A Second Opinion
Copyright 2003 A Second Opinion February, 2003, Vol. 2,
No. 2 Free
Oshkosh-On February 2nd a groundhog named Georgie-Porgie emerged from his hole in downtown Oshkosh just long enough to predict another two years of economic disaster for the USA. When asked why, the furry varmint noted the Bush misadministration's commitment to supply-side economics. "It's a fundamentally flawed economic program", quipped the rodent, "Even with an IQ equivalent to the average turnip, I'm smart enough to figure out that when the government collects tax revenue and spends it on public works like local schools, university systems and roads, that tax money is pumped right back into the economy and stimulates economic growth. When taxes are cut, especially for the rich, that money doesn't find its way back into the economy as efficiently. Some of it is used to pay down personal debt. A good deal of it is stashed away in tax-free accounts offshore. No economic stimulus there at all, just budget deficits. And when the government has to compete for capital to pay the interest on the national debt, it drives up interest rates. That will be next, higher interest rates. Wake me up when it's over."
Debunking Dubba-U-nomics
by Mike Hersh - www.liberalslant.com
"Jobs are created when the economy grows; the economy grows when Americans
have more money to spend and invest; and the best, fairest way to make sure
Americans have the money is not to tax it away in the first place." - G
AWOL Bush
That sound bite sounds right, but it's really right wing...and wrong. Jobs are
lost when the economy shrinks; the economy shrinks when most Americans have
less money to spend and invest; but the best, fairest way to make sure most
Americans have money to spend and invest is through fair and sensible economic
policies which promote growth by promoting fairness.
While it's true different economists see the same data in different ways and
make drastically different predictions, economics is less confusing than many
believe. There are a few basic economic laws which no one can repeal. It's basically
about making choices. The right choices make for a better future. Right wing
choices lead to the mess we're in now.
We need only consider the Clinton Era for proof of what works, and look at
the miserable Bush I and Bush II performance for proof of what doesn't. While
the right wingers typically blame this Bush economic mess on Bill Clinton, here's
an overview of the Clinton-Gore Administration's economic success:
"Elimination of record-high budget deficits; Largest pay-down of debt
in history; Smallest government in over three decades while increasing key investments
in our people; Lowest tax burden for typical families since the 1970s; Seven
consecutive years of double-digit investment growth for the first time on record;
Lowest unemployment in a generation; and Longest economic expansion in U.S.
history." Also, record home ownership, record high employment and income
for minorities, and college tuition assistance for millions of Americans.
If the Supreme Court hadn't stolen the election from Al Gore and the American
people, we could have had more of the same prosperity thanks to "a balanced
and fiscally responsible budget plan [including] Paying off the debt by 2013,
resulting in lower interest rates and a stronger economy; Strengthening and
modernizing Medicare by securing it until at least 2030, reforming it to make
it more efficient and competitive, and improving its benefits, including new
prescription drug coverage; Extending the life of Social Security to at least
2054; Investing in key priorities like education, health care, environment,
public safety, and national security; and Providing targeted tax relief for
families to help them save for retirement, pay for child care, and go to college.
"
A BUDGET THAT INVESTS IN AMERICA'S PRIORITIES, April 13,
2000: http://clinton3.nara.gov/WH/Work/041400.html
Instead of continued prosperity and fair affordable tax cuts for all Americans,
we're once more facing recessions and triple digit deficits as far as the eye
can see. This because Bush sides with the truly greedy rather than the vast
majority of Americans. Bush throws out policies we know work well, choosing
to borrow and waste money on Star Wars, unnecessary $billion a day wars, and
gifts for the idle rich. The economy can't grow off welfare for the wealthy
and corporate crime that Bush coddles and promotes. Then Bush will pass along
the bill to future Presidents and the next generation. Just as Reagan and Bush
I did.
When Republicans tell you they want to cut your taxes, don't believe them. Not
if you're an average American. Read the fine print. Look at their proposals
and budgets. They may cut your federal income tax a few hundred or even a few
thousand, but they will raise other taxes and cut aid to state making them raise
your taxes. This is the bottom line: Unless you earn more than a quarter of
a million dollars a year, Bush's proposals make you to pay higher taxes for
less in services you and your family need. Not only that, they hurt the economy
and may cost you your job. All this so their privileged pals can pay lower taxes.
"All they are saying is give greed a chance."
Why do right wing Republicans embrace failed policies and reject basic economic
laws? Out of greed and because ideology overwhelms their better judgment. Wealthy
special interests hire mercenary and fanatic academics to pontificate from self-serving
"think tanks." Keep this in mind the next time you hear right wingers
-- calling themselves supply-siders or "libertarians" or whatever
-- tell you they know what's good for you and the economy. They never let economics,
facts or history stand in the way of a bad, unfair policy.
Bush's policies are taking money from most Americans, and concentrating cash
in the hands of the elite few. That means almost all of us will have less money
to spend and invest, and the few who have more money will have less incentive
to do either. This is a recipe for recession -- if not depression.
Former Nixon advisor Kevin Phillips wrote at least three books explaining this
in detail with irrefutable data. JK Galbraith and many others traced the Great
Depression to wrong-headed right wing policies such as those Bush is pushing.
These policies lose millions of jobs and mortgage the future by rolling up debt
and slashing investments in education and infrastructure.
While right wingers embrace some basic economic facts, their ideology clouds
the overall picture. Right wing rhetoric -- based on nonsense like "Say's
Law," ignoring the need for demand to move products -- flies in the face
of common sense. It also contradicts history, recent and long-standing economic
laws, even the most basic: "There's no such thing as a free lunch."
Supply Siders claim that cutting taxes increases revenues, so tax cuts pay for
themselves. They often claim Reagan and JFK accomplished this, but that's wishful
thinking -- if not outright lying. Tax revenues did not increase because Reagan
cut taxes. Revenues fell dramatically. The record -- produced by Reagan's own
Office of Management and Budget proves that revenues increased only after Reagan
hiked taxes.
By fixating supply, right wingers ignore the need for consumers to have money
and want to spend money ("demand") before they can spend money. The
Keynesian view holds that without demand, supply remains stagnant -- not "demanded"
and therefore not purchased. When almost no one has anything, and only a few
have almost everything, the economy chokes to a halt and starts contracting.
Imagine playing the game Monopoly. After a while, one person has all the money
and you can't play further. It simply won't work that way. History proves the
same laws apply to the national economy. When too few have too much, and too
many have too little, the economy sputters and fails.
Before the New Deal, "boom and bust" cycles wracked the US economy.
Wealth and power flowed into the hands of the elite, and impoverished the rest.
The bust cycles became deeper and longer, until we reached the culmination of
Supply Side economics: the Great Depression.
After a century or more of unmitigated failure, you'd think no one would propose
"Supply Side" -- at least not with a straight face. If it weren't
for the unbridled enthusiasm of "free market" fanatics and the bottomless
greed of special interests, Supply Side would join other discredited oddball
ideas like the "flat earth" theory or the idea frogs come from mud.
Periodically, however, this right wing ideology arises against common sense,
history and established economic thought. The latest incarnation of this carnival
game developed during the late 1970s. Based on oversimplifications and even
stark internal contradictions, a few non-economists launched a junk-science
approach known as "Supply Side" Economics. In this they borrowed from
a long discredited theorem known as "Say's Law."
"Say's Law" holds that no matter how little money consumers have,
or how little they want an item, they will buy it provided producers supply
enough of that item. This because as the supply increases in the face of stable
demand, the price per item will fall until people buy all the items. Don't believe
people really think this "proves" Supply-Side? Take a look at this
quote from a typical ideologue:
"...Hoover, Roosevelt, and Keynes had it all backwards. The proper economic
principle is called 'Say's Law,' for Jean Baptiste Say (1767-1832), that 'supply
creates demand.' This means that 'overproduction' in a free economy is actually
impossible. This happens to have been the topic of the doctoral dissertation
of the great economist Thomas Sowell, now available as Say's
Law, An Historical Analysis [Princeton University Press, 1972]."
The breathless endorsement of Say concludes with this gem: "Why Say's Law is correct is evident from one simple consideration: if inventory doesn't sell, then prices will be cut until it does." See Say's Law and Supply Side Economics: http://www.friesian.com/sayslaw.htm
Crack your local Yellow Pages or search online and count all the buggy whip
vendors for confirmation of "Say's Law." No matter how low the price
of an unwanted item falls, not enough consumers will buy it. Moreover, unless
enough consumers have enough money, they cannot buy the things they want --
much less the things they don't want.
As absurd as this notion is, it provides the main economic underpinning for
"Supply Side." The right wing view tries to repudiate an idea any
kid running a lemonade stand knows: Without customers, there are no sales.
No matter how cheap the car or home is, if you're broke you can't buy it. To
make bad matters worse, these right wing policies increase actual costs of purchasing
items -- higher interest rates, higher sales / property taxes -- thereby decreasing
the demand needed to break the vicious cycle! I'll get to that later.
Bush's approach failed before and will fail again, leading to fewer jobs, higher
real costs for consumers and businesses, and higher total taxes for most Americans.
Supply-Side policies caused, deepened and lengthened the Great Depression, and
did the same during the Reagan Recessions of the 1980s. Next month Part II (permission
to reprint from the Liberalslant http://www.Liberalslant.com)
What the Northwestern Forgot to Tell You…
By John Lemberger
Oshkosh-In the January 21st edition, the Oshkosh Northwestern printed
a front-page article titled, "Study: Tax hike would pound state economy".
This article was printed as news when, in fact, it was only opinion and belonged
on the editorial page. The article was about the opinion of a group calling
themselves The Wisconsin Policy Research Institute.
A little research reveals that The Wisconsin Policy Research Institute is funded
entirely by two Foundations, the John M. Olin Foundation and the Lynde and Harry
Bradley Foundation. The John M. Olin Foundation is supported by the Olin chemical
and munitions manufacturing business. It was created to fund right-wing think
tanks like the Heritage Foundation and, of course, The Wisconsin Policy Research
Institute. The Lynde and Harry Bradley Foundation supports organizations and
individuals that promote the deregulation of business, the rollback of social
programs, and the privatization of government services. It also supports the
Heritage Foundation. Given its funding sources it is not surprising that The
Wisconsin Policy Research Institute came to the conclusion that a tax hike would
pound the state economy. The careful reader should not expect it to be objective.
What is disappointing is that a respected, established newspaper like the Oshkosh
Northwestern should report such opinions as news. News is the reportage of facts.
Opinion is the interpretation of those facts. Another interpretation of the
facts concerning the state budget deficit based on the historical performance
of the economy is that, when the top tax rate is high, the economy performs
best. Based on this historical fact, creation of a new top tax bracket for the
extremely wealthy would not "pound the economy", but would help the
state toward a much needed recovery.
What the Northwestern Forgot to Tell You…Part II
In a January issue of the Northwestern, it was reported that the mayor of London
had an argument with animal rights activists about how to control the pigeon
population in Trafalgar Square. While the managing editor of A Second Opinion
has always had a soft spot in his heart for pigeons, another news story from
London on the same day went unreported by the Northwestern: Union workers refused
to unload munitions from a train bound for British forces in Iraq. We will let
the reader decide which story most deserved to be reported.
Breaking War News!!!!!
The Internet is reporting today that The Guardian of London has solid evidence
that the British government's latest intelligence dossier on Iraq was plagiarized
from published academic articles several years old. It was written by a graduate
student from California named Ibrahim al-Marashi. Several lines of the report
were altered to make it look bad. For more go here: http://truthout.org/docs_02/020803A.htm.
Not exactly the kind of up-to-date information needed to justify war. What is
even more significant is that Colin Powell based part of his speech to the UN
on this report and in fact referred to it as "the fine paper that the United
Kingdom distributed... which describes in exquisite detail Iraqi deception activities"!!!
So we are about to kill tens of thousands of innocent Iraqi civilians on information
that is old, out-dated and most likely inaccurate. May God forgive us.
Bush's Record at Mid-term
By John Lemberger
Oshkosh-As we begin the second half of President (sic) Bush's take over of
the United States government it is time to review his record. Here are the
major highlights from January to June, 2001:
July-December, 2001:
"Anyone who wants to combat lies and ignorance today and to write
the truth has at least five difficulties to overcome. He must have the courage
to write the truth although it is suppressed everywhere, the cleverness to recognize
it although it is veiled everywhere, the art to make it usable as a weapon;
the judgment to select those in whose hands it may become effective; the cunning
to spread it among these. These difficulties are great for those who write under
fascism…indeed even for those who write in the countries of civic freedom."-Bertolt
Brecht
A Second Opinion is edited by John S. Lemberger. He can be emailed at jlemberg@uwosh.edu . The views expressed in A Second Opinion do not necessarily reflect those of Commentary hosts Tony Palmeri and Jim Mather.