Wednesday, January 06, 2010

Credibility Means Nothing

And we're Americans, we don't let facts get in the way of narrative or mythology, dammit.

It does not matter one whit that 1999 - 2009 was America's lost decade, economically speaking. There will always be people who will hold onto the fantasy that the Bush era tax cuts created some form of economic gains that were dashed only by the election of Obama, who is at fault for the recession (and will never get any credit for stopping the meltdown). Liberals are always to blame. If it wasn't for them, we wouldn't have thrown our Dow 30,000 away on entitlement spending for welfare queens.

Maybe if the liberals had spent 1999 - 2009 actually helping (instead of hating) America, Christmas and enhanced interrogation, the economy would not have tanked and we would have found those weapons of mass destruction. But no, all they did was complain, and dream up an iconic messiah without a birth certificate.

And that will be what history tells future generations, because, as Oyster writes:

Predictably, the Dems will cower in the corner and wait for the other side to craft a startlingly absurd economic explanation for the miserable Bush decade, and watch in admiration as they repeat it in coordinated fashion with straight faces. Dems love playing prevent defense on such things, with some idiotic forlorn hope that the press will call out the GOP for being crazed, unhistorical phonies.

Stupid liberal media.



Dante said...

"And we're Americans, we don't let facts get in the way of narrative or mythology, dammit."

Exactly. Why let little things like massive tax cuts in the 60's and 80's (who both have sizable growth in that handy dandy net job growth chart) get in the way of some good old-fashioned anti-Bush anti-tax-cut narrative?

Cousin Pat from Georgia said...

Thing is, the Dem narrative is not "tax cuts never work."

On the other hand, the GOP narrative is "tax cuts always work."

If we accept the mythology as is, tax cuts have been enacted 3 times. 66% of the time, they have grown the economy, in different ways. 33% of the time, they have wrecked the economy. 100% of Democratic tax cuts have grown the economy, compared to only 50% of GOP tax cuts.

And looking further into the analysis, tax cuts worked under a Democratic President with low spending and a Republican President with high spending. Then they didn't work under a different Republican President with really high spending.

The big difference is that Kennedy & Reagan lowered taxes when the top marginal tax rate was (way) over 50%. Bush lowered taxes when the top marginal rate was lower than 40%.

To me, that suggests lowering taxes too much can be counter- productive, especially during times of war and bureaucracy realignment (DHS). Though I don't think there is a "magic" top marginal tax rate to aim for, alterations between 50% and 39% TMTR seem to work the best.

But that's just if I took the mythology and narrative at face value without considering any other factors.

For me, it will always be about return on investment per tax dollar spent. Americans were taxed to the point of apoplexy under FDR, Truman and Ike, but growth continued because of the way those tax dollars were spent. We had wars to win, infrastructure to build, a Soviet Union to deter, men to put on the Moon and an Interstate Highway System to build. We practically dumped money into university based research to give us any edge we could.

Nowadays, we are taxed far, far less than then, but our return for each dollar spent is so negligible, it feels burdensome.

But we won't ask why it feels burdensome, we'll just argue about "big government vs small government + contractors."

Dante said...

Your return on investment can be from here to the moon but if you can't afford it, you can't afford it. Just ask any number of companies who died after overexpansion. Yeah, they got great returns but at the expense of not have enough cash to run their day-to-day operations.

I don't have a problem with deficits. A deficit is a bet on the American economy and I'm always willing to take that bet. What I do have a big problem with is any rapid increase (or decrease for that matter) in the deficit as a percentage of our GDP. And the rapid increase on our debt ceiling makes me nervous that we'll never realize the returns we potentially get from the increase in spending.

But the real crux of the matter is that you can't look at any single factor in a vacuum. A lot of other stuff was going on in the 60's and the 80's and the 00's. To try to lay blame on any single factor is silly. Even to lay blame at the feet of the government alone would ignore significant private hands in the matter.

To lay blame on any single person or Party is equally silly. You can blame Replublicans because they were in charge of Congress and the White House during most of the 00's but that would ignore the significant amount of support the minority Party lent the economic bills passed during that time period. Hell, Feinstein and Torcelli voted for the Bush Tax cuts back in 2001. So did about a dozen other Democrats.

If you want answers to our economic woes, you won't find them in Congress. They're too invested in their side winning and the other side losing to actually look at what went wrong and try to fix it. One side will ignore any ill effects from the Bush Tax cuts. The other side will ignore Barney Frank's nuclear detonation of A paper mortgage lending standards which forced a chain reaction in subprime lenders who scraped even further down the creditworthiness barrel to keep their numbers up.

When we can get past blaming people and Parties and start looking at what really went wrong (and likewise what really went right), then we'll find real long term solutions. But I won't hold my breath for that to happen.

Cousin Pat from Georgia said...

I absolutely agree with you on being able to afford return on investment. However, as a nation, we've been able to afford a 90% top marginal tax rate back during the good ole days.

We were able to afford it based on all the other things going on, and the return we saw on that investment.

Today, we're having trouble affording a top marginal rate between 33 and 39%, because we receive very little return.

And yeah, people are going to oversimplify what happened economically during the Aughts. American popular culture does not study history very well and usually looks derisively on those who would challenge their assumptions.

Yes, a lot of pundits will attempt to find one person or event to blame, when there were many factors at play.

Both partisan sides will attempt to roll out their own narrative, but we know which side is more successful at selling laughable narratives. That's one major theme of both this post and Oyster's.

I've been hearing the right wing narrative since 2007 that Barney Frank, Fannie Mae and Freddie Mac are the trinity that caused this recession. Yes, they were pieces of that puzzle. Yes, they might have even been pretty big pieces. But to think that Barney Frank is the main force behind the whole economic doldrum that was 1999-2009 is so obtuse it borders on negligent.

Yet I've not heard a single right wing, conservative or GOP decision maker even consider the possibility that the Bush tax cuts could even share some of the blame.

DADvocate said...

Discussing 1999-2009 economics without mentioning 9/11 ignores one of the largest influences on the economy for at least 2-3 years.

The attacks caused an immediate drop in economic activity. My company saw a 20-30% drop in business which cause layoffs. Recovery was relatively rapid but the impact was significant.

Cousin Pat from Georgia said...

+ 1 DADvocate.

Economic disruption during the last decade must be considered when examining the Bush years.

The September 11th Attacks and subsequent wars in Afganistan and Iraq did throw a monkeywrench into the national psychology and economy - the effects of which I don't think have been discussed adequately in the body politic or popular culture.

Don't forget the economic disruption caused by the hurricanes in 2004 - 2008, with the spike in 2005. Thousands of miles of damage, Florida, hundreds of thousands of internally displaced civilians for months if not years, flooding and shutdown of the Mississippi River's major shipping hub, the massive evacuation of the nation's 4th largest metro area (Houston) two times, oil refineries and importation infrastructure threatened, gasoline price spikes, and the unraveling of many government agencies (at all levels) to respond cohesively to the crisis specifically in 2005.

Those are some hard pills to swallow in a decade's time. But you won't hear about that from the narrative writers. One wonders why.