"Rick Perry's an idiot," says former GHW Bush Treasury official and Reagan domestic policy adviser Bruce Bartlett. I avoid calling D-students idiots. But I will agree with The Economist's U.S. Editor Greg Ip that Perry and his fellow Republicans have a dangerously bad grasp of economics:
Many Republicans consider the tepid economic recovery an indictment of Keynesianism, and use the word as an epithet, as in "Keynesian utopia" (Sarah Palin) or "Keynesian bubble" (Ron Paul). They argue that aggressive fiscal and monetary stimulus have made things worse by generating uncertainty among firms and investors, and that austerity would put things right.
They almost surely have it wrong. Uncertainty about fiscal and monetary policy was also rampant in the early 1980s: Taxes were cut and raised repeatedly and the Fed tried, then abandoned, efforts to target growth in the money supply instead of interest rates. Yet after a sharp recession in 1981-82, the economy took off, primarily because the recession had been induced by high interest rates and, once rates fell, demand sprang back [Greg Ip, "The Republicans' New Voodoo Economics?" Washington Post, 2011.08.19].
Ip notes that the greater threat to a robust econoic recovery is not the much-touted "uncertainty" (come on, you chickens: if you can't stand uncertainty, get out of the free-market kitchen) but the austerity and faith in self-correction preached by Austrian economics:
American businesses — with some justification — complain that regulatory uncertainty has increased under the Obama administration. But weak U.S. growth primarily reflects the difficulty of stimulating demand through lower interest rates at a time when the private sector and the financial system are trying to shed debt — exactly the sort of liquidity trap Keynes identified in the 1930s. Other countries have experienced similar stagnation in the wake of financial crises. As for austerity boosting growth, the International Monetary Fund has found that far more often it does the opposite: Cutting the deficit by 1 percent of gross domestic product raises unemployment by 0.3 percentage points. The effects tended to be worse when they were not offset with lower interest or exchange rates [Ip, 2011].
Rick Perry's solution is to shift our attention from taxing the rich to taxing the poor. Says Perry, raising taxes on the wealthy "punishes success"... and suddenly I realize that what Perry and the GOP are really saying is that we aren't punishing failure enough, and those darn poor people are all failures.
By Republican philosophy, the working class and middle class should be expected to pay more taxes, sacrifice their job benefits, and face increased uncertainty about their retirement and kids' college funds. But threaten the super-rich with taxes or uncertainty, and you're a socialist blasphemer.
Republican economics is wrong, intellectually, empirically, and morally. It's really just class warfare, trying to convince the majority that government has no role in the economy so they can take the government's hand off the tiller and let wealth naturally accumulate upward.
He doesn't sound too bright, but turns out he's not alone having poor grades. Obviously Bush, but also Kerry and Gore were not good students: http://tpmdc.talkingpointsmemo.com/2011/08/rick-perrys-lousy-grades-on-par-with-past-nominees.php
Your understanding of GOP economic policies is let me just say, as kindly as I can, inaccurate.
If you think the poor endure punishment now, wait until we have a 20-percent value-added tax on everything we buy.
Policies, shmolicies - results matter. Check out the Texas miracle after 11 years of Perry. Go to the link for the table.
http://www.ritholtz.com/blog/2011/08/the-texas-miracle/
Remember even zealots are entitled to their own opinions, but not their own facts.
John Hess, I am pleased that neither Bush, Kerry, nor Gore are running. Perry should sit down and join them.
Troy, you may understand economics better than many of your fellow Republicans.
Stan, when that tax is proposed, I'll likely raise heck about it. Regressive, right?
And John Kelley: wow! That table is a killer!
Cory, the value-added tax (VAT) is horribly regressive. That strikes me as ironic because the so-called "progressive" European Union nations all have it. It's a cash cow, but it didn't prevent fiscal calamity over there, did it? They're in worse shape than we are!
Wow. "Republican economics is wrong, intellectually, empirically, and morally." It must feel really nice to think that you and your ideas are intellectually, empirically, and morally superior to those who disagree with you. Somehow, I have never developed a taste for that.
Like most Republicans, I think that the problem is sovereign debt. As for empirical data, you may have heard of Europe. What is the problem with Greece, Portugal, Ireland, Italy, and Spain? Empirically, it is that their governments have spent more than they take in and borrowed more than they can ever pay back. I have presented charts of CBO projections showing that the U.S. is well on its way to Greek level insolvency. I note that these charts were optimistic. They projected that U.S. debt would reach %100 of the GDP in a decade or so. We reached it this year. I think it is neither intellectually nor morally wrong to acknowledge this.
Yes, I think the Keynesian model has been discredited. If a trillion plus of deficit spending each year is not enough to stimulate the economy, what would do it? Yes, bringing budgets into balance will be painful in the short run. What is the alternative? I do not think it intellectually, empirically, or morally superior to advocate the unlimited expansion of the public debt. That is in fact your position, my friend.
Cory, interesting that Troy and Ken just wag their fingers at you without countering your class warfare argument. Come on guys. Speak to Cory's real point. I know it's not fashionable, but the Tea Party and the GOP has thrown the Class argument gauntlet down. So let's deal with it instead of trying to change the subject, okay?
OK Bill I will. Cory makes a blanket statement he and his views are superior "intellectually, empirically, and morally."
I can't find the intelligence in what he is arguing, no emperical information is referenced, and I reject his morality. What am I supposed to argue?
Here is Cory's argument: "It’s really just class warfare, trying to convince the majority that government has no role in the economy so they can take the government’s hand off the tiller and let wealth naturally accumulate upward."
It's the classic progressive argument against unrestrained capitalism.
And progressives claim to be the guy for the weak. Well, I think progressives either hate the poor or dont understand the unintended effect of their policies.
Psalm 82: God standeth in the congregation of the mighty; he judgeth among the gods. 2How long will ye judge unjustly, and accept the persons of the wicked? Selah. 3Defend the poor and fatherless: do justice to the afflicted and needy. 4Deliver the poor and needy: rid them out of the hand of the wicked. 5They know not, neither will they understand; they walk on in darkness: all the foundations of the earth are out of course.
But, since Christianity has/should have no influence at all on legislation (unless, of course, we are talking about sexual/reproductive behavior):
“I wish to be left alone,†said Scrooge. “Since you ask me what I wish, gentlemen, that is my answer. I don’t make merry myself at Christmas and I can’t afford to make idle people merry. I help to support the establishments [the workhouses and the prisons] I have mentioned—they cost enough; and those who are badly off must go there.â€
“Many can’t go there; and many would rather die.â€
“If they would rather die,†said Scrooge, “they had better do it, and decrease the surplus population. Besides—excuse me—I don’t know that.â€
“But you might know it,†observed the gentleman.
“It’s not my business,†Scrooge returned. “It’s enough for a man to understand his own business, and not to interfere with other people’s. Mine occupies me constantly. Good afternoon, gentlemen!â€
- A Christmas Carol
Troy, perhaps the latter, unless you are accusing us of self-loathing.
LOL. As you know buddy, it is just my retort to those who claim to be the only ones who care for the poor. Who am I to assert you are self-loathing unless of course I look at your facebook picture. :)
Yeah, that's one sorry lookin' sucker, huh? LOL.
I at least have the good sense to have a picture of my daughter. Which now that I think about it can be used to make a case for evolution.
Why class warfare? We can lower everyone's taxes by shrinking government. I think that is the Tea Party line as opposed to the GOP Establishment line. So Bill, don't confuse the GOP with the Tea Party. Some of us understand that the GOP want big government as bad as the leadership of the Dems.