An Inconvenient Economic Truth
There are two great threats to economic liberalism. The first, we see more and more each day. It's manifest in the unbridled power grab of politicians who espouse its supposed benefits. It is also evident in the arrogance of illogical and mal-formed policies, so clearly designed to garner votes, rather than deliver results.
Since FDR, liberals have sought to construct an impenetrable voting block, composed of those beholden to, and dependent upon, government largess.
As I've highlighted in a previous blog entry, Roosevelt admitted as much when he said, "...tax, tax, tax...spend, spend, spend...elect, elect, elect." The meaning, of course, was and is that Democrats use their power to curry favor with various constituent groups in return for votes, without much regard for the greater good. You scratch my back, and I'll support your cause and/or look the other way. The fact that 40% to 50% of the country doesn't pay federal income taxes is reflective of decades worth of effort to assemble an indebted class that is also a reliable voting block for liberal candidates and incumbents.
For the past 77 years or so, prior to 2008, the Republicans, even though they were often out of power, were able to provide an adequate counterbalance. The often wildly impractical intentions of liberals were frequently able to be watered down or outright defeated. And, in the instances when their programs did manage to see the light of day, the system was able to handle it because the initiatives were relatively isolated and not part of a multi-pronged, all out assault on our wealth creation engine.
Things are different this time. The system cannot absorb the stress of such an unprecedented expansion of government. The law of large numbers has caught up with liberal orthodoxy. More importantly, we're all getting an opportunity, given liberal government control, to evaluate in real time their medicine and its side-effects. It's not theory any more. This stuff does destroy opportunity and initiative, and threaten our welfare. But, despite very clear evidence as to its ineffectiveness and debilitating consequences, liberals continue their cynical efforts to bribe (e.g. see Mary Landriew), extort (e.g. see numerous national organizations), and threaten (e.g. see EPA) in order to force a deeply flawed vision down our collective throat.
Such hubris, in the face of strong and strengthening, public opposition, is actually catalyzing the second great threat to liberalism—economic literacy. For decades, a substantial portion of the population paid little attention to the inside the beltway machinations of Democrat and Republican policy specifics. People had a general sense that the two parties kinda canceled one another out and that things would just work somehow. And, whenever Republicans gained too much of an advantage, the mainstream media was always there to put its finger on the scale.
Now, with a mounting sense that something is amiss, people are starting to pay a lot more attention. It's become increasingly difficult for the media to convince us that black is white. Policies are being scrutinized to a much greater extent. This has to be quite worrisome to liberal elites. The driver of their dogma has been the voting support of factions who are the direct beneficiaries of liberal policies, not a virtuous cycle of evidence that said policies are creating a greater good for all.
This blog has expended a good deal of effort over the past 14+ months focusing on the incontrovertible facts associated with Democrat and Republican principles. It has attempted to highlight what the mainstream media has regularly chosen to ignore, cover-up, or obfuscate.
In today's New York Times, Greg Mankiw, a Harvard economist and former Bush 43 advisor, does a commendable job of pointing out those pesky facts.
Notwithstanding undeniable evidence regarding the lack of efficacy of Keynesian-oriented government spending approaches to economic maladies (note the last three stimulus packages—one from Bush and two from Obama), the Dems continue to force their Big Government agenda and ignore solutions that have worked time in memoriam. Can there be any other conclusion than they fear losing power and exposing once and for all the failings of their faction-first, power retention method of operation?
Mankiw asks, appropriately so, why not tax cuts? After all, they have a rich history of delivering the intended results. He highlights as one piece of evidence, the academic work of Christina Romer (one of President Obama's top economic advisers) and her husband, David, that "tax policy has powerful influence on economic activity." The Romer's research shows that "each dollar of tax cuts has historically raised GDP by $3." That number happens to be three times the figure found in an administration-driven report. Not surprisingly, the administration report concluded that government spending (yeah, I know you're shocked) actually had a roughly 57% greater positive impact on GDP than tax cuts. Who would have figured that the administration would produce a report with findings that perfectly fit its Big Government mindset? Coincidence? You make the call.
Additionally, Mankiw says, "Other recent work supports the Romer's’ findings. In a December 2008 working paper, Andrew Mountford of the University of London and Harald Uhlig of the University of Chicago apply state-of-the-art statistical tools to United States data to compare the effects of deficit-financed spending, deficit-financed tax cuts and tax-financed spending. They report that “deficit-financed tax cuts work best among these three scenarios to improve G.D.P.”
Still not convinced? Mankiw offers something more compelling:
"My Harvard colleagues Alberto Alesina and Silvia Ardagna have recently conducted a comprehensive analysis of the issue. In an October study, they looked at large changes in fiscal policy in 21 nations in the Organization for Economic Cooperation and Development. They identified 91 episodes since 1970 in which policy moved to stimulate the economy. They then compared the policy interventions that succeeded — that is, those that were actually followed by robust growth — with those that failed."
"The results are striking. Successful stimulus relies almost entirely on cuts in business and income taxes. Failed stimulus relies mostly on increases in government spending."
It should be noted that this study comes out of Harvard, hardly a conservative think tank.
So, armed with facts and a growing awareness of what is going on in the political and economic realms, will we say enough is enough? And, will we allow the Democrats and mainstream media to continue to denigrate the use of tax incentives as the tired old policy of a party that is out of ideas or just interested in the wealthy?
Would the media or Democrats stand for it if someone or some group denied the unequivocal benefits of civil rights? Of course not. So let's not tolerate them denying what is obvious to any thinking, dispassionate observer.
Tax policy is the hammer in our economic revival tool belt. Anyone who says otherwise is, dare I say, a tool.
Since FDR, liberals have sought to construct an impenetrable voting block, composed of those beholden to, and dependent upon, government largess.
As I've highlighted in a previous blog entry, Roosevelt admitted as much when he said, "...tax, tax, tax...spend, spend, spend...elect, elect, elect." The meaning, of course, was and is that Democrats use their power to curry favor with various constituent groups in return for votes, without much regard for the greater good. You scratch my back, and I'll support your cause and/or look the other way. The fact that 40% to 50% of the country doesn't pay federal income taxes is reflective of decades worth of effort to assemble an indebted class that is also a reliable voting block for liberal candidates and incumbents.
For the past 77 years or so, prior to 2008, the Republicans, even though they were often out of power, were able to provide an adequate counterbalance. The often wildly impractical intentions of liberals were frequently able to be watered down or outright defeated. And, in the instances when their programs did manage to see the light of day, the system was able to handle it because the initiatives were relatively isolated and not part of a multi-pronged, all out assault on our wealth creation engine.
Things are different this time. The system cannot absorb the stress of such an unprecedented expansion of government. The law of large numbers has caught up with liberal orthodoxy. More importantly, we're all getting an opportunity, given liberal government control, to evaluate in real time their medicine and its side-effects. It's not theory any more. This stuff does destroy opportunity and initiative, and threaten our welfare. But, despite very clear evidence as to its ineffectiveness and debilitating consequences, liberals continue their cynical efforts to bribe (e.g. see Mary Landriew), extort (e.g. see numerous national organizations), and threaten (e.g. see EPA) in order to force a deeply flawed vision down our collective throat.
Such hubris, in the face of strong and strengthening, public opposition, is actually catalyzing the second great threat to liberalism—economic literacy. For decades, a substantial portion of the population paid little attention to the inside the beltway machinations of Democrat and Republican policy specifics. People had a general sense that the two parties kinda canceled one another out and that things would just work somehow. And, whenever Republicans gained too much of an advantage, the mainstream media was always there to put its finger on the scale.
Now, with a mounting sense that something is amiss, people are starting to pay a lot more attention. It's become increasingly difficult for the media to convince us that black is white. Policies are being scrutinized to a much greater extent. This has to be quite worrisome to liberal elites. The driver of their dogma has been the voting support of factions who are the direct beneficiaries of liberal policies, not a virtuous cycle of evidence that said policies are creating a greater good for all.
This blog has expended a good deal of effort over the past 14+ months focusing on the incontrovertible facts associated with Democrat and Republican principles. It has attempted to highlight what the mainstream media has regularly chosen to ignore, cover-up, or obfuscate.
In today's New York Times, Greg Mankiw, a Harvard economist and former Bush 43 advisor, does a commendable job of pointing out those pesky facts.
Notwithstanding undeniable evidence regarding the lack of efficacy of Keynesian-oriented government spending approaches to economic maladies (note the last three stimulus packages—one from Bush and two from Obama), the Dems continue to force their Big Government agenda and ignore solutions that have worked time in memoriam. Can there be any other conclusion than they fear losing power and exposing once and for all the failings of their faction-first, power retention method of operation?
Mankiw asks, appropriately so, why not tax cuts? After all, they have a rich history of delivering the intended results. He highlights as one piece of evidence, the academic work of Christina Romer (one of President Obama's top economic advisers) and her husband, David, that "tax policy has powerful influence on economic activity." The Romer's research shows that "each dollar of tax cuts has historically raised GDP by $3." That number happens to be three times the figure found in an administration-driven report. Not surprisingly, the administration report concluded that government spending (yeah, I know you're shocked) actually had a roughly 57% greater positive impact on GDP than tax cuts. Who would have figured that the administration would produce a report with findings that perfectly fit its Big Government mindset? Coincidence? You make the call.
Additionally, Mankiw says, "Other recent work supports the Romer's’ findings. In a December 2008 working paper, Andrew Mountford of the University of London and Harald Uhlig of the University of Chicago apply state-of-the-art statistical tools to United States data to compare the effects of deficit-financed spending, deficit-financed tax cuts and tax-financed spending. They report that “deficit-financed tax cuts work best among these three scenarios to improve G.D.P.”
Still not convinced? Mankiw offers something more compelling:
"My Harvard colleagues Alberto Alesina and Silvia Ardagna have recently conducted a comprehensive analysis of the issue. In an October study, they looked at large changes in fiscal policy in 21 nations in the Organization for Economic Cooperation and Development. They identified 91 episodes since 1970 in which policy moved to stimulate the economy. They then compared the policy interventions that succeeded — that is, those that were actually followed by robust growth — with those that failed."
"The results are striking. Successful stimulus relies almost entirely on cuts in business and income taxes. Failed stimulus relies mostly on increases in government spending."
It should be noted that this study comes out of Harvard, hardly a conservative think tank.
So, armed with facts and a growing awareness of what is going on in the political and economic realms, will we say enough is enough? And, will we allow the Democrats and mainstream media to continue to denigrate the use of tax incentives as the tired old policy of a party that is out of ideas or just interested in the wealthy?
Would the media or Democrats stand for it if someone or some group denied the unequivocal benefits of civil rights? Of course not. So let's not tolerate them denying what is obvious to any thinking, dispassionate observer.
Tax policy is the hammer in our economic revival tool belt. Anyone who says otherwise is, dare I say, a tool.
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