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Response to 60minuteman--
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Aug 3, 2010 6:15 am
771 Views
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60minuteman in a recent blog seemed to have difficulty in understanding the graph that I had presented in an earlier blog.
In order to make things a little easier for him I a presenting these two graphs that may be a bit easier for him to interpert.
These two graphs based upon information from the Congressional Budget office depict the relationship between revenues and deficits in three Republican and two Democratic administrations.
It is worth noting that the only administration that achieved a budgetary surplus was that of Bill Clinton. Furthermore it should be noted that Obama inherited a catastrophe from Geo W Bush (the only administration since the Great Depression to have a negative job creation during the 8 years of his administration), imminent catastrophic failure of our economy, and job losses of nearly 250,000 per month in the last three months of the Bush 43 Whitehouse.
The second graph shows the total deficits and national debt increases during the Geo W Bush administration. As one can readily ascertain the state of our fiscal health was rapidly going over the cliff during the Bush Presidency.
60minuteman, I hope that this information is simplified enough to be understandable by you. As you can see by the Congressional Budget Office data tax cuts did not translate to increased federal revenues under the Geo W Bush administration (actually 1.2% decrease in revenue as expressed in percent of GDP).
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Republican David Stockman on How the GOP Destroyed the US economy.
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Aug 2, 2010 6:50 pm
10480 Views
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David Alan Stockman (born November 10, 1946) is a former U.S. politician and businessman, serving as a Republican U.S. Representative from the state of Michigan (1977–1981) and as the Director of the Office of Management and Budget (1981–1985). Stockman was elected to the United States House of Representatives for the 95th Congress and was re-elected in two subsequent elections, serving from January 3, 1977, until his resignation January 27, 1981 to accept appointment as Director of the Office of Management and Budget under U.S. President Ronald Reagan.
The following are what Mr. Stockman has to say about the GOP fiscal policy and it's effect on the US economy over the past four decades:
The details are what makes Stockman’s take so astonishing. Here are his most important observations, of which I find little to disagree with:
• The total US debt, including states and municipalities, will soon reach $18 trillion dollars. That is a Greece-like 120% of GDP.
• Supply Side tax cuts for the wealthy are based on “money printing and deficit finance — vulgar Keynesiansism robed in the ideological vestments of the prosperous classes.”
• Republicans abandoned the belief that prosperity depended upon the regular balancing of accounts — government, trade, central banks private households and businesses.
• Once fiscal conservatism was abandoned, it led to the serial financial bubbles and Wall Street depredations that have crippled our economy.
• The Nixon administration defaulted on American obligations under the 1944 Bretton Woods agreement.
• Who is to blame? Milton Friedman. In 1971, he persuaded President Nixon to unleash on the world paper dollars no longer redeemable in gold.
• According to Friedman, “The free market set currency exchange rates, he said, and trade deficits will self-correct.” What actually occurred was “impossible.” Stockman calls it “Friedman’s $8 trillion error.”
• Ideological tax-cutters are what killed the Republicans’ fiscal religion.
• America’s debt explosion has resulted from the Republican Party’s embrace, three decades ago, of the insidious Supply Side doctrine that deficits don’t matter if they result from tax cuts.
• The GOP controlled Congress from 1994 to 2006: Combine neocon warfare spending with entitlements, farm subsidies, education, water projects and you end up with a GOP welfare/warfare state driving the federal spending machine.
• It was Paul Volcker who crushed inflation and enabled a solid economic rebound — not the Reagan Supply Side Tax cuts.• Republicans believed the “delusion that the economy will outgrow the deficit if plied with enough tax cuts.”
• Over George W. Bush 8 years in office, non-defense appropriations gained 65%.• Fiscal year 2009 (GWB last budget): Tax-cutters reduced federal revenues to 15% of GDP — lower than they had been since the 1940s.
• The expansion of our financial sector has been vast and unproductive. Stockman blames (tho but not by name): 1) Greenspan, for flooding financial markets with freely printed money; and 2) Phil Gramm, for removing traditional restrictions on leverage and speculation.
• The shadow banking system grew from a mere $500 billion in 1970 to $30 trillion by September 2008 (see Gramm, above).
• Trillion-dollar financial conglomerates are not free enterprises — they are wards of the state, living on virtually free money from the Fed’s discount window to cover their bad bets.
• From 2002 to 2006, the top 1% of Americans received two-thirds of the gain in national income.
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Greenspan on the Bush Tax Cut Extension
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Aug 1, 2010 9:55 am
702 Views
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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.
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.
"I'm very much in favor of tax cuts but not with borrowed money and the problem that we have gotten into in recent years is spending programs with borrowed money, tax cuts with borrowed money," he said. "And at the end of the day that proves disastrous. My view is I don't think we can play subtle policy here."
The comments from the former Fed chief were an elaboration of a position he outlined in an interview earlier in the week. 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.
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.
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.
"I see it [as] we just stay where we are," he said. "There is a gradual increase in employment but not enough to reduce the level of unemployment ...There is nothing out there that I can see which will alter the trend or the level of unemployment in this country."
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