Saturday, August 14, 2010

A Republican Finally Tells the Truth

I believe what follows is probably the most important thing I have ever posted, and I'm a little sorry that so much of it is not mine. I am going to reprint here what may be an unfairly long series of excerpts from an article in the New York Times by a man named David Stockman.

For those of you who weren't around at the time, or have forgotten, David Stockman was President Ronald Reagan's budget director, and he was a major participant in the Republican plot to convince the American people to believe in the absurd theory of "trickle-down economics," the idea that if we just give the rich lots more money that it was going to somehow make the rest of us richer too.

This is not the first time that Stockman has lifted the curtain on this cruel deception, which we are all now paying for. In the mid-nineties, in the introduction to the second edition of his memoirs, he admitted that none of the participants in that plan, from Reagan on down, regarded it as anything but a hoax. Now (a couple of decades too late) he's totally ripped the curtain off of the sham that is Conservative economic doctrine, and I believe every American needs to hear what he has to say. So, here we go:

"IF there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing...It is therefore unseemly for the Senate minority leader, Mitch McConnell, to insist that the nation’s wealthiest taxpayers be spared even a three-percentage-point rate increase.

Mr. McConnell’s stand puts the lie to the Republican pretense that its new monetarist and supply-side doctrines are rooted in its traditional financial philosophy. Republicans used to believe that prosperity depended upon the regular balancing of accounts — in government, in international trade, on the ledgers of central banks and in the financial affairs of private households and businesses, too. But the new catechism, as practiced by Republican policymakers for decades now, has amounted to little more than money printing and deficit finance..."

Let me break in here to point out that, of course, anyone who knows anything about the Republican runup to the Great Depression is aware that, although Republicans have always claimed to believe that " Republicans used to believe that prosperity depended upon the regular balancing of accounts," in fact they never believed any such thing. Well, let's continue:

"This approach has not simply made a mockery of traditional party ideals. It has also led to the serial financial bubbles and Wall Street depredations that have crippled our economy...Now, since we have lived beyond our means as a nation for nearly 40 years, our cumulative current-account deficit — the combined shortfall on our trade in goods, services and income — has reached nearly $8 trillion. That’s borrowed prosperity on an epic scale.

It is also an outcome that Milton Friedman said could never happen when, in 1971, he persuaded President Nixon to unleash on the world paper dollars no longer redeemable in gold or other fixed monetary reserves. Just let the free market set currency exchange rates, he said, and trade deficits will self-correct."

Anyone foolish enough to ever again refer positively to this voodoo economics should be forced to read Stockman's confession about a thousand times.

"... now there is no discipline, only global monetary chaos as foreign central banks run their own printing presses at ever faster speeds to sop up the tidal wave of dollars coming from the Federal Reserve.

The second unhappy change in the American economy has been the extraordinary growth of our public debt... This debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party’s embrace, about three decades ago, of the insidious doctrine that deficits don’t matter if they result from tax cuts."

(bolding mine) or more simply put, deficits don't matter when they result from Repeublican theft of our national wealth.

"But in the end it was a new cadre of ideological tax-cutters who killed the Republicans’ fiscal religion."

Stockman conveniently forgets Harding and Hoover cutting the tax rate on the rich to one third of its previous rate, thus creating the financial bubble whose bursting brought on the depression. "Ideological tax cuts" have always been a part of the poison conservative economic brew that has done so much damage to our country.

"It may be true that governments, because they intervene in foreign exchange markets, have never completely allowed their currencies to float freely. But that does not absolve Friedman’s $8 trillion error. Once relieved of the discipline of defending a fixed value for their currencies, politicians the world over were free to cheapen their money and disregard their neighbors."

The apotheosis of the "I've got mine-screw you" attitude that has become known as "Reaganomics."

"... when, in the following years, the Federal Reserve chairman, Paul Volcker, finally crushed inflation, enabling a solid economic rebound, the new tax-cutters not only claimed victory for their supply-side strategy but hooked Republicans for good on the delusion that the economy will outgrow the deficit if plied with enough tax cuts."

i.e. spread the grand Republican lie.

"By fiscal year 2009, the tax-cutters had reduced federal revenues to 15 percent of gross domestic product, lower than they had been since the 1940s. Then, after rarely vetoing a budget bill and engaging in two unfinanced foreign military adventures, George W. Bush surrendered on domestic spending cuts, too — signing into law $420 billion in non-defense appropriations, a 65 percent gain from the $260 billion he had inherited eight years earlier. Republicans thus joined the Democrats in a shameless embrace of a free-lunch fiscal policy."

Of course, the Democratic president who Bush "joined" had turned a gigantic Republican budget deficit into a large Democratic surplus, so I'm not sure who Stockman is talking about here, but then, you can't expect the whole truth from a Republican, can you?

"The third ominous change in the American economy has been the vast, unproductive expansion of our financial sector. Here, Republicans have been oblivious to the grave danger of flooding financial markets with freely printed money and, at the same time, removing traditional restrictions on leverage and speculation."

Again, the exact behavior of Harding, Coolidge and Hoover in the 1920's.

"But the trillion-dollar conglomerates that inhabit this new financial world are not free enterprises. They are rather wards of the state, extracting billions from the economy with a lot of pointless speculation in stocks, bonds, commodities and derivatives. They could never have survived, much less thrived, if their deposits had not been government-guaranteed and if they hadn’t been able to obtain virtually free money from the Fed’s discount window to cover their bad bets.

The fourth destructive change has been the hollowing out of the larger American economy. Having lived beyond our means for decades by borrowing heavily from abroad, we have steadily sent jobs and production offshore.

It is not surprising, then, that during the last bubble (from 2002 to 2006) the top 1 percent of Americans — paid mainly from the Wall Street casino — received two-thirds of the gain in national income, while the bottom 90 percent — mainly dependent on Main Street’s shrinking economy — got only 12 percent. This growing wealth gap is not the market’s fault. It’s the decaying fruit of bad economic policy."

Bad Republican economic policy.

"The day of national reckoning has arrived. We will not have a conventional business recovery now, but rather a long hangover of debt liquidation and downsizing...it’s a pity that the modern Republican Party offers the American people an irrelevant platform...when the old approach — balanced budgets, sound money and financial discipline — is needed more than ever."

Well, Stockman has to end with a prayer to his old God, but still, there is more truth here than you will hear from anyone short of Paul Krugman these days. So it turns out that our current economic disaster was not caused by a thirty year old Democratic law making banks lend fairly to minorities, nor by a secret Obama Communist plot. It was caused by what anyone watching should have seen: Republican lies, greed and theft, period.

Of course, being the truth, this article will be immediately forgotten by our political and journalistic class. Well, that way, we can have another depression really soon, and maybe we can all live to see the end of the United States of America, killed by "patriots."

16 comments:

TRUTH 101 said...

Sadly this guy will go throught the republican vilification process like Scott McClellan and a few former republican treasury secretaries and budget directors whose names escape right now.


This crime will go unpunished as most other republican crimes.

Had the guys running the republican party now been in charge in the early seventies Nixon would have finished his term with no problem and Archibald Cox would just be getting out of jail.

Anonymous said...

Sounds like a bunch of crap to me. FDR and Reagan both lowered taxes drastically. Bush 2 lowered taxes as did Clinton (Capitol Gains) .. in each of these cases revenue to the government INCREASED .. but irresponsible Government spending outpaced this revenue. How can you explain tax receipt increases in this case dude??

Go look up Treasury receipts and Federal spending online to compare.

I have a feeling you know very little to nothing about economics. Its not a fixed pie as you imply.

Never got a job from a poor man, repressing the job creators only hurts the middle class who then can't get jobs!!

This Obamba Administration has demonstrated a new economic theory called "trickle up poverty" .. 50% of Americans have either lost their job or had their income reduced under Obamanomics.

How are high taxes good? Since when has the Government spent money wisely??

cock-n-balls said...

How are tax cuts "unaffordable" ?? Are you unaware that Obama added a Trillion Dollars in spending to the budget vs Bush's last year in office?? ... THAT's unaffordable.

I'm afraid you don't know anything about economics and have never had a look for yourself at Federal Spending vs Tax Receipts over the years.

This isn't just about Democrat vs Republican but the future of our nation. People like you blogging paint a bleak picture ...

Anonymous said...

Green Eagle: I suggest you read Stockmann's article again. I don't think you quite understand what he is getting at.

His article is not a 1 sided rip on Republicans.

Green Eagle said...

Boy, you right wingers don't like to hear this, whatever the source:

"I have a feeling you know very little to nothing about economics."

"I'm afraid you don't know anything about economics"

These are not arguments, they are ad hominem insults.

The truth is that giving rich people too much money creates bubbles and deregulation is nothing but a mechanism to turn business over to criminals. Following two perpetual Republican doctrines caused the Great Depression, and they also caused our current economic disaster. There is ABSOLUTELY ONE reason why we are not in a full-blown depression now: When the market collapsed in 1929, the country had to wait 3 1/2 years for Democrats to take over and act like adults, while Republicans continued their criminal behavior the whole time. This time, we only had to wait four months.

"Are you unaware that Obama added a Trillion Dollars in spending to the budget vs Bush's last year in office?? ... THAT's unaffordable."

You are including the TARP legislation in this figure. You know damned well that TARP was passed under the Bush administration with full Republican support.

"This Obamba Administration has demonstrated a new economic theory called "trickle up poverty" .. 50% of Americans have either lost their job or had their income reduced under Obamanomics."

Go down a couple of posts and take a look at Bob Cesca's graph that I reproduced, to see the magnitude of dishonesty involved in making that claim.

I see enough of this crap everywhere else; I don't need to see it on my own blog. You guys need to get your greed under control and stop drinking the Republican kool-aid, if you want to have much of a country left.

P.s.- of course, none of this applies to you, Truth. As usual, you are telling the, er, truth.

Cardinal44 said...

It's no coincidence that Regan whymes with Satan.

Green Eagle said...

Yeah, but is it a coincidence that Obama rhymes with llama?

dmarks said...

"The truth is that giving rich people too much money creates bubbles "

I do oppose giving rich people ANY money. And after all, tax breaks give people $0. It's not a gift to steal less from someone.

"You know damned well that TARP was passed under the Bush administration with full Republican support."

Full well? Actually most House Republicans voted against TARP.

Check http://clerk.house.gov/evs/2008/roll681.xml.

How, what were you saying?

Green Eagle said...

DMarks,

As you know perfectly well, appropriate taxation is not theft.

I am happy to have conservatives come here to discuss things with me, but I don't like people who just spout bankrupt right wing talking points.

Stockman's comments, coming from a real Reagan insider, stand for themselves. Since the election of Taft, about a hundred years ago, virtually all of this country's economic problems have stemmed from coporate greed and conservative economic cant in the service of that greed.

Why do people like you, who have nothing to gain from this fraud, insist on pulling all of us down into the gutter, rather than simply accept the fact that someone spent billions to hoodwink you into continually stabbing yourself in the back? One moment of regret for your past actions is certainly a far better fate than a lifetime as a victim of a plundered economy.

mastercynic said...

Obama . llama - both shoulder heavy loads?As to taxation, you would think that the nations crumbling infrastructure which was once the envy of the world, along with underfunded and failing public education and the world's most expensive Third World level health care would indicate some issues since these are things the very wealthy can provide for themselves.

Octopus said...

I don't have a lot of time to devote to this comment, so I will be brief.

First, Anon and C-n-B (probably one and same person) are garden-variety troll assassins who have added nothing of substance to this comment thread. Note the offensive link imbedded inside of C-n-B's moniker … more than sufficient justification to delete.

Stockton is correct about this: “a lot of pointless speculation in stocks, bonds, commodities and derivatives.” The point of capital markets is to raise funds through investment for building, production, infrastructure, research and development and a myriad of other commercial activities that contribute to overall economic development. Instead of investment for worthwhile economic projects, we have entered into an era of easy money … mindless gambling and speculation on schemes that contribute nothing to GDP.

Stockton is also correct about a fundamental fiction of supply-side economics that assumes producers will produce jobs for consumers. Consider this: If 90+ percent of the population are consumers, and less than 10% are producers, any system that rewards producers with the lion’s share of economic growth will eventually starve consumers to the point where they can no longer consume, and all economic activity comes to a halt. This is essentially what supply-side economics has accomplished: The destruction of the middle class, i.e., the consumers.

Notwithstanding the above, I have harsh words for Stockton, Greenspan, and other former adherents of the Reagan mantra: They were willing parties to fraud and deception. Stockton helped advance the Reagan era policy, and Greenspan was Bush’s enabler.

About my qualifications to voice this opinion: MEcon, London School of Economics.

Green Eagle said...

Well, I clicked on the link at "cock-n-balls." it led me to a cheesy sex site. If I get any further posts from this, uh, dick, I will certainly delete them. Whoever you are, you are a cheap asshole, and judging from your comment a stupid and ignorant one too.

Octopus, thanks as usual for your perspective. I know you have had a lot more experience with this kind of wanker than I have and you are much quicker to spot the ones that aren't worth the time.

As for your comment: "They were willing parties to fraud and deception. Stockton helped advance the Reagan era policy, and Greenspan was Bush’s enabler," I agree totally. The fact that one of them, decades after the damage has been done, consents to tell the truth, doesn't undo their evil; but it's nice to have a record of the truth from one of the participants.

dmarks said...

Green, you made up something about "talking points" (which exist only in your mind, and have nothing to do with anything). At least you backed off from the whopper about TARP being a Republican problem.

"As you know perfectly well, appropriate taxation is not theft."

Nice big loophole you left there, about what is "appopriate".

"virtually all of this country's economic problems have stemmed from coporate greed and conservative economic cant in the service of that greed."

Wanting to keep more of what you create is not greed. If anything is greed in this, it is the real rulers, the state, taking so much from the people just because it can. That's the real greed that causes virtually all of the country's economic probl;ems.

dmarks said...

Octo said:

"This is essentially what supply-side economics has accomplished: The destruction of the middle class, i.e., the consumers."

According to Wikipedia, middle class is defined in the following "Depending on class model used, the middle class may constitute anywhere from 25% to 66% of households."

That's probably about a third of Americans existing now, in defiance of the claim that letting the people keep more of what they earn has destroyed the middle class.

St. Joan said...

There are some very evil people commenting in this thread. Wilfull liars and obfuscators. Apologists for greed and the rape of the fruit of our labors. God bless all of you who are pushig back against their lies. God bless Obama and all of us who stand with him in this epic battle of good vs. evil.

Octopus said...

Dmarks, you have quoted me out of context. This is what I said:

"If 90+ percent of the population are consumers, and less than 10% are producers ..."

Shall we have another Shirley Sherrod moment here?

Dmarks - "At least you backed off from the whopper about TARP being a Republican problem."

TARP was signed into law by former President George W. Bush in October of 2008. Look it up, and stop playing loose with the facts.