Kevin Graham wrote:Cinepro, the RIght Wing has no answer for our problems.
Sadly, I would agree that the current crop of Republicans don't appear to have the brains or the backbone needed to do what needs to be done.
Their only proposal is the same one that has failed time and time again. Lower taxes on the rich and as the theory goes, they'll use that extra money to hire workers and revenues will increase as a result. It has never worked out that way. Ever. Conservative economists who worked for both Reagan and Bush have since admitted that tax cuts do not pay for themselves.
I agree. The only hope for our long-term economy is for the government to massively cut spending, including its obligations to entitlement programs and defense.
Economic prosperity under Reagan, as admitted by his own advisers, came because the Fed slashed the already high interest rates. Reagan in fact had to increase taxes six times in order to offset the massive deficits he was creating. This "tax cuts for the rich = economic prosperity for everyone" was an ongoing myth that has been easily shattered by recent reality. Thanks to Bush, we've been in a period of record lows for taxes, and look what that did for Job creation. Hundreds of thousands of jobs lost month after month just as he was leaving office.
The Bush tax cuts were a terrible idea. Even if there had been a tangible government "surplus" at the time, the responsible thing to do would have been to enact a
one time refund to return the surplus to tax payers.
Bush cut taxes and increased (deficit) spending which is about the only thing dumber than increasing taxes and spending.
But again, the rates being discussed are inconsequential to the size of the governments problem.
As far as complaining about deficit spending, your own VP candidate admitted in multiple letters that stimulus money he requested would produce jobs. This is Keynesian. He admitted, unwittingly, that it works.
No one denies that if the government hires someone, or gives someone else money so they can hire someone, a job is created. The question is where did the government get the money to do this, and how is this good for the long term health of the country?
Ryan asking for money doesn't prove that government stimulus "works". It proves that Ryan is just as much a politician as every other politician that said or did something for his constituents in order to help his short-term job prospects.
Like I've said elsewhere, I thought the first-time homebuyer's tax credit was insanely stupid, but when I qualified for it, I cashed the check.
But he now runs against the same thing he already admitted would create jobs. Ever bother to ask why? And as far as your harping about government spending, it would be much easier to take the current Right Wing complaint seriously if it weren't for the fact that the Conservatives were the ones who wrote the book on running up massive deficits. The deficits and our debt exploded under Reagan and Bush, while we enjoyed fifty years of economic prosperity after WWII primarily as a result of the Keynesian mechanisms that were employed at the time. The economy was booming under Clinton, when taxes were much higher and the deficit was gone for the first time in decades. When democrats tried to warn of massive deficits caused by the wars, Dick Cheney told us "deficits don't matter." And so where was the outcry from those fiscal conservatives who pretend to be so worried about the debt? It didn't exist. They were silent. They had to wait until a Democrat took office before they could complain and pin the blame on someone else. Suddenly, they're all about austerity measures because they saw how the stimulus was working to get us out of economic depression we were in. Again, Ryan admitted that stimulus worked, but they want the recovery to go as slowly as possible for their own political gain which is why the shoot down everything Obama proposes to further stimulate the economy. They know that any public acknowledgment that the Keynesian stimulus was working, would be detrimental to their political power grabs. This is one of the reasons I've concluded the Right Wing really doesn't care about the benefit of the people. It is all about themselves.
Krugman's article points to one the most recent example of Keynesian vindication, but Richard Posner wrote in 2009 why he suddenly became a Keynesian which provides a history of its success:
http://www.tnr.com/article/how-i-became-keynesian
I'm sorry, but the "stimulus" and other government attempts to interfere in the economy aren't "working". They are only successful in delaying the pain that we will have to deal with to sort out the mistakes of the 2000's. They're doing a good job of trying to inflate away some of the pain (inflation benefits debtors and hurts creditors, so all those people who owe money and the US government itself benefit from money printing), but inflation will bring its own problems (as it always does, otherwise every country would be printing its way to prosperity as we speak).
Keynesian economics don't work in the same way that perpetual motion machines don't work. Keynes relies on "magic", with the idea that a government can somehow get money through taxing it from the people, borrowing it, or printing it, and then placing that money somewhere else in the economy (after deducting the costs of the government itself), and somehow create more wealth than the economy started with. That doesn't work.
If the money comes from taxes, then the economy will shrink by the amount of inefficiency introduced by the government moving the money around and redistributing it.
If the money comes from borrowing, then the only chance for things to get better is if the government can create a return on the investment that exceeds the interest being paid, minus any losses from poor investment decisions.
If the money is printed, it provides a short term benefit to the banks who receive it into the system first (they get to use it before the effects of this newly created money get realized in higher prices). It creates a disadvantage to those who are further down the line from the banks. Did you ever wonder why the fed gives the newly printed money to the banks instead of doing something much more logical and "stimulating", such as mailing out $1,000 bills to random people across the country?
The question to all this isn't whether or not Keynesian Democrats or Hayekian Republicans should be in charge. The real question is whether or not politicians should have this much power to control the economy in the first place. When questions about the government's actions in the economy come up, instead of debating yes or no, first we should discuss why the government even has that option in the first place.
Once people stop wondering how the government got the power to "save" banks and car companies and give money to people for jobs (or not give it, depending on their whims), or give money to people who don't have jobs, it's all down hill from there.