21 responses to “McClintock visits Nevada County”

1. 

   Scott Obermuller

   25 January 2009

   And they said Tom was an outsider who would need months to learn the “needs” of his district! I think I shall never have to contact his office to offer my opinion as it seems he is as close to my views as an elected official can be. He will be a lonely vote in Washington, but a good one.

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2. 

   Russ Steele

   25 January 2009

   Scott,
   Rep. McClintock indicated that he has joined a Republican Study Group of about 100 like minded Representatives. He also mentioned that Ron Paul had a group of six, that he found shard many of his views. McClintock is a member of the Natural Resources Committee and is seeking to eliminate regulations that are constraining the development of California’s natural resources, water, timber and minerals. But, he surely will need more than one vote to make any real changes in a Democratic controlled Congress.

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3. 

   Wade

   25 January 2009

   “We know what works…”
   And?????? Do tell. No, I mean really. We are all ears. Is it tax cuts? Deregulation? Limit the growth of federal government? Limit earmarks? Privatize Social Security? Lower the minimum wage? Bust the unions?
   What a tease.
   From The Onion:
   “Those spend-happy Democrats are going to ruin this small-government, fiscally conservative utopia that Bush spent eight years crafting.”
   Wait, California has a deficit? I remember Gray Davis getting recalled amidst much bluster and outrage for something similar, albeit far smaller and shrinking at the time. What say you now fiscal “conservatives” (and Bill O’Reilly)? It is hard to believe that revenue reduction didn’t perform the miracle of deficit reduction the way it is supposed to according to supply side dogma. Perhaps your state needs some more tax cuts. They don’t seem to be working yet…

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4. 

   George Rebane

   25 January 2009

   Wade, I understand your confusion. No one has claimed that reducing state revenues will shrink deficits. When the Democrat legislature increases govt expenditures at 2x and 3x inflation, deficits occur. When expenditure rates are increased on the basis of windfall tax revenues continuing forever, then deficits occur. When our Republican governator starts acting like a left-wing liberal, deficits occur (as when Republicans in Congress started acting the same way). Even left-leaning economists understand that sustainable economic benefit comes from reduced business taxes, and are so advising Team Obama. If it were the other way around (like many on the left believe), then we could always simply tax our way out of any impending economic pullback.
   It’s been known for decades that people readily spend monies earned from perceived sustainable earnings and save monies from one-shot windfalls. The Dems can’t comply with these truths because they promised to buy their votes, and now is pay back time. At the same time both Repubs and Dems are planning on giving money to banks for lending while not giving the same guarantees that Fannie and Freddie receive. The banks aren’t going to lend to borrowers they can’t evaluate, and it turns out that they haven’t been able to do that fundamental banking function for quite some time now. And the dolts in Congress are confused about why the stimulus dollars are not making it into circulation. So they’ll do more of the same. The problem is that the US govt has NO MONEY TO LEND. It must take/get it out of someone else’s pocket, and the damn Chinese are getting too smart for us.
   Complex times are made more complex when you insist on turning knobs and pulling levers on a machine the operation of which you don’t understand. von Mises’ advice to what the govt should do in such times still holds, “Nothing … and sooner!”

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5. 

   Mikey McD

   26 January 2009

   Wade, what tax bracket are you in? Would you pay 40-50% of your income to our failed government if they did not have a gun to your head?
   Great recipe for success would be “tax cuts, Deregulation, Limit the growth of federal government, Limit earmarks, Privatize Social Security, Lower the minimum wage, Bust the unions”

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6. 

   Wade

   26 January 2009

   George –
   I must heartily disagree with your statement that “No one has claimed that reducing state revenues will shrink deficits.” On the contrary, these claims are sounded frequently, by all levels of conservative politicians and/or “economists,” from Bush and Cheney to Romney to Limbaugh to Mankiw to Kudlow to George Gilder and Jude Wanniski. Each and every State of the Union, Bush projected reduced deficits due to tax cuts (revenue reduction) and since the later addition to supply side theory, reduced spending, was barely mentioned at all (and never practiced) during either term of his presidency, the single, most pure assertion of the supply sider could not be more clear: revenue reduction begets increased revenue (begets deficit reduction). Here is Kudlow: “Taxes get reduced, more revenue comes in.”
   When you say “The banks aren’t going to lend to borrowers they can’t evaluate, and it turns out that they haven’t been able to do that fundamental banking function for quite some time now.” are you (obliquely) referring to the Community Reinvestment Act of 1977? Or something else? It is important to note that a tiny fraction of financial institutions that created the current sub-prime mortgage related crisis were required to follow the provisions of the act. The vast majority was not.
   I agree about the levers and buttons, but as Krugman points out often these days, we’re down to “lever”: Fiscal policy via spending. Monetary policy via lowering interest rates is no longer available due to extended abuse (indeed this was one of the core causes of the current crisis, speaking alliteratively anyway).
   FWIW, I have no problem with the prescription “Do nothing,” as compared to what we ARE doing, although I believe the failure of financial industry bailout cash failing to materialize where it was intended has more to do with questionable (and questionably timed) acquisitions like Merrill and Countrywide than with anything else… This is exactly the problem: We ought to be investing in the real economy rather than in the collapsed shadow banking economy. European energy-sector banker “Jerome a Paris” terms the undue pull of the financial sector relative to other sectors of mature economies “Anglo Disease” making reference to the “Dutch Disease” of the ’70s, the symptoms of which were a highly profitable oil sector pulling in an inordinate amount of capital / energy ultimately to the detriment of the rest of the economy. He argues that, over the last few decades, capitalism has become “financial capitalism,” and that “a model of financial capitalism is thus all-encompassing, not only grabbing an increasing share of the economic pie, but also dominating all political and economic discourse.”
   Further:
   “The reality, unfortunately, is that a massive inequality, declining or stagnant living standards for the majority, which spend more than they earn, and, as a consequence, a massive bill pushed out into the future. Well, that future is now, and the imbalances will only be unwound if incomes match spending, which can happen via lower spending or via higher incomes.
   In the financial capitalism model, incomes are a cost and should not increase; if that logic prevails – if the Anglo Disease is not cured from our body politic – spending will crash and a recession is not only inevitable but likely to be very painful, as the real economy slows down brutally, and the financial bets that ride it suddenly look highly unreasonable, and turn into losses (as is happening already in the subprime sector).
   If, to the contrary, policies are focused on propping incomes for the poor and the middle classes rather than profits, on investing in the real economy rather than in monetising its existing activities (for instance via plans to boost energy efficiency in the household sector and renewable energies), on taxing today’s wealthy rather than tomorrow’s citizens, then there is a chance to limit the crash. ”
   And yes, we have no money to lend. Dropping several trillion on a foreign adventure of, at best, preposterously limited utility can do that sort of thing. Thus far the Chinese have seemed disinclined to unwind their dollar position. What seems far more likely is that their part in increasing petroleum demand will rebound, reversing price declines in that sector without any additional dollar devaluation (thus erasing New Mexico’s half billion dollar deficit).
   To sum: In light of what we’re doing now, I’m with you: Do NOTHING sooner!
   Mikey McD –
   That recipe for “success” has been cooked & served (minus SS, and Republican gov’t growth). Even the most ardent supply-siders like Greenspan have enough shame to avoid simply calling for more. And no, Norquist, being rather obviously delusional, not to mention disingenuous beyond compare, doesn’t count.
   Bracket? I’m in the “28%” tranche. Does that matter?

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7. 

   Mikey McD

   27 January 2009

   “To sum: In light of what we’re doing now, I’m with you: Do NOTHING sooner!” – agreed.
   Lower taxes would lower deficits, if gov spending did not soar. The problem is government spending. A society cannot tax itself into prosperity and a government cannot spend a society into prosperity.
   Government is the problem, not the solution.

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8. 

   Wade

   27 January 2009

   Mikey –
   When taxes were raised in ’93, there was widespread consternation on the right. The economy was supposed to grind to a halt, unemployment would soar, prosperity would be out of reach.
   The exact opposite occurred, putting your statement that “a society cannot tax itself into prosperity” into serious question, no? Reality handily trumps theory in this case: the ’90s were not only incomparably prosperous, serious deficit reduction was achieved. How to square these easily researched facts with your anti-tax dogma?
   Can you explain?
   Famous tax-cutting fundamentalists, Reagan & Cheney, succeeded only in smashing previous records for deficit creation, although Reagan acknowledged reality to an extent by raising taxes when the deficit looked to balloon further than even he found palatable. Supply side theory emphatically states that the opposite is supposed to be true. In fact, that’s pretty much all it states. I’m still looking for examples of this phenomenon in real life… Got any?
   The Laffer curve helpfully informs us that tax rates of 0% and 100% are both untenable. It says nothing else. There is ample evidence that our economy can thrive and prosper with higher taxes than we enjoy presently. Why then continue to insist that this is impossible? I don’t get it…

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9. 

   Mikey McD

   27 January 2009

   You are smoking crack if you think taxes created the wealth generated in the 1990’s. There was a technology revolution in the 90’s that not even excessive taxes could curb and much less government spending. To say that the taxes created wealth in the 1990’s insane.
   Spending by government in the 1990’s was nothing compared to the spending today. I strongly believe that taxes are stealing and that government spending plays the largest role in deficit/wealth generation discussions.
   Their is a very easy solution: all those in favor of paying taxes, do so. All those opposed, keep your money.
   Your theory taken to the extreme: raise tax rates to 100%, sit back and watch the economy soar!
   JUST IMAGINE HOW MUCH BETTER THE 1990’S WOULD HAVE BEEN WITH LOWER TAXES!!!!!!!!!!!!!

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10. 

    Wade

    27 January 2009

    um, big strawman.
    Nowhere did I say that “taxes created the wealth generated in the 1990’s.” And, no, that isn’t what I meant, implied, or otherwise indicated. I pointed out that taxes were raised in ’93 and prosperity followed, in spite of the cherished shibboleth that this is impossible. Correlation isn’t causation of course, but this perfectly solid proof that higher taxes are not incompatible with capitalist wealth creation and prosperity. I know this because it happened. In real life. How do you know that tax cuts reduce deficits? Because you type it in ALL CAPS.
    My theory? Are you reading? I went out of my way to explicitly point out that a 100% tax rate was untenable. I learned this from the Laffer curve. So, uh, strawman #2 fails spectacularly as well.
    I’m not sure what the effect of lower taxes would have been in the ’90s. Since an important driver of that decade’s prosperity was deficit reduction (paid for by taxes), maybe it wouldn’t have been “SO MUCH BETTER.” The amount of capital freed up by the federal government borrowing a lot less for debt service was part of what fueled the tech boom of which you speak.
    I appreciate that you believe strongly that taxes are evil, etc. and that it is better for the US to pay for expensive things like occupations by borrowing the money from China (we have to do this while we wait for more revenue to appear from all the tax cuts) and that one can reduce the deficit by cutting taxes. I am trying to understand this strongly held belief and so have asked for examples. I’ll try again: Can you point to tax cuts leading to deficit reduction… ever?

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11. 

    George Rebane

    27 January 2009

    There is, of course, a documented history that from our Vietnam pullout in 1973 until after Reagan took office in 1981, that our entire defense establishment was essentially derelict. It was derelict to the point that the declining USSR actually considered a last ditch pre-emptive attack into western Europe in the late 70s betting that the US would have neither the stomach nor the means to counter their thrust through the Fulda Gap.
    It was Reagan’s forced massive and visible rebuilding of the our military during the early years of his term that staved their intentions – we invited the USSR General Staff here to witness it – and brought on the age of Gorbachev’s glasnost and perestroika with its inevitable conclusion. Yet Reagan’s tax cuts did allow the economy to grow and minimized the deficit increases that the military rebuild entailed.
    During Clinton’s years one must remember that the 1994 ascendant Republican Congress had something to do with ‘Clinton’s tax cuts’ and curbing the administration’s spending programs – all this before they themselves were subverted into pork barrel politicians just in time for Bush2.
    I am afraid that there will be no reconciling the two diametrically opposite views of history. It is because of this that the Left has a huge advantage in growing their constituency. The Republicans have no candy to offer the voters.
    Viz Laffer Curve – yes, the 0 and 100% tax rate endpoints are untenable, and they are so for all tax regimes be they marginal or flat rate or whatever. Nevertheless, between those bookends there is a monotonic rise to maximum government revenues, and a monotonic decline from there to essentially non-existent government revenues for any consistent tax policy taken through that rate range. The Right argues that we are on now on the down slope, and the Left argues that we are on the up slope of the curve. This debate is one of the many that will not be resolved in the public forum with the sheep that now make up our electorate. To those sufficiently well-read, one can only bring up the example of the EU countries, especially the post-USSR eastern members, who have and continue to rapidly reduce their tax rates in order to grow or stop the decline of their economies. In this league, the US is definitely the knuckle-dragging Neanderthal.

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12. 

    Mikey McD

    28 January 2009

    Wade, I was being a bit facetious. My point is that spending doesn’t get the attention it should for its role in deficits-taxes(revenues) are only part of the equation.
    I guess my question would be… have we seen a prolonged period with both low tax rates and low spending?

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13. 

    Wade

    28 January 2009

    Mikey –
    To answer your question: No, I don’t think so. Furthermore, I don’t think it’s realistic to ever expect such a period. George’s reference to Reagan’s military buildup above is a good example of why not. Big government spending is not the character flaw of Democrats only. Whether it be military buildups, wars and occupations, or increased Medicare for children, free job training, and ponies for inner-city youth, whether it be right wing or left wing objectives, I just don’t think we ever get a period of “low” federal spending. Therefore we need to apply deficit reduction measures that work in real life, i.e. work in the context of high government spending. As has been shown over and over, deficit reduction measures that might work if only it weren’t for all that government spending are abject failures at reducing the deficit. See Bush and Reagan deficits for examples…
    Having said that, you’re right. Tax cuts don’t actually pay for themselves. Commensurate reductions in spending can, however, pay for tax cuts…

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14. 

    Wade

    28 January 2009

    Part I
    George –
    Thanks for that.
    One of the curiosities of these discussions (I have had this same one dozens of times with Pop) is something I have noticed frequently — the tendency to caveat (yes, that is now a verb) deficit reduction techniques with real life e.g., the ’80s don’t count because of the Cold War, the ’90s don’t count because of the tech boom, the ’00s don’t count because of 9-11, and so on. The effect, if not the intent, is to carefully preserve the asserted validity of supply side theory by removing all counter examples from the board.
    I would posit a few things:
    1) It doesn’t matter what the government is spending money for the purposes of deficit reduction. Could be missile defense, could be free hotdogs.
    2) If the proposed technique doesn’t work in real life, it doesn’t work. We will continue to have black swans, unplanned expenses, and various sorts of large, long term, policy driven investments. Could be universal healthcare, could be space lasers.
    In that light: Clinton raised taxes in ’93, began seriously reducing the deficit, prosperity followed. The fairly simple formula of higher taxes = higher revenue = lower deficit, was vindicated. Just as importantly, there were no ill effects on the private sector (the argument that the boom would have been even bigger with lower taxes is specious and , in any event, cannot be proved). I would also note that he did this in the context of an ideologically hostile Fed which kept interest rates relatively high and tended to crank them up around election time to boot. Contrast this with the ultimately disastrously low rates of the Bush years…
    I have not yet seen the competing formula, lower taxes = higher revenue = lower deficit, with no ill effects on the private sector thusly vindicated and am interested in examples. It’s supporters tend to just assert that it is true and leave it at that. The genesis of supply side theory was as an ex post facto justification for tax cuts aimed at the wealthy, but it has since become one of the most cherished and widely held beliefs in American politics, credited with superior job creation as well as deficit reduction, the historically poor job creation record of the Bush administration notwithstanding of course.

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15. 

    Wade

    28 January 2009

    Part II
    Yes, the Republican congress of the Clinton years played a role in curbing spending for sure, certainly in terms of killing universal healthcare (and things like welfare reform). While there is no argument that this would have been a serious policy-driven, long-term investment, I would argue that it would likely have resulted in lower healthcare costs measured against GDP today. Another likely effect would have been to drastically change the outlook for companies such as the Big 3 by freeing them of the massive costs incurred by providing healthcare to employees and retirees, thus enabling them to compete on a level playing field with foreign auto companies, all of which enjoy nationalized healthcare in their home countries.
    The important thing however is that Clinton brought an explicit policy of deficit reduction to office. The Republicans can be counted on to cooperate with deficit reduction when there is a Democrat in the White House (there was not a peep about the deficit the whole of the last 8 years), but not with tax increases — that was Clinton. It was clearly successful — the deficit was significantly reduced.
    I am uncomfortable with arguments like “Reagan’s deficit would have been even bigger if not for his supply side implementation.” First, I think theses sorts of retroactive hypotheticals are unprovable (see “the ’90s would have been even more prosperous with lower taxes”) and second, what action Reagan took to stem the growth of the deficit was accomplished with tax increases, not more tax cuts.
    To wit:
    “The first Reagan tax increase came in 1982. By then it was clear that the budget projections used to justify the 1981 tax cut were wildly optimistic. In response, Mr. Reagan agreed to a sharp rollback of corporate tax cuts, and a smaller rollback of individual income tax cuts. Over all, the 1982 tax increase undid about a third of the 1981 cut;”
    and in ’83:
    “…the Social Security Reform Act of 1983, which followed the recommendations of a commission led by Alan Greenspan. Its key provision was an increase in the payroll tax that pays for Social Security and Medicare hospital insurance.
    For many middle- and low-income families, this tax increase more than undid any gains from Mr. Reagan’s income tax cuts. In 1980, according to Congressional Budget Office estimates, middle-income families with children paid 8.2 percent of their income in income taxes, and 9.5 percent in payroll taxes. By 1988 the income tax share was down to 6.6 percent—but the payroll tax share was up to 11.8 percent, and the combined burden was up, not down.”
    ( from Krugman )

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16. 

    Wade

    28 January 2009

    Part II
    Reagan did this, admirably, with the deficit in mind. While he still left office with a, at the time, record-setting deficit, it may well have been far worse had he not acted to counter the effects on the deficit resulting from his own tax cuts and spending. It is important to note that even Reagan recognized the adverse effect on the deficit that his large ’81 tax cuts produced — that is “up,” not “down.” The contrast with Bush is clear: we are still waiting for the deficit reducing power of the Bush tax cuts to materialize. and the deficit, like Reagan’s, is record-setting.
    I have mocked the Laffer curve here before and will continue to do so. I believe it’s meaningful lessons concern 0% and 100% tax rates. There can be no truly meaningful discussion about “where we are” in between those two end points, since there is no actual formula to achieve maximum revenue involved, only the visual version of some pseudo-code along a generic curve unrealistically free of the all the noise and other inputs of a real life economy. There can, however, be a meaningful discussion about tax rates, deficit reduction, and overall economic health. I think the impact that raising or cutting taxes can have on the deficit is clear, Reagan tried both and got mixed results, a much larger deficit, solid job creation and, until ’87, a healthy market. Clinton tried raising taxes and got a significantly reduced deficit, stellar job creation, and a healthy market (S&P500 +9 trillion over course of administration). Bush tried strongly cutting taxes and got a massively increased deficit, terrible job creation (worst since Hoover), and terrible long term market conditions (S&P500 -4.6 trillion over course of administration).
    As to the necessity of Reagan’s military buildup to deter the “T-72s streaming through the Fulda Gap” scenario, both the size and efficacy of conventional Soviet power had long been wildly (and notoriously) over-estimated at the time and, in any case, their test bed for a serious conventional land war, Afghanistan, proved so spectacularly disastrous strategically and financially as to disabuse them as well as the world of the notion that they were capable of any such thing for at least a generation. This is not even to mention that the true deterrent in play was then as now, nuclear.
    Not to minimize unduly Reagan’s role in effecting the wind down of the Cold War, just to sketch in the broader picture, which contains much more nuance and a variety of factors leading to the same conclusion, many of which had nothing to do whatsoever with his foreign policy decisions. The proxy wars waged by both sides in Central Asia / America should have been lesson enough that no one was likely to successfully kick off a large scale conventional invasion of Europe or Russia.
    I will not argue that point at length though. My assertion is that these things have / do / will continue to happen and shouldn’t serve as the “if it weren’t for those meddling kids” of deficit reduction. If deficit reduction is a priority and, Keynes aside, I believe it should be, we should do those things that actually reduce the deficit rather than those things that might have reduced the deficit had not history stood, inconveniently, in the way.

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17. 

    Wade

    28 January 2009

    whoops, that last is “Part III”

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18. 

    Mikey McD

    28 January 2009

    Could not agree more… “Big government spending is not the character flaw of Democrats only” -Wade 1059am comment
    Big Gov spending is a flaw of dems and republican governments, period. They spend to much and then steal (from you and me) to pay for it. No different than my neighbor robbing me because he over extended himself.
    I can’t accept under any circumstances tax rate increases to fund government waste and malfeasance.
    “Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.”
    -Frederic Bastiat,
    “The government is like a baby’s alimentary canal, with a happy appetite at one end and
    no responsibility at the other. ”
    -Ronald Reagan

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19. 

    George Rebane

    28 January 2009

    Wade, I do see where you’re coming from, but since I have never felt comfortable there, I can’t accept the arguments that you state so clearly. If I were to summarize your ‘taxes and deficits’ position, then I understand you to both state and/or imply that –
    1. There is no clear causal evidence that lowering taxes can increase government revenues.
    2. There is no clear evidence that lowering taxes will lower deficits, in fact, there is evidence that deficits have been lowered with increased tax rates.
    3. Government knows how to spend the people’s money at least as well as the people do to provide for the common weal and to increase the quality of life.
    4. We have not yet tested the limits for the increased benefits we can all enjoy were we to pay higher taxes, and should not let any other knowledge we may have about human behavior, conduct of institutions, and the large body of ‘expert literature’ to sway us from supporting the tax and stimulus programs coming from Washington.
    5. The ongoing European experience with the lowering of tax rates is not relevant on this side of the pond.
    6. With the financial and political wisdom collected in/by Washington, we may be assured that government will always come up with the best plan forward for the generation and disposition of wealth. History is witness to this notion.
    Most certainly these are the principles that fuel and sustain the collective Left. And, of course, they are refuted by the historical interpretation (e.g. Bastiat), prescriptions (e.g. von Mises, von Hayek, Hazlitt, Friedman, etc), and scholarship (e.g. the copious issue of foundations/institutions Cato, Hoover, Heritage, American Enterprise, etc.) of the Right. Over my lifetime I have not seen any progress in either the melding or mutual understanding between these two camps. As our country grows dumber, the schism widens. The Left’s biggest argument for increased collectivism in the face of the tragic failures of socialism/communism is of the same kind that you cite for the Right’s caveats about the effect of tax rates – collectivist theory is innately good, and should serve as the basis for how humans organize society, historically mistakes were made and it has been poorly applied, nevertheless we need to keep trying until we get it right.
    I frankly don’t know how to get us any closer than these broad delineations. I do know that if it were possible to equitably divide up the country’s resources into two parcels – one each for the Right and Left where they could then practice their own ideals – the people on the conservative/libertarian side of the argument would separate themselves in a heartbeat. From conversations with my liberal/collectivist friends, my take is that they would not want to allow such a scenario to come to pass. I label this proposal ‘The Great Divide’ for discussion purposes.
    In this I continue to comfort myself with the thought that the Left’s opposition to The Great Divide is that, in the deep marrow of their bones, they know they would quickly wind up with another social travesty on their hands no matter how equitably the division started. Perhaps you have the complement of this conclusion to comfort and sustain you. And so there we stand, perhaps mutually comforted in that we can still civilly discuss these issues, and, in the process, attempt to illuminate each other’s path with the light that we each hold dear.

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20. 

    Wade

    29 January 2009

    George –
    You have understood some of my position correctly, but have indulged in augmenting it with a bit too much boilerplate “socialism.” Allow me to clarify:
    1. There is no clear causal evidence that lowering taxes can increase government revenues.
    —Careful here. The problem is that revenues do not go up enough to cover the tax cuts, much less achieve something additional like deficit reduction.
    2. There is no clear evidence that lowering taxes will lower deficits, in fact, there is evidence that deficits have been lowered with increased tax rates.
    —Correct. I’m still looking for an example of the former. I have provided an example of the latter.
    3. Government knows how to spend the people’s money at least as well as the people do to provide for the common weal and to increase the quality of life.
    —Mmmm, no. I think government can be an instrument for US to spend OUR money more wisely and efficiently e.g. public transit, roads, healthcare…
    4. We have not yet tested the limits for the increased benefits we can all enjoy were we to pay higher taxes, and should not let any other knowledge we may have about human behavior, conduct of institutions, and the large body of ‘expert literature’ to sway us from supporting the tax and stimulus programs coming from Washington.
    —No. I think there are enough examples say Canadian healthcare and university systems for example. I think every “stimulus” program from DC should be picked apart ruthlessly. I do not agree with the Wall St. bailouts, nor do I feel necessarily sanguine about the current “stimulus” package. In general, I think a New New Deal sort of thing, specifically aimed not at rebuilding 20th century infrastructure, but at long distance rail, IT, transitioning exurbs into higher density hubs, and single payer healthcare could be beneficial and could help stabilize the economy.
    5. The ongoing European experience with the lowering of tax rates is not relevant on this side of the pond.
    —Eastern Europe is tricky and I’m not sure it’s the best model or comparison. Low taxes in Russia, for instance, are simply an admission by the government that they are unable to collect them in the first place. Ukraine and Latvia teeter on the brink of utter collapse. In any case, according to the CBO, most corporations pay no tax at all in any given year, making the “onerous” rates here irrelevant.
    6. With the financial and political wisdom collected in/by Washington, we may be assured that government will always come up with the best plan forward for the generation and disposition of wealth. History is witness to this notion.
    —No & No. I am specifically talking about deficit reduction, that is, paying for what we allow our government to spend rather than borrowing the money. That is quite a bit narrower than “I believe the government always knows what is best and desire every aspect of my life to be controlled by a benevolent bureaucracy. I think it is a travesty to have enthusiastically supported the expenditure of trillions to have invaded and occupied indefinitely Iraq, but not to take seriously the matter of paying for it. Whether one admits it or not, this action is the epitome of a big government spending boondoggle. The significant tax cuts that accompanied this spending have yet to pay for themselves much less the war through the generation “increased revenue” per supply side theory. I would like us all to acknowledge this and move on to the business of paying down what we have borrowed. I believe that, between the two, “tax-and-spend” is vastly preferable to “tax-cut-and-spend.” That doesn’t mean, however, that I support any and all federal spending and believe the government should take over everything. I do not.
    In broader strokes: I think there is a great deal of cognitive dissonance in our politics and in our nation regarding taxes, wealth, capitalism, socialism, and the right-left continuum. In reality, the great capitalist, wealth creating engines of our nation are the cities like New York, Boston, San Jose, etc. If you look at the intake and redistribution of federal tax revenue, all these cities are net donors while the conservative “heartland” of the Southern and Mountain West states are all freeloaders and beneficiaries. Yet, if you asked these conservatives and “libertarians” what they thought the distribution of federal taxes was like, they’d almost certainly tell you that their tax dollars were going to support “welfare queens” in New York, the exact opposite of reality.
    Nowhere is this disconnect more outrageously obvious than in the right-wing socialism of Sarah Palin’s Alaska. Alaska’s extraction based economy simply could not function without massive, ongoing transfers of wealth from Washington. They practice purely socialist collective ownership of the State’s mineral commodities in the form of royalty checks distributed to all citizens. Yet, the politics they espouse is the brand of hard-right, guns & jesus, anti-Washington stuff that sneers at government handouts & socialism. Can anyone explain this? I see this sort of thing all over the West: “libertarian” ranchers who cash federal ag checks, use subsidized water and heavily sunsidized grazing “rights” paid for by the very people back East that they detest. Unionized cops who honestly think no one else should be allowed to organize. These types very existence is propped up by other people’s taxes, yet they deign to pay any themselves… I don’t get it.
    It goes without saying that all of these conservatives heartily support the occupation of Iraq. None of them are interested in raising the money to pay for it because taxes are bad. The thinking pretty much ends there.

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21. 

    George Rebane

    29 January 2009

    Well enough Wade, I stand with your characterization of your own beliefs and interpretation of the evidence. They are well stated and have to stand as they are. I hope that your re-indictment of the capitalist welfare system for corporations and wealthy farmers is not another attempt to cover me again with that blanket. My position on all kinds of corporate welfare has been made in these pages and elsewhere – I oppose them and reject the repetition of the charges if intended to convict me or my belief system.
    I generally agree with your view of Alaska. However, that problem is never discussed in terms of states rights in their original sense. When the central government extracts tribute and land from the several states, and then returns it conditioned on the satisfaction of questionably suitable (again to the several states) mandates, ‘welfare’ becomes a slippery concept. I tend to apply the nostrum of ‘don’t take it from me in the first place, so that I don’t have to beg and play games to get it back’.
    My citation of Europe’s policies of lowering taxes was not restricted to eastern Europe – ‘old Europe’ is also applying these medicines in the attempt to heal the effects of over socialization.
    I conclude this response at ‘Another Bridge to Nowhere?’, since it departs markedly from, and seeks to conclude the current thread.

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