The Economy

Let me first be clear about one thing... I am not an expert... not even close in fact... but there are a few simple principles that I do understand, so we'll just stick with those...

From the conservative perspective, high taxes stifle growth... I agree that a repressively high tax rate is not good, as the more you take from wealthy people and corporations, the less motivation and capability they will have to work hard, invest, spend money, create jobs, etc... I get it... furthermore, the Laffer Curve makes sense to me... the idea that an optimum tax rate exists after which point government revenues will actually decrease as productivity drops registers with me as well...

That having been said, there seems to be no conclusive evidence what exactly that optimum tax rate is... and Republicans love to point out that tax revenue increased from 2001 to 2007, and that 2007 tax revenues exceeded anything we saw during the Clinton years... Republicans cite this fact (and it is a fact) as evidence that lower taxes mean more growth and therefore more federal revenue... their idea is that a smaller piece of a bigger pie is still more pie, and that economic growth will outpace the tax cuts...

Here's the problem... as a percentage of the GDP, we have had far less economic growth in the 7 years since 2001 than we had in the 7 years prior to 2001... so even though tax revenue has increased because the modest overall economic growth since 2001 did in fact outpace the tax cut, the evidence suggests that the tax cuts did not cause the growth, as we experienced more growth before the tax cuts than after...

OK, that's my analysis of the tax situation... I just offered not one single solution... I told you I'm not an expert... I do think, though, that as Republicans brag about how much growth and therefore additional tax revenue the tax cuts created, the Democrats should point out that 2001-2007 was actually an economic slowdown compared with the Clinton years... the Dems should hammer this point home... every time the Republicans talk revenue, the Democrats must counter with our economy's stunted growth...

By the way, aren't the Republicans magnificent at political spin? McCain talks about the economy's sound fundamentals... when questioned, he says that the American workers are the most important fundamental, and how dare someone attack American workers... I think that most sensible people would agree that while a capable work force is an important element of a healthy economy, the "fundamentals" are things like the strength of our currency, credit markets, housing markets, employment rates, retail sales, the stock market, and I'm sure many others... besides employment rates (which will probably spiral downward very soon), aren't all the other economic fundamentals I mentioned basically in ruins? The Democrats must specify what they think the fundamentals are, and they must point out McCain's blatant dishonesty and spin and lack of straight talk when he pretends like he was referring exclusively to American workers... and the Democrats had better hurry, as the straight party ticket sheep are already repeating McCain's ridiculous talking point...

It reminds me of a disagreement I just had with a conservative at work... as I mentioned in my last entry, I think the Democrats should leave Sarah Palin alone (except to point out McCain's pure political motivations for choosing her)... but when a socially far right governor who demands that only abstinence be taught at public schools winds up with a pregnant teenage daughter, I find that ironic if not hilarious... my conservative friend accused me of being sick (he's right, but that's another topic)... he then morphed my comment on irony into an attack on all people of faith...

"I don't find Bristol's pregnancy ironic at all; quite the contrary. I'm a Christian just like Sarah Palin and her family. Moreover a Christian who makes mistakes frequently. Your suggestion that it's ironic that Palin's daughter became pregnant while she's an advocate of abstinence is erroneous. Are you surmising that Christians are somehow perfect and not subject to mistakes? I'm now an advocate of abstinence but my track record before accepting Christ speaks to the contrary--am I a hypocrite?"

Are conservatives amazing or what? I mean, seriously, what the f**k is this guy talking about?

Now, on to a few simple principles (or maybe just one principle) that I do understand...

When a poor person buys a Cadillac or a Ford F350 on credit, it's a very bad idea, as the difference between a poor person and a desperately poor person is debt... economics 101- expenses shouldn't exceed revenues (and yes I do understand that some expenses are an investment and that investment-based short term debt often keys growth in the business world)... but still, I think we can generally agree that assuming large-scale debt runs contrary to responsible fiscal behavior...

I know you know where I'm going with this... since 2001, our national debt has risen from $4 trillion to $9 trillion... that's a lot of money in a short amount of time... and it's a major problem, and I would argue it's THE major problem...

Both parties like to spend money... the Democrats have long been labeled, I think in many cases fairly, as the party of "tax and spend" (social security, medicare, etc)... but if you look at the hard numbers, the truth is that Bill Clinton, wild-eyed fornicating liberal that he was, spent considerably less than either our current president or Ronald Reagan (in Reagan's case, using inflation adjusted dollars)... so, while the Democrats may be the party of "tax and spend", at least they're responsible enough to pay for their spending habits...

Republicans, on the other hand, are the party of "borrow and spend"... and deficit spending and the debt it creates, in my opinion, is the single biggest cause for our current financial situation...

Here's how it works... we run up huge debt, and rather than cutting spending or raising taxes to pay down the debt, we manufacture new money out of thin air to pay down the debt... now, once we have flooded the world economy with new dollars, the value of the dollar plummets, and voila- inflation...

So, massive deficit spending (as we had under Reagan and Bush 2) causes widespread inflation, but irresponsible federal borrowing and spending habits also destabilize credit markets... so, as inflation outpaces wages and the dollar loses much of its purchasing power, the American people find themselves in a situation in which they need loans (second mortgages, additional credit cards, etc) to maintain a comfortable lifestyle or in some cases to even keep their heads above water...

So Neo-Conservative fiscal policy creates a helluva catch 22... deficit spending causes inflation, which causes the people to need additional loans, but whoops... too late... deficit spending has already destabilized the credit markets!!!!

Democrats have to explain this to the American people... I think it will resonate... something else that will resonate is this- INFLATION IS A TAX!!!! Not only is it a tax, but it's a tax that disproportionately affects people who can least afford it...

That's about it... oh, one more thing... McCain's answer to irresponsible spending seems to be his fight against earmarks... he wants to expose the folks who add earmarks ("I'll make them famous!!") to legislation at the last second, and that's fine... but by focusing solely on earmarks, he implies that earmarks are a much bigger piece of the problem than they actually are... he acts like if we eliminate or reduce earmarks, then that will solve everything and balance the budget... I don't have any stats, but I GUARANTEE that earmarks are WAY less than 1% of total federal expenditures... it's disingenuous and misleading and arguably flat out dishonest to make earmarks the centerpiece of your fight against runaway spending...

Tomorrow (allegedly), I'll talk about what I perceive to be the 4 main pillars of the neo-con movement... and I might get into what a Republican is, used to be, and should be...