once in a while, a right winger hands me an opportunity
on a silver platter.
other day, I wrote an essay in which I attacked
the Laffer Curve - the notion that the lower taxes
are, the better the economy does. Picking the
economy under Clinton as a counter-example, I
wrote, "And yet the economy grew, longer and stronger,
than it did under Ronbo. AND he [Clinton]cut back
on the deficit, rather than the cheap gimmick
of borrowing trillions in order to appear robust."
right winger piped up, asking me if the numbers
4.2 trillion and 5.7 trillion meant anything.
They were, as you must have guessed just from
context, the numbers of the national debt on the
day Clinton took office and the day he left, respectively.
gosh, I thought. I can't let this poor guy run
around not knowing the context of my statement.
Right wingers these days have enough to bear without
me sitting back and grinning and letting them
make fools of themselves. Someone really nasty
might come along and embarrass them with a full
set of numbers comparing Reagan and Clinton.
like me. If you're going to leave someone twisting
in the wind, it's no favor to hang them slowly,
I always say. So here are the numbers I provided.
Deficits - Reagan
Deficits - Clinton
"zero year" is the first year in office of the
two respective presidents, and reflects the budget
of the administration prior - Carter and Bush
I, respectively. The -78b of Carter's last year
was the all time record in America's nearly 200
years of budgets. It took 191 years to amass the
first trillion in debt, and Reagan added the second
trillion in just five years.
Reagan boom, which ran from 1983 to 1990, was
fueled by mountains of debt. During that time
he lowered taxes massively on the upper class,
and when the debt exploded, raised taxes [mostly
on the middle class] in years three and five.
economic boom began about six months before he
took office, after Bush raised taxes again in
a futile effort to curb the red ink (the $290
billion deficit in Bush's final budget set another
record, one that stood for ten years). Clinton,
over despairing yowls from right wingers that
such an action would destroy the economy and leave
the Dow quivering fretfully at 1,000 points, then
raised taxes on the wealthy. The economy continued
to rebound slowly, and the annual deficits began
added six million jobs in his first term, and
an amazing 16 million in the second term, even
as the deficits turned into surpluses. Only FDR
had a better job creation record - or oversaw
a stronger economic rebound. Of course, he started
out with a lot more room for improvement, too.
When an economy features a third of the working
force idle and nearly a quarter of the states
no longer using American currency, there's pretty
much only one direction the economy can go, and
remain an economy.
Bush I and Putsch numbers are even worse than
Reagan's. George senior inherited a budget that
was on the verge of fiscal collapse and waited
until late in his term to take strong measures,
and of course Putsch's approach to the budget
is nothing short of insane.
DeLay, a man willing to say anything in public
for the sake of ideology, said that of course
you lowered taxes in times of war. Fortunately
we aren't at war, not really, or America would
be a happy memory, a country in receivership with
a dead economy by now. In real wars you may not
be able to raise taxes, because you have to keep
productivity as high as possible, but lowering
them is suicide. In world war two, budget outlays
vastly outstripped revenues, reaching as much
as three dollars spent for each dollar that came
in (1943 featured $24 billion in revenues, $78
billion in outlays). During the Civil War, outlays
reached as high as ten to one over revenues.
you are making $1,000, and spending two or thee
times that amount, does it make sense to reduce
factor that made Clinton's achievement all the
more remarkable: Between 1952 and 1978, interest
on the national debt ran within a half point of
10% of budget outlays either way, pretty consistently.
By the time Reagan/Bush I were done with us and
had given us round one of supply-side economics,
interest on the national debt was at 21% of budget
outlays. That meant that the interest on the debt
as a portion of the budget had more than doubled,
and Clinton only had 79 cents on each dollar to
spend usefully, instead of 90 cents. The rest
all went to banks, bondholders, and investment
three years of Putsch, we have annual deficits
of nearly half a trillion (Putsch is adding to
the debt at a rate that accumulates in one year
what took a full century before Reagan). Financing
the debt takes about 24% of the budget, and that's
with interest rates at 50 year lows. Interest
rates are now rising, caused in part by inflationary
pressure, caused in turn by the latest energy
to Laffer, the economy should be booming. Reduced
taxes, and war to promote monetary circulation.
At least, that's the theory.
yet it isn't happening. Instead the country is
once again in a death spiral of debt, and this
time, with a lunatic at the helm and ideologues
who don't really give a shit about America controlling
the GOP in Congress, there's been no turning back
from this fiscal madness.
what went wrong with the Laffer Curve. Paul Krugman
of the New York Times, an economist of some note,
stated it very simply. "Deficits matter." Big
debt is a drag on any economy, and especially
on a fundamentally weak economy like we have now.
cure? Kick the bums out. And hope the Kerry administration
has the political courage to take some hard steps
to alleviate debt.
Posted: June 15, 2004