Sunday, April 24, 2011

Spinning Economic Tales

It's part of the GOP economic myth that somehow President Ronald Reagan- who left office in January, 1989- created the economic boom which came about during the presidency of William Jefferson Clinton, which began in January, 1993. On Friday, leading storyteller Rush Limbaugh claimed

Intellectually, you and I know that the Clinton tax increases retarded economic growth in the nineties; that the economic growth of the nineties that happened was still an offshoot of what happened in the eighties with Reagan. Had the Clinton tax increases not happened, the economic growth would have been even better than it was. The American people simply were not able to be shut down and stopped.

As you might have expected, the man who said "intellectually, you and I know that the Clinton tax increases retarded economic growth" then went on to appeal to the intellect by citing no statistics, details, or facts. "Intellectually," indeed.

Apparently, though, that wasn't the tune Rush was singing on July 20, 1993, two weeks before the Clinton budget, with a huge income tax increase, was approved by Congress with zero- 0- Republican votes. Then, despite eight years (ending 53 months earlier) of what he considered a virtual economic miracle, Rush maintained on his television show (as related by Salon's Steve Kornacki)

I want to stress something to the Republican Party that's watching this show and those of you who are members of it. The Republican Party staked out a claim as the party of middle class relief from oppressive government in the 1980s by doing what? By opposing tax increases and instead standing for tax rate reductions. The only difference between a Democrat and a Republican in this economic bill is the opposition to tax increases. It's the tax increases that are going to doom this plan. It's the tax increases that are going to stop this economy. It's the tax increases that are going to slow it down and hurt the people who make this country work.

If the Republicans decide to compromise on any tax increase, they are participating in the damage that this plan will cause the country. They are helping and are complicit in the damage this plan will cause to the people who make this country work. And by compromising on any tax increase whatsoever, the Republicans are then forfeiting any opportunity to say, Hey, it wasn't our idea. Hey, we had no part in this. Hey, we didn't have anything to do with it.' By going along with these tax increases on the wealthy, then the Republican Party or the members of the party who do that are forfeiting any political credibility in the future in opposing this plan and for their own future.

The Republican Party, I want to tell you right now, is never ever going to come back and win the White House unless they unite on the concept that this government needs no new tax rate increases to operate. This government simply has enough money to operate as it is. Tax rate increases slow down economic activity. It is not a theory. It's not an opinion. It is fact. It is true. And if the Republican Party can't unite around the idea that the way to cause economic growth, the way to create wealth is to rid people of the shackles of an oppressive government veer--via high tax rates, then the Republican Party is forever going to be disunified and is not going to be able to mount a credible opposition to the Democratic plan which is total tax increases, total big government.

Then, like the over 200 GOP members of Congress who rose in unison (well, not exactly in unison) to say NO! to the tax increase and YES! to continued budget deficits, Limbaugh was convinced that that "tax rate increases slow down economic activity."

Not so much, evidently. As this site documents, manufacturing, corporate profits, tax receipts, median family income, and the stock market all were higher in the Clinton Administration than during the Reagan Administration. Admittedly, overall home mortgage rates and poverty were lower during Clinton's term, but even some Republicans would agree that is positive. Whether because, or despite, the increase in tax rates Congress narrowly approved over unanimous GOP animus, tax increases did not "stop this economy" or "slow it down and hurt the people who make this country work." Heck, even the people Rush believes "make this country work" prospered during the last Democratic Administration; corporate profits increased by $143.5 billion during Reagan's terms and by $326.6 billion during Clinton's terms.

President Reagan had to run big deficits to get the American economy moving. Bill Clinton eventually balanced the budget and left George W. Bush with a big surplus, which he promptly squandered. Now while inheriting two wars, a deep recession, and an exploding debt caused most of all by tax cuts (graph, below, from Center for Budget and Policy Priorities), President Obama is condemned for jacking up the debt. Now, Rush and other Republicans have gotten religion and are now obsessed with red ink.

But as all the caterwauling indicates, most Republicans are much more exorcised about an activist government working on behalf of the American people than by the gap between revenues and spending. Otherwise, they would acknowledge, as Kornacki notes,

we have a decade's worth of compelling evidence that raising income taxes on the wealthy can reduce deficits and (at the very least) not inhibit sustained economic growth. And yet, Limbaugh is still telling his listeners -- in rhetoric that Republicans on Capitol Hill are still parroting -- that this has "never worked."

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