Wednesday, May 14, 2003

It Did Not Work, and We Sunk Deeper Into The Great Depression I read the post from last week at "Why Your Wife Won't Have Sex With You" about economics today, and figured I should go ahead and put in my two cents about the Republican one-note tax cut samba. Alright, who has seen Ferris Bueller's Day Off? Anyone? Anyone? Well, if you have, then you remember the scene where Ben Stein is giving a lecture on economics. One of the subjects he hits on is the "Laffer Curve." Does anyone know what this is? Anyone? It says that tax revenue at points on the left of the curve will be the same as on the right side of the curve. (Click on the image to link out for more info.) This, as far as I know, is of the basic tennents of so-called Reaganomics, or supply-side economics. Knowing this, and some basic facts about our economy over the past dozen years, I come to the conclusion that the Republicans haven't an ounce of integrity when it comes to their economic aims. Let's assume for a moment, for the sake of argument, that Reagan & co. were right when they argued early on that the American tax structure placed us to the right of the peak of the curve. The argument was that lowering tax rates would actually increase tax revenues by moving us up the curve. Well, it occured to me that when, during the Clinton administration, we had budget surpluses for the first time in many decades, the Republicans might claim this as their ultimate vindication. "You see," they would say, "due to the lowering of tax rates that we started in the 80's and that have continued on through, we are now bringing in more revenue that we were at a higher rate of taxation. We were right and we claim our moral victory." That might be what they would have said if they knew a damn thing, or if they had any integrity. (Remember, we're assuming here that their theory was right, and that it was a major cause of our economic expansion of the 90's. I'm not saying at the moment that either of those things are true or false. I am saying that if supply siders believed their own initial arguments for lowering taxes in the first place, this is how I imagine they would have handled things.) But of course, they know only one thing when it comes to economics: lower taxes. When tax revenues finally went up (as they said was the purpose of the tax reductions in the first place,) they said that the government would be immoral to keep that money. We must give it back to the people. (Of course it's not like the government was locking it up in a treasure chest somewhere. They were paying off government bonds, freeing up capital and thus lowering interest rates, making money cheaper for everyone.) Well if an economic boom isn't the time to pay off the debt, then when is? The answer is the same as always: anytime but now. Of course, this is but one facet of the whole mess. The issues of: which taxes are involved, how they're spent, the effects of wealth concentration, the effects of social welfare programs, etc., are all important as well, but they are subjects for another time (and probably another person who knows more about these things than I do). 7:36:59 PM    Put your John Hancock right here!