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."