It's impossible to argue economics with conservatives who have no idea what Ronald Reagan really did -- tax, spend
I’ve stumbled across of couple of recent conservative arguments that are so confusing that they’re downright confuzzled, which is just south of ridunkulous.
Let’s start with this editorial on the fiscal cliff (which I’ll have the honor of debating later tonight on the Kudlow Show) from the WSJ (who’d a thunk it, but both of these pieces are from the Journal). The piece argues…actually, I’m not sure what it’s arguing.
They don’t think taxes should go up due to the fiscal cliff—they think they should go down. But they do think the spending cuts should occur, though when it comes to the defense cuts, they’re a little squishy.
But the punchline is, when it comes to the fiscal cliff, the right policy set is…wait for it!…cut taxes and cut spending!
OK, I get it—their only tool is a hammer, so everything’s a nail. But if your answer to every problem that comes up, regardless of the timing, the underlying economic conditions, the politics or anything else is always the same, should anyone take you seriously?
And that there is one a them rhetorical questions.
The second piece is slightly less muddled but only slightly. It’s an op-ed by Phil Gramm and Glenn Hubbard (note the extra ‘m’ and ‘n’ in those names—what’s up with that!?) on how a Romney recovery would be really great.
The argument goes like this…hmmm…again, I’m not really sure how it goes. Something like this:
–Reagan and Obama both took office during recessions, but the Reagan recovery was much better.
–Why? Because he spent less.
Except for the inconvenient facts that the causes and depths of the recessions were very different, with real GDP and jobs falling much more in the Great Recession—the one we’re still climbing out of. Monetary policy was hugely different, in ways I’ll show in a moment.
And he didn’t spend less—Krugman, Friday:
I find it especially instructive to look at spending levels three years into each man’s administration — that is, in the first quarter of 1984 in Reagan’s case, and in the first quarter of 2012 in Mr. Obama’s — compared with four years earlier, which in each case more or less corresponds to the start of an economic crisis. Under [Reagan], real per capita government spending at that point was 14.4 percent higher than four years previously; under [Obama], less than half as much, just 6.4 percent.
The role of the Fed is also misrepresented here. Look at the figure below. The Reagan recession was much more under the Fed’s control. Volcker and Co. jammed interest rates up to almost 20%, a major factor in the recession, and could then bring them down from that very high perch. And given that this wasn’t a finance/housing bubble recession, investors and households were poised to respond to the lower rates. That’s all totally different to where we were and are now—note the zero lower bound at the end of the figure—and in ways that ensure a tougher recovery.
Then there’s the whole Romney policy angle. I’ve argued that the Romney policy play book looks more like W. Bush than Reagan. Reagan actually raised taxes (11 times!) and was, as noted, not afraid to spend. Gov. Romney’s plans are for tax cuts and spending cuts that will grow the economy through trickle down.
In that regard, it’s conspicuous that G.W. Bush’s name doesn’t show up in this article, as the trickle down thing was a disaster on his watch. Actually, the Bush name does show up in Hubbard’s bio—he was his chief economist for awhile.
OK, I feel better now. Thanks for letting me shake those muddles out of my head.
Jared Bernstein joined the Center on Budget and Policy Priorities in May 2011 as a Senior Fellow. From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joe Biden. Follow his work via Twitter at @econjared and @centeronbudget. More Jared Bernstein.
More Related Stories
- There's no substitute for government disaster relief
- Holder signed off on search warrant for reporter
- Mississippi could begin prosecuting women for miscarriages
- Mike Judge: "Bowling for Columbine" made me pro-gun
- Closing Gitmo is not enough
- Murkowski: Palin too disengaged to run for Senate
- In IRS scandal, new GOP tactic is ignorance
- Code Pink activist berates Obama at national security speech
- Cuomo: "Shame on us" if New York City elects Weiner
- Coburn calls questions about tornado aid "typical Washington B.S."
- Conspiracy theorists clash over London attack
- Voting is not a right
- Destroying the planet for record profits
- Ahead of Obama's speech, U.S. acknowledges four American drone killings
- Pic of the day: Barack Obama at prom
- Anti-Islam backlash in London after machete attack
- Must-see morning clip: Bill O'Reilly visits "The Daily Show"
- Obama’s drone speech will probably be maddening
- Boehner: "Inconceivable" Obama didn't know about IRS targeting
- Obama to announce new effort to close Guantanamo Bay
- House supporters of KXL received $56m from fossil fuel industry
Featured Slide Shows
The week in 10 picsclose X
- 1 of 11
Credit: AP/LM Otero
Credit: AP/Matt Rourke
Credit: AP/Jenny Aicher
Credit: AP/Molly Riley
Credit: AP/J. Scott Applewhite
Credit: AP/Carolyn Kaster
Credit: AP/Las Vegas Review-Journal/Jeff Scheid
Credit: AP/NASA/Chris Hadfield
Credit: AP/Jacquelyn Martin
Credit: AP/The Duluth News-Tribune/Clint Austin
Recent Slide Shows
- 1 of 11