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| Voodoo Economics at work. The Laffer Curve gone Amok! |
I read this and I just had to share this. David Stockman who was in Ronald Reagan's director of the OMB in the Reagan's administration just called out the GOP and its economic policies. This was originally in the New York Times on Sunday. Here is a summation I got from a blog called "The Big Picture". This blog ain't no left-wing screed.
Now from what I see in the polls the US is about to elect the same folks to run the US House of Representatives. Please read this.
• The total US debt, including states and municipalities, will soon reach $18 trillion dollars. That is a Greece-like 120% of GDP.Well, I think this is what President Obama is trying to undo. This is over 20 years of Republican policies. Yes, we did have Bill Clinton and he followed some of these policies but did manage to tweek them and balance the budget which Bush promptly just spent on the massive tax cuts for the rich. Now the same Republicans who RAIL against President Obama for deficit spending now want to increase the defitit to keep the Bush tax cuts going. Even Alan Greenspan states its NOT a good a idea to have tax cuts with deficit spending. Yup, he gave political cover for the Bush Administration for the tax cuts to pass Congress. So read this and think about it. Oh here is a 1981 article that was published in the Atlantic Magazine which David Stockman talks about the Reagan tax cuts. Enjoy!
• Supply Side tax cuts for the wealthy are based on “money printing and deficit finance — vulgar Keynesiansism robed in the ideological vestments of the prosperous classes.”
• Republicans abandoned the belief that prosperity depended upon the regular balancing of accounts — government, trade, central banks private households and businesses.
• Once fiscal conservatism was abandoned, it led to the serial financial bubbles and Wall Street depredations that have crippled our economy.
• The Nixon administration defaulted on American obligations under the 1944 Bretton Woods agreement.
• Who is to blame? Milton Friedman. In 1971, he persuaded President Nixon to unleash on the world paper dollars no longer redeemable in gold.
• According to Friedman, “The free market set currency exchange rates, he said, and trade deficits will self-correct.” What actually occurred was “impossible.” Stockman calls it “Friedman’s $8 trillion error.”
• Ideological tax-cutters are what killed the Republicans’ fiscal religion.
• America’s debt explosion has resulted from the Republican Party’s embrace, three decades ago, of the insidious Supply Side doctrine that deficits don’t matter if they result from tax cuts.
• The GOP controlled Congress from 1994 to 2006: Combine neocon warfare spending with entitlements, farm subsidies, education, water projects and you end up with a GOP welfare/warfare state driving the federal spending machine.
• It was Paul Volcker who crushed inflation and enabled a solid economic rebound — not the Reagan Supply Side Tax cuts.• Republicans believed the “delusion that the economy will outgrow the deficit if plied with enough tax cuts.”
• Over George W. Bush 8 years in office, non-defense appropriations gained 65%.• Fiscal year 2009 (GWB last budget): Tax-cutters reduced federal revenues to 15% of GDP — lower than they had been since the 1940s.
• The expansion of our financial sector has been vast and unproductive. Stockman blames (tho but not by name): 1) Greenspan, for flooding financial markets with freely printed money; and 2) Phil Gramm, for removing traditional restrictions on leverage and speculation.
• The shadow banking system grew from a mere $500 billion in 1970 to $30 trillion by September 2008 (see Gramm, above).
• Trillion-dollar financial conglomerates are not free enterprises — they are wards of the state, living on virtually free money from the Fed’s discount window to cover their bad bets.
• From 2002 to 2006, the top 1% of Americans received two-thirds of the gain in national income.
I find it fascinating that the most incisive criticism of the irresponsible GOP policies has comes from two of its former stars: Bruce Barlett and now David Stockman.
