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Tilting at Windmills

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July 7, 2008
By: Kevin Drum

CHART OF THE DAY.... Via Krugman, this CBPP chart from April does a great job of describing Republican Party economic policy in a nutshell. The Bush expansion may have featured sluggish wage growth, sluggish GDP growth, sluggish investment growth, and sluggish employment growth, but it also featured a terrific, tax-cut driven surge in corporate profit growth! That makes it a success by anyone's measure, right?

John McCain, of course, promises yet more Norquistian tax-cutting goodness, because God knows we don't want to go back to the hell on earth that followed Bill Clinton's modest tax increases of 1993. Much better just to make sure that rich people are taken care of and let the market sort out the rest.

Kevin Drum 1:14 PM Permalink | Trackbacks | Comments (32)

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Alternatively, for those of us who think Congress makes more difference to the economy than does the President, it suggests that Republican control of the House and Senate had its upside.

Posted by: Shelby on July 7, 2008 at 1:22 PM | PERMALINK

Republican control of the House and Senate had its upside.

Not recently.

Posted by: penalcolony on July 7, 2008 at 1:27 PM | PERMALINK

VOTE DIGBY FOR PRESIDENT---VOTE THE INTERNET.
Commonsense will do MORE to help this ecconomy than "yer partisan politics" EVER thought about.

Posted by: Mike Meyer on July 7, 2008 at 1:32 PM | PERMALINK

Yeah, "it figures" is rarely better used than to describe the results of Republican economic policy.

One of the hypocrisies of right-wing tax prattling is to say some places that you want "flat rates" and not for the government to "distort" the economy by offering some a better tax deal than others, etc; but then promote a lower capital gains tax rate etc. because, of all things, that stimulates investment, encourages savings, etc.

Another BS of theirs is the $1,000/child/year tax credit, that is welfare indeed but for the wealthy: The childless making 20k have to subsidize the children of those making up to 100k, even with public education available. Not only is it hypocritical and unfair, but encourages more births (i.e., more labor supply for lower wages, more housing demand for developers etc., more demand in general for higher commodity prices - get the picture?) I am being robbed to encourage others to make my life more difficult and the Earth less viable.

Posted by: Neil B. on July 7, 2008 at 1:34 PM | PERMALINK

"Much better just to make sure that rich people are taken care of and let the market sort out the rest."

You are just jealous that you are not on the receiving end of the favoritism this bought-an-paid-for administration has been able to dispense for its monied friends.

Too bad a few million mainstream Republicans refuse to realize they aren't either.

Posted by: Zit on July 7, 2008 at 1:40 PM | PERMALINK

I want to be a corporation when I grow-up.

Posted by: rusrus on July 7, 2008 at 1:45 PM | PERMALINK

Yeah, it was hell under Clinton -- my retirement account went up with the markets -- every year! Inflation was low, record deficits became record surpluses. HELL!!

Posted by: John McCain: More of the Same on July 7, 2008 at 1:48 PM | PERMALINK

I have a new joke routine where anytime someone remarks about economic bad news, diminishing living standards or expectations I shrug my shoulders and hold out my hands and say, "That's the market!"

Posted by: Brojo on July 7, 2008 at 1:50 PM | PERMALINK

Yeah, it was hell under Clinton -- my retirement account went up with the markets -- every year! Inflation was low, record deficits became record surpluses. HELL!!
Kevin may have been referring to the prescient Onion article from January 2001 called "Bush: 'Our Long National Nightmare Of Peace And Prosperity Is Finally Over'"
If not, he should have been.

Posted by: Bill Arnold on July 7, 2008 at 1:58 PM | PERMALINK

o/t - Bush is having no problem raising money among longtime supporters, even with chronically low approval ratings. Go figure!

Posted by: MaryCh on July 7, 2008 at 2:13 PM | PERMALINK

The overall wealth of the nation is declining from globaloney, stupid wars, natural resource rape, immigration, and so forth. Thus each segment of the sheeple has a selfish plan to enrich itself at the expense of others, resulting in "waterbed impoverishment." For ex., if you push down taxes, borrowing and inflation pop up. If you vote more benefits, either taxes or borrowing go up. US economic planning is a collection of get-rich-quick schemes.

Posted by: Luther on July 7, 2008 at 2:22 PM | PERMALINK

Jasper has a point. Lots of regular folks invest their 401K monies into corporations.

Posted by: optical weenie on July 7, 2008 at 2:40 PM | PERMALINK

That "point" is largely phony since what most of us get out of that is still less than we get from our direct pay, and much of it is unreliable anyway due to mismanagement. I'd rather get paid more directly than have a trickled-down indirect benefit that depends on shaky things like the shifty "value" of the stock market.

Posted by: Neil B. on July 7, 2008 at 2:59 PM | PERMALINK

This is not just George Bush. This has been the goal of the entire neoliberal agenda since the 1970's. All productivity gains go to holders of wealth; they are not divided between those who make profits and those who work for wages.

Posted by: bellumregio on July 7, 2008 at 3:13 PM | PERMALINK

Jasper

Current corporate tax policy rewards Wall Street, but doesn't do that much for Main Street. In the long run Wall Street is a waging tail, Main Street is the big dog.

I don't think anybody here is opposed to corporate profits, but over the long run profits that are created by artificial government tax policies can't be sustained in the real world. Unless wealth is being shared with the workers and shareholders (consumers )who spend the money to buy the goods, sooner or later corporate profits will decline. The Wall Street tail will stop waging and down will go CalPERS along with all the rest.

Personally, I would institute corporate tax policies designed to encourage dividends, and to keep jobs at home. How about higher corporate taxes plus a corporate tax plan that makes dividends deductible at the corporate level. How about a tax and trade policy that discourages companies from sending jobs overseas. The current corporate tax policy encourages corporations to accumulate profits which encourages waste and CEO abuse.

I would also promote policies encourage creativity and job creation. We need corporate tax policies that create a healthy sustainable economy. Don't misconstrue. Most of us around here understand and encourage profits. I personally love them. I would love them more if more companies could avoid taxes by paying dividends.

Posted by: Ron Byers on July 7, 2008 at 3:14 PM | PERMALINK

All of your graphed values (except unemployment) are in inflation adjusted dollars. Since the official government inflation measure seriously undermeasures inflation (energy/food doesn't count) all the recent figures should be adjusted downwards by a not inconsiderable amount. I think many in fact would show that growth has been negative!

Posted by: bigTom on July 7, 2008 at 4:23 PM | PERMALINK

I certainly understand why the mass media won't go out of their way to clarify this to their viewership (silly me, I almost wrote "readership"). I'd bet hugely that over 80% (and a bit more modestly that it's over 90%) of the sources most Americans rely on for what modest amount of news they actually pay attention to -- counting broadcast networks, cable networks, radio, and major and minor newspapers and magazines -- are owned by the same corporate entities whose management and shareholders have been the beneficiaries (read: "sole beneficiaries") of the "Bush boom" enrichment. They're sure not going to tell us what we don't need to know.
What I don't get is why no Dem politician that I'm aware of -- certainly not Hillary or Barack -- has ever made a central part of their campaign, their stump speech, and their advertising, a nice simple story along these lines:
"Republicans have spent over three decades telling us that lower taxes, especially on the wealthiest individuals and corporations, will boost the economy, and higher taxes will damage it. They've told us that government regulations -- reasonable, common-sense controls on pollution, worker and consumer safety, and truth in advertising and accounting -- smother business, destroy initative, and, again, damage the economy.
"But thirty years of facts show that they're wrong -- completely, totally, absolutely, and provably.
"In the early 90's, Newt Gingrich, Bob Dole, and every other Republican mouthpiece swore the modest Clinton tax increases on the best-off, and regulations like the Disability Act, would throw us into recession. Instead, they led to the first balanced Federal budget in [God knows how long -- 50 years?], and the [biggest / longest? 2nd-biggest / longest -- after the 50s and 60s?] economic expansion ever. [crowd cheers]
"And just 8 years ago, when George W Bush [crowd hisses / boos / howls] cut taxes on the wealthiest individuals, estates, and corporations, and loosened regulations such as the ones on home mortgages and speculation in commodities like oil, he promised a growing economy would result... and instead triggered the greatest redistribution of wealth upward that this country's ever seen. You don't need an MBA to see the results, which speak for themselves.
"So ask yourself this simple question:
"After 8 years of total Republican control of tax and other economic policies...
"Are you better off now than you were 8 years ago?"

I seem to recall something along those lines worked pretty well for some other politician. (Can't quite remember the name, though I think I can place the face.)
Since Republicans have been winning election after election after election by telling simplistic and obvious [to even the "lowest information voter" now -- as long as it's pointed out to them] lies, why can't Democrats win by telling the simple truth?
Why are none of them doing this?
Can someone explain this to me?
Thanks in advance if you can...

Posted by: smartalek on July 7, 2008 at 4:34 PM | PERMALINK

I read Krugman today, he did not mention Iraq! I find it hard to believe that the 5-year, trillion dollar Iraq Q has nothing to do with the state of the economy?

Posted by: antiquelt on July 7, 2008 at 4:43 PM | PERMALINK

Between 2001 and 2007 there were some severe shocks to the economy, including the 9/11 attack, the costs of the War on Terror, the war in Afghanistan and the war in Iraq, as well as the sharp rise in oil prices. It was quite an achievement to have even a weak expansion during such a difficult period. I have no doubt that the Bush tax cuts were key to avoiding a recession.

Posted by: David on July 7, 2008 at 6:31 PM | PERMALINK

"because God knows we don't want to go back to the hell on earth that followed Bill Clinton's modest tax increases of 1993."
___________________

We will, of course, tax ourselves back into prosperity. Because government redistributionist policies have always worked out so well.

Posted by: trashhauler on July 7, 2008 at 6:57 PM | PERMALINK

Trashauler, Jasper: It is odd that most people are worse off relative to the top when Republicans are in charge, despite the superficial appeal of your theories. Distribution is more important than "redistribution", and as power is taken back by the aristocracy, the rest of us get less to start with. I note you two ignored my point about subsidizing the children of the wealthy, ignored all the money blown in Iraq to bitch about "social program" which now take very little of the slice of total Federal spending, etc.

Posted by: Neil B. on July 7, 2008 at 7:27 PM | PERMALINK

Between 2001 and 2007 there were some severe shocks to the economy, including the 9/11 attack, the costs of the War on Terror, the war in Afghanistan and the war in Iraq, as well as the sharp rise in oil prices.

And how many of those factors is Bush personally responsible for? Let's see:

Did nothing to prevent 9/11? Check.

Caused oil prices to rise from $22/barrel by destabilizing Iraq and sabre rattling against Iran? Check.

Embarked on what his own press secretary has described as an ill-conceived war of choice? Check.

And actually, you boob, wars tend to stimulate the economy by giving corporations a whole new market for their wares: the government. And that's what this house of cards has been about; using illegal invasions and catastrophic schemes for artificially propping up a housing market to create the illusion of a functioning economy to re-elect a president and a political party who would never, EVER get by on their own merits.

The country is teetering on the edge of a recession or depression, people are hurting, and you have the gall to spread agitprop on behalf of the Bush maladministration. Why here's you six months ago telling us the U.S. is experiencing an economic boom!

It's striking to see panelists analyzing a hypothetical recession, while ignoring the actual economic boom.

Posted by: ex-liberal on December 21, 2007 at 10:13 AM | PERMALINK

You're a fuckwit. Take your tired old propaganda campaign elsewhere.

Posted by: trex on July 7, 2008 at 8:28 PM | PERMALINK

First of all let me point out that All obama wants to do is do away with Bush Tax Cuts which obviously don't work. If you think Bush's Tax Cuts Helped Our Economy and you think every thing is just Peaches and Cream You are either retarded or schizophrenic. Look around you at Americans struggling!!!! So what you bought another Mercedes! It's not about you or me. You must be wealthy. How much money do you need? All of our problems come from the greed and policies of the Administration. Hell there wouldn't have been 9\11 if Al Gore was President he would have read the PDB

Posted by: The BrownHornet on July 7, 2008 at 8:36 PM | PERMALINK

The last time we had a far-ranging discussion on this topic I was coming around to the idea of a flat-rate tax system with a very large deduction per person. Something like 30% rate on individuals with a $15,000 deduction would certainly simplify the system, redistribute wealth from the richest, protect the weakest and free corporations to make gobs of dough.

Today, reading this, it occurs to me there are some loopholes corps are using today to avoid taxes and that even in the system I suggest there would be individuals who'd try to avoid their taxes.

Individuals who move their assets abroad should be taxed all the same for being Americans. In fact, regardless of where they live they should be taxed as Americans unless Congress wanted to make a deal with foreign countries to split the loot of all foreigners in their respective countries.

This kind of system frees us of the question of where a corporation is located or where it does business and only requires us to know who has citizenship and income (or capital gains) to tax.

For someone who owns mega-shares of an American corp, but wants a lower rate the idea of taking on citizenship of Aruba or somewhere else might be appealing, but they should be stripped of all voting rights for their stock and of any right to be an officer of an American corp. If you're gonna leave...leave, otherwise pay yer taxes.

I don't think a corporation is a person and shouldn't be taxed. It's American owners should be, regardless of where they want to live or keep their cash.

"I want to be a corporation when I grow-up."
-- Posted by: rusrus on July 7, 2008

ROFLMAO

Posted by: MarkH on July 7, 2008 at 8:53 PM | PERMALINK

It seems to me, like if you were going to manipulate these categories to conform to a "bubble," wouldn't it look exactly like this? Poor performance, poor GDP, poor employment ... but good corporate performance.

Posted by: Martin on July 7, 2008 at 9:31 PM | PERMALINK

John McCain, of course, promises yet more Norquistian tax-cutting goodness, because God knows we don't want to go back to the hell on earth that followed Bill Clinton's modest tax increases of 1993. Much better just to make sure that rich people are taken care of and let the market sort out the rest.

lol

Posted by: Swan on July 7, 2008 at 9:50 PM | PERMALINK


First of all, "worse off relative to the top" doesn't have any day-to-day impact on anyone who's not, say, attempting to outbid someone on-the-top for a luxury yacht on eBay. "Worse off relative to inflation" or the cost of food or some other metric might be more appropriate, but... the only thing "relative to the top" shows is: envy. The rich are getting richer than the poor are getting richer and... what, exactly?

Because, silly, the upward distribution means the rest of us have less than we would have if more had came to us to begin with.

BTW the writer of the linked page evaded the child tax credit just like you did, the regressive prevalence of sales taxes, etc.

Posted by: Neil B. on July 7, 2008 at 10:43 PM | PERMALINK

The CEOs and corporate executives that perform embezzlement by committee are immune to tax increases. They and their board of directors' henchmen, with no institutional opposition, can and will raise payouts to ameliorate or obviate any Obama inspired increase in fat cat taxes.
Note that fat cats and Wall Streeters are giving two to one to Obama. They want access to the '08 winner. Their net embezzlement proceeds are not in jeopardy.

Posted by: Craig Johnson/ cognitorex on July 8, 2008 at 11:06 AM | PERMALINK

the People get more benefit from money in their pockets and the free market than they get from money siphoned away from them and used to fund random government (social) "programs"

Western Europeans not only have universal health care, they also don't work in August. The top quarter of incomes in the US may benefit from the extra money in their pockets that would go to paying for things like universal health care, which only goes to increase their investment portfolios anyway, but the other seventy-five percent of the households do not.

Because government redistributionist policies have always worked out so well.

The New Deal was responsible for America's huge middle class, not GDP.

Posted by: Brojo on July 8, 2008 at 11:58 AM | PERMALINK

Gotta love games with numbers. "The expansion of "2001-2007"????? Pardon me, but Bush was handed a recession in progress in 2001, then got hit by 9/11. The expansion didn't begin until 4th qtr '02. Try rerunning the numbers from there.

Of course with the games played with the first set, who would want to rely on the comparables?

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