By the way, Ann, you're still falling back on the old canard that lowering taxes somehow always reduces revenue when it's not the case.
And you keep repeating that tax cuts will increase tax revenue, because when taxes are lowered it means that so many more jobs are created and so many people put in so many more working hours and earn so much more money that tax revenue will increase anyway. You keep repeating this, Roger, but you offer little or no evidence to bolster your case.
How about this alternative scenario? Let's try on this saying, TANSTAAFL. And then let's add, BYCBNAPLM. Or, There Ain't No Such Thing As A Free Lunch. But You Can Buy Now And Pay Later, Maybe.
In other words, the economic boom that has been going on, interrupted by a few hiccups, pretty much since the day of Reagan, may have happened because Reagan and the younger Bush made such drastic tax cuts. And then they borrowed from abroad to fill the holes in the federal budget and make sure that the spendingfest could continue.
Hmmmm... let's see... the housing market implosion... didn't someone say that it happened because a lot of people borrowed beyond their means to be able to spend on housing, and then when somebody asked these borrowers to pay up, they were unable to do so and they lost their homes?
If somebody grants you loans and don't mind too much if you pay back or not, then surely your standard of living is going to improve. If your taxes are lowered and your government keeps spending as if it had the same tax revenue as before, then surely lots and lots of people are going to be better off than they were before.
Until somebody asks them to pay up, that is.
In the latest issue of Newsweek, there is commentary or report on the present crisis written by Francis Fukuyama. I agree with those who consider Fukuyama's reputation as a soothsayer somewhat suspect. In 1992, he published a book called
The End of History and the Last Man, where he basically argued that Western liberal democracy and capitalism had triumphed over all other ideologies for all time. That was sixteen years ago, and while the United States is certainly still the only superpower of the world, it is not as if there are no signs of any future contenders.
It seems to me as if Fukuyama is a man who tends to be carried away by the power of the moment and
read more into it than what is necessarily there. So it should perhaps come as no surprise that Fukuyama is now highly critical of the capitalist system that is right now under severe stress. For all of that, it doesn't follow that Fukuyama is necessarily wrong about his analysis of what caused the present crisis. In his Newsweek commentary, he praises the positive and corrective power of Reaganomics when it arrived in 1980. But, Fukuyama writes,
Like all transformative movements, the Reagan revolution lost its way because for many followers it became an unimpeachable ideology, not a pragmatic response to the excesses of the welfare state. Two concepts were sacrosanct: first, that tax cuts would be self-financing, and second, that financial markets could be self-regulating.
It was I and not Fukuyama that added the italics in that quote. Fukuyama's point, however, is that the tenet that tax cuts are always self-financing is a
belief, not a fact. And, Roger, I have yet to see you present strong evidence suggesting that tax cuts always lead to increased or at least sustained tax revenue, all other things being equal.
Fukuyama points out that the belief that tax cuts increase tax revenue is a new idea put forth by neocons and neoliberals, not a traditional belief traditionally embraced the Republican party. Fukuyama writes:
Prior to the 1980s, conservatives were fiscally conservative— that is, they were unwilling to spend more than they took in in taxes.
Well, in hindsight and with the 20/20 vision that comes from knowing how things turned out (at least until now), how should we judge the idea that tax cuts increase and not decrease tax revenue? Fukuyama answers,
In fact, the traditional view was correct: if you cut taxes without cutting spending, you end up with a damaging deficit.
Fukuyama offers the following evidence to show that the traditionalists were right and the Reaganomics people were wrong:
Thus the Reagan tax cuts of the 1980s produced a big deficit; the Clinton tax increases of the 1990s produced a surplus; and the Bush tax cuts of the early 21st century produced an even larger deficit.
Roger, I have yet to reply to a claim you made in a post from September 21. There you said,
I defend tax cuts because rich people supply ALL THE JOBS.
In my opinion, this is blatantly and obviously wrong. Aren't there jobs that are created from tax money? Federal jobs? Or jobs created from taxes levered by states?
I saw a figure in a Swedish newspaper that
every third job in Governor Palin's state, Alaska, is paid for by tax money. I have no idea if that figure is correct. It wouldn't surprise me at all if it is exaggerated. But obviously very many jobs in Alaska are paid for by tax money, and obviously Alaska would hurt rather badly if that tax money disappeared.
In another commentary in Newsweek, written by Robert J. Samuelson, a comparison is made between the Wall Street crash of 1929 and today's situation. Samuelson, who, by the way, is a conservative as far as I know, says that today's situation is definitely better than the situation of 1929. One of the most important reasons, according to Samuelson, is that the government is a so much bigger actor in today's economy than it was in 1929:
There are parallels between then and now, but there are also big differences. Now, as then, Americans borrowed heavily before the crisis—in the 1920s, for cars, radios and appliances; in the past decade, for homes or against inflated home values. Now, as then, the crisis caught people by surprise and is global in scope. But unlike then, the federal government is now a huge part of the economy (20 percent vs. 3 percent in 1929) and its spending—for Social Security, defense, roads—provides greater stabilization.
Samuelson argues that the government's much bigger role in today's economy helps to
lessen the crisis. So if Samuelson is right, then not only is it not true that rich people create all the jobs, but it is also a good thing that they don't, since we may all be much worse off if they did.
Ann
