U.S. Economy

Book review of a significant book by an insider in the Republican
inner-circle.
Though what puzzles me about all of these after the fact and i wasn't one of
them type revelations is why do they bother?
They are not redeemed for their errors which apparently they where aware of
even while they where part of the organization which has done significant
economic damage to the nation.
And of course as he states stuffed the pockets of the rich while taking the
food out of the children's mouths.
Maybe Paul O'Neil came out better than most as he fought them while he was
Secretary of Treasury.
----- Original Message -----
From: olcharlie
To: larrylewis
Sent: Wednesday, October 17, 2007 7:34 PM
Subject: u.s. economy


Crackpot E-Con 101


Jim Newsom
http://portfolioweekly.com/ME2/dirmod.asp?type=Publishing&mod=Publications%3A%3AArticle&mid=8F3A7027421841978F18BE895F87F791&tier=4&id=9124C0D293884358A5BBECEB9CC3FB78


The Big Con: The True Story of How Washington Got
Hoodwinked and Hijacked by Crackpot Economics by
Jonathan Chait


Alan Greenspan's memoir/confessional, The Age of
Turbulence, has been getting all the publishing
headlines lately, zooming up to the top spot on
bestseller lists while the author makes the rounds of
TV chat-em-ups. And it certainly has been interesting
to hear the former Fed chief vent about the Bush
administration's out of control tax-cut-and-spend
economic policy which he helped to enable.


But another book that came out the same week is
actually more noteworthy in its analysis of the
Republican economic revolution of the last three
decades. The Big Con: The True Story of How Washington
Got Hoodwinked and Hijacked by Crackpot Economics was
written by Jonathan Chait, a senior editor at The New
Republic. In it, he examines the astonishing rise of
"supply side" economics (aka "trickle down") that has
driven GOP policies since the Reagan ascendancy,
reaching its apex during the six-years-and-counting run
of the Bush II administration.


I remember well Ronald Reagan's embrace of the whacky
theory that cutting taxes on the wealthy would
magically produce higher incomes for all and greater
revenues for the government. You may recall Poppy
Bush's succinct analysis when he was running against
the Gipper for the 1980 Republican presidential
nomination: he called it "voodoo economics." He was
right, but he abandoned his own wise judgment when he
accepted the vice presidential nomination that fall.


Ever heard of David Stockman? He was Reagan's Director
of the Office of Management and Budget from 1981-1985,
a vocal proponent and implementer of supply side
economics who later wrote his own memoir admitting that
the whole thing was just a "Trojan horse" to cut taxes
on the wealthy and to intentionally run up the budget
deficit as an excuse to cut domestic social programs.


Those of us old enough to have been around in the early
'80s should know these things. But what Chait does in
his book is trace the story back to its beginnings and
follow the disastrous consequences through to today.
Interestingly enough, Dick Cheney has been involved
from the start.


Arther Laffer was the inventor of the supply side
doctrine through his concept of the "Laffer Curve." An
economist who had lost his job with the Office of
Management and Budget because of his unconventional
methods, he promulgated the idea that higher taxes led
to less tax revenue because people had no reason to
earn more income if they would have to pay higher taxes
on that income. Though recent history had already
proven this to be incorrect, Wall Street Journal
editorial writer Jude Wanniski latched onto the
concept, and in 1974, the two met with President
Ford's assistant Dick Cheney. Chait notes that
"Cheney apparently found the Laffer Curve a revelation,
for it presented in a simple, easily digestible form
the messianic power of tax cuts."


We know what subsequently transpired: the Republican
Party, previously known for its conservative economic
policies and its concern with deficits, inflation and
excessive spending ("they were quite willing to raise
taxes in order to balance the budget") rapidly devolved
into a party whose central economic mantra is "tax cut,
tax cut, tax cut." The political party that spent the
1960s and '70s railing against "Democratic deficits"
became the party of record-breaking budget imbalances.
After he became Vice President, Cheney famously
declared "deficits don't matter."


The Big Con reminds those who may have forgotten of the
reality of American economic history since World War
II:


"From 1947 to 1973, the U. S. economy grew at a rate of
nearly 4 percent a year--a massive boom, fueling rapid
growth in living standards across the board. During
most of that period, from 1947 until 1964, the highest
tax rate hovered around 91 percent. For the rest of the
time, it was still a hefty 70 percent. Yet the economy
flourished anyway."


The first batch of Reagan tax cuts in 1981 cut the top
tax rate to 50 percent, and the second batch in 1986
took it down to 28 percent. (Poppy Bush pushed it up to
31 percent in '91). It doesn't take an economics
Ph.D. to see what has happened since 1981--the gap
between the super rich and everyone else has exploded,
the middle class has shrunk, and real income for
working people has stagnated or declined.


Jonathan Chait boldly states the premise of his book up
front. "American politics has been hijacked," he
writes, "by a tiny coterie of right-wing economic
extremists, some of them ideological zealots, others
merely greedy, a few of them possibly insane."
Incendiary language, yes, but hardly an overstatement.
As the Bush years wind down to a thankful close, it is
important to keep in mind that not all terrorists use
bombs and airplanes.


As Woody Guthrie sang during the Great Depression,
"Some will rob you with a six-gun; and some with a
fountain pen."