The Tax History Conservatives Want Us to Forget
Grover Norquist is regularly billed as one of the leading intellectual lights of the conservative movement - and I think you will agree that the arguments he made in a debate with me over taxes this morning on CNBC highlight not merely the shocking intellectual bankruptcy of the movement he leads, but just how out of touch Republicans in Washington really are.
The debate revolved around President-elect Obama's potential plans to put off raising taxes on the very wealthy. Norquist begins the debate with the claim - I kid you not - that "the economy is in the present state because when the Democrats took the House and Senate in 2006 you knew those tax increases were going to come in 2010." He insisted that, "The stock market began to collapse as soon as you recognize that those old tax rates were coming back." Yes, because under "those old tax rates" - ie. Clinton-era tax rates - the economy was so much worse than it is today.
As you'll see, the CNBC reporters start laughing at Norquist, having trouble taking him seriously. And I must say, I really wasn't sure he was being serious - but, of course, he was. I went on to make the point that I've often made in the past - the point that conservatives simply want everyone to forget: Namely, that President Clinton faced down a recession in 1993 by raising taxes on the wealthy in order to finance an economic stimulus package, and the economy subsequently boomed.
That simple, undeniable bit of history undermines the entire structure of conservatives claim that raising taxes on the super-rich will hurt the economy. And as you'll see from Norquist's response, they simply cannot deal with that truth. Indeed, Norquist actually goes all the way back to the 1920s as his example that raising taxes on the wealthy impedes economic growth - somehow ignoring the history from 15 years ago. He then goes on to claim with a straight face that Franklin Roosevelt created the Great Depression (this, along with the "center-right nation" propaganda, seems to be the right's new talking point).
The question now is whether the Obama administration buys into Norquist's fact-free nonsense, or whether it musters the same courage President Clinton mustered in prudently raising taxes on the super-rich to responsibly finance an economic stimulus package. Sure, temporary deficits are acceptable right now - there's no arguing that. But doing what's necessary to minimize those deficits is also important.
In terms of policy, if, as Congressional Quarterly reports, Obama wants to enforce budget discipline on a necessarily large economic stimulus package, it will require generating additional revenue from the wealthy. In terms of raw politics, if Clinton's 43 percent of the vote gave him enough political capital to come into office during an economic downturn and do that, I'd say Obama and his 53 percent gives him enough political capital to do the same today. And I would argue that if Obama backs off his promise to raise taxes on the wealthy, he will effectively validate the false conservative frame that claims tax increases on the wealthy endangers an economy.
While I certainly agree with the CNBC reporter that the 2008 is different than the 1990s, it isn't different when it comes to taxes - we have very recent history that proves raising taxes on the wealthy in order to raise revenues for economic stimulus, if done prudently, helps an economy recover. That is the argument that nobody during this debate was able to undermine - and it is the argument conservatives fear most, because they know it is accurate.
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Norquist said some very strange -even deranged- things in that interview. I was listening to it on CNBC radio yesterday during lunch and was simply astonished. But Sirota was also off-base in theinterview saying the Clinton tax increases had something to do with an economic recovery in the 90s and that there is evidence from very recent history proving raising taxes on the wealthy in order to raise revenues for economic stimulus, if done prudently, helps an economy recover. First, this is wrong because the Republican Senate killed Clinton's stimulus package in April 1993. Second, the economic recovery began in Q1 of 1992, a full year before Clinton was inaugurated as President. Real GDP growth, in fact, was at 4% for four consecutive quarters before Clinton got into office. Job growth was weak but that is always a lagging indicator, plus the job numbers were later determined to significantly underestimate job growth in the small business sector. Also, the fed had stopped lowering interest rates in 1992 - it had already lowered the discount rate from 7% down to 3% - because of the economic recovery- and again we know that that is very stimulative. So the momentum in the economy that had already been built up from the 1992 recovery continued thru 1994 (we were near recession in the first half of 1995) was accomplished despite the increase in taxes and not because of that increase.
while some of what you say is true, your conclusion -the recovery was accomplished despite the increase in taxes and not because of that increase.- is in no way supported by any of the facts you list
stating other ecconomic factors that happened while the tax increase happened and then simply concluding that it was those other factors with no real understanding of the situation is almost as bad as norquist's nonsense
I agree with your arguments but would like to point out that the period of growth you refer to was also the beneficiary of low energy costs and increased productivity from the growth of the internet. I'm not talking about the .com boom and bust. There is a lot of work done over networks that provides huge benefits compared to the way we used to do things.
In 1989 email was a novelty. I was working as a programmer and even though we had email available we weren't using it. It took awhile to adjust to the possibilities. I'm able to work from home and accomplish more.
If we expect to have a growing economy we'll need to develop new sources of energy and ways to increase productivity. I'm sure that is exactly what will happen. We'll need our government to be involved in ensuring our focus is on these areas.
And a MAJOR part of the reason why the Clinton tax increases helped is the fact that it showed the USA was really trying to do what it needed to do. This raised confidence in the US economy, which caused foreign investment to increase, and caused Americans to be more willing to spend and boom the economy!
the move to embrace the CBO numbers at the whitehouse over the OMB numbers helped as well.
Markets are about confidence, thye have none now under bush, and are starting to react to Obama, who is staffing the economic team with heavyweights.
Foreign investors flocked to the US because of relative economic strength and the productivity boom, not because Clinton's tax increase "showed the US was really trying to do what it needed to do"... whatever that means. The Germany economy was weak because of problems brought on by reunification. The Japanese economy absolutely imploded after 1990 and no one wanted to invest there. So where do people put their money? Commodities were also weak, which meant money flowed to US equities and bonds. Then when all of Asia imploded in 1997-1998 and oil prices collapsed to $10 a barrel, all the money flowed into the US. There was so much money sloshing around it was sick. Clinton could have raised taxes even more and it probably wouldn't have mattered at that point.
Yeah, you go ahead and believe that.... I won't be able to change your mind anyway.
I DO find it VERY interesting, however, that during the 50s and 60s we not only had a high minimum wage, but EXTREMELY high taxes on the upper class, and yet AMAZINGLY we were doing JUST fine!!!
How wonderful! No president is responsible for the economy. It's all mob mentality and psychology.
Without question, it's undeniable, and everybody has to agree. No doubt about it, there can be no argument, the best argument is to lead the unexamined life. The clowns hired by right wing think tanks to fabricate nonsense in exchange for cushy jobs in corporate communications are in for a cold reckoning.
The result of unfettered capitalism has been an implosion that is dragging the country down, but the silver lining is that the monster that is corporate America is being seriously questioned by those in the middle who have seen stakes driven through the heart of their pensions, the oft vaunted stakes they were supposed to have in capitalism's usurpers--the lying, criminally insane corporate mentality. Tax cuts for these sociopaths has given us the global economic meltdown we deserve.
Grover's movement is really Pie-in-the-Sky-ism.
When Clinton raised taxes Republicans said it would cause a recession. When he raised the minimum wage they said it would cause inflation and higher unemployment. The result, 8 years of non inflationary economic growth creating 22 million jobs with rising wages and a budget surplus.
Over the past eight years the Bush Administration has cut taxes, borrowed and spent 5 trillion dollars. What’s to show for it? The answer:
Five trillion dollars in debt
A negative five trillion in trade deficits
A broken economy
Failed Wars
Unemployment 50% higher than when he started and rising
Real wages lower than when he started and falling
A manufacturing base that has shrunk to the same level as it was in 1947 (yes that’s right)
Foreclosures running over 100,000 per month
Americans’ personal debt at a record high
Fifteen percent of American home owners under water and ten percent nearly so
No progress in energy security
No progress in infrastructure rebuilding
Over half the States running deficits with a total of over 60 billion dollars
A yearly federal budget deficit of 1 trillion dollars for 2008 and twice that for 2009
Two trillion borrowed from the Social Security Trust Fund
All five major Wall Street investment banks failed or restructured as commercial banks
Four and a half trillion ADDITIONAL dollars pledged for more bailouts
And on and on
Republicans just aren’t good with governance or money.
As I will hammer home again, not all of this could have been done without help. Since 1970, I recall only two parties who have ran America into the ground. The Republicans and Democrats. The ultimate fault lies at the feet of the American voter. The American voter blindly accepts that there is only two parties capable of "fixing" the problems faced by the nation.
Education, health care, and taxes are but only three issues that have never been adequately addressed. Indeed, they have become a tangle nightmare of a mess. Yet, election after election, the American voter listens to recycled promises from thirty years ago.
And the mess continues to get worse. Maybe it is time for the American voter to abandon the Democrats and Republicans and seriously look into a third party alternative. While Wall Street became drunk on profit driven greed, both parties have become drunk on power they have held since the early twentieth century. Neither serves the American public.
What you must look at, when considering a third party option, is the response the Demo-Republican Party gives when a third party captures any percentage of the vote. The Party tightens and raises the requirement to a higher level of difficulty for any third party to achieve when registering candidates to challenge their rule. What does that tell you?
You are right, when the republicans have been in power the democrats have helped them out. HOWEVER, when the DEMOCRATS have been in charge we have seen the economy actually PERFORMING!
A lot of that information is wrong and or misleading. First, there was a huge trade deficit in the late 90s and 2000 as well. The current deficit is mainly due to oil. Our exports have close the non-petro trade gap to the smallest since 1997 or 1998. Second, the unemployment rate at 2000 is not a good comparison because it was the peak of the previous business cycle. The unemployment rate was as low as 4.2% just last year. Third, real wages and disposable incomes are much higher now than in 2000. It's real median incomes which are down. Real household income per capita is also up. Don't also forget that those income numbers don't include fringe benefits, which have increased since 2000. Four, industrial production reached an all time high this year and production capacity in many major industries is at all time highs. Five, American's personal debt was high in 2000 as well. Six, infrastructure spending has been much higher in the last three years than it was in 2000.
You just made a LITTLE boo boo there! You've claimed elsewhere that the 90s economy wasn't that good since we were already into a recession in 2000 caused by Bill Clinton. Now you are claiming that we were at the peak in 2000. The fact of the matter is that you can compare jobs and jobless numbers reasonably between 2000 and now. You can ALSO compare jobs and jobless numbers reasonably between 2000 and right before companies started going bust in this cycle and you will see that we were STILL below 2000 numbers!!!
"there was a huge trade deficit in the late 90s and 2000 as well."
Trade deficit 2000 - 369 billion
Trade deficit 2007 - 738 billion
Trade deficit 2006 - 811 billion
"unemployment rate at 2000 is not a good comparison because"
It makes Bush look bad. The unemployment rate in 1993 when Clinton took over was 7.5%.
"It's real median incomes which are down."
It's the median incomes that have the greatest affect on 90% of Americans. Overall incomes have done well only because the upper 10% has done much better. The upper 1% has done extremely well.
"don't include fringe benefits"
Like the loss of health insurance for millions and the increases in the portion that workers pay have increased the fringe benefits, right.
"industrial production reached an all time high"
The manufacturing base is the number of Americans employed in manufacturing. Over 2.8 million manufacturing jobs have been lost under Bush, the number of Americans employed in manufacturing is less now than in 1947.
"American's personal debt was high in 2000"
Household debt 2000 - 7 trillion
Household debt 2008 - 14.7 trillion
"It's real median incomes which are down"
Which is much more significant than average income which is heavily skewed by the very high incomes at the top. If Bill Gates walks into my house we have an average net worth of $20 billion.
That is standard MSNBC crap, David. It's not just Norqvist, it's every right winger on the channel, especiall Kudlow. I deleted it from my channel line up, because it's the most useless "news" channel. It's as bad as FOX.
Political Correctness bred this beast.
Gave it bed, room and board.....
Every time Norquist et al popped their head up on a show, BOTH the 'moderators' AND the
'other side' got caught up in the "oh, well - we need to hear BOTH sides" and would allow him to spout his illogical and ideological rants as some sort of 'informed talking point'.
Get OVER it.
Political Correctness is the bane of civilization (or civil discussion).
Um, no. Political correctness is a refusal to call groups by names which offend them. (It used to be called "politeness" -- Miss Manners was giving the same advice for years before the term "Politically Correct" became au courant.)
I'm not sure there is a term for the cause of this problem. In fact, there's more than one cause, so there should be more than one term. On the one hand you have people who confuse being open minded with ignoring the evidence, a tendency exploited by the religious right (whenever you hear "teach the controversy" you can substitute "there's little to no evidence on my side but I want to guilt you into letting my viewpoint be treated seriously"). On the other hand, there is a very real pressure on news sources, which are almost uniformly the property of corporate interests, to further those corporate interests, and you can bet that lower taxes rank high on that list.
More than one cause - absolutely.
Good analysis.
I need to disagree with your analogy of PC and Miss Manners, just from a different perspective.
"Political correctness" = Willing to deny reality when it is politically expedient and to keep repeating this course of action until thwarted or succeeds.
See: Joe Lieberman in the McCain Campaign camp
That's not PC, that's "fair and balanced". That's also a DIRECT result of massive corporations owning all the media, rather than local media companies owning a local station!
Mommadona,
"Political Correction is the bane of civilization (or civil discussion
http://en.
I generally agree.
As someone who has been an avid newspaper reader for 30 years, I first became aware of the phrase from an Indian upstart name Dinesh D'Souza, Dartmouth "trained," trained in the fine art of White Supremacy, and in his case self hatred.
http://www
This piece of waste stunk up the political discourse by putting a Black face to his rantings on political correctness, all with the sweet smell of a Dartmouth education.
What he essentially accomplished, as you so astute observed, was to define civil discourse as bad and uncivil discourse as good, thus shifting the media paradigm that allowed for name calling and bombast as correct reasoning, the Rush Limbaugh syndrome.
Political correctness is nothing more than civil discourse.
Grover Norquist was once billed as a domestic terrorist for his virulent rant against our government. Only upon the arrival of full-tilt neo cons in this administration did he start to look "normal" and was he given legitimacy. NO one needs to worry that Obama buys this garbage. Norquist - "make government so small you can drown it in the bathtub" - believes, like the Hunt brothers in Texas, that the rich are the ONLY deserving force in America. The Hunts wanted democracy to be based on income - you got a many votes as you had dollars. The only bright spot was then they'd have to divulge how many dollars. Well, there are always nut cases around. The only bad thing here is that CNBC gave Norquist a moment of air time. On the whole he has less to offer than the guy telling us we need tinfoil hats... Norquist is a virulent extremist and should be confined to distributing his screed on mimeographs run off in a garret over some garage. He's had way more than his fifteen minutes.
I see it all clearly now. No restoration of the tax rate to pre "BUSH TAX CUT" levels, and therefore, nothing goes to the middle and poor classes of Americans who have suffered through the nightmareish years of Bush's torture and abject abuse.
The talk about tax breaks for the middle and poor classes thus appear to be nothing more than a verbal tool used to get elected, and now we are supposed to listen to a diatribe about maintaining the tax status quo benefiting the RICH again at the expense of the middle and poor classes!
This makes me so sick I want to puke. We voted our conscience, our pocketbooks, and we again began to hope. Now, from all appearances, we are about to have the rug pulled out from under us again and are expected to buck up little camper and smile so the rich's feelings don't get hurt. And worse, we are supposed to believe that it is all because of the "economy stupid"!
Trust me on this, there will be hell to pay if Obama doesn't come through and help out the middle class and the poor. We are stretched to the limit, and have absolutely NO PATIENCE left for lying, deceptive politicians who use us as pawns to gain power, and then use that power to once again screw us without so much as a kiss, a hug, and a night on the town for our favor!
Practically speaking, wouldn't it be rash for Obama to announce any of his vast changes intended, before Jan. 20th? Really....
We do NOT know what he is going to do. on anything. We only know some of the people chosen to PERHAPS become his cabinet etc.
As anxious as we all are, assume Obama to be very much on top of the problems, and very much more informed than we out in this shattered world...fu
He is forming the team and they have until Jan 20th to get the game plan together, because then they take the field -- running. Everyone will already have his assignment, the game will be GO.
Obama is smart, he knows how wrongs are wrongs.
His heart hurts for his country, his people...h
He knows that we know.
Now we just have to know that he knows.
Have hope, send strength, think big...thin
Ours is to press on and work for the right actions -- everywhere.
Hmmm... I see the average Rube American rallying against "socialized" medicine, even though it would relieve a huge burden off of their shoulders. A burden, that if it has not already manifested itself in their lives, will manifest itself later. Instead, the Rube American grumbles about the $7 trillion dollar taxpayer give-a-way to the very system still controlled by the very same people who have gambled away Rube America's pensions and financial power. That is all you do. Grumble. Wouldn't you have loved to give yourselves SEVEN TRILLION dollars to improve education, health care, and other problems?
Apparently not. You would rather have your taxpayer dollars go to provide the largest welfare checks in 9,000 years of history to? Wall Street. The Demo-Republican Party cannot find $7 trillion dollars to improve our social society. Yet, they can find the cash in less than two months for failed, so-called "Masters of The Universe".
Complete idiocy. Look in the mirror. Deny yourselves a measure of relief while grumbling about the corporate welfare. This is why you are poor. The poor always grumble before returning to the grindstone. Work til you die to provide your masters their luxuries. It is what you are good for.
Ms Friedland was right this is unprecedented. in '92 the deficit was the issue and after reality set it that was the underscore of his policy. His tax plan was passed to balance the budget and not spend. Let's also remember that Clinton benefited from an Incredible increase of productivity not his policies. Where he came in by balancing the budget it kept the dollar strong that kept the cost of capital low that spurred that economic growth with the productivity. Basically in '92 i was in college with a 2mb of ram and 60mb hard drive ya mega bytes. By the end of the Decade desktops were under a 1000 and the internet kept prices and materials low keeping inflation down coupled with low cost of capital not tax policy. Clinton could have lowered taxes, gone to a flat tax, or just cut spending but in the end it was the Internet and innovation that was the catalyst to economy. Norquist and the conservative are still trying sell bull over substance. because the republicans lost the '06 election is why the economy went down. Had nothing to do with the SEC changing reserve requirements from 12-1 to 40-1 or writing bad loans to poor people with poison pills dependent on them refinancing there leveraged houses that are now under water or adding 4 trillion on to the deficit? Really
Thank you for that erudite summation.
Don't forget that Clinton policies helped create the dot-com bubble. Oh, and he did sign the bill that did away with Glass-Steagall. Of course, there are other gems, such as NAFTA, buried in the Clinton legacy. The erosion of America's manufacturing base accelerated under NAFTA.
For instance, the Chinese now provide America with a critical component in GPS and laser guided munitions. They are the sole-source provider. It would take America years to be able to replace that one component if the Chinese decided to use the component only for themselves. Oh, that too, was under a Clinton give-a-way.
So, before you start heralding the Democrats as the saviours they are not, examine their past actions.
Yeah, and his POLICIES had NOTHING to do with that explosion in computing power, since he was ENCOURAGING it with his POLICIES!!
The fact of the matter is that the President really DOES have a HUGE influence on the economy!
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