NY Times’ Paul Krugman: Supply Side Economics Creates Deficits
Nobel Prize winning economist, Paul Krugman, attempts to educate a largely ignorant Republican/Tea Party constituency on the documented failures of Supply Side economics. He focuses on the Carter and Reagan years (since Republican politicians tend to cite Reaganomics as their model for economic success), and he demonstrates that revenues actually dropped decisively with Reagan’s tax cuts:
… the revenue track under Reagan looks a lot like the track under Bush: a drop in revenues, then a resumption of growth, but no return to the previous trend:
Matt Yglesias contends that “the conservative movement in America doesn’t [actually] care about the budget deficit,” and the proof is in the policies for which they advocate:
1) There have been two presidents who were members of the modern conservative movement, Ronald Reagan and George W Bush, and they both presided over massive increases in both present and projected deficits.
2) The major deficit reduction packages of the modern era, in 1990 and 1993, were both uniformly opposed by the conservative movement.
3) When the deficit was temporarily eliminated in the late-1990s, the mainstream conservative view was that this showed that the deficit was too low and needed to be increased via large tax cuts.
4) Senator Mitch McConnell says it’s a uniform view in his caucus that tax cuts needn’t be offset by other changes in spending.
5) The deficit reduction commission is having trouble because they think conservative politicians won’t vote for any form of tax increase.
In sum, there are zero historical examples of conservatives mobilizing to make the deficit smaller.
Senate Republican Leader Mitch McConnell recently made the following assertion about George W. Bush’s tax cuts for the wealthy:
“There’s no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue, because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject.”
Here Ezra Klein of the Washington Post resoundingly slams McConnell’s fictitious allegations:
There’s an ontological question here about what, exactly, McConnell considers to be “evidence.” But how about the Congressional Budget Office’s estimations? “The new CBO data show that changes in law enacted since January 2001 increased the deficit by $539 billion in 2005. In the absence of such legislation, the nation would have a surplus this year. Tax cuts account for almost half — 48 percent — of this $539 billion in increased costs.” How about the Committee for a Responsible Federal Budget? Their budget calculator shows that the tax cuts will cost $3.28 trillion between 2011 and 2018. How about George W. Bush’s CEA chair, Greg Mankiw, who used the term “charlatans and cranks” for people who believed that “broad-based income tax cuts would have such large supply-side effects that the tax cuts would raise tax revenue.” He continued: “I did not find such a claim credible, based on the available evidence. I never have, and I still don’t.”
Of course, the Right rarely if ever lets factual evidence get in the way of their deep-seated, largely debunked, ideologies.
Still, it is good to see the Left finally doing a better job of educating the public about the real track record between the differing economic policies — something necessary if we are serious about promoting positive change in this country.
Paul Krugman Warns About The Right-Wing’s Hold On GOP
Krugman makes some interesting points in his NY Times column about the Right-Wing’s new hold over the GOP.
First, he addresses the anti-health care reform rally last week in front of our nation’s capitol, and some of the now-all-too-common ‘grotesque’ visuals and rhetoric (i.e. “large signs showing piles of bodies at Dachau with the caption ‘National Socialist Healthcare.'”):
The key thing to understand about that rally is that it wasn’t a fringe event. It was sponsored by the House Republican leadership — in fact, it was officially billed as a G.O.P. press conference. Senior lawmakers were in attendance, and apparently had no problem with the tone of the proceedings. […]
What all this shows is that the G.O.P. has been taken over by the people it used to exploit.
He gives some historic background on the GOP’s courtship of the far-right:
With the rise of Ronald Reagan: Republican politicians began to win elections in part by catering to the passions of the angry right.
Until recently, however, that catering mostly took the form of empty symbolism. Once elections were won, the issues that fired up the base almost always took a back seat to the economic concerns of the elite.
But something snapped last year. Conservatives had long believed that history was on their side, so the G.O.P. establishment could, in effect, urge hard-right activists to wait just a little longer: once the party consolidated its hold on power, they’d get what they wanted. After the Democratic sweep, however, extremists could no longer be fobbed off with promises of future glory.
Furthermore, the loss of both Congress and the White House left a power vacuum in a party accustomed to top-down management. At this point Newt Gingrich is what passes for a sober, reasonable elder statesman of the G.O.P. And he has no authority: Republican voters ignored his call to support a relatively moderate, electable candidate in New York’s special Congressional election.
Real power in the party rests, instead, with the likes of Rush Limbaugh, Glenn Beck and Sarah Palin (who at this point is more a media figure than a conventional politician). Because these people aren’t interested in actually governing, they feed the base’s frenzy instead of trying to curb or channel it. So all the old restraints are gone.
Krugman warns that the party of Beck and Limbaugh could make some serious gains in the midterm election, if only because Obama has been unable to stop the country’s economic bleeding (unemployment has now reached a 26-year high of 10.2%). He cautions what this could mean:
if Tea Party Republicans do win big next year, what has already happened in California could happen at the national level. In California, the G.O.P. has essentially shrunk down to a rump party with no interest in actually governing — but that rump remains big enough to prevent anyone else from dealing with the state’s fiscal crisis. If this happens to America as a whole, as it all too easily could, the country could become effectively ungovernable in the midst of an ongoing economic disaster.
It sort of goes without saying, that if an ideological group as evil as the Nazis could come into power during extremely adverse economic times, who’s to say we won’t end up with an ever-increasing number of scary, fear mongering, destructive politicians of our own during this economic slide? Probably a good rule-of-thumb is to never take the far-right lightly …