Streams

Opinion: Both Parties Prefer Fairy Tales to Truth on Economy

Tuesday, September 18, 2012 - 02:02 PM

Cover from Fairy Tale Parade no. 7 (August–September 1943), copyright © Okefenokee Glee & Perloo, Inc., used by permission of the Walt Kelly estate. Cover from Fairy Tale Parade no. 7 (August–September 1943), copyright © Okefenokee Glee & Perloo, Inc., used by permission of the Walt Kelly estate.

Ideology is a dangerous thing. For people who believe in an ideology deeply, plain to see facts don't hold a candle to fundamental tenets. You can see this in all forms of ideology, cultural, religious or political.

There are enough of these persistent myths that you could write a small library of books about them, but one of the most dangerous is this idea that tax cuts magically pay for themselves. Many on the right believe this fairy tale with a great deal of zeal. It would be amazing if it were true, and in perfect political propagandistic form... those that benefit from widespread belief in this myth repeat it over and over and over, knowing that there is a segment of the population that will eat it up.

But it doesn't hold up to scrutiny when you actually look back at how it has played out in the past. The latest illustration comes from a report from the Library of Congress' Congressional Research Service, which found very little to connect lower tax rates to higher economic growth:

"Advocates of lower tax rates argue that reduced rates would increase economic growth, increase saving and investment, and boost  productivity (increase the economic pie)...

There is not conclusive evidence, however, to substantiate a clear relationship between the 65-year steady reduction in the top tax rates and economic growth. Analysis of such data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top  of the income distribution."

I had a fantastic conversation related to this a few days ago, with an entrepreneur who's startup I am likely to be doing some work with. As a business owner, he said he'd like to see lower taxes, but wasn't under the illusion that they magically paid for themselves by huge economic growth spikes following them. He went on to talk about how the tax cuts during the Reagan years were so successful because of how they solved the issue of a severe lack of investment capital - something that isn't even close to the case today.

In fact, the world market is awash in cheap cash that is looking for something to invest in. What is sorely needed are investments that have value, and unmet and growing demand. Cutting taxes on the wealthy solves none of this. What it would do, as the study mentioned above states, is put more capital into the hands of those who already have the most, and  it in the mean time it make the debt and deficit issues that are facing the next few generations even more unfair, selfish and hard to tackle.

The Democrats have their own fairy tales. Most relevant to this conversation being the idea that we can have a skyrocketing retired population, keep Social Security and Medicare spending roughly as is and balance the budget without huge tax increases on the middle class like you see in the tax rates in Europe. Both sides want to have their cake and eat it too, and are going out of their way to make the only people who actually end up bearing the costs be future generations, most of whom aren't even born yet.

There is nothing inherent to the liberal political ideology that says you must weave lie filled fairy tales to justify spending more than you tax, or the conservative political ideology that says weaving tall tales so you can get away with cutting taxes more than you cut spending is acceptable.

Our economy crashed largely because of a systemic disease of short-term profit chasing, regardless of the long-term risk of collapse it created. The same is happening in government now, only the crash will come in a couple decades when the short-term, greed driven, lack of planning on the part of cut averse Democrats and tax averse Republicans leads to a crisis on par with what we've seen in Greece and other countries in Europe with a similar head-in-the-sand unwillingness to stop spending more than they tax over long periods of time.

If you're liberal and don't want to see entitlement programs cut much, then at least be honest and admit that that means you're for politically impossible tax increases on the middle class. And if you're a conservative, and don't want to see taxes go up at all, then it's time you are honest with what that means - drastic cuts to Social Security, Medicare and the military. Anything else is just more of the same propagandistic, short-term thinking that got us into the fiscal and economic mess our country is in now.

 

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Comments [4]

Solomon Kleinsmith from Omaha, NE

"Of course you'd appeal to Bob Woodward, possibly the most overrated and self-serving celebrity journalist there ever was, but if you trust him so much, why don't you believe him when he said that Simpson-Bowles *wasn't* doomed from the start, as you've repeatedly, falsely claimed?"

Are you capable of making an argument without some sort of ridiculous logical fallacy?

I don't have to agree with his analysis on everything to respect his reporting.

Where did I say that Simpson-Bowles was doomed from the start? It was doomed to go directly to Congress when the president set the voting level at 14 of 18, but it's still alive and kicking, and the president has ignored it since. Can't be both doomed from the start, and still alive, as I've written about several times.

I don't pretend to know whether Obama is sincere or not. I don't play those sorts of childish games where I pretend like I know what a political figure is thinking or feeling deep down. All I know is what Obama has DONE. I don't care what Obama FEELS about fiscal reforms. I care about what he DOES.

"Indeed, you are speaking your mind, and I'm telling you that you shouldn't."

Love it... so rarely do you come across such a nutjob in real life. Freak shows like you almost only come out on the internet. Love it. What a sad little man you are.

"I realize you didn't anticipate that anybody would bother to call you out for it, but like so many things political, you're wrong."

You're a riot... I've been blogging on and off for years. You're one of the worst jerks I've ever come across, but not. even. close. to the most liberal or the most vehement in your disagreement. The only thing that sets you apart at all is the level to which you embrace the job of troll, and even to that I've seen people that are much better at it than you.

We have that in common you and I... neither of us are anywhere near the tops of our games. I just am a nice guy... and you're a flaming jerk.

Sep. 20 2012 03:54 PM
Jack

Yes, you are peddling something -- garbage. If you were intellectually honest, your views would reflect and account for the points I mentioned. Instead, because these facts get in the way of your both-sides-are-bad, centrism-über-alles motif, you double down on the false equivalence that has become your stock in trade.

Of course you'd appeal to Bob Woodward, possibly the most overrated and self-serving celebrity journalist there ever was, but if you trust him so much, why don't you believe him when he said that Simpson-Bowles *wasn't* doomed from the start, as you've repeatedly, falsely claimed?

Numerous times Woodward says that Obama was sincere about fiscal reform, and was willing to cut a deal to make it happen, but that he wasn't going to be put in the position to stick his neck out *alone* politically and then have the deal collapse in Congress. This is what you don't understand about politics, and apparently never will, from your contrived centrist perch.

Indeed, you are speaking your mind, and I'm telling you that you shouldn't. When you aren't simply lying, you simply don't know what the hell you're talking about. Just because one can speak your mind, it doesn't mean he should. You shouldn't. You've got an agenda based on dishonesty and willful ignorance. I realize you didn't anticipate that anybody would bother to call you out for it, but like so many things political, you're wrong.

Your continual bullshit doesn't go unnoticed, and if I have to point out every instance of it, so be it. The well-being of our country is too important to let self-serving hacks such as yourself from distorting the truth.

Sep. 19 2012 03:18 PM
Solomon Kleinsmith from Omaha, NE

Funny how you quote something that is very clearly fact, and then call it a lie.

Thank you for illustrating my point.

The dems have only (so far) worked around the edges of entitlement reform, and the savings they got out of Medicare, which did need to happen, needed to stay there - like Al Gore was saying a decade ago.

Yes - I AM likening dems to republicans, because they have their heads in the sand roughly as deeply as the republicans do on fiscal issues, just in very different ways.

Read Bob Woodward's book and you'll see how Obama and the democrats were just as much a part of the "grand bargain" falling apart as the GOP was, and the real chance to pass fiscal reform - the Fiscal Commission - has never had support from the democratic leadership or the president.

I'm not peddling anything, anymore than anyone else is. I'm just speaking my mind. I don't fetishize anything, much less "centrism" (no such thing as "centrism" - not sure how I could fetishize something that I don't think exists), anymore than those at different areas of the spectrum fetishize their own beliefs.

Sep. 19 2012 12:22 PM
Jack

"The Democrats have their own fairy tales. Most relevant to this conversation being the idea that we can have a skyrocketing retired population, keep Social Security and Medicare spending roughly as is and balance the budget without huge tax increases on the middle class like you see in the tax rates in Europe."

That's an exquisite bundle of lies. Lies designed to bolster yet more false equivalence between Republicans and Democrats. You're a broken record of deception and "both sides do it" garbage at this point.

President Obama and Democrats have *already* begun reforming Medicare, via the PPACA. The Independent Payment Advisory Board provisions in the law allow benefits to be changed, cap Medicare's growth rate at GDP+0.5%, and seek savings from efficiency by focusing on quality over volume.

To reiterate, *this is already law*. Law which you've IGNORED for your trite political posturing. The Democrats aren't naive about Medicare, they're actually working to fix it. Yet here you are falsely likening them to the Republicans and their absolute unwillingness to raise taxes ever.

As for raising taxes on the middle class to fund government, what the hell do you think the big "fiscal cliff" of January 1, 2013 is about? Democrats have already said they'll let the Bush tax cuts expire, barring a deal with Republicans, thus automatically raising middle class rates, along with the trigger to automatic cuts in spending.

Obama himself was even willing to strike a "grand bargain" on these issues but Paul Ryan and the Republican Party were absolutely unwavering in their opposition to tax increases on the wealthy (alleged economic growth due to tax cuts on the wealthy is simply a political excuse, by the way). Tell me, why should Democrats stick their necks out politically when they have no reciprocal behavior and partnership from the other side?

Your sad deception is highlighted by your "oh, and Democrats are just as bad" paragraph coming as an afterthought, meaning you didn't bother to think about it much at all, you just tacked it on at the end for the sake of false balance, fulfilling the predetermined narrative -- that your fetishized centrism is the true answer.

You're not fooling anybody, Solomon. Keep peddling this "centrist" garbage, people will keep calling it out.

Sep. 18 2012 05:48 PM

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