilience. While our rivals (in Asia as well as the West) face a slow demographic decline, our population is steadily increasing. The European Union’s recent follies make our creaking 200-year-old institutions look flexible by comparison. And China can throw up all the high-speed rails and solar panels it wants, but it won’t change the fact that most of the country is still sunk in rural poverty.
Republican fear mongering is red meat for the Tea Party Movement, a largely Republican force that the party wants to keep inside its tent. And yes, Douthat has a point that our nation does face problems that are different, and perhaps more difficult, than in the past (I would argue definitely more difficult), but that's not a justification for lies and misrepresentations designed to gin up fear about and opposition to legislation and spending initiatives that could both help the economy and position the U.S. for long-term growth.

Thiessen compares the outcome of the British election to a "Tea Party government". The election result in the U.K. is a bit odd - imagine a very close election that resulted in a Republican majority by virtue of people like Bernie Sanders choosing to caucus with the Republicans. The British government is taking the approach of austerity, in Thiessen's words, "necessitated by years of Labor profligacy, which produced the second-largest budget deficit in Europe" - recall that Labor came into power under Clinton and only lost power this year. So most of those years of what Thiessen sees as fiscal irresponsibility overlap with Bush's Presidency - yet somehow the Republican Congress that Bush inherited, and the massive tax cuts, war spending, and unfunded entitlements of the Bush era are flushed down Thiessen's memory hole.

Incredibly, in relation to a country that has a much higher tax rate than ours - and in which part of the austerity measure is to further raise taxes. Recall, Thiessen is arguing that the British budget would please the Tea Party movement. Where can I find the portion of the Tea Party platform (not that one actually exists, but let's go with the commercial ventures that are trying to profit from their organization of the Tea Party movement) or the Republican Party who is willing to admit that the people of this nation are not under-taxed? Thiessen defends the British budget as offering a "balance of spending cuts to tax increases is 77 to 23 percent" - okay, let's hear the Republican Party offer up a budget with a similar balance of tax increases and spending cuts, and see how it goes over with the Tea Party Movement. (I expect the Republican Party's silence to be deafening.)

Over the next couple of years we'll find out if Europe's new devotion to austerity delivers the robust economic growth predicted by its advocates. I'm not optimistic. I'm not going to speculate as to whether the nation's of Europe are in a position to attempt more stimulus spending, and I don't have the numbers in front of me, but (fear-mongering aside) we are - and Thiessen's propaganda having been duly considered, another major stimulus bill won't bankrupt us and, if it works, should at least party pay for itself through increased tax revenue resulting from economic growth. With a stimulus bill we would have a clear exercise in contrasts - who pulls out of the economic slump first, the budget slashers or the stimulus spenders. I suspect that people like Thiessen believe it's the latter, which is why they (and similarly positioned newly fledged deficit hawks) advocate the former.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.