David Leonhardt has a terrific piece in the Times today on Bruce Bartlett — “the most persistent — and thought-provoking — conservative critic” of the GOP.

The discussion of tax cuts is fat too common sense to be seen in print very often:

“His conservatism starts with the idea that high taxes are no longer the problem, even if complaining about them still makes for good politics. This year, federal taxes are on pace to equal just 15 percent of gross domestic product. It is the lowest share since 1950.

As the economy recovers, taxes will naturally return to about 18 percent of G.D.P., and Mr. Obama’s proposed rate increase on the affluent would take the level closer to 20 percent. But some basic arithmetic — the Medicare budget, projected to soar in coming decades — suggests taxes need to rise further, and history suggests that’s O.K.

For one thing, past tax increases have not choked off economic growth. The 1980s boom didn’t immediately follow the 1981 Reagan tax cut; it followed his 1982 tax increase to reduce the deficit. The 1990s boom followed the 1993 Clinton tax increase. Tax rates matter, but they’re nowhere near the main force affecting growth.

And taxes are supposed to rise as a country grows richer. This is Wagner’s Law, named for the 19th-century economist Adolf Wagner, who coined it. As societies become more affluent, people demand more services that governments tend to provide, like health care, education and a strong military. A century ago, federal taxes equaled just a few percent of G.D.P. The country wasn’t better off than it is today.

Modern conservatism, Mr. Bartlett says, should therefore have two main economic principles. One, it should prevent government from getting too big. There is no better opportunity than health reform, given that the current bills don’t do nearly enough to slow spending growth. Instead of pushing the White House to do better, however, Congressional Republicans are criticizing any effort to slow spending as an attack on Grandma. They’re evidently in favor of big Medicare, just not the taxes to pay for it.”

Hard for me to disagree with what Mr. Barlett says . . .

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Source:
Partisan Economics in Action
DAVID LEONHARDT
NYT, October 6, 2009

http://www.nytimes.com/2009/10/07/business/07leonhardt.html

Category: Politics, Really, really bad calls

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

33 Responses to “Partisan Economics”

  1. VennData says:

    Easy for him to say. He hasn’t been whipping up his constituents with “Socialism” “Immigrant Health Care” “Death Panels” “Flag Burning” and such thought-provoking issues as “Our alleged president wasn’t born in the United States.”

    Once you’ve been feeding the animals this, it’s hard for you to turn back. The GOP needs a HR-driven house cleaning.

  2. worth says:

    Not hard for me to at least half-heartedly disagree with this assertion of his:
    “A century ago, federal taxes equaled just a few percent of G.D.P. The country wasn’t better off than it is today.”
    Wasn’t it better off, at least in terms of how unassailable its position in the world was? Tons of resources, little debt, had much of our domestic market all to ourselves, other countries desperately relied on our exports, no external threats whatsoever…not too shabby, if you ask me.

  3. DL says:

    I personally believe that, everything else being equal, lower taxes on capital and labor result in more output than would otherwise be the case.

    At the same time, however, I think that is difficult to either prove or disprove this proposition. One can look at the tax policies within a given country at different time periods, or one can compare the tax policies of two different countries during the same time period. Either way, however, there are too many variables to make a solid case one way or another, and usually, those who argue (publicly) for a given effect (or absence of effect) of taxes have some sort of political ax to grind.

    One thing’s for sure, as taxes rise, efforts to avoid paying them increase.

  4. John says:

    Barry,

    The federal government’s problem is not income. The problem is too much spending. And almost everybody wants to curtail spending to some degree, but nobody wants their programs cut.

    The Republicans’ biggest problem is they have no principles.

  5. Modern conservatism, Mr. Bartlett says, should therefore have two main economic principles. One, it should prevent government from getting too big.

    I believe it is even simpler than that (as a conservative myself, my brand of conservatism is to get to the simplest, most efficient society possible without worshiping the act of getting there[like the greenies would do over environmentalism]). I believe economic conservatism would make sure the government spends within its means(that is why Canada did so well, not the GST). The simplest, most efficient conservative government would only take what dollars are absolutely necessary from the taxpayers to create a civil society and to spend only those dollars

  6. Here’s a thought:

    Government should be like a convenience store. People go to a convenience store to get what is necessary, usually when they are in a bind, and get back to what they were originally doing as soon as possible. They don’t mind paying a little extra for it but they also don’t expect four star costs and a four hour, twelve course meal when they walk into the place. They expect to spend a few minutes and some cash getting their pressing needs met

    Imagine if the [insert random government office here] were more like a convenience store

  7. franklin411 says:

    John:
    Yours is an argument for higher taxes: Everyone wants services and nobody wants cuts. Therefore, revenue must be raised to support the services everyone wants.

    Common:
    The problem is that people define “necessary” selfishly. For instance, 3/4 of the Republican senators in my state went to public universities back in the 1960s and 1970s, when tuition was free. If you had asked them what they thought of it back then, they would have said that free college tuition was a necessity. Today, they don’t want to pay taxes to support the university system, and they call college a “luxury.”

    Modern society is completely interconnected, and we’d all be better served if we admitted that. Take any service and you’ll find that every citizen benefits from it in some way. For example, even though a person might never go to a public university himself and he has no children to send there, the fact is that he benefits from the inventions created in public universities, such as tThe internet, computers, cell phones, HDTVs, and modern medicine.

  8. Thor says:

    Yes, only half the things you list weren’t invented in a public university. They were either invented my military research or private (Bell) research labs.

    Do you make a conscious effort to blind us with your ignorance every time you open your mouth?

  9. pokethis says:

    DL said:

    “One thing’s for sure, as taxes rise, efforts to avoid paying them increase.”

    Not paying taxes has probably risen to great heights currently and was just allowed to increase by the Senate. Illegal tax evasion is less of a problem than sanctioned tax evasion. Someday everyone will wish we had just paid a sustainable amount of taxes and by then the costs will be much greater than any tax rate.

  10. pokethis says:

    Thor says:

    “only half the things you list weren’t invented in a public university”

    50% developed by universities vs 25% by the defense department and 25% by private (well, defense contractors), I’d say that is not a bad percentage.

  11. Thor says:

    pokethis – which specific technology are you talking about? I’m not arguing that universities aren’t directly responsible for many of the technologies and medicine we enjoy today. My issue was with the examples given in the post.

  12. franklin411 says:

    @pokethis
    Agreed. It’s funny how we focus on the organization that put its nameplate on the invention, rather than on the scientists who created it, the educational institution that produced the scientists, or the basic research without which he invention could never have been conceived in the first place.

    A person could argue that the War Department invented the atomic bomb/nuclear energy, but he’d be ignoring the fact that the scientists who worked on the Manhattan Project were “drafted” from the University of California at Berkeley.

  13. Moss says:

    Conservatives are only interested in one thing. Maintaining the privileges that have been gained.
    This quest has skewed any ‘principles’ which may have been evident at one point.

    @F411

    I can guarantee u that the senators you mention were NOT conservatives at the time of their enrollment.

  14. mcmalley says:

    …so government, government spending, and government taxes do not hinder the economy at all, but give us good things (..like education & healthcare) that the sorry private sector cannot provide. Who knew {??}

    Federal tax receipts as a % of GDP are down, but Federal borrowing as % of GDP is triple the modern historical average. Numbers are easily manipulated — watch what they actually spend.

  15. Kurt Brouwer says:

    It’s fine for Bruce Bartlett to criticize Republicans as they deserve plenty of criticism. Yet, last I checked, the Rs do not have majorities in either house of Congress.

  16. DMR says:

    Common Man,

    I’m with you in one respect: I wish that this debate could be taken off the national stage. After all, if each state followed its own path, it would be easier for people to just leave states they don’t like to move to states that they do like. That would be true competition.

    I personally prefer that the government built road that comes up to my house are not so potholed that it is only used when no other option is available (i.e. I’m willing to pay extra for it to be nice)…and not only good roads but a couple of unnecessary elements like flower pots in the town square to attract more pedestrian traffic and keep crime down (it works, don’t ask me). Other places don’t need to spend on such stuff if they don’t want to. I’ve lived in some truly miserable states in this country of ours and I left most of them for a reason :) It works for others and they stay.

    For me personally, schools are no different. Up here in Massachusetts, the public school that I send my kids to is very good. Children of Harvard professors and children of refugees and illegal aliens rub shoulders there. There is a fairly decent chance for a meritocracy and a good 10% of students irrespective of class/race end up going on to Ivy league schools. The corporations also pay a very high tax rate to keep residential taxes down. Last time I checked, most high tech companies are not queueing up to leave town for some low tax-low education state in the middle of nowhere. Why force everybody to do the same?

    Health care? The system here works for the most part. Costs went up only marginally when the new system went into effect and we have a 96% insured rate now. I don’t understand why Obama is trying to shove this thing down the throats of Americans who don’t want health care reform. None of the plans on the table in Congress would offer anything better than what we already have. There is nothing in it for an MA resident rich or poor in the health care fight.

  17. doodad11 says:

    I’ve read Bruce’s work in Forbes. Good writer. Agree with 95% of what he says especially about social security sand medicare.

  18. HarryWanger says:

    Hey Gang! AA crushed on earnings! Looks like my mini economic boom is playing out right before your eyes now! Seeing strong demand and stabilization.

  19. impermanence says:

    The organisation of society is for one purpose only, to separate as much labor-value from the majority as is possible.

    DMR writes:
    “Health care? The system here works for the most part.”

    No, it does not work for the most part. It is a disaster. It only works for the corporations whose parasitic proboscis sucks the life blood out of the American people.

  20. doodad11 says:

    Good point about Bruce’s work. Agree

  21. dmlopr says:

    Franklin411 says “Yours is an argument for higher taxes: Everyone wants services and nobody wants cuts. Therefore, revenue must be raised to support the services everyone wants.”
    Nobody wants cuts? No wonder this country is full of obese. Try telling people “No, find a way to get by with less”, for a change. I bet you tell people that when it comes to gasoline, right?

  22. wally says:

    The “conservative” side of US politics has marginalized itself as a bunch of unreasonable and unreasoning whack jobs who stand for nothing and against everything. They are simply ‘aginers’… against science, against reason, against compassion, against caring about your neighbor, and their general policy is aggression against everyone – fight wars against others, buy bullets to ward off your own countrymen.

    There is no future for them or for us in that. If they cannot find a positive policy center, they will soon be gone.

  23. tawm says:

    All taxpayers become taxed at ever higher rates due to inflation-induced bracket-creep; look at how many folks are hit by the AMT.
    PS for those who insist on ranting about Republicans and dissing Conservatives — you’re falling right into the pol’s trap for divide-and-conquer.
    PPS Blame Bush…

  24. techy says:

    Taxes, family values, environment etc… all rhetorics.

    there are two things which if taken care….can take care of 80% of problems in lawmaking.

    1. Remove religion from politics
    2. Campaign finance reform.

    else we just keep talking about these issues with no consequences whatsoever….since 70% of the pople are polarised based on religion and the politicians listen to lobbyist since they need money for elections.

  25. madman130 says:

    How can you reduce the government if the tax revenue grows? Even at the minimum Government will need more people to “handle” the growth in revenues. That’s how it usually works, right?

    Not to mention him wanting all the goodies from the government. How can you say you want to reduce the Government while want more goodies.

    Oh, is that why he is an “honest” conservative liberals love?

    I think that’s why.

  26. S Brennan says:

    While agree with the thrust of the article, the following quote leaves me wondering.

    “just as it was a problem when Democrats were saying that welfare was working, teachers’ unions were always right and stagflation couldn’t happen.”

    Could David Leonhardt please quote the major Democratic politico that held this position. Why do so many in the press feel obligated to “balance” their article with a BIG lie?

  27. madman130 says:

    Worth, I agree.

    This is what bothers me about a lot of so called pundits. They still have an outdated world view.

    The world is much more competitive than before for resources/capitals/talents and all.

    How will America and Americans will compete with rest of the world?

    1. You have to lower the cost of doing business (low corporate tax).
    2. Low salaries for US workers ( can’t tax high on low salaries)
    3. Saving will be more important in the future (Government is wasteful)

  28. Thor says:

    4. Getting asia to stop keeping their currencies undervalued.

  29. Tom K says:

    BR, I’m disappointed in you. Leonardt makes the same mistake as every other liberal: he automatically equates Republicans with conservatives. That basic errors colors his entire column as idiotic.

    George Bush never was a fiscal conservative (as well as most Rs in congress) and real conservatives have been pointing that out over the past 9 years, but people like Leonardt have apparently been living in a cave.

    Leonardt also presumes everyone (including Bartlett) agrees with his liberal philosophy: “As societies become more affluent, people demand more services that governments tend to provide, like health care, education and a strong military”

    I have a more logical law for Leonardt…let’s call it Tom K’s law: When a majority of voters discover they can vote themselves goods and services without immediate cost, either by raising taxes on a minority of citizens and/or having the government borrow the money, they will tend to increase their demand for services.

    As such, the majority of politicians recognize the only way to obtain and hold office is to increasingly propose more and more services to voters. The theory being that any negative consequences will be A) far into the future or B) won’t have my fingerprints on them (people will be too dumb to recognize the cause was their own desire for services they saw as low cost if not free)

    I agree with Bartlett’s on both economic principles, however a VAT would be disastrous way to goods and services.

  30. clawback says:

    “A century ago, federal taxes equaled just a few percent of G.D.P. The country wasn’t better off than it is today.”

    Barry,

    I’m surprised you weren’t all over this idiotic non sequitor. But as someone said above, it’s not about taxes, it’s about spending. People like Bruce Bartlett have ruined the Republican party, because what do they stand for again? Slightly smaller govt. than Democrats want? And their principles are…what? Hair-splitting arguments about the effects of tax rates are a waste of time. Are the Republicans going to stave off fiscal disaster? Are the Democrats? Of course not, and it’s not about marginal tax rates. It’s about spending, spending, and spending. Mostly on things that do harm rather than good (Iraq war, Haliburton, ACORN, Dept. of Ed….etc.).

    We love ya, BR, but I’m parting ways on this one.

  31. madman130 says:

    clawback,

    You stole my thunder. Since my last post I have been thinking the same way. Juts didn’t know how to put in words. Seriously, if pubies gonna behave like the democrats of yesteryear, how does it serve the populace?

    Also doesn’t it pretty much guarantee dems to act and behave socialists? People like Bartlett and his bosses like Bush have ruined the conservatives ( I am L btw) for a long time to come.

  32. madman130 says:

    Looks like dog at my post few mins ago.

    clawback, couldn’t agree more. Left vs right or rats vs the pubies, that’s the game for the masses.

  33. Pat G. says:

    The problem with “partisan economics” or partisan politics is that both lead to preferential treatment for the partisan supporter whose party won. Running a country efficiently and effectively will never occur if we don’t address what’s in the best interests of MOST U.S. citizens. You can’t please all the people all the time but somewhere along the line our government has trampled over the idea that the majority should rule. Constitution 101.