Institutionalized Insanity

Being mostly retired, my mental health depends a little too much on the machinations of the market. That's the selfish part. The rest, the sense of impending doom for our country, comes not just from there.

So the jobs numbers still are crap. Which is the perfect lens through which to view the political world. Republicans, no doubt, rejoice. Of that, I think there's no question: the less good the economy, the better their chances -- as they see it -- to win in 2012. That much is fact. The part that's speculation is the extent to which they've deliberately blocked Democrats' efforts, intentionally sabotaging the economy for political gain; about that, I can't be as categorical. But the fact that they still think the be-all and end-all (hmm.... end-all???) of economic policy is tax cuts suggests it's deliberate.

I recognize, and have written much about, the connection between Republicans and belief in the obviously false. Still, I have to think that among their leaders there must be some that can read. Or remember a decade or so back. For the last time we had spectacular growth and a balanced budget was after Clinton raised taxes. And the end result of Bush's cuts was massive jobs losses. Those are facts, too. Since it's never happened that tax cuts have led to budget balance or sustained growth, those guys are either fools or destructive self-aggrandizing cynics. To put it politely.

At least two Nobel-Prize-winning economists said from the very beginning that the "stimulus" was too small, too front-loaded, and too weighted with tax cuts. And ever since it's been in place, despite the fact that the Bushian trend of staggering job losses has been turned around, Republicans have done everything they could to block any more of it.

People use the term "job creation" like a magician uses a handkerchief. It's a multi-purpose deception. But the fact is that there's only one way that governments predictably create jobs: by spending money on projects. It was true when FDR did it, it's true when BHO has done it -- to the extent that he has, within the confines placed upon him by a Congress filled with idiots and deceivers. Cutting taxes on businesses -- already low -- is the wheel before the cart before the horse before the road. Businesses don't hire until there's demand for their products. Demand doesn't happen until people are working. If people are building roads, designing them, ordering materials; when they're inventing better batteries, if they're repairing bridges and spending wages, demand develops and businesses add employees to the economy. It's not complicated.

Clearly, it's too late now to get it right. The Republican deception machine has, as usual, been successful in its sleight of hand, convincing the public they're seeing something they're not. To the extent that he let himself be pushed around, President Obama deserves blame. But his were the right ideas. He just held back too much. He left too much rabbit in the hat.

And now, once again, it appears we're about to see the disastrous effects of tax cuts and spending cuts. But as opposed to when W strode into office with his self-declared mandate after losing the popular vote, and we were riding the wave of economic boom, this time we're barely back up on our knees from the knock-out blows he subsequently delivered.

Republicans have taken the opportunity to say the latest jobs report means no new taxes. What do you suppose they'd have said had the report been great? Without doubt: this proves we don't need new taxes. (Funny how they took credit when jobs were looking better.)

We're the classic definition of insane. We keep choosing the thing that's never worked, and we expect different results. In the truly insane, it's sort of excusable, understandable. In the case of American politics, it's just a deeply, deeply depressing spectacle of selfish stupidity and egregious gullibility.

Have a nice weekend.

Madness

The keystone in the arch of incompetence that overlies all of modern Republicanism since Lord Ronald is the statement, repeated endlessly by all adherents and perhaps even believed by a few of them, that "tax cuts pay for themselves." It's really the perfect basis on which to judge them, because it exemplifies everything they've said or done in the last thirty-some years. It's without evidence, it's patently false, it's highly damaging to our future. And it's accepted as the gods' truth.

Once again, here's Ronnie's own economic advisor, truth-telling into the hurricane headwinds:

Republicans claim to be deeply concerned about the budget deficit and the national debt, yet repeatedly demand additional large tax cuts. For example, former Minnesota Gov. Tim Pawlenty, a candidate for the Republican presidential nomination, supports a balanced budget amendment to the Constitution but also wants an $8 trillion tax cut. He rationalizes this contradiction by asserting that his tax cut will not actually lose any revenue. As Pawlenty told Slate reporter Dave Weigel on June 13:

“When Ronald Reagan cut taxes in a significant way, revenues actually increased by almost 100 percent during his eight years as president. So this idea that significant, big tax cuts necessarily result in lower revenues – history does not [bear] that out.”

In point of fact, this assertion is completely untrue.

[...]

This is not surprising given that no one in the Reagan administration ever claimed that his 1981 tax cut would pay for itself or that it did. Reagan economists Bill Niskanen and Martin Anderson have written extensively on this oft-repeated myth. Conservative economist Lawrence Lindsey made a thorough effort to calculate the feedback effect in his 1990 book, The Growth Experiment. He concluded that the behavioral and macroeconomic effects of the 1981 tax cut, resulting from both supply-side and demand-side effects, recouped about a third of the static revenue loss.

[...]

Republicans also assert that the tax cuts of the George W. Bush years paid for themselves. On July 13, 2010, Senate Minority Leader Mitch McConnell said that there was no net revenue loss from any of the Bush tax cuts, in defense of an earlier comment by Senator John Kyl that all spending increases must be offset so as not to increase the deficit, but tax cuts need never be offset. Said McConnell:

“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.”

This is a view not shared by economists who worked for Bush. For example, Alan Viard, senior economist at the Council of Economic Advisers during Bush’s first term, told the Washington Post in 2006, “Federal revenue is lower today than it would have been without the tax cuts. There’s really no dispute among economists about that.”

We're truly at the Mad Hatter's tea party. (Rich, huh?) Half our country is in the thrall of a political party whose central philosophy is demonstrably false; and yet -- presumably because it's such a happy thought that promises everything will be fine, not only with no sacrifice but with the actual opposite -- that party has managed to gain the ability to grind our government to a halt.

It was a cliché before it was ever uttered: you're entitled to your own opinion but not your own facts. And yet here we are. The power of lies is irresistible, evidently; the more so the tougher the times. When times get tough, the tough get... drowned out. How easy, how appealing: the country is broke, we need money to fix our infrastructure, to educate our kids, to fight our wars. And guess what? There's great news!! The solution to everything is to cut taxes. Eat our crap and we'll give you cake, too. Ronald loves you. Be selfish, ignore reality. And you'll still get into heaven, right here on earth. Sign me up and send me a teabag.

What hope can there possibly be when a major political party is based on a lie, pushes the lie, has the lie reinforced by a propaganda conglomerate run by the only people who benefit from the falsehood, and is swallowed whole, drunk deep and steaming, because it promises free and sweet tea for everyone? This is a world that makes no sense, except as one visited by Alice. Or Lemuel Gulliver. The US of A, the fuck-yeah exceptional: overtaken by magical thinking, dancing to its own destruction.

It's absolutely amazing; and, except for the fact that it's being enabled by a form of religious fundamentalism, it defies explanation. The question is, do the purveyors know they're lying, or, as with their other ignorancii, such as their reckoning of the age of the earth, on evolution, and their stand on global climate change, have they actively suppressed facts to maintain the beliefs it takes for them to stay happy in a complicated world?

Dining On Delusion

When we hear someone interesting say something thought-provoking, either my wife or I will say to the other, "We should have him (or her) over for dinner." We have quite a guest list.

My new hero, Bruce Bartlett, conservative economist and former economic adviser to Ronald Reagan, has once again thrown the cold water of reason on the fanned flames of fantasy finance.

When Republicans talk about economic growth, they tend to talk as if there is only one factor that affects it: tax rates. Thus, last week former Minnesota Gov. Tim Pawlenty, a candidate for the Republican presidential nomination, put forward an economic plan that he said would raise growth rate of the real gross domestic product to 5 percent per year from its historical level of about half that. His only specific proposal for achieving this ambitious goal was to slash tax rates on the wealthy.

Pawlenty would cut the top individual income tax rate from 35 percent to 25 percent, cut the corporate rate from 35 percent to 15 percent, and eliminate completely all taxation of capital gains, interest and dividends – the principal sources of income for the wealthy. Implausibly, Pawlenty asserted that despite reducing revenues by some $8 trillion over the next 10 years – from the lowest level of federal revenues as a share of GDP in 60 years – that his plan would balance the budget. I could find no data or analysis of how Pawlenty’s plan would actually achieve this goal.

My purpose today is not to criticize the particulars of Pawlenty’s plan, which is very much in the Republican mainstream, but rather to talk about the nature of economic growth and how one-dimensional the GOP view is. The truth is that economists know a lot about what causes growth and what policies will raise the growth rate, and tax rates have a far smaller role than most people and all Republicans believe.

[...]

To present the textbook view of what determines long-term economic growth, I turned to an actual textbook by Harvard economist Gregory Mankiw, who served as chairman of the Council of Economic Advisers for George W. Bush.

[...]

What matters for business investment is not the corporate tax rate, but the ultimate tax rate on capital including the tax on the corporation’s owners, the shareholders. In 2003, that was almost 58 percent – 35 percent at the corporate level and as much as 35 percent at the individual level. Now, that combined rate is at most 45 percent because in 2003 the tax rate on dividends was reduced to a maximum of 15 percent.

Unfortunately, there’s no evidence that the 2003 tax cut did anything to stimulate corporate investment. Indeed, according to the Federal Reserve, nonfinancial corporations have increased their holdings of liquid assets to $1.8 trillion from $1.2 trillion since 2003. Thus it’s implausible that a further reduction in the corporate rate, as Pawlenty and other Republicans favor, would do much to raise investment.

[...]

The bottom line is that neither taxes nor spending by themselves are the most important government contribution to the investment climate; it’s the budget deficit. Consequently, a reduction in tax revenue which raises the deficit is unlikely to stimulate domestic investment because more money will have to be borrowed from abroad. Conversely, a tax increase dedicated to deficit reduction could well be stimulative, as was the case with the 1982 and 1993 tax increases. Contrary to Republican dogma, rapid growth followed on both occasions.

[...]

It's his conclusion that really is a cry in the wilderness, and one which I've hollered, too, many times. What's needed is the exact opposite of teabaggR fiscal policy, and their failures are going to kill us all:

If we want to raise the long-term rate of growth, we have to go back to the textbook and increase saving and investment, channel more public investment into education and basic infrastructure, and do everything in our power to promote scientific research and technological advancement. It’s not sexy and it takes a lot of time, but it works.

And yet it constitutes everything the Rs are cutting, in the name of enabling giveaways to the wealthy. But the most amazing part of all is that we stand around with teabags up our asses, watching it happen, thinking we're sitting on one of these.