The Republican Party could easily describe the macroeconomic policies of the Democratic Party as ‘tax and spend,’ but then, not much can be said for their approach or stewardship over the U.S. economy. I’ve often imagined a political cartoon with a house on fire, and next to it is a caricature of Speaker of the House John
Boehner (R-OH), dressed as fireman, yelling, “Throw some tax cuts at it.”
Unfortunately, that cartoon is how I envision the Republican Party. My annoyance with the faction’s macroeconomic policies really settled in the onset of the debt ceiling debate and, listening to how determined Republicans were to force austerity on the U.S. like Buddhist monks set for immolation.
In the fantasy that allows for the Republican Party’s laissez-faire beliefs to prevail, lowered tax rates increase revenue streams to the IRS, and austerity is a pathway to stronger growth. But, in reality, as many economists have said (including Austan Goolsbee, Nouriel Roubini and Mark Zandi), the U.S. government should be spending more to aid the recovery and worry about the deficit and debt in better times.
Now, I’m sure a few people feel they can counter that belief by pointing to the shortfalls of the American Recovery and Reinvestment Act of 2009. But the economic stimulus package championed by Pres. Obama was too small. A host of economists said this in the outset, and it included the accursed idea by Republicans to include tax credits – which simply don’t give bang for the buck in the world of macroeconomic policy.
Even if you don’t accept this strain of argument, which is mostly influenced by the theories of John Maynard Keynes, you must realize the Republican Party makes this argument on behalf of the military industrial complex all the time.
As Nobel-prize winning economist and columnist for the New York Times, Paul Krugman, pointed out in his column “Bomb, Bridges, and Jobs,” “Representative Buck McKeon, Republican of California, once attacked the Obama stimulus plan because ‘more spending is not what California or this country needs.’ But two weeks ago, writing in The Wall Street Journal, Mr. McKeon…warned that the defense cuts that are scheduled to take place if the supercommittee fails to agree would eliminate jobs and raise the unemployment rate.”
Remarkably, the U.S. military is the only public institution that escapes the Republican Party’s orthodoxy, which is derived from the Austrian School of Economics, that the free-market is always more efficient, and, if there is a failure in the marketplace, it must be the result of meddling by the U.S. government.
That orthodoxy is, sufficed to say, crazy talk, and it’s an absolutist view of the capitalist system and macroeconomic policy. I partly blame Pres. Ronald Reagan for popularity of that narrative, with his “government is not the solution to our problem, government is the problem” kind of talk, but I also blame the Republican Party for apotheosizing The Gipper.
A point I am surprised is not more frequently used by the Democratic National Committee, is Pres. Reagan raised taxes on seven occasions, and, if you consider his gubernatorial career, the number increases. Compare that record to Republicans, who nowadays act as if they signed Grover Norquist’s anti-tax pledge in blood.
More importantly, when you examine the tenure of Pres. Reagan (1981-1989), who had some of the most significant job growth in U.S. history – approximately16 million jobs – most of that growth occurred before he lowered the top personal income tax rate to 38 percent from 50 percent, and then to 28 percent in the last years of his presidency.
So, even if you consider Pres. Reagan lowered the top personal income tax rate to 50 percent from 70 percent in 1982, it’s evident tax policy alone didn’t make Morning in America.