by Andy Cohen / The Politics of Football / July 30, 2010
So according to unconventional wisdom, when a Republican resides in the White House, deficits don’t matter one iota. But the instant a Democrat moves in, the budget deficit becomes the single greatest threat to American society since the War of Independence; the absolute bane of our existence.
How strange, then, that Republican economic policies have the effect of increasing the budget deficit, while Democratic policies have tended to decrease the level of deficit, or even result in a budget surplus. Yet Republicans in Congress would like us to believe that they have just the remedies necessary to stamp down that pesky deficit and cut our national debt!
So with the 2010 midterm elections fast approaching, let’s try to get an idea of what might happen should Republicans retake majorities in the House and Senate, and what they would do to change our economic course.
Meet the new fiscal policies, same as the old fiscal policies.
As usual, Republican economic policies revolve around tax cuts. Early in the Bush administration, we saw two rounds of tax cuts, neither of them accounted for in the federal budget; i.e. neither of them paid for. But according to Republicans, you don’t have to pay for tax cuts—they pay for themselves. And according to Arizona Republican Senator Jon Kyl, “You should never have to offset a deliberate decision to reduce tax rates on Americans.” But even a cursory glance at the facts reveals this position to be an utterly ridiculous falsehood.
For the remainder of this article and more swell graphs, please go here.
{ 11 comments… read them below or add one }
So when you see those Meg Whitman tv ads bragging about how many jobs her taxes cuts will create, you need to check up on how those cuts worked out for Bush: Net Zero job creation.
Thanks Doug! I think you might just have given me an angle to write about in the governor’s race. Her plan, after all, centers primarily on tax cuts.
By far, Clinton was the best economic leader we have had as president.
Besides the reduction in the Budget Deficit, which was remarkable enough, he worked constructively with a hostile Republican congress. Before the Clinton economy, it was thought by academics that the unemployment rate could never get below 5-6%. I wish we had more socially liberal and fiscally conservative politicians (He was in part pulled this way by Congress). California is going broke because we don’t.
We can’t deny that jobs were created during his administration, but was it that positive if the job creation was almost exclusively in the service sector, with a huge loss of manufacturing jobs with their higher pay?
In addition I wonder how accurately we can measure the residual effects of a President’s policies between their implementation and measurable economic indicators as well as “man on the street” perceptions. It could take years, to be sure, for people on the bottom to feel the hurt from a President’s bungling.
Surely it also depends on the media’s role as well. If we read how horrible things are going to be often enough they inevitably end up horrible.
My personal observation would be that Clinton’s 8 years were presiding over a feel good era as we all enjoyed a good life reaping benefits from Reagan’s Voodoo Economics. American corporations, facilitated by pro China policies, were going through a “profit taking” phase, selling their brick and mortar assets and their shareholders taking the money and running- that set up his predecessor and the nation for an inevitable disaster as we saw our prosperity was a facade.
It is interesting to note about your comment concerning “working with a hostile Republican congress” and the fact that Bush Sr was also pushing NAFTA- it could be said that was possible as the inherent greed of doing business with the emerging markets of China was to all their mutual benefit, so they wouldn’t have had a disagreement there.
In an article on the topic of the food revolution, Michael Pollan writes about “the cultural contradictions of capitalism—its tendency to undermine the stabilizing social forms.” This becomes clear when, as you describe Andy, the richest 2% of us keep getting richer while there is a lack of political will to fund unemployment, create jobs and encourage investment in a sustainable public infrastructure. These failings have destabilized and will continue to destabilized our society, and the horror is that facts don’t seem to matter. The politics under the circumstances are pretty scary.
It would be very myopic to view a simple graph like this and declare Wm. Clinton to be the economics guru of recent adninistrations simply based on federal budget debt balancing.
The fact of the matter is he did reduce the budget deficit to (near projected, not actually realized) surplus, but this is not an indicator of wise financial policies unless you think selling your home to the pawnshop for $1000 to make the monthly mortgage payment- liquidating your assets at fire sale prices to eliminate immediate obligations- is a good long term plan.
Clinton’s administration oversaw, and actively facilitated, the transfer of nearly all of America’s manufacturing capabilities to Chines factories through commerce policies that were very friendly to Chinese interests, and American corporations seeking to do business there. (one could argue the short term benefit to US consumers, I won’t, as I don’t place much value on plastic throwaways of technology) The “transfer” of a US factory closing and one sprouting up in China, with a near uninterrupted supply chain of product to shelf, inevitably saw engineers from the US companies mentoring the Chinese in a plethora of manufacturing techniques that if handed from company to company in the traditional sense would be called “corporate espionage”. The whole thing was a giveaway of American intellectual properties, committed by greedy stockholders and the enormous capital gains income they reaped when their stock pricesd soared for a short time on increased profits all were taxable by the federal gov’t. As was the sale of land their factories sat upon. All this was revenue pocketed by Uncle Sam.
Now I’m not going to blame corporate greed on Bill Clinton. Nor the voracious appetite of the US consumer for cheap DVD players and other items while demanding they be paid enough at a factory job to buy an Escalade and put their kid through college.
However both through legitimate policies like NAFTA (which Bush 41 was also intent on implementing, so again not trying to be partisan here) and the rather sordid and unreported dealings involving campaign contributions to the DNC acccepted surely to alter policies (google “Bernard Schwartz loral chinagate” for one example of factual data) Wm. Clinton’s commerce policy bent over backwards for China and this undeniably assisted their explosive industrialization and China’s industry producing what we used to is undeniably a huge factor in our economic decline.
I don’t think balancing the budget was such a great thing if America got liquidated and China became a powerhouse to do it.
Looks like the bail out of GM is going to create jobs…..in Mexico.
“General Motors will invest $500 million to produce a new vehicle and eight-cylinder engines in a plant in northeastern Mexico, a company spokesman said on August 4.”
For a more blatant example, just a month after the bailout they announced a $1billion investment in their operations in Brazil. From a US worker’s point of view it’s despicable, however from the view of a GM stockholder, which the US gov’t in effect is, it is a prudent move as their Brazilian operations, both in production and sales, have been very profitable.
Figure the guy whose name appears on the signature line on our paychecks makes a lot of decisions every day, if he did so primarily with the employee’s interests in mind those paychecks would quickly bounce.
(To be clear about NAFTA’s relationship to China, many jobs took a pit stop south of the border and quickly migrated to China, and as a whole NAFTA saw a large number of higher paying mfg. jobs lost replaced by service jobs)
We can get into NAFTA if you want……in fact, I’ll probably end up writing about it eventually. The premise of NAFTA was a good one, in my opinion. The main problem as I see it was that Mexico failed to live up to its end of the bargain. They were given all kinds of concessions in order for them to be able to implement certain reforms within their own country and catch up technologically and socially with the U.S. and Canada.
They were supposed to start investing more in their economy to make it more advanced and industrialized, to invest in education for their people, and they were given 15 years from the inception of NAFTA to meet certain thresholds. They were supposed to increase their skilled labor force, and eventually increase the level of income for their labor force. It was supposed to create a new middle class of Mexicans that didn’t exist when they were a third world country (which they have to a degree). They didn’t, and it effectively threw the NAFTA out of whack from where it should have been at this point.
You can blame the Mexican government for not having the will to reform their own country and their own economy. Of course, that’s only one aspect of the agreement as a whole.
so uh guess you are not going to show obamas section of the chart, if you all all of this deficit up obama STILL added more, and he is STILL failing, that is why it is a problem all of the sudden, also clinton was prevented from increasing it because of a republican congress