WASHINGTON, Aug. 20, 2008
The Invisible Hand Slaps Conservatives
The New Republic: When Real Life Gets In The Way Of GOP Dogma
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I've recently been perusing a copy of The Bush Boom: How a 'Misunderestimated' President Fixed Our Broken Economy, by right-wing commentator and National Review contributor Jerry Bowyer. Ah, yes, the Bush Boom. It's a bygone era, a time of hope, like the Kennedy years. Also like Camelot, the Bush Boom was tragically cut short--by, um, the Bush recession. Actually, the second Bush recession, to be precise.
Now, I don't really think it's fair to blame a president for having the economy tank on his watch. But that's just the point. For several years--the "Bush Boom" years--Republicans were essentially arguing that the mere fact that the economy was expanding should be taken as proof that Bush's economic policies succeeded.
President Bush would routinely announce facts such as (from a speech last year), "During the time when we cut taxes to today, our economy has grown by more than $1.9 trillion." He would mock his critics and declare, "events have proven them wrong."
The whole trick here was to start at the bottom point of the economic cycle and assume that any subsequent improvement was the result of his policies. Of course, this is a ludicrously forgiving measure. Over time, the economy tends to grow, and it also goes through cycles. To point out that we're better off at the peak of a cycle than at the trough is something that could be said of any economic cycle. Bush was claiming his miracle fertilizer succeeded because his plants were taller at the end of the summer than at the beginning of spring.
So the justification for Bush's economic policies was that the economy was no longer in recession. Now they can't even claim that any more. It's as if Bush's plants suddenly wilted in August.
I'd never go as far as conservatives do in attributing economic growth to tax rates. But that's the right's game, so let's see how the Bush Boom measures up, now that it's gone to macroeconomic heaven. A recent paper by the Economic Policy Institute (EPI) compares the Bush Boom to the ten previous periods of economic expansion since 1949. If you measure it from the peak of the previous business cycle, the Bush Boom ranks eighth out of the last ten expansions. If you measure it from the trough of the recession, Bush's preferred gauge, it ranks dead last.
And the meager growth that did occur accrued almost entirely to the rich. One of the few categories where the Bush Boom really did boom was corporate profits, which rank, depending on which measure you use, second or fourth. But wage and salary growth ranks last out of the ten previous expansions. Median family income actually declined. As the EPI paper notes, "this marks the first time this has happened since World War II in a business cycle lasting anywhere near as long as the most recent cycle." So, from the standpoint of making most people better off--which, of course, is the whole point of economic growth--the Bush Boom was a staggering catastrophe.
The Bush Boom was accompanied by frantic attempts to convince Americans that things were actually going better than they thought. One comical subgenre of Republican argumentation was to explain away polls showing persistent economic pessimism as a kind of false consciousness. If polls showed that people thought the economy was bad, it wasn't because their incomes hadn't risen--it must be the fault of the liberal media playing up bad news and ignoring the glories of the Boom. Ubiquitous right-wing economic commentator Larry Kudlow even coined a catchphrase to describe the press's suppression of the Bush Boom: "The greatest story never told."
When Phil Gramm recently remarked that we were becoming "a nation of whiners, " he gave voice to what had become the standard Republican view. What's the matter with you people? Can't you see that Phil Gramm and everybody he knows are making out like bandits?
Now that the Boom has ended, the new GOP line is to acknowledge the bad times but proceed on cheerfully as if all conservative economic precepts have been borne out. Bush recently declared, "the economy is not doing as well as we'd like to do--like it to do today, but there's no question that the tax cuts provided economic vitality." John McCain asserted, "Raising taxes in a bad economy is about the worst thing you could do because it will kill even more jobs when what we need are policies that create jobs." (Last year, remember, you couldn't raise taxes on the rich because the economy was growing, which proved the tax cuts worked.)
If you're keeping score at home, this makes two consecutive economic cycles that have annihilated the premises of right-wing economics. When Bill Clinton raised the top tax rate in 1993, conservatives unanimously predicted it would destroy the economy. When Bush cut the top tax rate, conservatives insisted it would produce (in fact, already had produced) widespread prosperity.
Of course, you could say that this was all horrible luck for the Republicans, and tax rates had little effect either way. But that would also undercut the right's case. The initial effect of tax cuts for the rich is to increase public debt and income inequality. Conservatives justify these consequences by pointing to the alleged second-order effects of tax cuts--promoting stronger incentives and higher growth. But, if the second-order effects are so tiny they get washed out by larger economic factors--and the evidence overwhelmingly suggests they are--why should we pay the price for them?
When the macroeconomic rationale for upper-bracket tax cuts is gone, you're left with nothing but a naked upward-redistribution scheme. Thus conservatives continue to cling to their cherished ideas. A recent Wall Street Journal editorial argued that, if the economy was sinking, it must be in part because markets fear the prospect of Barack Obama winning and raising taxes. (You thought Obama was up because the economy was bad? Turns out you had it backward. )
Combing through the Bush economic triumphalism literature, I sought in vain for some measure of self awareness. The closest I came was this unwittingly prescient remark by Bowyer in The Bush Boom: "What, in particular, of our economic and financial pundits? When they make predictions that do not come to pass, they seem to suffer no ill consequences."
By Jonathan Chait
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Best-selling author Mitch Albom on his first nonfiction work since "Tuesdays with Morrie."
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See all 33 CommentsPosted by commonsence1 at 11:54 AM : Aug 21, 2008
That''s because the ''official description'' doesn''t take into account the disparity between the wealthy and everyone else because it only looks at the AVERAGE!
The wealthy are making uber-bucks while the middle class is tanking.
That, ''my friends'', is called reality. Your ''official description'' doesn''t take it into account, but middle-class people know the day-to-day reality of THEIR economic situation--and it ain''t good. You can only ignore that fact if YOU are an ELITIST!
Take a statistics class to see how the overall picture may have a low middle with an extreme high to make the AVERAGE look high.
PS-- John McCain actually went on record saying that he doesn''t know how many homes he has. Obama has ONE--who''s an elitist now?
http://apnews.excite.com/article/20080821/D92MOBPO1.html
Posted by commonsence1 at 11:58 AM : Aug 21, 2008
Typical, elitist Republican response to reality.
Many American families would disagree with your assessment of the economy. Most economists would disagree with it as well. As usual, you label anything left of Cheney as a "liberal", a strategy which has lead to a record drop in Republican voting registrations at the state level.
Republicans: all lies, all the time.
Posted by sparks224 at 07:52 PM : Aug 20, 2008
I always saw it as a bit of a form of economic blackmail.
When someone convinces you that the rich have to have even more money in order for you to simply have a job, honey, you''''ve been played.
Posted by ofbyfor1 at 06:24 AM : Aug 21, 2008
What a great saying! I''''ll have to remember that one.
Posted by itgrammy at 08:45 AM : Aug 21, 2008
Thanks, pass it on! Voodoo economics has deluded the middle class!
You cannot reason with them, ya just hafta 8itchslap em good and hard upside the head and ....POP....BINGO!
Now lets all get out there and slap some sense into some conservatives in time for this election!
The Democrats are the party of the middle class and the working man and they make the effort to help them by improving working and social conditions...by preventing the RICH AND INTERCONNECTED from exploiting the average man and woman who controls neglible capital.....GOT IT?
Our so called Government is mainly made up of the rich and the interconnected rich and they have UNIVERSAL FOR LIFE HEALTH INSURANCE and 48,000,000 of our "Fellow Americans" ..citizens ....have none.
GOT IT?
vOTE FOR Mccain and you are voting against yourself unless you are one of the RICH AND INTERCONNECTED.
WAKE UP OUT THERE!
What a great saying! I''ll have to remember that one.
A perfect description of Reaganomics.
Posted by sparks224 at 07:52 PM : Aug 20, 2008
I always saw it as a bit of a form of economic blackmail.
When someone convinces you that the rich have to have even more money in order for you to simply have a job, honey, you''ve been played.
"Between 2002 and 2006 the incomes of 99% [of Americans] rose by 1% a year in real terms, while those of the top 1% rose by 11% a year; three-quarters of the economic gains during Mr Bush''s presidency went to that top 1%."
Amazing... how many people a Stetson hat and an ''aw-shucks'' drawl will fool...
At this point, if Obama looks like nobody you''d invite home for dinner, you should probably be voting for him... ;)
A perfect description of Reaganomics.
Nobody, not even GW Bush, is entirely useless; he can always serve as a bad example, at least.
The upper class are not going to start sending their precious little ones to private schools simply because they have to pay more in taxes. The idea would be unthinkable for them to have their silver spoon children have to mix with the riff-raff hoi polloi.
These people, by definition, already have a substantial amount of disposable income.
Don''t worry about losing your job--at least not for the reason you give.
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