P.L.A. - A Journal of Politics, Law and Autism

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Friday, May 09, 2003
Tax Cuts – A Faith Based Initiative

We have been negligent in not previously linking to a relatively new blog entitled It’s Still the Economy, Stupid. ISTES is the brainchild of econoholic Mary Beth at Wampum. She posts there as does Matthew of To The Point and the Angry Bear. The group effort is well worth your time.

We learn from ISTES that Warren Buffett has come out against the Bush tax cuts. Matthew quotes TheStreet.com reporting on Buffett’s comments:
Buffett said: "We [as in the U.S.A.] are going to spend $2.2 trillion this year; it's just a question of where it comes from. And, frankly, I don't think enough of it comes from people like me and too much comes from people who work in our shoe factories."

Reuters further reported that Buffett also said: Bush "is not changing the amount the American public sends the government, just changing who does it," and unfairly to the benefit of rich people.

Matthew comments:
This is true. The only way you could dispute this statement is if Bush were actually cutting spending, which he is not doing. Spending is actually increasing quite dramatically. I don't dispute that spending needs to go up for defense and other national priorities, just that you can't have the government expend resources and then pretend they don't come from somewhere. They do, and if you don't collect the resources in tax revenue, you have to collect them elsewhere, usually by crowding out investment from the private sector or by inflating away the value of money. It's simply basic accounting.

The right wing spin machine was quick to attack Buffett for his statements. Buffett was attacked for being partisan and self-serving. Rush Limbaugh dismissed the opinion of the most successful investor in history as “standard issue liberal claptrap.”

The attacks on Buffett are not surprising. Certain elements of the Republican Party are intent on attacking anyone who does not carefully toe the Bush line on tax cuts.

The Club For Growth ran television ads against Republican Maine Senator Olympia Snowe comparing her opposition to Bush’s tax cut plan to French opposition to the war in Iraq. Did Snowe want to increase taxes? No, her sin was in wanting to cut “only” $350 billion of taxes over 10 years instead of the President’s $726 billion proposal.

George Voinovich, Republican Senator from Ohio, is concerned about the effect of a $726 billion tax cut on the deficit. Like Snowe, he supports tax cuts in the $350 billion range. The President went to Ohio to campaign against a fellow Republican in order to put pressure on Voinovich to forget about the deficit and support the tax cut.

The administration has claimed that the tax cut proposal would create 1.4 million jobs. When Paul Krugman noted in a column that at a price tag of $726 billion, that works out to more than $500,000 per job, NRO ran a piece by Donald Luskin calling Krugman a liar. See this post for the details. The Luskin piece went on to misrepresent the contents of a Council of Economic Advisor’s Report and to simply make stuff up in order to attempt to discredit Krugman’s simple statement of a mathematical truth.

The administration is promoting the tax cut as a way to stimulate the economy and create jobs. Any fair evaluation of the plan, however, shows that it is a slow, inefficient and costly method of attempting to reach that goal. Brad DeLong wonders why the administration does not propose a real stimulus package:
One of the strangest things about the George W. Bush administration is its refusal to propose a stimulus package that would actually stimulate the economy. Nobody believes that this is an administration that would decide that it is more important to pursue economic policies that are good for the country as opposed to those that generate good employment news in the summer and fall of 2004. And here what is good for the country--short-term fiscal stimulus--and what is good for President George W. Bush's reelection chances are perfectly aligned.

So why the continued focus on policies that all serious analysts agree have little effect on employment in the short term? It's a total mystery. It's as if the economists have been unable to persuade anybody else in the White House that economic policies, like, affect, you know, the economy.

Matthew Yglesias has similar thoughts:
Of course all this leads one to wonder why the administration doesn't just get behind an economic stimulus package that would actually stimulate the economy by giving a short-term spurt of cash to the low-income Americans who would spend it? Some possibilities:

1.They've started to believe their own propaganda and think that they're tax program really will have the effects they attribute to it.
2.They're more concerned about cutting taxes than staying in power.
3.They don't think fiscal policy makes a difference and regard it as some kind of pointless nihilistic exercise.
4.They're unaware of the fact that unemployment is unpopular.

Two riddles are posed. First, why must certain elements of the right wing attack anyone and everyone who deviates in even the slightest degree from the tax cut agenda? Secondly, if the goal is to stimulate the economy, why has the administration not proposed an actual stimulus plan?

We think that the answers to both riddles are found in the fact that, for some, support for tax cuts is akin to a religious belief.

Religious faith is constant in all circumstances. For some, belief in the appropriateness of tax cuts is also constant. When the economy was roaring along in the late 1990s, Mr. Bush put together his tax cut proposal. When the economy softened, Mr. Bush believed the same tax cut was needed to ensure against recession. When the recession happened anyway, the tax cut was the prescribed remedy. When the tax cut failed to revive the economy, Mr. Bush advocated additional tax cuts. If faced with a problem, religion counsels prayer. If prayer does not provide the answer, religion counsels more prayer. Mr. Bush’s record on tax cuts is similar.

The condition of the federal budget does not affect the belief in tax cuts. When the budget was in surplus, Mr. Bush recommended tax cuts to promote fairness. Now that the budget is in deficit, Mr. Bush recommends more tax cuts to stimulate the economy.

In times of peace, Mr. Bush’s faith prescribes tax cuts. Faith is not build on a foundation of sand and during time of war, the answer remains tax cuts.

If the need for government revenue to pay for the retirement of the baby boomers is a long way off, the proper course is tax cuts. As the call on governmental resources becomes closer, tax cuts again are the answer.

Religion teaches adherents to place faithfulness to the teachings of the church above other concerns. So it is with the adherents of the faith of the tax cut.

Ronald Reagan advocated the 11th Commandment of “Thou shall not criticize a fellow Republican.” As the experience of Senators Snowe and Voinovich demonstrate, the 11th Commandment must give way to the gospel of tax cuts.

Republicans once were wedded to the idea of balanced budgets. They even thought that the policy of balanced budgets should be enshrined in the Constitution of the United States. A balanced budget, however, has been trumped by the fervor for ever more tax cuts.

Republicans also swore allegiance to protecting the Social Security system by not using surplus Social Security tax receipts to finance the general operations of government. Once again, that policy bowed to the belief in tax cuts.

Republicans once were concerned about the fiscal health of the States. The States now face the greatest fiscal crisis since the Great Depression. The administration, however, refuses to help the states because doing so would require funds that could otherwise be sued for tax cuts.

No promise, principle or problem can change the belief in tax cuts. No economic, budgetary or foreign policy circumstance can negate the call for ever more tax cuts.

When tax cuts are viewed as a religious belief, we have answers to the riddles posed above. The reason that the administration does not propose an actual stimulus package is that its policy has nothing to do with economics or public policy. It is not intended to stimulate the economy or stimulate jobs. The administration’s tax cuts proposal is simply an affirmation of faith. The rest is just marketing.

The reason that Buffett, Snowe, Voinovich and Krugman are attacked is that they are heretics. By questioning the core teaching of the one true belief, they have committed heresy and like Galileo, they must be punished.

For the Bush administration tax cuts are the true faith based initiative.

Thursday, May 08, 2003
You Got To Know When To Fold ‘Em

We have not written about the flap over the gambling habits of America’s scold, William J. Bennett. Bennett has made a fortune as the top cop of the right wing’s morality police. He also has a gambling Jones. The Washington Monthly reports that Bennett likes to frequent casinos where he plays only the sucker games of high stakes slot machines and video poker. His favorite is the $500 per pull slot machines.

Bennett reportedly lost $500,000 in two days at the Belagio in Vegas last month. Over a decade he has lost a reported $8,000,000.00. Bennett at first denied that he had a problem (“I don’t play the milk money”) and compared losing $8,000,000 at the casinos to playing church bingo. Bennett then claimed that he played the high stakes machines to relax. Can anyone tell us why playing the $500 per pull slots is any more relaxing that playing the $1 per pull slots?

Michael Kinsley has a great article in Slate about the Bennett flap. As Kinsley points out:
Even as an innocent hobby, playing the slots is about as far as you can get from the image Bennett paints of his notion of the Good Life. Surely even a high-roller can't "cycle through" $8 million so quickly that family, church, and community don't suffer. There are preachers who can preach an ideal they don't themselves meet and even use their own weaknesses as part of the lesson. Bill Bennett has not been such a preacher. He is smug, disdainful, intolerant. He gambled on bluster, and lost.

Bennett’s hypocrisy is not just in condemning gambling while engaging in it (although he has done some of that since problem gambling was one of Leading Cultural Indicators Bennett promoted) but rather in condemning everyone else’s vices while ignoring his own.

A number of conservative commentators attempted to defend Bennett arguing that as long as he was not hurting himself or his family (assuming that the loss of $8,000,000 does not sting even for someone like Bennett who has parlayed piety and hubris into a fortune) it was nobody else’s business. As William Selatan points out in Slate, that defense of Bennett contradicts Bennett’s moralizing about other vices:
Sullivan, Glassman, Goldberg, and Last are fully entitled to make this argument. But Bennett isn't. As drug czar in 1989 and 1990, he constantly emphasized that anyone who patronized that addictive industry was responsible for its victims. On Meet the Press, he advocated mandatory sentences for "recreational, yuppie" marijuana users, blaming them for "the murder and mayhem in Washington, the fact that we have babies now being born addicted to cocaine. … These people are accessories to all those things, and they need to start paying a price." He told the Wall Street Journal that the "casual user … is driving the whole enterprise." He told USA Today, "For your middle class or your yuppie user, let's do what they do in Phoenix: Weekend in jail, counseling program, and you pay the cost of it." He criticized celebrities who admitted to past drug use, warning that such disclosures gave kids the idea that "you can do drugs and still be rich and successful."

Bennett also pulled the rug out from under his defenders by admitting that he has a problems and promising to stop gambling.

Demosthenes notes (if that link is bloggered please try this one and scroll down) that the Bennett flap exposes the tension between the social conservative and the libertarian wings of the Republican party.

Charles Kuffner, Brad DeLong and Kevin Drum all provide detailed analyses of whether Bennett’s claim to be about even over the years can possibly be true. Each is a good post but, guys, you are making it too hard.

The law of the obvious demonstrates that Bennett is not close to even after a decade of playing high stakes slots and video poker. The law of the obvious shows that Bennett is not “about even” in two ways. First, the essential fact of slot machines and video poker is that, regardless of the amount of money that goes in, only a portion comes back out. While over the short haul, someone made be up, Bennett has played a lot over a long period of time. He is not even.

Secondly, the casinos where Bennett plays are incredibly lavish if a bit garish. Those casinos were not built and maintained by having high stakes players like Bennett break even over a long period of time.

I feel sorry for Bennett. He needs to stop visiting the casinos to relax. There are other forms of relaxation. Anyone who is stupid enough to lose $8,000,000 playing sucker games at casinos is always welcome in my rubber bridge game. It is a great form of relaxation. There is not need to call ahead, Bill. You can just show up, and we will make room for you. You can relax for a few rubbers or many. Just please remember to bring your checkbook.

Wednesday, May 07, 2003
A Powerful Resistance to Shame

Mitch Daniels, President Bush’s Director of the Office of Management and Budget has announced that he will resign his post effective June 1, 2003. Speculation has it that Daniels will return to Indiana to run for Governor. Daniels is the last of the original Bush economic team to leave the administration. Paul O’Neill, Larry Lindsey, and Glen Hubbard all left voluntarily or with a push.

As Daniel Gross in Slate as noted, it was Daniels’ job as OMB Director to restrain spending. George Bush nicknamed Daniels “The Blade” for his ability to cut spending. Daniels talked of putting the Stones’ “You Can’t Always Get What You Want” as the waiting music on the OMB phone system.

With Daniels’ resignation, it seems appropriate to assess Bush’s performance in restraining spending.

The administration certainly likes to talk about restraining spending. From the White House web site we find this quote:
History has shown that—unlike tax cuts—spending increases, once made, are rarely reversed. This pattern cannot long continue without jeopardizing our Nation's long-term goals.

In addition, Mr. Bush has talked about the consequences of failing to restrain spending:
We must remember the lessons of the past. In the 1960s, increased spending required by war was not balanced by slower spending in the rest of the government. As a result, in the 1970s we faced unemployment and growing deficits and spiraling inflation.

Mr. Bush has even promised to be the enforcer of spending discipline:
The President will enforce fiscal discipline on Congress, because when spending is out of control, deficits increase and our economic growth is hindered. Congress must control its enormous appetite for excessive spending, so we can meet our national priorities without undermining our economy.

Jimmy Breslin recently asked for his readers to "tell me if you ever heard of anybody with as powerful a resistance to shame as Bush."

In no area is Mr. Bush’s lack of shame more apparent than in the disparity between his rhetoric and his actions with regard to government spending. Given the rhetoric, one may presume that federal spending would decrease under a Bush administration. Despite having Republican control over both Houses of Congress, that assumption would be false.

Under the last Clinton Budget (FY 2001), the Federal Government spent (see table 1.1) $1.863 trillion. In the first year of a budget prepared by Mr. Bush (and passed by Republican majorities in both Houses of Congress) spending was $2.010 trillion, in increase of almost 8%.

In the 2003 Budget (again prepared by Mr. Bush) spending is estimated to increase again to $2.140 trillion (plus the cost of the war in Iraq). That is an increase of about 6.5%. If $80 billion is added for the war, the increase is in excess of ten percent.

For 2004, Mr. Bush proposes (see table S-1) to increase spending yet again to $2.229 trillion, an increase of 4.2% (not including any supplemental spending required by the rebuilding of Iraq). Indeed, the budget projections provided by Mr. Bush propose to increase spending each and every year through FY 2008. If Mr. Bush has his way, by FY 2008, the federal government will have increased spending by about 46% over the last Clinton budget.

Even if we eliminate defense, Social Security, Medicare, Medicaid and interest on the national debt from the calculations, Mr. Bush proposes to increase total non-military discretionary spending (See table S-2) each year through FY 2008.

In the FY 2001 budget submitted by President Clinton about $349 billion was allocated to non-defense discretionary spending. By FY 2008, under Mr. Bush’s proposals, $466 billion will be spent on non-defense discretionary spending. That represents an increase of about 34%.

The Blade was too dull to restrain spending. He may have a reputation as being frugal but his boss is not. Like so many areas, Mr. Bush simply says one thing and then does another. When the consequences of his actions become apparent, he blames someone else for his own failures. Breslin is right, George W. Bush has a truly remarkable resistance to shame.

Monday, May 05, 2003
Paging Ken Starr

PLA has learned that on an official trip to Arkansas today, President George W. Bush pressured an attractive Arkansas woman to commit an immoral act. Not only was Mr. Bush’s trip paid for with taxpayer dollars but he also used Secret Service agents to prevent any disruption of his efforts to pressure the woman. The White House does not deny the factual allegations of the charge and, as far as PLA can determine, the woman in question has had no comment on the President’s pressure tactics.

There are only two remaining questions. First, what has Ken Starr been up to lately? Secondly, should impeachment proceedings begin immediately or should they await further investigation?

Okay, now that we have your attention, we must admit that we are writing about President Bush’s efforts to pressure Arkansas Senator Blanche Lincoln into supporting the President’s tax cut proposal.

The Washington Post reports as follows:
President Bush, campaigning for his beleaguered tax cut package today, beseeched Americans to place personal calls to their congressional representatives to tell them they want the proposal passed….

Bush's Arkansas stop, tacked onto his return trip to Washington after a weekend at his Crawford, Tex., ranch, was designed to bring pressure on Sen. Blanche Lincoln (D-Ark.). Hers is one of three Democratic votes the White House has targeted to help eke out a Senate majority on the plan.

We think that a good case could be made that the President’s tax proposal is immoral. It fails to prepare for the retirement of the baby boomers and spends our children and grandchildren’s money to fund the administration’s current agenda. Mr. Bush sells the program as a job creator but his own Council of Economic Advisors’ report shows that the President’s proposal would create only 1.4 million jobs (many fewer than have already been lost on Mr. Bush’s watch) at a cost of in excess of $500,000 per job. While the proposal will, according to the optimistic estimates of Mr. Bush’s economic team, pump up job grown between now and the next election, it will reduce job growth thereafter.

In essence, Mr. Bush asks that we run up a three quarters of a trillion dollar debt and send the bill to our children so that he can improve his chances for reelection. We find that immoral.

You do not, however, have to take our word for it. It is the official position of the Republican Party that increasing the national debt (as Mr. Bush plans to do every year until at least 2012) is immoral.

In the Republican Party’s 2000 platform, we find (link via Jeff Cooper) the following:
Reducing that debt is both a sound policy goal and a moral imperative. Our families and most states are required to balance their budgets; it is reasonable to assume the federal government should do the same. Therefore, we reaffirm our support for a constitutional amendment to require a balanced budget. (Emphasis added)

President Bush has argued that the current budget deficit results from factors other than his irresponsible fiscal policy. If balancing the budget is a moral issue that should be enshrined in the Constitution, it is a matter of principle.

Mr. Bush said in his Responsibility Era speech:
I will be guided by principle and convictions that will not change.

Those unchanging principles and convictions apparently do not apply when it is time to seek reelection.