Posted by: Rick | Wednesday, August 4, 2010

Tooth Fairy Politics

Multiple choice: Which of the following represents the biggest obstacle to progressive change in America?

a) The Republican Party
b) Conservative Democrats
c) Powerful corporations
d) The media
e) Barack Obama

The correct answer is (d).  Here’s why:

1) The USA is structurally locked into a two-party system.  Nothing short of a new Constitution can change that.   

2) Over the last forty years, conservatives have relentlessly accused the media of having a “liberal bias”. 

3) In an effort to be seen as “fair and balanced”, reporters are loath to question Republican (or even, albeit to a much lesser extent, Democratic) ideology.  They only cover strategy and messaging.  As a result, right-wing politicians feel free to say almost anything — no matter how absurd — on policy.

4) According to modern conservative dogma, cutting taxes always leads to economic paradise and will never increase the deficit.  100% of all Republican politicians will say this.

5) In the real world, supply-side economics of the kind noted above has been completely discredited.  100% of all respectable economists (Republican or Democrat) will say this.

6) Republican free-lunch, tooth-fairy economics — which is sheer fantasy — may always be sold to a gullible public.  The true goal of such policies — the further enrichment of the already rich — will never be mentioned by the media.

This is a big, big problem.  And there’s not a lot we can do about it.

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Responses

  1. Do you even know what “supply side economics” means? I’d bet you don’t.

    As for Liberal media bias, do you deny it? You think Liberals are at a disadvantage in this area? Really?

    • From TIME magazine, December 2007, via Media Matters:

      “If there’s one thing that Republican politicians agree on, it’s that slashing taxes brings the government more money. “You cut taxes, and the tax revenues increase,” President Bush said in a speech last year. Keeping taxes low, Vice President Dick Cheney explained in a recent interview, “does produce more revenue for the Federal Government.” Presidential candidate John McCain declared in March that “tax cuts … as we all know, increase revenues.” His rival Rudy Giuliani couldn’t agree more. “I know that reducing taxes produces more revenues,” he intones in a new TV ad.

      If there’s one thing that economists agree on, it’s that these claims are false. We’re not talking just ivory-tower lefties. Virtually every economics Ph.D. who has worked in a prominent role in the Bush Administration acknowledges that the tax cuts enacted during the past six years have not paid for themselves — and were never intended to. Harvard professor Greg Mankiw, chairman of Bush’s Council of Economic Advisers from 2003 to 2005, even devotes a section of his best-selling economics textbook to debunking the claim that tax cuts increase revenues.”

      Use the Google, conservatives! It’s not your enemy.

  2. As I said, you really don’t know what it is. Allow me to help.

    The goal of supply side economics is a bold one: to have an expanding economy (i.e., growth) with moderate inflation or even declining prices. This turns typcial macro theory on its head, which has traditionally held that growth always must lead to inflationary forces. When an economy shows healthy growth there is always talk of it “overheating” and therefore fears of inflation. But with supply side policies, capacity increases along with demand, and prices are moderated.

    Supply-side stimulus is brought about by getting producers to expand plant and equipment — capacity — so that marginal demand from consumers does not lead to inflation. And getting entrepreneurs to risk their capital in new businesses (–> increasing productive capacity) so that employment will be the thing that rises alongside growth (not inflation).

    The notion that “tax cuts actually increase revenues” is not supply side economics, it is something else. But it is an argument that has something going for it: it takes into account cause and effect, which most macro models of tax policy ignore.

    If you raise taxes but stifle growth in doing so, you may get more revenue than before, but probably not more than if you did nothing at all (left tax rates the same). Likewise, if you cut taxes and encourage growth properly, you should ultimately get more revenue than doing nothing in the face of a stalling economy.

    Remember, John Kennedy famously spurred the economy through tax cuts, so it isn’t only a Republican idea. Though these days you’d think it was.


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