Capitol Hill Blue Forums Political Issues Finance, the economy & Economics Simple Fact: Republicans Can't Manage the Economy

By Robert Weiner and John Larmett
August 20, 2007.

Contrary to the mythology the party has created, GOP presidents are terrible for business.

At last week's news conference, President Bush again said that he's reduced the deficit to $239 billion, created 8 million jobs and generated unemployment at a low 4.5%. He said the economy is strong, largely due to his tax cut policies. On the other side, Rep. David Obey (D-Wis.), House Appropriations Committee chairman, has complained of our limited resources now because of Bush's "gargantuan deficits he created with that stupid war and those stupid tax cuts paid for with our money."

There is a widely held belief that Republicans are better for business than are Democrats. Let's look at the facts. The wild stock market ride of recent weeks does not compare to the two worst stock events, the crash of 1929 and the 1987 free fall, which also occurred under Republican administrations. Since 1900, Democratic presidents have produced a 12.3% annual return on the S&P 500, Republicans only 8%. Gross Domestic Product growth since 1930 is 5.4% for Democratic presidents and 1.6% for Republican presidents.

Bush inherited from President Clinton an annual federal budget surplus of $236 billion, the largest in American history. Clinton balanced the budget for the first time since 1969. Budget surpluses were expected to total $5.6 trillion between fiscal year 2002 and 2011.

Despite this, Bush transformed the surpluses into a $1.1 trillion annual deficit in just three years because of the Iraq war and his relentless push for permanent tax cuts for wealthy Americans, a new iteration of Herbert Hoover's equally catastrophic "trickle-down" theory. Bragging about a $239 billion deficit sets such a low standard that Bush can claim horrific failure as a good thing for the country. The Bush administration's annual loss of three-quarters of a trillion dollars is unprecedented. Bush presided over the loss of 2 million American jobs in his first 2 1/2 years and has net gained 5.6 million in six years, the worst since Hoover. Clinton created 23 million jobs.

It's not rocket science to figure out the difference. Clinton: tax breaks for the middle and lower incomes who actually spend the money, no Iraq war. Bush: disproportionate tax breaks for the wealthy (50% to the wealthiest 1% by 2010), $750 billion for a war monetarily benefiting only a few military contractors and a financial sieve for the country. Democratic presidents spread the wealth through spending on needed social programs and targeting tax cuts to lower- and middle-income Americans, stimulating the economy more broadly. Republicans pump into defense contractors and high-income Americans, creating a significant detriment to the whole economy with larger deficits and higher interest rates.

Economist John Maynard Keynes was right in 1936: When you "prime the pump" into people programs (like jobs or lower income tax cuts to help Americans buy what they need), you get people results. On the other hand, when you move money from the economy into tax cuts for the rich and a military vacuum, you don't prime the economic pump; you deplete it. ...

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http://www.alternet.org/workplace/60217/



Has the Dow hit 15000 yet? Anyone who has been on vacation this summer -- perhaps you went to Mars -- and just got back would think so, considering our president's hard work (though he is off half the summer himself). Cuttin' taxes is hard work. Denyin' child'ens health insurance is hard work. Gettin' ready for my daughter's wedding is hard work.

Consider this, if the government were a business, no bank in the land would loan them a dime!!!

First there is some very misleading information concerning the so-called deficit surpluses of the Clinton Administration. Like Enron, Tyco and all the rest of the corporate scandals; the government too has been wrought with some of the most amazing accounting tricks that skew the way the numbers look. Republicans and Democrats are equally to blame for their spending habits. In fact, Congress, under both the leadership of the Republicans and Democrats have overspent the Nation’s “income” for the last 45 out of 50 years. They have all been running deficits upwards of 6 Trillion Dollars, 4 Trillion of which has been added on in the last 20 years…so neither political party can point the finger at the other, they are both equally culpable. Now, with the Bush budget we can expect that another 3 to 4 Trillion will be added onto the bloated deficit.

Most people don’t understand what the difference is between deficit and debt, they are very different and while they relate to each other they are not the same and the effects of each are different. The deficits are brought about when the government spends more then it actually brings in, we could call it income; the debt on the other hand is what the government has borrowed to continue the madness. The deficits are added to the debt in fiscal year-end accounting. Surpluses are simply subtracted from the overall debt; it doesn’t mean that there was any more real money added to the government’s coffers.

Currently, the debt is now right below the $9 Trillion Dollar mark and the deficit is actually smaller this year at over $200 Billion, much lower then the last few years under Bush. Bush deficits have added $2 Trillion to the Debt.

I am in no way defending Bush or the Republicans, but Clinton had his share in the spending spree. In 1996 the Clinton Budget called for $12 Trillion in spending over a 7-year period, with at least $200 Billion deficits annually for all those years, thankfully that spending plan didn’t go into effect. 1993 saw nearly $300 Billion in Clinton deficit spending alone.

Once again, someone doesn’t quite understand the way the tax system works, taxes are meaningless for revenue under the Federal Reserve System. Taxes barely put a dent in the periodic interest payments on the debt. We are now paying so much on the National Debt interest payments alone that taxation is a moot point. Besides the government just borrows what it needs to operate.

As far as the bogus economist John Maynard Keynes, the 50s repudiated his “theory”. He was a Fabian Socialist who combined a mishmash of socialist economics mixed with corporatism. He is one of the primary reasons we find ourselves in the place we do today. Keynes touted deficit spending, said it didn’t matter…obviously it does!

This country long ago rejected sound monetary policy and budgetary restraint; both Republicans and Democrats have each taken their turns at the ruination of this Country. The government, under the leadership of both parties, has repudiated the U.S. Treasury’s legal obligations to fulfill its promises to pay its debts. They confiscated the People’s gold by trickery, debased the nations currency, deliberately caused inflation. They have drained the ability of the People to save, used deficit spending to achieve ideological goals, monetized debt, attempted to plan the economy obviously without much success and have taxed the American People with a tax scheme that subsidizes classes at the expense of others. Their plan has attempts to redistribute the wealth for so called social justice purposes…all of which have reduced the vast majority of this country into a subservient class of producers.

They have extended the power of government far beyond its proper or legal role creating little more then a supreme executive government with powers so extensive that it can arbitrarily create new laws at will, without responsible oversight or restraint. It is a magnificent façade they have contrived, both political parties are little more then treasonous organizations intent on power, wealth and control.

I don't put any credence in either of the Political Party's Establishment Elite! They are liars, thugs, traitors, plutocrats and ravenous for power!

"Deficits don't matter."
Vice President Dick Cheney

Who are we to question the Vice President of the United States of America?

Yep...Cheney was just spouting the Keynesian line, Keynes also frowned upon individual savings and we can now see the effects of Keynesian economics on the savings rate in this country. Keynesian Fabian Socialism has been so ingrained into this system that both Democrats and Republicans, along with their Big Banker Buddies can't see anything without those Keynesian rose-colored glasses. It won't be long before they are forced to take them off and look at the world in a very different way.

Gosh, I studied Keynes in college... and do not remember that at all. Maybe you have a reference.

My understanding was that the Cheney's ideas emerged as a perversions of the already perverted ideas of "supply Side Economics." At the time of all the supply side hoopla... no one... especially it's proponents ... characterized these ideas as Keynesian. And in fact proponents of Keynesian economics did not support the supply side scam.

So, here we go round again. Any time some neo-conservatista does something stupid... it is because he is actually following socialist principals. Apparently conservatives are unable to make mistakes on their own. I mean... ultimately Bush was only following the logical extension of Clinton policies in Iraq... So in the end, Iraq is really just another a liberal boondoggle.

In the end, there is one thing you have to admire about conservatives... they are really into taking responsibility. Bush (the decider) only does what the military tells him to do in Iraq. And he only went in there in the first place because our intelligence told him we had to. Blah Blah Blah

Did you read Keynes General Theory of Employment, Interest and Money?

In particular the sections on Fexible Money Wages, The Liquidity Preference Theory of Money, The Multiplier, and The Marginal Efficiency of Investment. It's all there!

Also Ardy, consider why the Republicans give tax cuts to one group and Democrats give tax cuts to another group. Since taxation is merely an economic control to stablize the dollar, each group contributes a stabilization factor to the value, inflation rate and exchange of the dollar. It is all part of the wider fiat scheme to keep the dollar in play. Each Party, when in power, take their respective turns and roles in managing the various aspects of dollar controls. The Republicans play the role of cutting taxes for the wealthy, thereby increasing investments; the Democrats cut taxes for the middle class, thereby increasing consumerism...both types of tax cuts and tax increases are necessary in a fiat system to maintain its viability. Then you have the Federal Reserve, which plays the role of Interest Rate Controller.

Since under a fiat system, taxation is not used for revenue, but for the redistribution of wealth, social construction and to maintain the fiat currency system, the political parties must each play a designated role in providing the system with its particular and necessary components in order to remain viable.

I will add more later...

RS
You seem to have a VERY BIG issue about everything surrounding fiat money. Consequent this concern, you take every person who had anything to do with the theory or execution of this flawed system... put them all in a blender... and pronounce them all equally responsible for all bad things that have happened.

This is (I believe) what has happened when you equate Cheney's supply side economics with Keynes theories. It is true that Keynes felt there were reasons to have a deficit. In that sense he had a much more expansive view of federal economic policy than Hoover. At the onset of the great depression, economic activity slowed and hence tax revenue fell. The Hoover response was to cut federal spending to balance the budget. This response only aggravated an extremely serious economic crisis.

FDR.. using Keynes theory had a different approach that allowed for running government deficits in the face of the great depression. Probably you feel that approach is folly and equivalent to saying deficits "do not matter." However it is not equivalent at all. For Keynes, deficits do matter... they matter quite a lot. His theories allowed for deficits in certain situations as therapy for certain economic illnesses.

The Cheney approach is that you can have unlimited deficits, all the time, in any amount, and during every economic situation. This is a theory/policy that was never ever advocated by Keynes.

The difference is the same as the difference between a doctor who prescribes medicine for illness... and a drug addict who uses drugs in all circumstance unrelated to illness.

So Again, I ask you to provide a specific quote from Keynes that would show he approved of unlimited deficits in ALL SITUATIONS as per the Cheney doctrine of "Deficits do not matter." Making a general reference to Keynesian theories does not accomplish proof of your false accusation.

Just because you disagree with Keynes does not give you license to falsely characterize his theories.

Well, let’s see…if you read the 1936 German edition of Keynes General Theory, you will notice something very odd, very odd indeed. Keynes himself wrote the introduction and in it he states very directly that his theories were far more suited to a totalitarian state, i.e. like Nazi Germany, then one of a free market…his own words pretty much say it all. That is not only very telling of Keynes himself, but of his economic theory in general. It was a theory of State Corporatism, used by FDR very efficiently and although it has been since repudiated, it’s effects linger to this day and effect each and every American detrimentally.

Keynes was a life-long member of the Fabian Socialist Society. In the Collected Writings of John Maynard Keynes, you will read something that is also amazing and telling of the socialistic ideals of Keynes: “I felt that the leading central banks would never voluntarily relinquish the then existing forms of the gold standard; and I did not desire a catastrophe sufficiently violent to shake them off involuntarily. The only practical hope lay, therefore, in a gradual evolution in the forms of a managed world currency, taking the existing gold standard as a starting point.” Obviously, judging from that statement, Keynes and other Fabians, including Dexter White [more of a Marxist] not only intended to change the entire system of global monetary exchange to one that was planned around a Corporatist economy, but played a very important role in the entire process that has had a very direct influence on where we now find ourselves today.

Can we judge Keynes by any other measure but his own words? I don't think so!

Yes R.S. I learned all about Keynes and the Fabian Society in High school. In our school this was a very dangerous situation. But I did not go to a public school and apparently others did. My husband would go into tantrums when he got into the economic words of Rothbard and Browne. He started countering Keynes while teaching at Caltech and when he brought some of his student home he really got into how bad things were going to get in America if we didn't stop this kind of teaching. He called our economic problems back in the 70s and I'm frustrated that he can no long write about his theories today. His personal life fell apart and it destroyed his logical thinking. I was tempted to bail him out of the naval hospital and bring him home and feed him healthy stuff and sit him down in front of a computer but I'm not his wife anymore and his current one is not pleased when he marked some of my ballots when I first moved to Arizona. A destroyed mind is a terrible thing to waste.

Brick tried to convince him to return to Arizona but Ray is in a near coma and hardly recognized his own son.

Keep writing. You are the voice of reason here.

RS...
You have posted at great length about problems you see in our economic and monetary policies. I am supposing that if one gave you (or someone with similar views) full power to run the country.... you would have a lot of ideas about policies to be implemented. You probably also recognize that in a democracy, it is not so easy to accomplish those idealistic goals. In fact, I am aware of no nation on earth that fully implements your ideas. I am assuming there is are reasons for that. Maybe people think your ideas are not feasible. Or maybe it is just too hard to get everyone to agree to your ideas... what with the temptations of fiat money. Or maybe there is some other reason. But the simple fact is that your ideas are being implemented NOWHERE .... despite how wonderful those ideas are. So.... it seems rather obvious that if you were a dictator (a benevolent philosopher king) that then you wold be able to implement your ideas for the good of all. And in the end... that was all Keynes was saying about his ideas.... that ultimately no economist is free to set the economic policy they feel would be optimal... the only way for any economist to set this optimal policy is for him to be part of a dictatorship.

I note that you still have not provided any quote from Keynes which indicates that he thinks deficits are irrelevant.

So, absent a direct response to prove your point... let me offer evidence that I think disproves your point, The following from Wiki on Keynes.

wiki link

The above clearly indicates that Keynes was aware of the dangers of unrestrained deficit spending and therefore could not believe Cheney's comment that deficits do not matter.