Reagan Appointees: Bush Tax Cuts Need to Go

The GOP seems utterly schizophrenic at times. In one breath that they chant the mantra of worshipping Ronald Reagan and in the next push measures that Reagan's own former economic advisers call lunacy. Obviously, they can't have it both ways and the fact that the Congressional GOP tries to simply shows how utterly disingenuous the party has become. One of the current items causing GOP temper tantrums is the issue of the soon to expire Bush tax cuts for the most wealthy members of society. While demanding that unemployment benefits for those suffering from the GOP's own voodoo economics be cut, the members of the Congressional GOP are screaming that the Bush give away to the most wealthy be extended. Entering into the fray are two former appointees of Reagan who both condemn the demand that the tax cuts be extended with now means of paying for them via cuts to the GOP's other sacred cows. The reality is that those who claim they vote Republican because they like the party's alleged fiscal responsibility need to wake up and open their eyes. That GOP died years ago. In an op-ed in the New York Times, David Stockman slams Mitch McConnell and his GOP cohorts for their "let them eat cake" attitude. Here are some highlights:
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IF there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nation’s public debt — if honestly reckoned to include municipal bonds and the $7 trillion of new deficits baked into the cake through 2015 — will soon reach $18 trillion. That’s a Greece-scale 120 percent of gross domestic product, and fairly screams out for austerity and sacrifice. It is therefore unseemly for the Senate minority leader, Mitch McConnell, to insist that the nation’s wealthiest taxpayers be spared even a three-percentage-point rate increase.
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Republicans used to believe that prosperity depended upon the regular balancing of accounts — in government, in international trade, on the ledgers of central banks and in the financial affairs of private households and businesses, too. But the new catechism, as practiced by Republican policymakers for decades now, has amounted to little more than money printing and deficit finance — vulgar Keynesianism robed in the ideological vestments of the prosperous classes.
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This approach has not simply made a mockery of traditional party ideals. It has also led to the serial financial bubbles and Wall Street depredations that have crippled our economy.
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[O]ur public debt. In 1970 it was just 40 percent of gross domestic product, or about $425 billion. When it reaches $18 trillion, it will be 40 times greater than in 1970. This debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party’s embrace, about three decades ago, of the insidious doctrine that deficits don’t matter if they result from tax cuts.
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Republicans have been oblivious to the grave danger of flooding financial markets with freely printed money and, at the same time, removing traditional restrictions on leverage and speculation. . . . The only reason we have not experienced a severe reduction in nonfarm payrolls since 2000 is that there has been a gain in low-paying, often part-time positions in places like bars, hotels and nursing homes.
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It is not surprising, then, that during the last bubble (from 2002 to 2006) the top 1 percent of Americans — paid mainly from the Wall Street casino — received two-thirds of the gain in national income, while the bottom 90 percent — mainly dependent on Main Street’s shrinking economy — got only 12 percent. This growing wealth gap is not the market’s fault. It’s the decaying fruit of bad economic policy.
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[I]t’s a pity that the modern Republican Party offers the American people an irrelevant platform of recycled Keynesianism when the old approach — balanced budgets, sound money and financial discipline — is needed more than ever.
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Alan Greenspan who bears guilt in enabling the current economic disaster (but who seems to have learned from the disaster) also has less than kind words for the GOP. As reported by Huffington Post, on Meet the Press, Greenspan called an extension of the Bush tax cuts as disastrous. Here are highlights:
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Former Fed Chairman Alan Greenspan said that the push by congressional Republicans to extend the Bush tax cuts without offsetting the costs elsewhere could end up being "disastrous" for the economy.
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In an interview on NBC's "Meet the Press," Greenspan expressed his disagreement with the conservative argument that tax cuts essentially pay for themselves by generating revenue and productivity among recipients. "They do not," said Greenspan.
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Speaking with PBS' Judy Woodruff, Greenspan expressed his opposition to passing legislation that would hold tax rates steady (under law the tax cuts Bush passed ten years ago are going to expire, thereby bringing rates back to Clinton-era levels). President Obama has pledged to continue the tax breaks for those individuals making under $200,000 and those families earning less than $250,000.
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But Republicans want the entire package kept in place. Even so, they have declined to say how they would pay for it, saying, in part, that keeping the Bush tax cuts in place will pay for itself.
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In addition to throwing cold water on that theory, Greenspan also weighed in on broader economic issues and trends. The former Fed Chairman relayed some sobering economic predictions, saying he expected the nation's unemployment rate to remain at its current level, mainly because there were few tools left to change it.