I used to consider myselt "middle of the road" polictially largely because I was liberal on social issues but conservative on economic ones. I don't like waste and I want a balanced budget. On that front the Republicans used to seem like the best bet. What the hell happened to that? When did the Republicans go completely off the rails economically and get so wrapped up in the idea of tax cuts as a solution to everything that they no longer seem to be in touch with economic reality?

From a fiscal stand point, it's obvious that in recent years the only difference between Republican and Democrats is not how much they spend, but where they spend it. And for all the talk about shrinking the size of government, no one wants to eliminate anyones sacred cow.

Ron

go to Zfacts.com and white house budget data

@ TJA:

"When did the Republicans go completely off the rails economically and get so wrapped up in the idea of tax cuts as a solution to everything that they no longer seem to be in touch with economic reality?"

Good question! I will attempt a highly condensed answer.

The answer goes back to the 1920s when the Federal budget was minuscule and the financial markets were completely unregulated. The twin engines of capitalism are fear and greed. These interacted with unregulated financial markets to cause the Great Depression of the 1930s.

The unemployment rate soared to 25%. To keep people from literally starving to death, Franklin Delano Roosevelt (FDR) laid the foundations of the welfare state. Back then the word "welfare" was used by liberals to mean "the government shouldn't let citizens starve to death". (FDR also put regulations on the financial markets to prevent fear and greed from causing another financial market meltdown.)

Conservatives disagreed with this liberal thinking about the role of government. Starvation remedies unemployment without the heavy hand of "socialist" government. This is called "the magic of the marketplace". So conservatives fought FDR's "New Deal" tooth and nail until the Second World War came to America in 1941.

The government borrowed huge amounts of money to finance the war and went deeply into debt. But it also solved the unemployment problem. Some people expected the Great Depression to come back after the war but it didn't. The government had inadvertently proven an obscure hypothesis by a British economist named Keynes.

Keynes proposed that governments should borrow money and increase spending turning economic downturns to stimulate the economy as happened during WWII. But this builds up government debt. So governments should also stop borrowing money and reduce spending during good times to pay down the debt. So what about taxes? Taxes should be set to keep the amount of government debt stable when averaged over many up and down economic cycles.

Sounds straightforward enough and it worked well enough from 1945 until the election of 1980. Conservatives had never gotten over their fear and loathing of the "New Deal", "welfare" state, "socialist" government, call it what you will. It wasn't pure and unfettered capitalism as they had come to know and love with an ideological passion only matched by their communist counterparts.

So in 1980 with the election of a genial actor named Ronald Reagan, the conservatives finally launched their assault on FDR's New Deal. They couldn't attack the popular social welfare programs directly, so conservatives tried a flanking maneuver they code-named "starve the beast". That meant cutting taxes so deeply that the government debt would explode unless something else was done. That something else, of course, was slashing social welfare programs to relieve the financial crisis engineered by the tax cuts.

This ruse is so obvious that a clever child could see through it. So conservatives came up with a lie so big and so bold that Congress would fall for it. The lie was ingeniously called "supply-side economics" to give the impression that the lie was actually backed by legitimate economics. And the lie was that... <cue drum roll> ... cutting tax rates would increase tax revenue. No, that is not a misprint and yes, you did read that correctly.

This has to rank as one of the biggest and most successful hoaxes ever perpetrated. Congress obligingly cut tax rates and waited for the increased tax revenues. And waited and waited and waited. Tax revenues plummeted as the "starve the beast" conservatives hoped for. They never wanted more tax revenues. That would have undermined their whole scheme to force the dismantling of the New Deal.

So faced with the financial crisis engineered by the conservatives' tax cuts it was now the turn of Congress to relieve the crisis by slashing social welfare programs. Well, as Jon Stewart would say, a funny thing happened about that. It seems that individual members of Congress didn't commit political suicide by slashing popular social programs. Who would have predicted that?!

Bill Clinton's presidency was a major annoyance in the scheme of conservatives. He increased tax rates and guess what happened? Under "supply-side" <snicker> economics that should have decreased tax revenues. But for the second time reality confirmed common sense and tax revenues did what a clever child would expect. They went up.

In the election of 1992 conservatives were up to bat again with the election of George W. Bush. The popular social programs were still intact. What to do? Bush assaulted Social Security itself with a scheme to privatize the retirement program. His timing in the wake of the tech stock bubble burst couldn't have been worse. That scheme crashed and burned. But the siren call of tax cuts to "starve the beast" was still there.

Bush was wise to the old saying, "Fool me once, shame on you. Fool me twice,... um... won't get fooled again." So he knew he couldn't peddle "supply-side" tax cuts again. Another bogus reason for cutting tax rates had to be found. And this time the lie had to be even bigger and bolder than the "supply-side economics" lie. The team that lied it's way into the Iraq War was up to the challenge.

Remember Keynes insight? For government borrowing and spending during bad times to work, you have to pay down the debt during good times. If cutting tax rates would reduce tax revenues, some way had to be found to justify reducing tax revenues in the face of a huge government debt. That would make absolutely no economic sense whatsoever. Unless... unless you could find the one economist in the nation with enough prestige and respect to sell another insane economic idea to Congress.

Enter the Maestro, Alan Greenspan, then Chairman of the Federal Reserve Board, appointed by Ronald Reagan. In the virtuoso performance of his career, the Maestro went to Congress and sold them on the idea that paying down the huge government debt was a bad idea. No, I honestly don't have the imagination to make this up. Nor do I have the intelligence to fathom Greenspan's reasoning. Was Greenspan in league with the "starve the beast" conservatives? Well, I don't know and he's not telling.

For the second time Congress took the bait, sweetened this time with the promise that the tax cuts would be "temporary". So tax rates were cut, tax revenues plummeted again, and the government debt continues its climb into the stratosphere. Note that this completely discredited "supply-side" tax cuts. Whatever. Meanwhile, individual members of Congress continue their stubborn refusal to commit political suicide by slashing popular social programs. And the "starve the beast" conservatives are eagerly vying for John McCain's attention.

As an afterthought, let me comment on the idea of paying down the government debt during good times. This is really good insurance against something bad and unexpected happening. Like, oh, I don't know... like how about AN ATTACK ON THE UNITED STATES THAT DRAWS US INTO A SENSELESS $3 TRILLION WAR! Just for an example.

Obama 08!

Has one Republican elected official offered to forego his salary? No. Why don't all members of the Congress sacrifice their salaries in the name of patriotism? Why cannot the Defense contractors stop charging "high prices" for services they provide? In Iraq private contractors fighting make three times the salaries of regular army. All of this is borrowed money. No one person admits that the richest country in the world is bankrupt!

TJA:

I used to consider myselt "middle of the road" polictially largely because I was liberal on social issues but conservative on economic ones. I don't like waste and I want a balanced budget. On that front the Republicans used to seem like the best bet. What the hell happened to that? When did the Republicans go completely off the rails economically and get so wrapped up in the idea of tax cuts as a solution to everything that they no longer seem to be in touch with economic reality?

It started with Reagan, who claimed he would reduce the size of government, yet government spending increased in every year of his watch. Yet the GOP became so enamored with his rhetoric that they constantly try to ape it.

On the one hand, it makes some tactical sense. They know that everyone believes that they pay too much in taxes, so promising to cut taxes is always an election winner. But, since they have no intention to reduce spending, they run up huge deficits, which are just deferred tax increases with interest.

It is not Republicans' fault or Democrats' fault we are in this mess. It is our fault.

Simply put, you have to win the vote of the average voter to win an election. The average voter wants more spending on everything, likes tax cuts and hates tax increases, and of course, opposes deficits. In other words, the average voter is a moron, yet our politicians are forced to cater to him or her.

It is pretty simple folks. For decades, the government has been spending $1.20 for every dollar it brings in. In varies from year to year depending on how the economic winds blow, but that's the basic reality. It does NOT depend on which party is in office. There is no statistically meaningful correlation between which party holds which office and either the economy or the budget.

To solve the buck twenty problem would require at least one of two things:

1: Significant tax increases. Not just nickles and dimes, not just "the rich", not other people. New, bigger taxes for everyone, you included. If you aren't willing to raise your own taxes to solve the problem, you are greedy, and I humbly request you get the heck out of my country for good.

2: Significant spending cuts. Since almost 90% of the budget is Social Security, Medicare, Medicaid, defense, and interest on the debt, you HAVE to cut spending on these things. Yapping about the .1% of the budget that is "pork" will not cut it.

Please pick your poison, and don't pretend we can dodge the choice any longer.

But actually, it started long before Reagan. I remember listening to Tip O'Neill talking to someone about fifteen years ago, just before his death, about his years in the Congress and how surprised everyone was that with the booming economy after WW II. He entered Congress in the mid-50, as I recall, and he said they had a really tough time trying to figure out ways to spend all the tax money that kept pouring in.

Some habits are just tough to break.

Ron

"But actually, it started long before Reagan. ... and how surprised everyone was that with the booming economy after WW II."

Yes, a lot of people expected the Great Depression to resume after the war. What they didn't understand was the effect of the Keynesian stimulus of massive government borrowing and spending during the war.

This is a small part of the story of the financial mess the government is in today. To better understand the whole story you have to go back to the 1920's. See my post above.

Obama 08!

For the mathematically inclined, if you take the first derivative of the data presented to find the slope of each President’s debt increase, you will find that the Republican slopes are consistently more positive than the Democratic slopes. For everyone else, this just means that unbiased mathematical proof exists to support the claim that since 1945, Republican presidents have borrowed more than Democratic presidents regardless of the inflation rate.

I think Past GOP spending requires 17% percent of your taxes to finance.

We are headed for bankruptcy

<link>

http://zfacts.com/p/318.html

We've been headed for bankruptcy for a long time. What is a more disturbing recent trend is how much of our debt is held by countries like China and Saudi Arabia. Bush's policies have put us in grave risk of becoming a client state for those countries. History will record this administration as the one that pissed away our status as the world's only superpower.

pwoxby,

I found this post of yours so interesting - Republicans and the economy - I have made a copy of it. In fact, your posts are so consistently pleasant and intelligently written, they (you) are among my favorite appearing in Slate. You are a gentleman/gentlewoman and a scholar. You have managed to maintain a sense of discipline and integrity where other posters have let egotism or vanity adulterate their sense of purpose and a clear expression of their ideas. You are a top poster in my book. I don't know the rules the Slate editors have for determining their favorite posts category, but this one of yours deserves billing. A+ work. I hope more people have an opportunity to read it.

Thanks. And may God bless you.