The Return of Voodoo Economics

Very good Opinion piece from the Weekly Independent.  I say good, because I agree with it….

With Congressional Republicans insisting that we have to attack the sickness of spending that, in Speaker John Boehner’s words, is afflicting Washington, it’s worth recalling some recent history.

In 1981, Ronald Reagan’s budget director David Stockman admitted to Sen. Daniel Patrick Moynihan, a Democrat from New York, that running up “strategic deficits” was a useful political tool because it “gives you an argument for cutting back programs that really weren’t desired and giving you an argument against establishing new programs you don’t really want.” Stockman noted further that strategic deficits can enable opponents of public investments to sound compassionate, providing them with opportunities to use phrases like “We can’t steal from our children to pay for our short-term desires” to oppose government spending.

Reagan had run on a platform of reining in government spending and waste and on promises to put our house in fiscal order. Reagan insisted that deep cuts in personal income and capital gains taxes would result in increased tax revenue for the government because of the wealth-generating benefits of the cuts—so-called supply-side economics. During the 1980 campaign, his future vice president, George H. W. Bush, mocked supply-side theory as “voodoo economics.” Of course, during his eight years in office, Reagan presided over an explosion in government deficits and a more than doubling of the national debt. But he also achieved two goals critical to modern conservatives: He dramatically shifted wealth from ordinary Americans to the very wealthy, and he made “deficit reduction” a useful code for hamstringing government efforts to help the less well-off.

When George W. Bush became president in 2001, he inherited large projected surpluses. Bush set about attacking those surpluses, passing large tax cuts in 2001 and 2003 that overwhelmingly benefited the wealthy and, in due course, wiped out those projected surpluses and replaced them with large projected deficits. Like Reagan, Bush accomplished two cherished goals in the process—further transferring wealth to the wealthiest Americans while putting Congress in a “straitjacket” with respect to critical investments in the nation’s infrastructure and social programs. As conservative columnist and Bush cheerleader Fred Barnes put it at the time, “The most important fan of strategic deficits in Bushland: Bush.” Like Reagan, Bush certainly succeeded, if success is defined as running up large deficits that constrain future efforts to address adequately the nation’s pressing social and infrastructural needs.

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