In general, this blog proposes that believing in a particular way (world-view, theoretical orientation, or mythology) builds a particular culture through influence on the creation of group process - how people make group decisions. What directions might emerge from believing the assumptions on which the piece below is based?
The Meditations of an Actual Conservative - first installment
(reproduced with permission from a Facebook discussion)
30 Years of Economic History or A Brief Examination of How We Got Where We Are.
The real judge of economic health is not the size of the national debt. It's the size of the national debt in relation to the GDP. Our Debt / GDP ratio is below that which existed in 1945. We pulled ourselves out of that and we can pull ourselves out again but its going to take economic discipline and the same sense of self-sacrifice embraced in that era. It's an unfortunate but natural part of economic and political reality in a fluctuating and volatile global economy.
In 1979, the Debt/GDP ratio was the lowest in the modern era, around 31%. Every president, Democrat or Republican following WW2 was being fiscally conservative and paying down the Debt/GDP ratio. However in the 1970's our economy was suffering the stagnating effects of the Arab Oil Embargo. Economists dubbed this "stagflation" because our GDP was stagnant, we were experiencing inflation and associated high interest rates. Nixon, Ford and Carter all continued efforts to reduce the Debt/GDP ratio to the detriment of the overall economy. Why? Because they all ascribed to the economic theory that too much Government spending would damage the economy even more. They were wrong and interestingly it was Ronald Reagan, a self avowed fiscal conservative, who proved it. How? Huge deficit spending. Reagan, the fiscal conservative, kick started the economy by initiating huge Government spending. Because of this the economy took off and the GDP increased drastically. The problem that eventually bit Reagan in the ass was his foolish adoption of Arthur Laffers now debunked theory of trickle down economics. Laffer assumed that reducing taxes would boost the GDP so much that lower tax rates would still mean higher revenue for the Government. It was a disaster. Lowering taxes on the wealthiest Americans lowered revenues and increased the debt faster than the GDP. Why, because the wealthiest Americans did not spend but instead saved their money. Nothing trickled down. The rich got richer, the poor got poorer and the middle class shrunk. Reagan should have lowered taxes on the middle class who were the real spenders. When Reagan finally leaves office the national debt has increased 215% to 2.9 Trillion Dollars. Had he instead increased taxes moderately after the economic recovery he could have controlled the debt to a manageable level and even kept it below the increase in GDP. Like all presidents before him he could have left office lowering or maintaining the Debt/GDP ratio. Instead he blew the roof off increasing the debt more than any president in history during peacetime or economic expansion. What started out as a great economic reversal was mismanaged eventually forming a cloud that would become a disaster in 2008, with the help of GW Bush, the son of his vice president.
Next was GHW Bush. He tried to stem the flood of red ink from what he once described as “Voodoo Economics” but Reagan's disastrous tax cuts to the wealthy were gutting the US Treasury. After promising "No new taxes" Bush was forced to break his pledge to limit the skyrocketing debt. For that he was thrown to the wolves by his own party, one significantly funded by the wealthy who liked their tax cuts despite their distructive effects on the overall economy. Bush is handily defeated at the polls and our national debt was approaching 5 trillion dollars.
In comes William Jefferson Clinton. His economic team recognises that Laffer Curve economics is a boondoggle and increases taxation on the wealthy while also cutting spending and taxes on the middle class. In short order revenue for the US Treasury goes up, resulting in lower interest rates and a boost in GDP. The economy thrives with the greatest increase in GDP since WW2. Clinton leaves office with the first budget surplus since Eisenhower. In the last 30 years Clinton is the only president to decrease the Debt/GDP ratio.
Disaster strikes. In comes GW Bush, a stooge for Dick Cheney, a corporate supply-sider who talks his president into again implementing Laffer’s disastrous trickle down economic policies. Tax breaks are again given to the wealthy and revenue to the US Treasury falters in relation to GDP. Consequently, the economy again spirals downward, the surplus vanishes and the Debt/GDP ratio skyrockets. 9/11 strikes and we enter a protracted war in Afghanistan and Iraq, putting more spending strain on the economy. GW Bush's unbelievable answer? More tax cuts to the wealthy...to the tune of 1.3 trillion dollars. As the economy continues to falter poor financial/mortgage practices from deregulation lead to an economic debacle which threatens the entire economic system. We are on the brink of economic meltdown. Finally GW Bush does one thing right. He orders huge economic spending to stabilise the fragile economy. It works and side-steps disaster but at massive cost. Why? Because we are already in so much debt due to past Laffer Curve economic skulduggery that we have little overhead to borrow ourselves out of trouble. The national debt is approaching 11 trillion dollars.
In comes a new president, Barak Obama, another fiscal moderate like Clinton, but he faces a much more difficult challenge. Fortunately he hires someone like Paul Volker instead of a supply-side ideologue to institute fiscal policy. At the end of the day it is 1941 all over again but the threat to our nation is the housing bubble and improperly regulated financial instruments, not the Imperial Japanese. What is our only real option? In 1941, we were against the wall and still suffering the effects of 1929 but to survive as a nation we were forced to institute huge deficit spending to build military hardware to fight the enemy. It ended the depression and won the war but left us with a Debt/GDP ratio above 100%. Today our Debt/GDP ratio is around 72% and we are similarly against a wall. Our only viable option is huge deficit spending via programs like TARP to buy time for the economy and our GDP to recover. To do otherwise will risk either collapse or more likely, a decade long period of zero economic growth. Obama is ultimately doing the only thing we can do and the fruits of his economic strategy are already ripening.
GM has stopped bleeding red ink and chosen to repay its 8.1 billion dollar loan from the US Treasury. This has saved thousands of American jobs and US manufacturing market share that otherwise would have been significantly lost to a foreign corporation.
New housing starts are at their highest rate in decades and prices are starting to recover.
The Stock Market although still volatile is over 11,000 from a low of 6500.
As the economy recovers we will see a significant increase in GDP. Careful increases in taxation of the wealthy combined with increasing GDP should build a stable base for long-term and eventually stable economic growth.
The balancing act Obama faces is figuring out a way to hold spending and increase taxation to stem the bleeding without seriously impacting GDP increases. Decreasing taxation on the middle class and increased taxation on the wealthy have already been implemented but that alone is not enough. Despite all the hair-pulling and misinformation, healthcare reform was not something that was optional. It was mandatory and should have been implemented decades ago. Increases in healthcare costs are so astronomical that they threatened the long-term health of the whole economy. It should have gone further but the political climate did not allow it. That will change as Americans experience first hand how reform works in the next decade.
What also must be considered is changes to Social Security. People live longer today and the very wealthy do not depend on Social Security benefits for retirement. It should be restructured to reflect this reality.
We must lower our military budget. Our military expenditures are stifling. We spend 41 cents of every dollar spent in the world. Our expenditures are 800% larger than China, 1200% larger than Russia and 20,000% larger than Iran. We cannot afford this. For example, the US has almost 50,000 troops in Germany to fight a soviet threat that no longer not exists. This is military waste, plain and simple. A modest decrease would not impact our security and go a long way toward providing us with funds to start paying down our debt, just like we did following WW2.
So...Who would you rather have in the White House? Who do you trust in this period of economic crisis, John McCain & Sarah Palin or Barak Obama and Joe Biden? I'm an old Goldwater Republican who now considers himself an independent and I can tell you I prefer Obama because I understand the economic challenges we face based on a solid facts and economic history, not BS peddled by demagogues like Rush Limbaugh, Glenn Beck, Ann Coulter or Sarah Palin.
Someday the Republican Party will return to its true conservative roots and regain its position as a valid representative of its political ideology. Until then I will not support them with my votes. The New Republican Party has done enough damage to this great nation.
In 1979, the Debt/GDP ratio was the lowest in the modern era, around 31%. Every president, Democrat or Republican following WW2 was being fiscally conservative and paying down the Debt/GDP ratio. However in the 1970's our economy was suffering the stagnating effects of the Arab Oil Embargo. Economists dubbed this "stagflation" because our GDP was stagnant, we were experiencing inflation and associated high interest rates. Nixon, Ford and Carter all continued efforts to reduce the Debt/GDP ratio to the detriment of the overall economy. Why? Because they all ascribed to the economic theory that too much Government spending would damage the economy even more. They were wrong and interestingly it was Ronald Reagan, a self avowed fiscal conservative, who proved it. How? Huge deficit spending. Reagan, the fiscal conservative, kick started the economy by initiating huge Government spending. Because of this the economy took off and the GDP increased drastically. The problem that eventually bit Reagan in the ass was his foolish adoption of Arthur Laffers now debunked theory of trickle down economics. Laffer assumed that reducing taxes would boost the GDP so much that lower tax rates would still mean higher revenue for the Government. It was a disaster. Lowering taxes on the wealthiest Americans lowered revenues and increased the debt faster than the GDP. Why, because the wealthiest Americans did not spend but instead saved their money. Nothing trickled down. The rich got richer, the poor got poorer and the middle class shrunk. Reagan should have lowered taxes on the middle class who were the real spenders. When Reagan finally leaves office the national debt has increased 215% to 2.9 Trillion Dollars. Had he instead increased taxes moderately after the economic recovery he could have controlled the debt to a manageable level and even kept it below the increase in GDP. Like all presidents before him he could have left office lowering or maintaining the Debt/GDP ratio. Instead he blew the roof off increasing the debt more than any president in history during peacetime or economic expansion. What started out as a great economic reversal was mismanaged eventually forming a cloud that would become a disaster in 2008, with the help of GW Bush, the son of his vice president.
Next was GHW Bush. He tried to stem the flood of red ink from what he once described as “Voodoo Economics” but Reagan's disastrous tax cuts to the wealthy were gutting the US Treasury. After promising "No new taxes" Bush was forced to break his pledge to limit the skyrocketing debt. For that he was thrown to the wolves by his own party, one significantly funded by the wealthy who liked their tax cuts despite their distructive effects on the overall economy. Bush is handily defeated at the polls and our national debt was approaching 5 trillion dollars.
In comes William Jefferson Clinton. His economic team recognises that Laffer Curve economics is a boondoggle and increases taxation on the wealthy while also cutting spending and taxes on the middle class. In short order revenue for the US Treasury goes up, resulting in lower interest rates and a boost in GDP. The economy thrives with the greatest increase in GDP since WW2. Clinton leaves office with the first budget surplus since Eisenhower. In the last 30 years Clinton is the only president to decrease the Debt/GDP ratio.
Disaster strikes. In comes GW Bush, a stooge for Dick Cheney, a corporate supply-sider who talks his president into again implementing Laffer’s disastrous trickle down economic policies. Tax breaks are again given to the wealthy and revenue to the US Treasury falters in relation to GDP. Consequently, the economy again spirals downward, the surplus vanishes and the Debt/GDP ratio skyrockets. 9/11 strikes and we enter a protracted war in Afghanistan and Iraq, putting more spending strain on the economy. GW Bush's unbelievable answer? More tax cuts to the wealthy...to the tune of 1.3 trillion dollars. As the economy continues to falter poor financial/mortgage practices from deregulation lead to an economic debacle which threatens the entire economic system. We are on the brink of economic meltdown. Finally GW Bush does one thing right. He orders huge economic spending to stabilise the fragile economy. It works and side-steps disaster but at massive cost. Why? Because we are already in so much debt due to past Laffer Curve economic skulduggery that we have little overhead to borrow ourselves out of trouble. The national debt is approaching 11 trillion dollars.
In comes a new president, Barak Obama, another fiscal moderate like Clinton, but he faces a much more difficult challenge. Fortunately he hires someone like Paul Volker instead of a supply-side ideologue to institute fiscal policy. At the end of the day it is 1941 all over again but the threat to our nation is the housing bubble and improperly regulated financial instruments, not the Imperial Japanese. What is our only real option? In 1941, we were against the wall and still suffering the effects of 1929 but to survive as a nation we were forced to institute huge deficit spending to build military hardware to fight the enemy. It ended the depression and won the war but left us with a Debt/GDP ratio above 100%. Today our Debt/GDP ratio is around 72% and we are similarly against a wall. Our only viable option is huge deficit spending via programs like TARP to buy time for the economy and our GDP to recover. To do otherwise will risk either collapse or more likely, a decade long period of zero economic growth. Obama is ultimately doing the only thing we can do and the fruits of his economic strategy are already ripening.
GM has stopped bleeding red ink and chosen to repay its 8.1 billion dollar loan from the US Treasury. This has saved thousands of American jobs and US manufacturing market share that otherwise would have been significantly lost to a foreign corporation.
New housing starts are at their highest rate in decades and prices are starting to recover.
The Stock Market although still volatile is over 11,000 from a low of 6500.
As the economy recovers we will see a significant increase in GDP. Careful increases in taxation of the wealthy combined with increasing GDP should build a stable base for long-term and eventually stable economic growth.
The balancing act Obama faces is figuring out a way to hold spending and increase taxation to stem the bleeding without seriously impacting GDP increases. Decreasing taxation on the middle class and increased taxation on the wealthy have already been implemented but that alone is not enough. Despite all the hair-pulling and misinformation, healthcare reform was not something that was optional. It was mandatory and should have been implemented decades ago. Increases in healthcare costs are so astronomical that they threatened the long-term health of the whole economy. It should have gone further but the political climate did not allow it. That will change as Americans experience first hand how reform works in the next decade.
What also must be considered is changes to Social Security. People live longer today and the very wealthy do not depend on Social Security benefits for retirement. It should be restructured to reflect this reality.
We must lower our military budget. Our military expenditures are stifling. We spend 41 cents of every dollar spent in the world. Our expenditures are 800% larger than China, 1200% larger than Russia and 20,000% larger than Iran. We cannot afford this. For example, the US has almost 50,000 troops in Germany to fight a soviet threat that no longer not exists. This is military waste, plain and simple. A modest decrease would not impact our security and go a long way toward providing us with funds to start paying down our debt, just like we did following WW2.
So...Who would you rather have in the White House? Who do you trust in this period of economic crisis, John McCain & Sarah Palin or Barak Obama and Joe Biden? I'm an old Goldwater Republican who now considers himself an independent and I can tell you I prefer Obama because I understand the economic challenges we face based on a solid facts and economic history, not BS peddled by demagogues like Rush Limbaugh, Glenn Beck, Ann Coulter or Sarah Palin.
Someday the Republican Party will return to its true conservative roots and regain its position as a valid representative of its political ideology. Until then I will not support them with my votes. The New Republican Party has done enough damage to this great nation.
[What follows is excerpted from the comments which followed the above post - ed.]
As someone statistically a member of the "wealthy" I've never resented the progressive tax structure. Besides, the... See More wealthy have instruments to lessen their tax burden. The middle class simply does not have access to these instruments because they do not have that much expendable income. I know wealthy who pay a smaller percentage on their real income in taxes than those in the middle class by utilizing these instruments. The progressive tax structure essentially mitigates this fact.
One thing that erks me about many wealthy complaining about taxes is that these are often the same people who wax eloquent about patriotism. I find it appalling that they are also the most likely to cheat on their taxes. Their country is in trouble. Their country provided this incredible opportunity to realize a wonderful quality of life and while they talk about patriotism and the rule of law, they cheat on their taxes. That's patriotism?
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I[n] the 1980's [t]he income tax rate went down under Reagan/Bush for the wealthiest Americans from around 69.5% to as low as 28%. There was a tiered rate during this time so the rate went up to around 33%-35% and then down to 28% for income above a certain level. This tiered structure taxed the middle class more that the wealthy.
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FWIW...Here are some historical FACTS to consider. In 1982 the top income tax rates dropped to 50% or below for the first time since 1932. The top taxes rates since 1982 have been far below those existing between 1932 and 1981. So, the wealthy who complain about today bearing unusually high income tax rates are either lying or unaware of historical fact. For example, during Eisenhower's administration, a proud Republican and conservative, the top income tax rate was 90%. Recent top income tax rates have fluctuated in the 30 - 40 % range.
Don't believe me? The facts are easy to find.
http://www.ntu.org/tax-bas
Another interesting to note. In 1992, Clinton raised the top rate to only 39.9%. This combined with cutting spending, cut the deficit. We enjoyed a huge increase in GDP via a booming economy which further led to increased revenue, balancing the budget and even creating a surplus.
As soon as GWBush started lowering tax rates on the wealthy, upping the income threshold and increasing spending, the budget exploded the other direction.
Its right there in black and white for anyone who cares to actually consider verifiable facts over BS peddled by ideologues with an political agenda.
Links and References
http://www.facebook.com/note.php?note_id=394465253943&comments
[from Toby]
The reason I cited the NTU website is that the numbers are correct and they are obviously anti taxation. Despite their bias, the numbers do not lie. The most obvious source for the information I use if the Congressional Budget Office.
http://www.cbo.gov/budget/
Other sources for information off the top of my head are these:
http://cedarcomm.com/~stev
http://zfacts.com/p/318.ht
http://zfacts.com/p/1117.h
http://en.wikipedia.org/wi
http://www.businessinsider
http://www.uwsa.com/us-nat
http://www.creditloan.com/
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