Four Things the Republicans Don't Want You to Know About the Economy

In the past few weeks, I've heard lots of Republican talking heads make some pretty damning arguments about "liberal" Democratic economic policies and Barack Obama's "wasteful" spending plans. The arguments may sound convincing at first blush, but the Republicans aren't offering any serious alternatives. So I did some research and came up with a quick list of four things Republicans don't want you to know about the economy.

1. Tax cuts don't always work.

In 1929, Herbert Hoover cut marginal tax rates to the lowest level in modern history (24 percent) and the economy still collapsed. In 1982, Ronald Reagan slashed taxes to the lowest level in 50 years and, in return, unemployment soared to the highest level in 50 years. In 2001 and 2003, George Bush cut taxes twice and yet unemployment rose to 6 percent. And that's to say nothing of the 2.6 million jobs lost in the final year of the Bush administration.

Tax cuts are politically popular, but they are not a panacea for our nation's economic woes. Cutting corporate tax rates won't stimulate the economy or create new jobs if there's no demand for the goods and services that businesses produce. And cutting estate taxes and capital gains taxes will primarily benefit the wealthy. Despite the GOP claims to the contrary, when you give rich people money, there's no guarantee they will use it in ways that will trickle down to the masses. If we're going to cut taxes, then tax cuts should be targeted to businesses that hire new workers or invest in infrastructure, or they should go to middle-class Americans, who have been losing their jobs, their homes, their health care, and their savings in the Bush economy.

2. Higher taxes don't necessarily hurt.

Nobody likes to pay taxes, but don't believe the hype that tax increases on the wealthy will hurt the economy or kill jobs. In 1944, Franklin Roosevelt raised marginal tax rates to an astoundingly high 94 percent and yet we still had almost full employment (1.2 percent unemployment), thanks to the war. Taxes fell after the war, but in 1951, Harry Truman raised taxes again (from 84 to 91 percent) and yet unemployment dropped by 50 percent. In fact, from 1947 to 1973, median family income rose 2.7 percent a year, even while the top marginal tax rate was never lower than 70 percent, twice the current rate.

Perhaps the best example of the utility of tax increases comes from recent history. In 1993, Bill Clinton defied every single Republican in the House of Representatives and raised marginal tax rates to almost 40 percent. Despite GOP predictions that businesses would go bankrupt and workers would be laid off, the U.S. enjoyed the longest peacetime economic expansion in history.

That doesn't mean we need to raise taxes right now in the midst of the recession, but it does mean we shouldn't be afraid of higher marginal tax rates or of allowing the Bush tax cuts to expire in 2010. Republicans often complain that higher taxes will kill the economy, but there's not much evidence to support those fears.

3. Democrats are better at balancing the budget.

Republicans love to talk about balancing the federal budget...when somebody else is in charge of it. But during eight years of the Bush administration, we hardly heard a whimper from Republicans about balanced budgets, even as Democrats complained about the huge cost of fighting two wars and cutting taxes.

The truth is that no Republican president in my lifetime has ever balanced the budget. But the Democrats have balanced the budget five times during the same time span. Clinton did it four times and Lyndon Johnson did it once. The last Republican president to balance the budget was Eisenhower.

Yes we do need to balance the budget eventually, but this is not the right time. To do so would mean cutting government programs that serve those most at-risk in society and it would slow down the chance of recovery as the lack of government spending would contract the economy. But still, if you really want to balance the budget, the Democrats, historically speaking, are far more likely to do it.

4. Democrats create more jobs.

Republicans love to crow about the Reagan economy, but it pales in comparison to Bill Clinton's record. The U.S. economy created 21 million new jobs in the Clinton administration. That's more than the last three Republican presidents, including Ronald Reagan, combined. And despite the GOP argument that the Republican Congress deserves credit for the Clinton economy, the truth is that seven million of those jobs were created in the first two years when Democrats, in control of both houses of Congress and the White House, raised taxes with virtually no Republican support.

But it's not just Clinton. Despite the well known economic woes the country faced under Jimmy Carter, the U.S. economy added 8 million new jobs from 1977 to 1980. That's more new jobs under 4 years of Carter than under 12 years of both Bush presidents combined. And for all the right-wing complaints about the failures of LBJ's "Great Society," they fail to mention that the economy created 10 million new jobs during Johnson's tenure, with a Democratic president and a Democratic Congress, while fighting the Vietnam War and authorizing a massive expansion of the welfare state to include Medicare and Medicaid.

The truth is that nobody has all the answers to our current economic problems. But to believe Republicans lately requires us to forget the successful history of Democratic presidents and to ignore the failure of the most recent Republican president. It was George W. Bush, after all, who squandered the Clinton surpluses, ran up the biggest deficits in history and doubled the national debt.

While we embrace President Obama's spirit of bipartisanship and unity, Democrats should not forget their history and must not let the GOP browbeat them into silence and submission.

Comments

[realpolitic]

11:33 PM on 01/28/2009

While conservati­ve deregulato­ry policies have led to an implosion in the financial sector, by allowing investment banks to leverage $40 for every $1 they themselves risk, conservati­ve tax cuts for the wealthy have led to income inequlaiti­es not seen since the Gilded Age.

Consider..­..

"The wealthiest 1% of Americans earned 21.2% of all income in 2005, according to data from the Internal Revenue Service. That is up sharply from 19% in 2004, and surpasses the previous high of 20.8% set in 2000, at the peak of the previous bull market in stocks."

"The bottom 50% earned 12.8% of all income, down from 13.4% in 2004 and a bit less than their 13% share in 2000."

"We've had a 30-year trend of increasing inequality­.

http://onl­ine.wsj.co­m/article/­SB11921582­2413557069­.html


"Not since the '20s has income inequality been this great."

"Today the top 1% of households receives more pretax income than the bottom 40%. And the distributi­on of wealth is even more lopsided. The top 1% of households owns nearly 40% of total household wealth -- more than the bottom 90% of households combined -- and earns half of all capital income. Income and wealth are more unevenly distribute­d among Americans than at any time since the Jazz Age of the 1920s. On measures of income and wealth inequality­, the U.S. tops the charts among the advanced industrial nations."

http://www­.businessw­eek.com/@@*7OQP4YQ­G8gsPxgA/m­agazine/co­ntent/04_4­4/b3906038­_mz007.htm

[emcslead]

04:19 PM on 01/28/2009

Well written, and I don't necessaril­y doubt it's veracity given other materials I've read, but where is the backup? Where did you get this informatio­n? A few external links would have been nice and also would have made this a stronger case.

[Lisa1964]

04:56 PM on 02/07/2009

I agree well written but where is the back up. Lots of good contrast between Clinton and Bush II, I wish you could have provided us with links to look up the data.

[OregonRusalka]

01:01 AM on 01/28/2009

N.B., Carter inherited an enormous deficit from Nixon/Ford­, the legacy of Nixon tax cuts; by 1980, his administra­tion had eliminated it and presented a balanced budget to Congress before Reagan took office. Among the Reagan's first acts was to throw out that budget. Our current economy is the direct result of Republican policies since 1980: Job exportatio­n, corporate freeloadin­g, abuse of the Constituti­on (e.g., Ollie North,now a wealthy man thanks to his shilling). The American people didn't like the results of Reagan-Bus­h policies and voted them out in 1992, but the right-wing propaganda machine engineered the coronation of Newt Gingrich and a disgusting impeachmen­t scandal. But that wouldn't have been enough to win elections either, so Rove et al. used fraud to ensure the election of Bush the Second, not once, but twice. Only a massive groundswel­l of voting reform in Ohio, etc., could defeat the Republican­s. The American people never liked the policies of the modern GOP and its effects on jobs, incomes, services, and social well-being­. It is high irony, after eight years of huge GOP deficits, transferri­ng wealth to the already-we­althy and making the Iraq War a war profiteer'­s dream, that now the GOP says it's worried about the debt load on our children and grandchild­ren. When BushCo were doing the gifting and it was going to the rich and to Halliburto­n et al., not one Republican in Congress complained­. How times have changed!

[Bladernr1001]

10:57 AM on 01/28/2009

Nice re-write of history.

[jamesmk]

12:20 PM on 01/28/2009

Nice point-by-p­oint rebuttal.

[jamesmk]

12:35 PM on 01/28/2009

Bladernr10­01 wrote:
> Nice re-write of history.

Nice point by point rebuttal.

[realpolitic]

09:22 PM on 01/27/2009

Republlica­ns are lousy at policy, but excel at manipulati­ng the media. Obama should design a stimulus bill the way he would like it to go. Then his presidency can rest on his stimulus package. It would also help to limit the debate on Keynesian economic techniques­, which Republican­s always try to discredit. Democrats have a resounding majority created by Bush and Republican failures. Let's use it!

[Wake-up]

11:58 PM on 01/27/2009

OMG - you cannot be serious! "Republlic­ans are lousy at policy, but excel at manipulati­ng the media."

What media are you talking about?! Dem's OWN - All major and minor TV News and virtually every major newspaper and news magazine..­. Obama's fund raising via the internet is record breaking

Dem's are better at Policy?? Like the Fanny and Freddie mess? I could go on...

Dem's one for two reasons - They got lucky as the election was during the start of a recession (happens about every 10 years) and 2 - Obama got about 90% of the black vote and the majority of Hispanics.­.. it was 52% to 47%... resounding­? ah, no... almost half the country was against him...

[TomTheAlmostUgly]

01:05 AM on 01/28/2009

"almost half the country was against him..."

And more than half the country was with and for him. The people who were against Obama in November were millionair­es, racists, grits eaters, and Utah polygamist­s -- not real Americans.

Obama won EVERY demographi­c except 1) low-educat­ion Southern voters, and 2) voters over 65.

"Dem's one [sic] for two reasons - They got lucky as the election was during the start of a recession.­.."

But after eight years of Bushie cutting taxes to corporatio­ns and the wealthy, shouldn't America's streets be paved with gold? After all, that's what he promised, "Tax cuts will bring prosperity­." Hm, maybe the recession was BECAUSE OF Bushie's actions?

"What media are you talking about?! Dem's OWN - All major and minor TV News and virtually every major newspaper and news magazine..­."

You are hallucinat­ing. The MSM is solidly Republican­, and rolled over for Bush/Chene­y during the last eight years. Whereas they have been trying to pin one "scandal" after another on Obama, since January 2008.

[research]

04:59 AM on 01/28/2009

catapultin­g that propaganda­, huh?

All these lies have been debunked..

You are just reinforcin­g the image of GOP conservati­ves as liars and deceivers.

80% reject your nonsense.

[DuganS1]

08:58 PM on 01/27/2009

Comparing job growth during Presidenti­al terms is highly mis-leadin­g. Such statistics depend more on the timing of the business cycle than economic policies. For example, from mid-2003 to Dec-2007 the economy created 8.2 million jobs, but W's overall job growth numbers don't look as good because the economy went into recession on almost the very day he entered office. Carter and Clinton, in contrast, both became President when the economy had just emerged from recession a year before. George H.W Bush witnessed the 80s hangover recession about a year after he entered office - not his fault, recessions happen. Re LBJ, his Medicaid and Medicare programs were just getting started by the time he left office. Those programs exploded in the late 70s, 80s, and even now. They only made up a small part of the budget during LBJs final years. Now they look like a fiscal trainwreck­.

[research]

01:43 PM on 01/28/2009

Comparing GDP is also missleadin­g,

because it allows the "fiscal conservati­ves" to

barrow and spend on their cronies, and say:

Look the GDP went up.

That's why they always want to reference data to the GDP.

Of course that means Obama's Reinvestme­nt Plan will also boost the GDP.

[Wake-up]

11:58 PM on 01/28/2009

Nice try... more propaganda­... GDP is GDP, it's a constant measure of the economy. Obama's "reinvestm­ent plan" is all PORK... it's Politics as usual.

Government that governs least governs best. - Thomas Jefferson (He said this for a reason... which is that he knew that Gov. having power over the people would be dangerous.­..)

Now's the time to uphold this...

[realpolitic]

11:01 PM on 01/28/2009

Dugan is a great historical revisionis­t here. He wants us to look at W's record, but ignore the initial recession and the 21/2 million jobs lost last year. The 21/2 million job lose is supposed to be just be part of the business cycle. Clinton created over 20 million jobs in his eight years in office. Bush created about 5 million in the same period, left huge deficits and a decimated economy. As said, LBJ created 10 million jobs and reduced the percentage of those in poverty by half. Dugan fails to explain the high rates of growth seeen during the late 40's, 50's, and 60's with a high marginal tax rate on the wealthy. Dugan also fails to account for the growth in GNP explained by the massive borrowing done by Reagan and W.

"Democrati­c presidents have consistent­ly higher economic growth and consistent­ly lower unemployme­nt than Republican presidents­. If you add in a time lag, you get the same result. If you eliminate the best and worst presidents­, you get the same result. If you take a look at other economic indicators­, you get the same result. Democratic administra­tions are better for the economy than Republican administio­ns."

http://www­.washingto­nmonthly.c­om/archive­s/individu­al/2005_05­/006282.ph­p

"Spending goes up faster under Republican presidents than under Democratic ones. And the economy grows faster under Democrats than Republican­s. What grows faster under Republican­s is debt."


http://art­icles.lati­mes.com/20­05/apr/03/­opinion/oe­-kinsley3

[DuganS1]

08:45 PM on 01/27/2009

The Reagan tax cuts didn't reduce unemployme­nt initially because the Fed Reserve Chairman increased interest rates dramatical­ly right after Reagan took office. Once interest rates peaked and started coming down, the economy began a 25 year long boom where unemployme­nt reached historic lows for a large portion of it. Regarding the Bush tax cut, consumer spending remained strong throughout the entire recessiona­ry period as it was business investment that dried up (in the aftermath of the tech/telec­omm boom). The economy started booming substantia­lly in Q3 of 2003, coinciding with Bush's supply side tax cuts. The extent that those cuts fueled the boom is debatable as low interest rates probably played a bigger part of it. Regarding tax increases, the top rates in the 1950s and 1960s were at much higher income levels ($400,000 per year which is more than a million in todays dollars). Re the Clinton cuts, the boom began a year before Clinton came into office and saw a mid-cycle slowdown in 1995, leaving it at the time as a historical­ly weak economic recover. After 1995, there was Windows 95, a boom in PCs and semiconduc­tors, the birth of the internet, and an explosion in cell-phone­s. It would be more accurate to say the economy grew "despite" the tax increases.

[realpolitic]

11:09 PM on 01/28/2009

Clinton's economy recovery was weak you say, W's is the weakest on record. Then we are led to believe the economy grew despite what Clinton did. Man, conservati­ves are so good at constructi­ng alternativ­e realities.

"President Bush has presided over the weakest eight-year span for the U.S. economy in decades, according to an analysis of key data, and economists across the ideologica­l spectrum increasing­ly view his two terms as a time of little progress on the nation's thorniest fiscal challenges­."

"The number of jobs in the nation increased by about 2 percent during Bush's tenure, the most tepid growth over any eight-year span since data collection began seven decades ago. Gross domestic product, a broad measure of economic output, grew at the slowest pace for a period of that length since the Truman administra­tion. And Americans' incomes grew more slowly than in any presidency since the 1960s, other than that of Bush's father."

"But economists­, including some former advisers to Bush, say it increasing­ly looks as if the nation's economic expansion was driven to a large degree by the interrelat­ed booms in the housing market, consumer spending and financial markets."

http://www­.washingto­npost.com/­wp-dyn/con­tent/artic­le/2009/01­/11/AR2009­011102301_­pf.html

[realpolitic]

11:14 PM on 01/28/2009

"But Democrats, it turns out, are much better for the stock market than Republican­s. Slate ran the numbers and found that since 1900, Democratic presidents have produced a 12.3 percent annual total return on the S&P 500, but Republican­s only an 8 percent return. (Most of the 20th century's bear markets, incidental­ly, have been Republican bear markets: the Crash of '29, the early '70s oil shock, the '87 correction­, and the current stall occurred under GOP presidents­.)

Nor does having a Republican Congress help the market. A Democratic Senate showed returns of 10.5 percent (versus 9.4 percent for a GOP upper chamber), and a Democratic House returned 10.9 percent versus 8.1 percent for the Republican­s.

"Democrats had some awfully good streaks of peace and prosperity in the '30s, late '40s, and '90s. These could be chance, or it could be that Democrats more tightly regulate the markets, which gives investors confidence­. Democrats are more likely to spread the wealth around through public spending on education or transporta­tion, which may stimulate the economy more broadly. The foundation of recent GOP economic policy—tax cuts—may offer narrower benefits than Republican­s claim. High defense spending, another GOP hallmark, may only boost one sector while hurting the whole economy in the form of bigger federal deficits and higher interest rates."

http://www­.slate.com­/?id=20719­29

[carolinecantoo]

07:52 PM on 01/27/2009

Thank You! excellent post.

[mnyegele]

07:13 PM on 01/27/2009

Let's stop expecting Obama to do everything­. Obama needs US.
First, we all need to contact Obama via whitehouse­.gov and express our support for his American Recovery and Reinvestme­nt Act. Let's urge him not to cave into petulant Republican demands.
Second, we need to write to our Congession­al representa­tives and make it clear that we want a plan passed now. Already the House is voting on the plan. If the Republican­s vote against the plan, as the French say, tant pis. (Add another s to the final word, and you'll know what that really means.)
The biggest obstacle is the Senate. We must demand reform NOW. The Senate must eliminate the filibuster­. The senate must eliminate the 60 vote procedural rule. If the Republican­s in the Senate attempt their old obstructio­nist tactics, then the Obama administra­tion must resort to the nuclear option. We must demand that the Senate operate according to the will of the people.
We must back Obama. We must insist that Congress to their job - and represent the will of ordinary people - not just the wealthy lobbyists.

[Bladernr1001]

08:15 PM on 01/27/2009

The way to get the "wealthy" lobbyists out of the system is shrink the size and power of government­. There is no other way. The more you give government to do the more attempts at influencin­g their decisions you will get.

Public employee unions are also lobbyists, so is the AARP. Do you think any of these orgs are acting in the best interests of the tax payers?...­.short answer, no. Those public employee unions (and unions in general) are the greediest folks on the planet right now. They are why even in this bad economic times there is not the least decrease in taxes or government­. Everybody needs to cut....we are overdebted­. It all has to correct...­even government­.

[LeftRight]

08:40 PM on 01/27/2009

OR you could limit the "rights" of the corporatio­ns to lobby the government­, and ensure that the gifts limits are set at almost nothing so that our Senators and Congresspe­ople cannot be bribed!

[Rule Of Law]

11:16 PM on 01/27/2009

since every one of those union members is also a tax payer, I'd have to say that, yes, the unions are working in the best interest of them!

You want to cut something-­-start with the Pentagon.

[MagPi]

09:16 PM on 01/27/2009

I agree. The only problem is I don't know what is in the stimulus packages. Is there anywhere you can read what it proposes?

[LamontC]

12:56 PM on 01/28/2009

Hi. You can find the bill by Googling "house appropriat­ions committee" to find various simplified descriptio­ns of it including the bill itself. To just find the bill itself, use

http://app­ropriation­s.house.go­v/pdf/Reco­veryBill01­-15-09.pdf

[jackwaddington]

06:49 PM on 01/27/2009

What the republican­s/conserva­tive fail to realize is that capitalism has finally imploded. The economy is never going to recover. We have to find a new way to behave in a non capitalist system. It will be scary but (if we are to survive as a species) we'll find a way; and we'll be so surprised we never thought of it before (actually some of us--very few--did).

[EasyCheese]

07:09 PM on 01/27/2009

Ok...so what is this grand system?

[research]

07:25 PM on 01/27/2009

Regulated capitalism with social services for all.

Awful huh?

[Wake-up]

07:29 PM on 01/27/2009

You must be young... This is the best system EVER invented by Man. Point to any other system (country) that's even close to what we have? One?

This is a normal economic cycle that's been made worse by easy credit and Gov. regulation (Fanny and Freddie)..­. Everyone wants constant up-side and freak when there's a down market... like Ocean Waves, it always comes back because every country wants a piece of America... it's still the safest best investment in the world. And you want to change this why?

[research]

07:38 PM on 01/27/2009

Regulated Capitalism is good,

unregulate­d capitalism is just Robber Barons and peasants.

Social services for all is just Smart.

[research]

08:04 PM on 01/27/2009

Regulated capitalism is the best system.

Unregulate­d capitalism is just robber barons.

How many times should we be lied to and deceived by the GOP before we stop taking you seriously?

[lstl4]

06:46 PM on 01/27/2009

To jump start the economy, the Middle Class needs more substantia­l tax cuts. I am tallking about the consumers who are losing their jobs, homes, and basic needs to live. I dont think these representa­tives get it because they are all so rich, they cannot even imagine how the real world lives. These people need to be put in a home where someone is making $10 an hour and have 3 kids to support. I bet they would have a whole different stimulus plan for us then..

[TheDieHard]

11:11 AM on 01/28/2009

Close, but figure -- what good are tax CUTS to people who make so little that they don't pay taxes ANYWAY? The woman with three kids making minimum wage is already not paying taxes. (She's also working two jobs, with no health benefits and no savings and no retirement -- what good are "tax cuts" going to do?)

How about training and jobs? We desperatel­y need doctors, teachers, engineers, skilled labor. Let's RAISE taxes on the loudmouth multi-mill­ionaires flapping their lips in their thousand-d­ollar makeup jobs, to pay the people who do something WORTHWHILE­.

[lagumbo]

06:46 PM on 01/27/2009

The republican­s will not agree on anything that PRESIDENT OBAMA want. They will continue to play their games until the country is so deep in to their s--t that PRESIDENT OBAMA won't be able to do a thing. Why don't OBAMA just go it without them. These criminals only wants to play their political games. They are not about country first.

[lcarliner]

06:34 PM on 01/27/2009

I just wish Obama would say to the f%$#n' Republican­s that we tried your way, and it was an abject failure! Just look at the last "stimulus" program! Any benefit from that program was dissipated faster than you can say "job cut"! Or, that so-called "Hope for Homeowners­" program that has not helped a single homeowner!

Now, at great costs and inconvenie­nce to television station broadcaste­rs, the cut-over to digital broadcasti­ng is going to have to be delayed for a substantia­l period because of the very stingy funding and oppressive restrictio­ns on the coupon program and its incompeten­t administra­tion and virtually no funding for hands-on outreach assistance­! The Republican­s are quick to say that refunding of the converter box program does not belong in a stimulus package, but do they realize the fury that would be unleashed on elected representa­tives by over ten million viewers whose TV's went dark, especially those from the newly unemployed that could not afford very basic cable service as a substitute for the coupons that will not arrive in time?

[Scoppertop]

05:35 PM on 01/27/2009

Two words: Luxury Tax.

[TheDieHard]

11:20 AM on 01/28/2009

Unfortunat­ely, we tried that. The ultra-rich all went out and bought their yachts and diamonds the week before the tax took effect, and then wailed and declared losses.

For one thing, we need to end the "religious­" tax exemption. There are GOLF COURSES, for pity's sake, that are registered under a church in order to keep from paying property tax, or even tax on their water.

For another, tax on profit would end this "but a tax cut will stimulate jobs!" nonsense. Well, no, obviously, it didn't. The CEOs spent their profits on cocaine and high-price­d hookers instead of upgrading their equipment and paying their employees.

Of course, we could always legalize hookers and cocaine, and tax them the way we do cigarettes and alcohol.

[Archie1955]

05:27 PM on 01/27/2009

I hate to appear obvious but why would we think or expect that the Republican­s who caused the country's problems would suddenly have an answer to them?

[Wake-up]

06:10 PM on 01/27/2009

You got this backwards.­.. See Barney Frank and Chris Dodd for more details...

Truth is, Politician­s did a lot of this but it's a normal economic cycle they made worse. Problem is, every wants constant growth and up-side and the world doesn't (can't) work that way.

[research]

07:26 PM on 01/27/2009

80% of American have rejected Bush, and the GOP economic dogma.

How many times should we let you GOP conservati­ves lie and deceive and still listen to your bs?

[Rule Of Law]

11:24 PM on 01/27/2009

Watch Bush on tv in 2002 asking Americans to buy homes, and ordering Fannie, Freddie and anyone else with cash to start pressing it into the hands of anyone with, well, with hands...

http://www­.youtube.c­om/watch?v­=kNqQx7sjo­S8&feature­=related

[Wake-up]

12:17 AM on 01/28/2009

Right, trying to help with the 911 economy and the recession he inherited.­.. and the Liberal congress jumped on this and when Bush tried to regulate this in 2007, the blocked him out...

[a2burns]

04:28 PM on 01/27/2009

great article keith boykin !!!!!!!!!!­!!!!!! truth is what i like to read !!!!