I remember in 1986, when I was a lot less politically savvy. When looking back at the Reagan years up until that time, I thought to myself “At least they can never claim supply side economics didn’t work.” Then I remember January 2001, when Alan Greenspan was so spooked by the dark clouds of recession on the horizon, that he lowered the discount rate by 50 basis points twice that month, before George Bush had even gotten comfortable in the Whitehouse. Again, tax cuts by Bush soon had the unemployment rate below 5% after peaking at 6.4%. At that point I thought “Supply-side tax cuts to the rescue again–they can’t say it doesn’t work.”
Well, they got amnesia. In fact they are saying supply-side economics have never worked. When they make this claim I always take them to J.F.K.’s arguments from the early 60’s.
“It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now … Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.” – John F. Kennedy, Nov. 20, 1962, president’s news conference.
“Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased – not a reduced – flow of revenues to the federal government.” – John F. Kennedy, Jan. 17, 1963, annual budget message to the Congress, fiscal year 1964.
Oh, I know, this is perceived as an abuse of Kennedy. Portraying Kennedy as a supply-sider is just conservative mythology, right? They can claim that if they want, but they can’t argue with the plain words and arguments made by Kennedy.
Of course, Kennedy didn’t invent this economic policy or the results. The same thing was done in the 1920’s by Presidents Coolidge and Harding, and it led to the Roaring 20’s.
My question is when has Keynesian economics, or it’s current iteration, Obamanomics ever worked?
During the Great Depression F.D.R. became a beloved god to many Americans for implementing the current social safety net and for his leadership in WWII. But it would be gratuitous to suggest his policies led us out of the Great Depression. The unemployment rate in 1938 was nearly 20%, more than five years after many of Roosevelt’s policies had been implemented.
It strikes parallels to what is happening today, high unemployment despite obscene amounts of money spent to supposedly stimulate the economy. Obama apologists will say that this spending prevented another depression, but anyone that got elected could have made that same claim. The truth is that the TARP bailout is probably what prevented a total economic collapse, and much of that money was committed before Obama took office. Furthermore, the last recession officially ended in June of 2009, likely before any of the stimulus money would have had a chance to effect the economy.
The sad fact is that America has now become addicted to a paternalistic government that provides for their every want. Many years ago Norman Thomas prophetically observed that…
“The American people will never knowingly adopt Socialism. But under the name of ‘liberalism’ they will adopt every fragment of the Socialist program, until one day America will be a Socialist nation, without knowing how it happened.”
We inherited Fabian Socialism from Europe, and look where they are today–in worse financial condition than the U.S. even without the massive defense budget we have here.
Nearly 250 years ago, we fought a war for independence to free ourselves from backward Europeans ideas. Today we want embrace them without a fight.
“Published originally at EtherZone.com : republication allowed with this notice and hyperlink intact.”