The Rise and Fall of Supply-Side Economics

[Just_A_Guy]

This article, which quotes from this book, interests me.

The supply-siders are to a large extent responsible for this mess, myself included. We opened Pandora’s Box when we got the Republican Party to abandon the balanced budget as its signature economic policy and adopt tax cuts as its raison d’être. In particular, the idea that tax cuts will “starve the beast” and automatically shrink the size of government is extremely pernicious.

Indeed, by destroying the balanced budget constraint, starve-the-beast theory actually opened the flood gates of spending. As I explained in a recent column, a key reason why deficits restrained spending in the past is because they led to politically unpopular tax increases. But if, as Republicans now maintain, taxes must never be increased at any time for any reason then there is never any political cost to raising spending and cutting taxes at the same time, as the Bush 43 administration and a Republican Congress did year after year.

Makes a heckuvalot of sense, IMHO.

[sixpacktr]

It can be construed that way. Obviously, abandoning a balanced budget is no good, no matter if your the gov't or a family, if you spend more than you make eventually you have to pay the piper.

However, I submit that there is another, bigger, reason for the mess we are in now. The rise of special interests (of all types) with their hands out and a lack of political courage by our 'representatives' on both sides of the aisle, and a fundamental shift in what the function of gov't is (small, border protector or large nanny?) I think explains it just as much if not more.

Letting people keep more of their own money is NEVER the wrong thing to do. I still believe in my heart of hearts that if we abolished the automatic withholding of our wages for taxes, medicare, etc and had people have write a check or send in a money order on Apr 15, we would see a revolution the likes of which hasn't happened here since the Civil War. Instead, people think of their tax return as 'getting money from the gov't' or they use it as a savings account (they could have made more putting it in the bank and then paying their burden, at least they would have gotten interest off it it). The gov't knew people would associate their return as gov't largesse, and not what it really is: excess money that they paid in, interest free, to an entity that could care less about them.

I think that a return to what gov't is supposed to be, which is a protector of borders and a builder of infrastructure, would take care of this problem. The gov't is trying to act in a way that it never was designed to do, and hence we have problems.

[bytor2112]

It's the politicians....not the policy. Cut spending....end waste. Our tax dollars are wasted. Want government healthcare? End the waste.

[jadams_4040]

This article, which quotes from this book, interests me.

Makes a heckuvalot of sense, IMHO.

And the biggest tax cuts went to the beasts; Which in turn were supposedly going to use the money they made from the taxpayers to create more jobs?

[Palerider]

And the biggest tax cuts went to the beasts; Which in turn were supposedly going to use the money they made from the taxpayers to create more jobs?

would you be talking about the money(stimulus) that Chrysler got from the Gov't and then sent the jobs to Mexico????:o

[talisyn]

And the biggest tax cuts went to the beasts; Which in turn were supposedly going to use the money they made from the taxpayers to create more jobs?

Yeah, major companies get tax breaks on the assumption that the money not spent on taxes would instead be used for either hiring more people or giving current employees larger paychecks, thus contributing to the community anyways. Funny how that doesn't seem to work so well.

[bytor2112]

Raising taxes creates jobs and encourages businesses to hire more people and the government wisely and prudently uses those tax dollars to create a perfect utopia for everyone. yay!!!!!!!

[Hemidakota]

I would start with eliminating many political judication seats of the Senate, Congress, and tie the pay of all government politicians and employees into one melting pot. Then move the UN to Europe, stopped the support of Europe and other nations of the world except those who want our help. And on....and on...and on!!! Now, I am beginning to sound like one of those politicians.

[FunkyTown]

I would start with eliminating many political judication seats of the Senate, Congress, and tie the pay of all government politicians and employees into one melting pot. Then move the UN to Europe, stopped the support of Europe and other nations of the world except those who want our help. And on....and on...and on!!! Now, I am beginning to sound like one of those politicians.

Actually, the UN was a replacement for the largely ineffectual League of Nations. The League's goals included upholding the new found Rights of Man such as right of non whites, rights of women, rights of soldiers, disarmament, preventing war through collective security, settling disputes between countries through negotiation, diplomacy and improving global quality of life.

It ended because countries just basically ignored their edicts and did what they want. Notably, the Axis powers continued their aggression regardless of edicts from the League. That's totally different than the UN, which found itself totally unable to cope with the US going to war with Iraq.

Just abolish it totally so nobody has to spend money on it. When Bush ignored the UN, he was just doing what Mussolini said the problem with the League was: It's all "very well when sparrows shout, but no good at all when eagles fall out."

[boyando]

All kidding aside, W. had it right when he said that it's our money and we know how to spend our money much better than the government. The problem, in my not so humble opinion, is still the spending.

And that is why W. failed, as a domestic President. Saying one thing and doing another will always get you in trouble, if your a conservative. Saying one thing and doing another will always get you praise, if you are a liberal.

And now, back to the kidding. I sure wish I was smart enough to write a book about giving the government more money and believing they wouldn't spend more.

Or maybe I should write a book about how mountain lions make better sheep dogs, than sheep dogs do.After all they can climb trees. And if they could talk, I'm sure that they would go against there nature and promise not to eat all the sheep.

Or maybe a book on how the current justice system doesn't work. After all we have been sending people to jail for centuries and crime has not ended. So lets turn all punishment of crimes over to those who know best about crimes, the criminals. Jail is just so old fashion and times have changed. A good follow up book would be about how the new system is saving the tax payers money, by closing all jails.

To quote Jimmy Durante (don't feel bad if you are to young to know who I am talking about), I've got a million of them, cha, cha, chaw.

[talisyn]

Saying one thing and doing another will always get you praise, if you are a liberal.

.

References please?

[Traveler]

It can be construed that way. Obviously, abandoning a balanced budget is no good, no matter if your the gov't or a family, if you spend more than you make eventually you have to pay the piper.

However, I submit that there is another, bigger, reason for the mess we are in now. The rise of special interests (of all types) with their hands out and a lack of political courage by our 'representatives' on both sides of the aisle, and a fundamental shift in what the function of gov't is (small, border protector or large nanny?) I think explains it just as much if not more.

Letting people keep more of their own money is NEVER the wrong thing to do. I still believe in my heart of hearts that if we abolished the automatic withholding of our wages for taxes, medicare, etc and had people have write a check or send in a money order on Apr 15, we would see a revolution the likes of which hasn't happened here since the Civil War. Instead, people think of their tax return as 'getting money from the gov't' or they use it as a savings account (they could have made more putting it in the bank and then paying their burden, at least they would have gotten interest off it it). The gov't knew people would associate their return as gov't largesse, and not what it really is: excess money that they paid in, interest free, to an entity that could care less about them.

I think that a return to what gov't is supposed to be, which is a protector of borders and a builder of infrastructure, would take care of this problem. The gov't is trying to act in a way that it never was designed to do, and hence we have problems.

Sixpacktr: Because you are a good person and LDS may I pick on your post? I believe your basic concepts and your heart is in the right place but I would hope to enlighten you and other posters in your thinking.

The first point I would like to make is that more than 60% of the revenues that the federal government of the USA extracts from its citizens come from taxes other than income taxes. Long before the income tax was initiated there were “hidden” taxes and semi hidden taxes which throughout history have proven to be regressive. Regressive means that the poor and lower income classes carry most of the burden. Problem number one in our society is the failure of education (both public and private education but most the public educators). I have yet to meet a high school graduate that understands where the federal government obtains it revenues. Most college students, I will guess 80% although I do not have any means of knowing other that my associations) do not know the sources of the federal government revenues.

Following 1776 when the USA became a country there were two sources of Federal income as outlined by the constitution. One source was an import tax on products imported but we need to remember that it was an import tax collected and kept by England that started the revolutionary war that established this country in the first place. More important at the time and THE SECOND was a State assessment tax. Each state according to its population was assessed a tax. It was determined that because states were represented according to population that they should also be taxed accordingly. This tax no longer exists along with the concept of a Senator as established by our constitutional fathers.

The USA was established during an economic period known as the industrial revolution which was producing a rapidly increasing economy along with associated problems for governments. To deal with these problems governments (including the USA) established various hidden taxes such as the corporate tax. The industrial revolution also produced a powerful wealthy class. Previously the wealthy class was based in agriculture but this class lost its political power in the civil war and was finely decimated during the great depression when 90% of the farm land was taken from families and given to large corporate entities such as banks. There are some economists that believe the great depression was actually contrived by large banking interest to end competition by smaller banks and to take over control of the countries farm lands that were producing 3/4’s of the world’s food. Following the money during that time period – I whole heartedly agree. As a side note here - there is a complaint by progressives that the USA is using up more than its share of energy but fail to point out that during the previous 100 years that the USA was also using that energy to produce most of the world’s food and commodities and services. It was not so much greed as process and output that was using the energy.

Special interest investing in Washington is not new in our generation. Theodore Roosevelt ran and was elected president for the sole purpose of breaking up the economic and political base of rich monophonic interests. He was somewhat successful in his generation but the rich and powerful learned some powerful lessons and one of the most prominent lessons was to support corporate taxes so they could claim they were paying their share in taxes but in truth pass those taxes on to the lower classes to carry 100% of that burden.

In short – I believe that we can all learn something from history. I have no problem with the voice of citizens mandating any task to the government. I do believe that every citizen has a dual role in government. One is to give as a mandate their “vote” as to what they want the government to do. And the second is to know and give their share of the taxes to support that mandate. This second principle is paramount and defines a good worthwhile citizen. I completely agree with Thomas Jefferson that only those that pay taxes should be considered citizens and given the power to vote.

I would also add that it is my firm belief that only citizens with the power to vote should be allowed to pay taxes or contribute in any way towards the economy of a government (including campaign contributions) that can or will represent a free people. Deliberate abuses in collecting money by a government official granted power to oversee the collection of money should be considered breach of public trust and a capital crime of sedition and treason.

The Traveler