Ezra Klein on the failed GOP economic ideology

Posted by AzBlueMeanie:

I have told you many times that the faith based supply-side "trickle down" GOP economic ideology has been entirely disproved and discredited. Yet the Republicans' bold election strategy this year is "back to the good old days of George W. Bush!"

You remember that golden era, don't you? The weakest post-recession (2001) economic expansion since the Great Depression. The weakest growth in employment since the Great Depression, and with the Great Recession of 2008, those weak employment gains were wiped out entirely leaving negative job growth for the decade of the oughts, for the first time since the Great Depression. Bush doubled the national debt by giving tax cuts to corporations and the über-rich which resulted in the greatest income disparity since 1929, just before the Great Depression. And Republican economic policies ("free market" deregulation) resulted in the worst financial calamity since the Great Depression.

The party that brought you the Great Depression and the Great Recession with its laissez-fair "free market" anything goes, no regulatory oversight of business which can do no wrong, and government is always evil ideology wants back into power so they can do it all again. They have learned no lessons. They accept no responsibility or accountability for their actions.

Republicans believe in economic theories that are demonstrably false, and that have been entirely disproved and discredited. When what you believe is based upon faith, however — "I just know it will work this time" — science and facts are dismissed. It is an economic ideology that is a danger and a threat to this country. So long as Republicans worship at the altar of these discredited economic theories, they are unfit to serve in political office.

Ezra Klein writes at the Washington Post The failure of conservative elites:

Lots of people — in fact, lots of politicians — quietly hold unpopular, or in some cases, ridiculous, policy positions. Occasionally, they even pursue them. But it's usually through stealth. They know that excessive transparency about what they actually think will only serve to harm them politically.

What worries me about Jon Kyl's hostility to offsetting tax cuts, and Mitch McConnell's decision to double-down by saying tax cuts pay for themselves, is the underlying assumption that these are popular, viable positions. It's one thing to believe that tax cuts should be added to the deficit, and it's another, crazier, thing to believe that tax cuts pay for themselves. But it's a whole other ball of wax to decide against keeping those beliefs to yourself. You can't stop people from privately cultivating wacky views, but you should be able to make people ashamed of them.

To a degree that people don't quite appreciate, conservative economic elites have attempted to do just that over the past decade. As Derek Thompson notes, pretty much every economist associated with the Bush administration made it a point to say that tax cuts don't pay for themselves.

*Greg Mankiw, CEA chair from 2003-2005: "Some supply-siders like to claim that the distortionary effect of taxes is so large that increasing tax rates reduces tax revenue. Like most economists, I don't find that conclusion credible for most tax hikes."

*Andrew Samwick, chief economist at CEA from 2004-2005: "No thoughtful person believes that this possible offset [from the Bush tax cuts] more than compensated for the first effect for these tax cuts. Not a single one."

*Ed Lazear, chairman of the CEA in 2007: "I certainly would not claim that tax cuts pay for themselves."

*Hank Paulson, Bush Secretary of the Treasury: "As a general rule, I don't believe that tax cuts pay for themselves."

But it looks like it didn't work. And the question is, what will these conservative economic elites do, or say, about it? Presumably, it's worrying that the leader of the Senate Republicans hews to an economic theory that would explode the deficit in the coming decades, and that suggests a willful ignorance about tax policy. And it's not as if there's an obvious check on McConnell: I asked Michael Steel, John Boehner's spokesperson, for his take, and he pointedly refused to disavow McConnell's comments. I also asked whether they would continue the Democrats policy of limiting the budget reconciliation process to deficit-reducing initiatives. He said he hadn't heard talk of such "hypotheticals."

Where does all this leave conservatives who worry about the deficit?

Klein expanded upon this post on Countdown with Keith Olbermann on Wednesday, July 14th – msnbc tv – Countdown with Keith Olbermann (transcript).

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Klein followed up with this post Ezra Klein – Do conservatives care about the deficit? Do Democrats?:

Matt Yglesias
asks the question and assembles some evidence. The two modern
conservative presidents, George W. Bush and Ronald Reagan, "both
presided over massive increases in both present and projected deficits."
The most important deficit reduction packages of the modern era, the
1990 and 1993 efforts, "were both uniformly opposed by the conservative
movement." The deficit commission is being run by the executive branch
because Republicans killed its congressional incarnation under the
theory that it might, as part of a balanced deficit-reduction package,
recommend tax increases. The conservative movement backed its leaders on
all of these measures.

I'd add one more point: In the 2000s, Republicans remade the budget
reconciliation process so it could be used to increase the deficit. When
Democrats took power, they passed a rule saying that reconciliation
needed to reduce the deficit. That is to say, they constrained
themselves for the sake of deficit reduction, where Republicans
unharnessed themselves from rules meant to limit the debt. That's how
the tax cuts were passed under budget reconciliation, while health-care
reform had to yoke itself to unpopular taxes and Medicare cuts in order
to use the same process. How political movements act during moments of
maximum power and political accountability matters.

 
 

What we can say from this, at the least, is that there's no evidence
conservatives care about deficits when they're in the White House.
There's some evidence from the Gingrich era that when Republicans
control Congress against a Democratic president, they get serious about
deficits. But deficit reduction holds an honored place in the opposition
party's playbook, as it constrains the majority party's ability to do
anything proactive. So I'm only giving partial credit for that. When
they have the power and will have to shoulder the blame, they've
increased deficits.

There's also a lot of evidence that conservatives care much more
about lowering tax cuts than they do about the deficit. Mitch
McConnell's supply-side nonsense aside, those two goals are in direct
contradiction, at least if you're not willing to offset your tax cuts
with spending cuts or tax increases. And the Republican Party, as Jon
Kyl said this week and Reagan and Bush both proved, is not.

By contrast, there's an increasing amount of evidence that Democrats
— and yes, I mean to move from describing ideology to describing party
— do care about the deficit. Clinton passed unpopular and difficult tax
increases and spending cuts into law. In 1993, he did it with no
Republican votes. Democrats lived under PAYGO rules in the '90s, and
after Republicans lifted them in 2002, reestablished the rules when they
retook Congress. Democrats strained to make health-care reform deficit
neutral, while Republicans made no effort to craft the Medicare
Prescription Drug Benefit as deficit neutral. Democrats have used the
budget reconciliation process only for bills that reduce the deficit,
while Republicans recast it to apply to bills that increased the
deficit. In fact, aside from stimulus spending, which increases the
deficit by its very nature, I don't know of a major domestic initiative
from either Obama or Clinton that hasn't been either deficit neutral or
deficit reducing.