What a field day for the heat
A thousand people in the street
Singing songs and carrying signs
Mostly saying, "hooray for our side"

Thursday, August 26, 2010

It's a kinda magic

Conservatives these days have warped up the reality distortion field and increased the shields on their bubbles. And, just to mix my metaphors, have begun shouting at the masses to clap harder because their Tinker-Bell ideas lay dying on the floor.

First up, the Bush Tax Cuts. Way back when there was a Republican majority in both houses of Congress, they held the Presidency, and they were stocking the courts with activist ideologs emerging from their decades long program of raising them in a bubble. And they decided to try their ideas of Lower Taxes and Less Regulation. So they passed the Bush tax cuts.

Now, if you remember these cuts were sold on the premise that lower taxes helps create jobs, brings wealth to everybody, and would increase tax revenues from all the prosperity. If you don't remember that, hey, just turn on the TV and listen to the conservatives these days. Why? They're touting the same old line and saying exactly the same thing. You may also remember that the actual CBO projections were so bad that, even with a majority and having the Presidency, they couldn't stomach the financial disaster of making those tax cuts permanent. You may have heard about "making them permanent." Yeah, it's another line the conservatives, especially the Tea Party supported conservatives, like to spout off.

But here's the thing. We've now had a decades long live experiment with that ideology. So, how did it work out?

Zero job growth for the decade (Washington Post and as a side note, look at that chart, actual job growth was greater when tax rates were substantially higher. In fact, they start to slow after the Reagan tax cuts, which strangely enough were sold with the same tired line). Also, real wages declined and wealth concentrated at the top end of the scale (Business Insider article I linked to before which pulled together several charts from other sources, and Alan Greenspan). As to tax revenue, do I need to find links about how we went from a surplus to record deficits (and ran that way since the first tax cuts)?

So, that ideology is demonstrably wrong. Reality. It's a bitcher. It also has an obvious liberal bias. Don't believe me? Hey, the tax cuts are here. Right now. We're living with them. See all the new jobs created by them? Neither do I.

The ideology is bankrupt, and it's nearly bankrupting our country. And we now have a wave of people who think that the real problem is that we didn't try hard enough. That's magical thinking. It's also the definition of insanity. And it's the reason why the advertising logic of "buy more, save more" still works. So if you ever wonder why I get so stabby at times, here's your answer. The whackaloon quotient keeps going up.

5 comments:

Anonymous said...

You know, it would help me a lot to read your blog at your site rather than on Bloglines - the links don't come through.

Interesting analysis.

Anonymous Cassie

Steve Buchheit said...

Hey Cassie, I put those links in for you, 'cause I know you're going to ask me for justification. I'd do more (showing cross referencing from differing sources), but I already have 3 jobs (day, council, and writing).

I'm just surprised I keep hearing the same arguments (attention John Boehner, you promised something new, this ain't it) and we already have the experiment to see how they worked. Well, there's the results. Did it support the hypothesis or not? In this case, it doesn't. Scientific process can't definitively prove a case (just make it look more highly likely), but it can disprove something.

And here we have the disproof of the argument. Lower taxes does not mean more jobs or greater wealth to the general population. It does look more likely that it enables the concentration of wealth at the upper end of the economic scale.

Anonymous said...

I know you do, but Bloglines is completely inconsistent when they show up. Some sites will show pictures, others won't, some show links, others won't. So belatedly, thanks for the link, and I promise to make the effort to read your posts on site.

Is economics so pure that this effect will always rise from that response? Is it possible that the Reagan tax cuts are the basis for the Clinton era's boom? Surely there are forces outside the government that effect the economy. I've never held that the president has all that much influence on the economy other than the bully pulpit.

As for all the government burden placed on a small business: I'm only the latest in a long line of entrepreneurs in my family. We've seen the regs go through the proverbial roof over the years. Eliminating the home deduction from personal income tax was the single most damaging piece of law (albeit from the judiciary, IIRC) for small businesses. Did you see the analysis by a business owner of what it costs him to have a single employee? (Neither Bing nor the evil Google is helping me find it... I'll keep looking.)

AC

Steve Buchheit said...

Hey Cassie, I hear ya, Currently using google reader to keep track of the blogs. There's a lot of things it does that annoys me, but it is faster that weeding through my RSS feeds folder (what I need to do it get all those feeds into the reader, though, there's a lot of them).

And yes, economics isn't so pure and there's always many issues going on around things (such as the claim that the Florida Concealed Carry law lead to a reduction of violent crime, but then Florida for those years also tracked to the rest of the US with the drop in crime, so obviously something else is going on).

As to the Reagan tax cuts bringing about the Clinton bump, that only works if you also agree that taxes weren't raised under GHW Bush and Clinton (which they were, and which the conservatives also complained).

And then, I'm examinging the claims of the proponents who are talking about the tax "increases" (which are actually the tax breaks expiring) and what they'll do if we make them permanent. And so far, history doesn't show that they'll actually accomplish those goals. Are they always other things going on, sure. However, taxes were much higher in the 40s, 50s, and 60s, and that's also when there was more actual business regulation (government interference) and growth (economics and job growth) were greater then compared to the "tax cuts are better for business" era after Reagan.

Also, what isn't shown in those charts is the actual unemployment rate which was lowest after the GHWB and Clinton tax cuts and "increased regulation", and increased after the GWB tax cuts and lower regulation.

Steve Buchheit said...

And yes, I am well aware of the costs of employment. And those compliance costs go up at 100 employees as well. One of the other trends going on which counters the "myths we tell ourselves," is if you cut out the "small businesses" which are "sole proprietorships" with one employee (the principle), for the past two decades the numbers of small business have decreased dramatically. So when politicians (on both sides) talk about small business as the "job generator", it really isn't.