Tilted Forum Project Discussion Community - View Single Post - Valid or Invalid: "All that growth is due to the policies of one....Ronald Regan."?

host · 12-02-2005, 04:06 AM

ArellaNova posted the statement that comprises the thread title. Link:
http://www.tfproject.org/tfp/showpos...7&postcount=65

I replied, here:
http://www.tfproject.org/tfp/showpos...3&postcount=67

This thread is created to respond to:

Quote:

Originally Posted by ArellaNova

As I have observed from this forum documentation is not required to have an opinion. I thank you for pointing that out though. If I have some time to pull up my old election files I will provide the documentation you require.

Smug/arrogant? Not so much more than anyone else, I'm afraid.

First impressions: Who am I trying to impress? Would you think my opinion true to form if I WERE trying to impress you?

I challenge you, then, to a documentation stand off. You havn't provided me with it to support your theory that Clinton fixed anything. (I would suggest that it happen in a seperate thread though-out of respect - or over PM or e-mail)

As to California, and the other states, Individual state economies can not be measured soely against national policies. They have individual laws, codes, legislatures, and regulations. California is a state that has been run by liberal-democrats for years. What does that say to you?

That is an interesting theory. I have a few that refute most liberal-democrat principles. The most important and the basis for many of my opinions is "Economics in One Lesson" By Henry Hazlett
http://www.amazon.com/gp/product/051...lance&n=283155

This has the clearest and concise explination of "The Broken Window Theory" which I use as basis for the argument that Govenrment intervention to "fix" economic problems only creates more problems.

I don't think the President himself deserves credit for economic growth or delcine as a whole at all. I think that Presidential policies can take credit for "affecting" the economy one way or another.

Yet is it my beleif that our free market economy is an entity unto itself - influences by many sources -deserving to be seen through the eyes of the public AND private sectors (gasp, yes. corporations. And parnterships. And small businesses). Link to this quote box:
http://www.tfproject.org/tfp/showpos...1&postcount=69

ArellaNova seems to idolize the alleged accomplishments of the Ronald Reagan presidency. I view our current problems...runaway federal deficit, massive corruption in federal government, erosion of America's relationships with other countries, and of the exchange rate of the dollar, oil dependence that threatens national secuirty, the 25 year postponement of an energy conservation policy, the plummeting of America's former human rights leadership, and in quotebox ( 7 ), I cannot help but wonder what this country would be like today if Reagan had never occupied the white house. Reagan's policies reversed the direction of many of Carter's policies that would have made chances far greater that we would not be energy dependent, at war, distant from former allies, and crippled by a huge deficit. There are persuasive arguments for the premise that the Soviet Union was in sharp decline, and that Reagan's foreign and defense policies accomplished huge deficits in pursuit of the Soviet fall that was inevitable without U.S. pressure.
Carter total debt increase, four years: 1977-1980 = $288 Billion
Reagan total debt increase, eight years: 1981-1988 = $1893 Billion
In 1980, total federal debt was $995 Billion
In 1989, total federal debt was $2868 Billion
Link: http://www.tfproject.org/tfp/showthr...80#post1474288

Is it not unreasonable, given the acceleration of federal debt in the Reagan years, the reversal of Carter energy, human rights, and foreign relations by Reagan, viewed from where our country was in 1980, and where it is now, to speculate as to whether we would be much better off if Reagan never had a chance to "lead" us? When Reagan took office, Carter's policies had lowered petroluem consumption by 10 percent in two years. The U.S. imported less that 40 percent of it's oil in 1980. Now, we import nearly 70 percent of the 22 million bbls that we consume each day. Where would we find ourselves if Carter had served until 1984? Would the deficit be smaller? Would we use as much oil each day, and borrow so much money to buy so much of it from foreigners? Would we have more allies, a more positive reputation among other nations? Would we be at war in the middle east, or "on terror"?

Would the richest be as rich? Would as many Americans be so poor, and without health insurance coverage? What did Reagan really lead us to?
Utopia? An economic miracle? I think not!

Here is an outline of my other footnoted points:

( 1 ) Supports my contention that the most reliable and convincing means to counter your
Reagan statment is that there is confusion about what bi-partisan, economic "experts", actually
believe. I contend that anecdotal evidence that "trickle down" economic policies dramatically
favored the rich, and failed to signifigantly increase the incomes of the majority.
Included in quote box ( 1 ) is this:
"Back in 2003, the choice of N. Gregory Mankiw, a Harvard professor, to head the council initially provoked some wonderment from economists. He had condemned supporters of some Reagan-era tax cuts as "charlatans and cranks" in the first edition of his basic economics textbook, and he had suggested replacing part of the income tax with higher taxes on gasoline - a nonstarter in this White House. But it's possible that the administration had few other options."

The crux of ( 1 ) is "The White House and Congress need as many as five academic economists of high caliber, and it's not obvious where they will come from. The Republican Party may be facing something of a shallow bench."

( 2 ) Speaks for itself:"N. Gregory Mankiw, whom Mr. Bush nominated on Wednesday to lead his Council of Economic Advisers, wrote a popular economics textbook in which he ridiculed the supply-side tax cuts of President Ronald Reagan as "fad economics" conceived by "charlatans and cranks.""

( 3 ) Criticism of the Hazlitt book that ArellaNova recommended, and my suggestion of a less controversial, and possibly superior, substitute.

( 4 ) A rebuttal of an April 26, 2005 WSJ editorial, that argued "the overall tax burden grew more progressive" Excerpts and links to studies (and a graphic chart) that support the following argument that indicates that economic policies of the twenty years preceding the year 2000 have resulted in: "The super-rich are pulling away from everyone by so much and at a rate so fast that the fact that incomes of many households at the bottom and in the middle have stagnated, or even fallen in constant dollars, has been obscured by ever increasing per capita income."

My point: Since 1980, the overall tax burden did not "grow more progressive", because republican federal tax policy that consistantly favored the wealthy and corporations, resulted in a much larger increase of income to the wealthy, compared to the actual increase in the actual federal taxes that they paid.

( 5 ) Quote from NY Times columnist Krugman that supports his professional association with newly appointed Fed Chariman, Ben Bernanke, and Krugman's endorsement of Bernanke, to attempt to qualify Krugman's credentials as an economist who is making a professional comparison between the effects of Reagan/Bush '41 economic policies, vs. Clinton policies.

( 6 ) Krugman's June 11, 2004 NY Times column, where he provides his opinion (as a Princeton Univ. economist) of the effects of Reagan/Bush '41 economic policies, vs. Clinton policies. I'll use his column's ending, to sum up my points, here.

"It's a measure of how desperate the faithful are to believe in the Reagan legend that one often reads conservative commentators claiming that the Clinton-era miracle was the result of Mr. Reagan's policies, and indeed vindicated them. Think about it: Mr. Reagan passed his big tax cut right at the beginning of his presidency, and mainly raised taxes thereafter. So we're supposed to believe that a tax cut passed in 1981 was somehow responsible for an economic miracle that didn't materialize until around 1997. Apply the same timing to the good things that happened on Mr. Reagan's watch, and you'll discover that Lyndon Johnson deserves the credit for "Morning in America."

So here's my plea: let's honor Mr. Reagan for his real achievements, not dishonor him — and mislead the nation — with false claims about his economic record."

Begin Footnotes ( 1 ) through ( 7 ), below:

( 1 )

Quote:

http://www.nytimes.com/2005/11/27/bu...ey/27view.html
November 27, 2005
Economic View
Help Wanted: Academic Economists, Pro-Bush
By DANIEL ALTMAN

IT'S no secret that hurricanes and wars have swamped the economic agenda that George W. Bush planned for his second term. In the commotion, however, one fact has gone largely unnoticed: much of Washington's expert economic team has disappeared.

The chairmanship of the Council of Economic Advisers will soon be vacant, and two spots on the Federal Reserve Board that were recently filled by academic economists already are. There is no assistant secretary of the Treasury for tax policy, and the director's chair at the Congressional Budget Office, currently occupied by Douglas J. Holtz-Eakin, will soon be empty, too.

The White House and Congress need as many as five academic economists of high caliber, and it's not obvious where they will come from. The Republican Party may be facing something of a shallow bench.

"Bush's reputation in at least the academic community is about as low as you can imagine," said William A. Niskanen, who was a member of the council during President Ronald Reagan's first term and is now chairman of the Cato Institute, a libertarian research group. "A lot of people would not be willing to give up a good tenured position for a position in the White House."

Back in 2003, the choice of N. Gregory Mankiw, a Harvard professor, to head the council initially provoked some wonderment from economists. He had condemned supporters of some Reagan-era tax cuts as "charlatans and cranks" in the first edition of his basic economics textbook, and he had suggested replacing part of the income tax with higher taxes on gasoline - a nonstarter in this White House. But it's possible that the administration had few other options.

"It has been true, typically speaking, that Republican administrations have found it harder to find senior, more prominent academic economists for the C.E.A. members and chairman than have Democratic administrations," said Michael L. Mussa, a senior fellow at the Institute for International Economics, a nonpartisan research group in Washington, who was a member of the council during President Reagan's second term.

Mr. Mussa explained that the problem was partly one of specializations. "In the economics profession, on the microeconomic and regulatory side, there you find a substantial number of Republicans," he said, "but macroeconomists tend to lean a bit more to the Democratic side, on average."

And politics do matter for the appointments. "If you have written publicly in strong opposition to the current administration, they will be less likely to be interested in you," said Kristin J. Forbes, a veteran of the council who is now an associate professor at the Sloan School of Management at the Massachusetts Institute of Technology. "On the Council of Economic Advisers, the priority is a very good economist who supports most of the president's economic policies."

The same is likely to be true for the positions at the Treasury, the Fed and the Congressional Budget Office. Two of the three spots being vacated by academic economists - Ben S. Bernanke and Edward M. Gramlich at the Fed, and Mr. Holtz-Eakin at the budget office - could well be filled with more of the same, Mr. Mussa said. (Mr. Bernanke is expected to become the Fed chairman; Mr. Gramlich has returned to the academic world, and Mr. Holtz-Eakin will join the Council on Foreign Relations.) Mr. Mussa added, however, that the economist at the budget office should have experience in policy and management.

That's something that many academics lack. "Generally, economists are not very slick," said Alicia H. Munnell, a professor of management sciences at Boston College who served on the Council of Economic Advisers when Bill Clinton was president and spent years working in the Federal Reserve system.

Economists may not want to be political, either, she added. The reason has to do with incentives. "Everybody wants to go back into academia and be respected, so you don't want to say anything too foolish that people are going to laugh at you afterward," Professor Munnell explained.

Professor Forbes recounted that she and her colleagues on the council had pledged never to support policies that they didn't believe in themselves. Nevertheless, the role of the council's chair can take on a decidedly political tilt. That much was clear when Professor Mankiw, the last chairman to serve for more than a few months, appeared before the Joint Economic Committee of Congress in February of last year.

At times Professor Mankiw, who has returned to Harvard, sounded more like Scott McClellan, the White House press secretary, than an economic adviser. "The president is very focused on putting people back to work, at creating jobs," he said. "The president has said that he wants to make the tax cuts permanent. He believes that is important for economic growth."

Once he even caught himself, but the result ended up the same: "The president has - we've worked with Congress in the past to extend unemployment benefits. The president will continue with Congress on that issue."

Quite a few economists might have a hard time acting as the president's mouthpiece today. Plenty of academics, even some who have supported Republicans in the past, have condemned the White House's current policies. In particular, the enormous federal deficit has elicited ire from both left and right.

"There are a number of Republicans, both the right-wingers and the moderates, who are very uncomfortable about the deficits, and particularly about the spending that we saw in the first four years," Mr. Mussa said.

Dismay about the war in Iraq could also prompt many academics to turn down the White House on principle, Mr. Niskanen said.

One hint that the labor pool is drying up may be in the ages of some recent appointees. Professor Forbes was only 33 when she joined the council in 2003. Katherine Baicker and Matthew J. Slaughter, two academics confirmed as members this month by the Senate, are 34 and 36, respectively. Before taking up their new posts, both were associate professors, as Ms. Forbes is now - not full professors, like the vast majority of their predecessors.

Mr. Niskanen suggested that this change could stem from a perceived drop in the prestige of the council. "Bush has centralized policy decision-making much more than any president in years," he said. "The Council of Economic Advisers has been somewhat bypassed."

Mr. Niskanen said that there were now fewer meetings between members of the council and members of the president's cabinet than there were during his term. The council's offices have even been moved to a building farther from the White House.

ALL of these tensions may have resulted in a sort of Catch-22. The president's inability to move forward with much of his second-term economic agenda - dealing with Social Security, the tax system, immigration and tort rules - may have dulled economists' eagerness to work with him. Yet he may need them in order to start the wheels moving.

"John Snow has talked about turning the tax commission report into legislation," Mr. Niskanen said of the Treasury secretary, "but he does not have the skills on board to do that."

Professor Forbes, who also spent time at the Treasury, said that working in Washington demanded heavy sacrifices and large commitments of time. Her colleague there, Harvey S. Rosen of Princeton, added that spouses were often unwilling to move for short-term stints.

But Professor Munnell praised the experience as "extraordinary," adding that it also had a tendency to change the outlook of academic economists: "Once you taste the real world, it's really hard to ignore it."

( 2 )

Quote:

http://www.nytimes.com/2003/02/28/business/28ECON.html
http://www.mail-archive.com/futurewo.../msg08567.html
February 28, 2003 NY Times
A Salesman for Bush's Tax Plan Who Has Belittled Similar Ideas
By EDMUND L. ANDREWS

WASHINGTON, Feb. 27 — In nominating a respected Harvard economist as one of his top advisers, President Bush has now replaced nearly everyone from his original economic team with people who at one time spoke out against the kinds of policies Mr. Bush is prescribing.

N. Gregory Mankiw, whom Mr. Bush nominated on Wednesday to lead his Council of Economic Advisers, wrote a popular economics textbook in which he ridiculed the supply-side tax cuts of President Ronald Reagan as "fad economics" conceived by "charlatans and cranks."

If Mr. Mankiw is confirmed by the Senate, which is likely, he would become one of the top three salesmen for an even bigger plan by President Bush to cut taxes by about $1.5 trillion over the next 10 years and let the government run big budget deficits for the foreseeable future.

Mr. Mankiw's comments have infuriated a number of prominent supply-side economists, including at least one who helped draft the Reagan tax cuts. Some of them question how Mr. Mankiw can credibly promote Mr. Bush's tax cut proposals in Congress, with business groups and among the public at large.

"It's stupid; it's simply not what a good economist writes," said Martin Anderson, a senior fellow at the Hoover Institute who served in the Reagan White House and also advised Mr. Bush during the presidential campaign. "Anybody who puts that in a textbook for tens of thousands of students to read has a lot of explaining to do."
But Mr. Bush's decision to recruit Mr. Mankiw and the other new members of the economic team reflects a pragmatic decision to install people who can project confidence at a time when the economy shows new signs of stalling and Democrats are gearing up for the next election.

Few people think the new team will waver over Mr. Bush's plans, but the president is nonetheless now relying on people who had no role in drafting the plan that they have to sell.
White House officials dismissed criticisms of Mr. Mankiw today, saying he ranks among the nation's top macroeconomists and is solidly behind Mr. Bush's economic plans.

"The president nominated Professor Mankiw because he is an outstanding and talented economist who shares his view that tax cuts lead to higher growth," said Claire Buchan, a White House spokeswoman.
But Mr Mankiw, 44, (pronounced Man-CUE) is not the only person on Mr. Bush's team who has said things that appear at odds with the president's current policy. Democratic opponents have already jumped on those statements to undermine the credibility of plans....

....John W. Snow, who took over as Treasury secretary this month, campaigned aggressively for a balanced federal budget in the mid-1990's, when the deficit was actually lower than it is projected to be this year.
Stephen Friedman, who recently took over as head of the White House National Economic Council, which is responsible for coordinating administration economic policy, was a board member of the Concord Coalition, a bipartisan political group that pleads constantly for balancing the budget and has long infuriated the Bush administration.
Thus far, Mr. Snow and Mr. Friedman have swallowed any reservations about deficits they once had and become unflinching champions for the president's tax cut plan. ....

.....By most accounts, Mr. Mankiw enjoys enormous respect as a bright and prolific economist who has written best-selling textbooks as well as academic papers on topics ranging from consumer behavior to monetary policy and budget deficits.
"He is definitely not a supply-sider and definitely not a supporter of Reaganomics in the sense that Washington people talk about," said Dale Jorgenson, a professor of economics at Harvard and a longtime colleague of Mr. Mankiw. "But he is one of the top few macroeconomists in the country. He's also very well-organized and a very, very productive guy."
What has infuriated some advocates of Mr. Bush's tax-cutting plans are things that Mr. Mankiw wrote in his textbook, "Principles of Economics," first published in the late 1990's.

The textbook includes a section on President Reagan's economic policies, which, like those of President Bush, called for deep tax cuts and were based in part on the idea that tax cuts could help pay for themselves by producing faster economic growth.
In a section of his book entitled "Charlatans and Cranks," Mr. Mankiw ridiculed the Reagan policies as "fad economics" that were tantamount to "fad diets."

"An example of fad economics occurred in 1980," Mr. Mankiw wrote, "when a small group of economists advised presidential candidate Ronald Reagan that an across-the-board cut in income tax rates would raise revenue."
After reviewing the impact of Mr. Reagan's policies, which included a run of high budget deficits that lasted until the mid-1990's, Mr. Mankiw wrote that the moral of the experience was that "when politicians rely on the advice of charlatans and cranks, they rarely get the desirable results they anticipate."
In later editions of his textbook, Mr. Mankiw dropped the entire section on "charlatans and cranks" and muted his criticism. But he has not mended his fences with today's advocates of big new tax cuts.

"These insulting passages display an enormous level of ignorance about the economic reality of the 1980's," said Stephen Moore, president of the Club for Growth, a political group in Virginia that raises money for candidates who support Reagan-style tax cuts.

Mr. Moore said he wrote a letter pleading against Mr. Mankiw's nomination to Karl Rove, President Bush's top political adviser. But White House officials, who are still angry about Mr. Moore's complaints about Stephen Friedman, said today that they did not listen much to Mr. Moore.
From the LA Times............

.....Tyler Cowen, an economist at Virginia's George Mason University, is skeptical when arts advocates say that government funding brings economic growth. Their studies don't take into account what the same dollars might generate if put to some other government use, or if they were funneled back to the taxpayers, said Cowen.

"The arts are essential, but not the arts we get from state spending," he said. "I don't want to trivialize it -- you would have less of some kinds of art if state subsidies were cut. But I don't think we should exaggerate it, either. The sums involved are so small, I don't see the damage."

In the debates ahead, those who want to shield state arts funding may be challenged because of the very resiliency and resourcefulness that artists and arts organizations historically have shown.

"The cuts are getting everybody shaken up, but the arts have been scrambling and surviving for a long time. They will find a way to survive and find other ways to make the system work and be supportive," acknowledges Robert Lynch, president of Americans for the Arts. But that, he adds, doesn't mean there won't be real pain and loss. "As a matter of survival, there will be fewer performances, shorter hours....The loser is the audience."

( 3 ) "Naked Economics" received a much larger proportion of positive <a href="http://www.amazon.com/gp/product/customer-reviews/0393324869/ref=cm_rev_sort/103-8592040-5601453?customer-reviews.sort_by=%2BOverallRating&x=10&y=11&s=books">reviews</a> than Hazlitt's book.

I found the excerpts from the following "citizen" review of Hazlitt's book, "especially helpful".

( 3 )

Quote:

http://www.amazon.com/gp/product/cus...2&y=11&s=books

Fatally flawed, but a useful guide to free market fallacies, October 21, 2003
Reviewer: Contrarian23 "Contrarian" (Washington, DC United States) - See all my reviews
OK - no "ad hominems" here. One bitter reviewer mentions that many of the "one star" reviewers don't discuss content. But several do. And many of the "five star" reviewers don't discuss content either. So let's stick to the issue - is this a "good" book?

Two major positives for Hazlitt: First, he writes well. His prose is usually easy to understand, and he takes pains to create simple models and analogies for the reader. Second, he elucidates most of the arguments put forth by "free market" apologists, so if you want to know how these people think, this is a great place to get started.

The negatives...ah, where to begin?
1.) The simplicity of his models and analogies is of course the greatest flaw. The real world is never as simple as Hazlitt suggests it is. Even the classic (and flawed) broken window analogy is a dramatic oversimplification. And even the most extreme positions that he takes are flawed. FOr example, at one point, Hazlitt mentions that if it were productive for a society to have its factories destroyed by war, then all factory owners would destroy their factories. But this is not so. In the real world, there are costs to tear down plants - and these are generally borne by the factory owners. If those same plants were destroyed by external forces, those costs are borne by others......

2.) As another reviewer notes, Hazlitt also conveniently ignores all of the following: externalities, public goods, frictions in labor markets, game theory (especially relevant in discussing tariff policy), monopolies and oligopolies, etc. In short, his reasoning is completely circular: if you assume away all of the real world complications that gave rise to various regulations and welfare policies, then OF COURSE you are going to conclude that those regulations and policies are unnecessary and destructive....
3.) Hazlitt does not deal at all with the horribly destructive economic beast that is the modern corporation. Kudos to the one pro-Hazlitt reviewer that pointed this out (and see his review for more detail). But the point for readers to understand is that Hazlitt, by wanting to end all government intervention,implicitly gives even more power to the corporations. This is not Adam Smith's small-farmer, local-shop-owner economics. Multi-national corporate economics is a far different game, requiring a far different set of rules.

There are other problems as well. Read Hazlitt for a thorough grounding in the fallacies of the libertarians, think through his arguments for yourself and you'll soon find yourself refuting almost every conclusion that he reaches. Then you'll be well poised to do battle with your closest misguided Republican friends, not to mention the truly bizarre followers of Ayn Rand.

( 4 )

Quote:

http://taxprof.typepad.com/taxprof_b...n_tax_pro.html
April 27, 2005
More on Tax Progressivity (or Non-Progressivity)

Stuart Levine of <a href="http://taxbiz.blogspot.com/2005/04/fools-and-knaves-wall-street-journal.html">Tax & Business Law Commentary</a> takes me to task for <a href="http://taxprof.typepad.com/taxprof_blog/2005/04/wsj_on_distribu.html">my post</a> yesterday about the Wall Street Journal editorial citing a recent <a href="http://www.irs.gov/pub/irs-soi/04asastr.pdf">study</a> by Michael Strudler, Tom Petska & Ryan Petska purporting to show that:

the overall tax burden grew more progressive from 1979 to 1999. And while that burden became a tad less progressive after the Bush tax cuts of 2001 and 2003, the rich and upper middle class continued to pay far and away the bulk of U.S. taxes.

As Mr. Levine notes, the WSJ editorial tells only part of the story -- the WSJ ignores data from the study and elsewhere that the growth in the income received by the very wealthy far exceeded the growth in the taxes they bore during this period:

*
Between 1979 and 2002, the threshold for the top 0.1% grew from $321,679 for 1979 to $710,661 for 2002, an increase of 121%. Similarly, the threshold for taxpayers in the 1% group rose from $109,751 for 1979 to $175,618 for 2002, an increase of just over 60%. However, the thresholds for each lower percentile class show smaller increases in the period; the top 20% threshold increased only 5.6%, and the 40% and all lower thresholds declined. In other words, over the period studied, the rich got a whole lot richer than everyone else and began to put real distance between themselves and the middle class.
*
The share of income accounted for by the top 1% of the income distribution has climbed steadily from a low of 9.58% (3.28 for the top 0.1%) for 1979 to a high of 21.55% (10.49% for the top 0.1%) for 2000. To put it another way, the rich have become real hogs with respect to the portion of the total economic pie they consume.

Indeed, we previously >a href="http://taxprof.typepad.com/taxprof_blog/2005/04/bc_symposium_on.html">blogged</a> the recent article by <a href="http://www.law.ufl.edu/faculty/mcmahon/index.shtml">Martin J. McMahon, Jr.</a> (Florida), <a href="http://www.lawprofessorblogs.com/taxprof/linkdocs/McMahon.pdf">The Matthew Effect and Federal Taxation</a> ,45 B.C. L. Rev. 993 (2004):

This article first examines in detail the increasing concentration of income and wealth in the top 1%, and particularly within much narrower cohorts near the top of the top 1%, that has occurred over the past twenty-five years. It demonstrates the strong Matthew effect in incomes in the United States over that period. The super-rich are pulling away from everyone by so much and at a rate so fast that the fact that incomes of many households at the bottom and in the middle have stagnated, or even fallen in constant dollars, has been obscured by ever increasing per capita income. ...Finally, the article suggests that its time for the tax system to address these problems by substantially increasing progressivity at the top of the income pyramid. Future tax legislation ought to mitigate the Matthew effect, rather than enhance it.
<center><center><img src="http://me.to/svr043.gif"

( 4 )

Quote:

http://www.lawprofessorblogs.com/tax...cs/McMahon.pdf
(Page 8)
.....The most recent CBO data show not only that the income inequality
inexorably increased throughout the last two decades of the
twentieth century, but that income inequality—particularly with respect
to the rate at which those at the very top of the income pyramid
pulled away from everyone else—increased in the 1990s more than in
the 1980s.26 In 2000, before-tax income was more concentrated in the
top 1% than at any time since 1929.27

The increasing income disparities
between the top 40% and the bottom 60% between 1979 and
1993 was attributable to the combination of a decline in real income of
the bottom 40% and stagnation of the income of the middle quintile,
coupled with modest income growth for the fourth quintile and
signiªcant income growth for the top quintile, particularly for the
higher cohorts within the top quintile. From 1993 to 2000, the three
lowest quintiles experienced a not insigniªcant increase in real incomes.
Nevertheless, due to dramatic increases in their incomes, the
upper income quintiles—particularly the top 10%—actually pulled
away from the lower income quintiles at a much greater rate in the
mid-to-late 1990s than they did in the period from 1979 to 1993, as is
demonstrated in the following table.....

( 4 )

Quote:

http://mediamatters.org/items/200504260003
Remedial economics for the WSJ editorial board

An April 26 Wall Street Journal editorial argued that "the overall tax burden grew more progressive" in the last 25 years because upper income taxpayers pay a larger share of total taxes than they did in 1979. But the Journal failed to explain why upper income taxpayers pay a larger share today: The wealthiest Americans earn a much larger share of total income than they did in 1979.........

( 5 )

Quote:

http://select.nytimes.com/2005/10/28.../28krugman.htm
........The naming of Mr. Bernanke was a sign of Mr. Bush's weakness, and it brought a collective sigh of relief.

Obviously I'm pleased, too. Full disclosure: Mr. Bernanke was chairman of the Princeton economics department before moving to Washington, and he made the job offer that brought me to Princeton.

So should we all feel confident about the economic future, assuming that Mr. Bernanke is confirmed? Alas, no.............

( 6 )

Quote:

http://www.nytimes.com/2004/06/11/opinion/11KRUG.html
June 11, 2004, Friday
By PAUL KRUGMAN (NYT); Editorial Desk

In the movie "The Man Who Shot Liberty Valance," a reporter defends prettifying history: "This is the West, sir. When the legend becomes fact, print the legend." That principle has informed many of this week's Reagan retrospectives. But let's not be bullied into accepting the right-wing legend about Reaganomics.

Here's a sample version of the legend: according to a recent article in The Washington Times, Ronald Reagan "crushed inflation along with left-wing Keynesian economics and launched the longest economic expansion in U.S. history." Actually, the 1982-90 economic expansion ranks third, after 1991-2001 and 1961-69 — but even that comparison overstates the degree of real economic success.

The secret of the long climb after 1982 was the economic plunge that preceded it. By the end of 1982 the U.S. economy was deeply depressed, with the worst unemployment rate since the Great Depression. So there was plenty of room to grow before the economy returned to anything like full employment.

The depressed economy in 1982 also explains "Morning in America," the economic boom of 1983 and 1984. You see, rapid growth is normal when an economy is bouncing back from a deep slump. (Last year, Argentina's economy grew more than 8 percent.)

And the economic expansion under President Reagan did not validate his economic doctrine. His supply-side advisers didn't promise a one-time growth spurt as the economy emerged from recession; they promised, but failed to deliver, a sustained acceleration in economic growth.

Inflation did come down sharply on Mr. Reagan's watch: it was running at 12 percent when he took office, but was only 4.5 percent when he left. But this victory came at a heavy price. For much of the Reagan era, the economy suffered from very high unemployment. Despite the rapid growth of 1983 and 1984, over the whole of the Reagan administration the unemployment rate averaged a very uncomfortable 7.5 percent.

In other words, it all played out just as "left-wing Keynesian economics" predicted.

In the late 1970's most economists believed that eliminating the high inflation then prevailing in the United States would require inflicting a lot of pain: the economy would have to go through an extended period of high unemployment and depressed output. Once the inflation had been wrung out of the system, the unemployment rate could go back down. And that's exactly what happened. In fact, it's instructive to put a graph showing the actual track of unemployment and inflation during the 1980's next to a figure from a 1978-vintage textbook showing a hypothetical disinflation scenario; the two look almost identical.

Ronald Reagan didn't decide to inflict that pain. The architect of America's great disinflation was Paul Volcker, the Fed chairman. In fact, Mr. Volcker began the process in 1979, when he adopted the tight monetary policy that caused that record unemployment rate. He was also mainly responsible for the recovery that followed: it was his decision to loosen up on the money supply in the summer of 1982 that set the stage for the rebound a few months later.

There was, in short, nothing magical about the Reagan economy. The United States did, eventually, experience an economic miracle — but not until Bill Clinton's second term. Only then did the economy achieve a combination of rapid growth, low unemployment and quiescent inflation that confounded the conventional economic wisdom. (I'm aware, by the way, that this plain statement of fact will generate an avalanche of angry mail. Irrational Clinton hatred remains a powerful force in American life.)

It's a measure of how desperate the faithful are to believe in the Reagan legend that one often reads conservative commentators claiming that the Clinton-era miracle was the result of Mr. Reagan's policies, and indeed vindicated them. Think about it: Mr. Reagan passed his big tax cut right at the beginning of his presidency, and mainly raised taxes thereafter. So we're supposed to believe that a tax cut passed in 1981 was somehow responsible for an economic miracle that didn't materialize until around 1997. Apply the same timing to the good things that happened on Mr. Reagan's watch, and you'll discover that Lyndon Johnson deserves the credit for "Morning in America."

So here's my plea: let's honor Mr. Reagan for his real achievements, not dishonor him — and mislead the nation — with false claims about his economic record.

( 7 )

Quote:

http://www.commondreams.org/cgi-bin/...05/0503-22.htm
Published on Tuesday, May 3, 2005 by CommonDreams.org
Carter Tried To Stop Bush's Energy Disasters - 28 Years Ago
by Thom Hartmann

In his recent news conference, George Bush Jr. suggested that our nation's "problem" with high gasoline prices was caused by the lack of a national energy policy, and tried to blame it all on Bill Clinton. First, Junior said, "This is a problem that's been a long time in coming. We haven't had an energy policy in this country."

This was followed by, "That's exactly what I've been saying to the American people -- 10 years ago if we'd had an energy strategy, we would be able to diversify away from foreign dependence. And -- but we haven't done that. And now we find ourselves in the fix we're in." As is so often the case, Bush was lying.

Consider President Jimmy Carter's April 18, 1977 speech. Since it was given nearly three decades ago, when many of the reporters in Bush's White House were children, it's understandable that they don't remember it. But it's inexcusable that Bush and the mainstream media (which, after all, has the ability to do research) would completely ignore it. It was the speech that established the strategic petroleum reserve, birthed the modern solar power industry, led to the insulation of millions of American homes, and established America's first national energy policy. "With the exception of preventing war," said Jimmy Carter, a man of peace, "this is the greatest challenge our country will face during our lifetimes."

He added: "It is a problem we will not solve in the next few years, and it is likely to get progressively worse through the rest of this century. "We must not be selfish or timid if we hope to have a decent world for our children and grandchildren.

"We simply must balance our demand for energy with our rapidly shrinking resources. By acting now, we can control our future instead of letting the future control us." Carter bluntly pointed out that: "The most important thing about these proposals is that the alternative may be a national catastrophe. Further delay can affect our strength and our power as a nation." He called the new energy policy he was proposing, "[T]he 'moral equivalent of war' -- except that we will be uniting our efforts to build and not destroy."

When Carter had become president three months earlier, the nation was still recovering from the "oil shock" of the 1973 Arab oil embargo, and scientists were realizing our nation was just then hitting the point of domestic peak oil production predicted more than a decade earlier by scientist M. King Hubbert. (The rest of the world is hitting the Hubbert Peak right now.) As Carter noted in his speech, "The oil and natural gas we rely on for 75 percent of our energy are running out. In spite of increased effort, domestic production has been dropping steadily at about six percent a year. Imports have doubled in the last five years. Our nation's independence of economic and political action is becoming increasingly constrained." Hubbert had predicted that the peak of oil production for the USA would come in the 1970s, and it did, hitting us with a shock.

"The world has not prepared for the future," said Jimmy Carter. "During the 1950s, people used twice as much oil as during the 1940s. During the 1960s, we used twice as much as during the 1950s. And in each of those decades, more oil was consumed than in all of mankind's previous history." Hubbert said we must begin to conserve. Carter agreed.

"Ours is the most wasteful nation on earth," he said, a point that is still true. "We waste more energy than we import. With about the same standard of living, we use twice as much energy per person as do other countries like Germany, Japan and Sweden." Carter directly challenged the fossil fuel and automobile industries. "One choice," he said, "is to continue doing what we have been doing before. We can drift along for a few more years. "Our consumption of oil would keep going up every year. Our cars would continue to be too large and inefficient. Three-quarters of them would continue to carry only one person -- the driver -- while our public transportation system continues to decline. We can delay insulating our houses, and they will continue to lose about 50 percent of their heat in waste. "We can continue using scarce oil and natural gas to generate electricity, and continue wasting two-thirds of their fuel value in the process."

But that would be unpatriotic, anti-American, and essentially wrong. Who but a traitor sold out to special interests, or an idiot, would countenance such insanity?

The year 1977 was a turning point for America. If we didn't make clear and rapid progress, we would face painful times ahead. The Saudis would have their fingers around our necks. We'd face war in the Middle East to secure future oil supplies. "Now we have a choice," Carter said. "But if we wait, we will live in fear of embargoes. We could endanger our freedom as a sovereign nation to act in foreign affairs."

Failure to act in the 1970s and 1980s would inevitably lead to a time when the only way to maintain our lifestyle would be to rape our planet and seize control of oil-rich nations in the Middle East. If we didn't begin to develop alternatives like solar power, and dramatically reduce our consumption of fossil fuels, then, Carter said, even our cherished personal freedoms would be at risk. If we continued to simply follow past policies that enriched the oil industry and the Saudis, instead of becoming energy independent, Carter said, "We will feel mounting pressure to plunder the environment."

If we failed to develop alternative sources of renewable energy and conserve what we have, the alternative could be nasty. As Carter pointed out: "We will have a crash program to build more nuclear plants, strip-mine and burn more coal, and drill more offshore wells than we will need if we begin to conserve now. Inflation will soar, production will go down, people will lose their jobs. Intense competition will build up among nations and among the different regions within our own country. "If we fail to act soon, we will face an economic, social and political crisis that will threaten our free institutions."

Carter's speech drew a strong reaction from the Saudis and the oil industry. Think tanks soon emerged - many whose names are today familiar - to suggest there was really no energy problem, and they led the charge to establish a permanent right-wing media in the US. Within two years, Saudi citizen and oil baron Salem bin Laden's sole US representative, James Bath, would funnel cash into the failing business of the son of the CIA's former director, political up-and-comer George H. W. Bush. With that money from the representative of Osama Bin Laden's half-brother, George Bush Jr. was able to keep afloat his Arbusto ("shrub" in Spanish) Oil Company. And he would be in the pocket of the bin Laden and Saudi interests for the rest of his life. But Carter was incorruptible.

"We can be sure that all the special interest groups in the country will attack the part of this plan that affects them directly," he said. "They will say that sacrifice is fine, as long as other people do it, but that their sacrifice is unreasonable, or unfair, or harmful to the country. If they succeed, then the burden on the ordinary citizen, who is not organized into an interest group, would be crushing." But that would be wrong. It would be un-American. It would lead to future oil shocks, and the probable death of American soldiers in Middle Eastern oil wars. Instead of caving in to the Saudis and the oil industry, Carter said: "There should be only one test for this program: whether it will help our country."

Two years later, as the bin Laden family's sole US representative was bailing out George Bush Junior's failing oil business, Jimmy Carter gave another speech on energy, further refining his national energy policy. He had already started the national strategic petroleum reserve, birthed the gasohol and solar power industries, and helped insulate millions of homes and offices. But he wanted to go a step further. "I am tonight setting a clear goal for the energy policy of the United States," Carter said on July 15, 1979. "Beginning this moment, this nation will never use more foreign oil than we did in 1977 -- never. From now on, every new addition to our demand for energy will be met from our own production and our own conservation. The generation-long growth in our dependence on foreign oil will be stopped dead in its tracks right now and then reversed as we move through the 1980s..." In addition, we needed to immediately begin to develop a long-range strategy to move beyond fossil fuel.

Therefore, Carter said, "I will soon submit legislation to Congress calling for the creation of this nation's first solar bank, which will help us achieve the crucial goal of 20 percent of our energy coming from solar power by the year 2000." But then came the Iran/Contra October Surprise, when the Reagan/Bush campaign allegedly promised the oil-rich mullahs of Iran that they'd sell them missiles and other weapons if only they'd keep our hostages until after the 1980 Carter/Reagan presidential election campaign was over. The result was that Carter, who had been leading in the polls over Reagan/Bush, steadily dropped in popularity as the hostage crisis dragged out, and lost the election. The hostages were released the very minute that Reagan put his hand on the Bible to take his oath of office. The hostages freed, the Reagan/Bush administration quickly began illegally delivering missiles to Iran.

And Ronald Reagan's first official acts of office included removing Jimmy Carter's solar panels from the roof of the White House, and reversing most of Carter's conservation and alternative energy policies.

Today, despite the best efforts of the Bushies, the bin Ladens, and the rest of the oil industry, Carter's few surviving initiatives have borne fruit.

It is now more economical to build power generating stations using wind than using coal, oil, gas, or nuclear. When amortized over the life of a typical mortgage, installing solar power in a house in most parts of the US is cheaper than drawing power from the grid. (Shell and British Petroleum are among the world's largest manufacturers of solar photovoltaic panels, which can now even be used as roofing shingles.) And hybrid cars that get 50-70 miles to the gallon are increasingly commonplace on our nation's highways.....

...Meanwhile, Bush brings us an energy bill that includes eight billion dollars in welfare payments to the oil business, just as the nation's oil companies report the highest profits in the entire history of the industry. Americans struggle to pay for gasoline, while the Bush administration refuses to increase fleet efficiency standards, stop the $100,000 tax break for buying Hummers, or maintain and build Amtrak. George Bush Jr. is arguably right that gas prices are spiking because we don't have an energy policy. But instead of blaming Clinton, he should be pointing to the Reagan/Bush administration, and to his own abysmal failures over the past four years.