Reagan insider: 'GOP destroyed U.S. economy' Commentary:

Wall Street Journal - Market Watch ^ | Aug. 10, 2010 | Paul B. Farrell

[Chunga85]

How: Gold. Tax cuts. Debts. Wars. Fat Cats. Class gap. No fiscal discipline

ARROYO GRANDE, Calif. (MarketWatch) -- "How my G.O.P. destroyed the U.S. economy." Yes, that is exactly what David Stockman, President Ronald Reagan's director of the Office of Management and Budget, wrote in a recent New York Times op-ed piece, "Four Deformations of the Apocalypse."

Get it? Not "destroying." The GOP has already "destroyed" the U.S. economy, setting up an "American Apocalypse."

Yes, Stockman is equally damning of the Democrats' Keynesian policies. But what this indictment by a party insider -- someone so close to the development of the Reaganomics ideology -- says about America, helps all of us better understand how America's toxic partisan-politics "holy war" is destroying not just the economy and capitalism, but the America dream. And unless this war stops soon, both parties will succeed in their collective death wish.

[griswold3]

To bring back manufacturing to the US would require a major overhaul of the tax system. Replace this one with one that doesn’t punish the productive class, something like the ‘Fair Tax’.

[nathanbedford]

Of course, the problem is, as you've stated, that the American public have surrendered their political authority to those whose ambitions have led them to so-called "public service."

This is a point overlooked so often by those who blame "government" for our woes. The fault, of course, is not in the stars but in ourselves. You are also right when you say that the Republicans, although guilty, are not nearly as guilty as Democrats because it is the latter who have pandered the electorate offering always the easier, softer way, the upside but never the downside.

Once the political issue is so framed that the question becomes one of imposing hardships, of saying no, the political reality is that no politician will take that side of the issue. A politician above all seeks to preserve himself in office and it is a rare politician indeed who will risk his sinecure to deliver the bad news to his constituents. So long as we as voters are inclined to shoot the messenger, the Ron Pauls in our political world will be a endangered species.

The endgame is upon us, in this both Stockman and the author are correct. It remains to be seen whether Rep. Ryan's plan can make its way through Congress and past the veto pen of the Manchurian Marxist to have a chance to save our way of life. Even if the plan or something similar becomes law, we might learn to our sorrow that we have repented too late.

[IrishCatholic]

While I was unimpressed with the article at the link, I am fascinated as to how you got put in charge of the:

“full body flame suit, tin foil hat, whistle past the graveyard, head in the sand” ping list.”

Did you mug a nun or something? Man, talk about bad karma. But thanks for pinging me to the train wreck. The fact the man completely misses it’s the spending, not the taxes that killed us makes the guy’s opinion worthless.

[samtheman]

David ignored the Brown Acid warning...

You are so right.

[marktwain]

You don't even mention things that seem to be the most important in today's economy. Software and information flow, both of which are dominated by fluid markets and individual innovation. Where was Amazon 15 years ago? Where was Ebay? Where was Facebook?

Old industries like machinery and textiles are going the way of farming, incredibly productive with only a small number of people required to produce what we want and need.

[Jim Noble]

I think that the original idea - the Howard Jarvis idea - that limiting taxation would limit the size and the scope of government - has been proven false.

To the extent that the GOP has used its power to limit taxes but not spending - and that they’ve adopted the idiotic mantra “cut taxes so that the government will have MORE to spend” - then I think accusing the GOP of destroying the economy is fair.

[Yardstick]

Thanks for that bit of history on Stockman, for those of us who are a little fuzzy on who the players were back then.

[skeeter]

Stockman lost all credibility back in the early eighties.

Now, if he claimed the republicans failed the economy by not only refusing to resist but steadily adopting the current keynsianism and statist economic policies of the left I'd be inclined to agree.

[runninglips]

60 posts before the culprit is named. Methinks Stockman is bought and paid for shill for these “progressives” too.

[Chunga85]

What he leaves out is very telling for instance let’s talk about being in the pocket of Wall Street.

As usual..you are 100 percent correct. The reason I found the article "post-worthy" was not to cheer lead for the author or bash Reagan's advisor.

Despite what values either party espouses the result always seem to be the same. Words aside, let's assume we still have a two-party system.

The hose-down of America has been and continues to be a "bi-partisan" effort.

[Be Free]

The Republicans were certainly complicit, but not the only, or even the leading cause. Two key faults that I saw:

1. They “compromised” with the Democrats, giving them what they wanted (social spending, give-aways and moving more individuals off the tax rolls) in return for what the Repub’s wanted (mostly tax-cuts and strong military).

2. They got addicted to the spending as well. When they saw no voter backlash against the Democrats’ spending, they thought they could do the same. An example was them being too clever by half, pushing and passing the prescription drug bill, thinking this would lock up the votes of the over-65 crowd forever (it didn’t, and now it is another “third-rail” issue).

This is what happens when you abandon (or have no) principals.

[Chunga85]

I am fascinated as to how you got put in charge of the: “full body flame suit, tin foil hat, whistle past the graveyard, head in the sand” ping list.”

No one put me in charge of the list and I give it a new name every time I use/abuse it. Some asked to be on the list, some I put in myself. Many of the people on the list more often than not disagree with me. That's ok. Just because I don't agree doesn't mean I don't respect and carefully consider their thoughts and opinions.

We have some tough decisions ahead and there will be no easy solutions.

Ping on/Ping off...just let me know.

[reefdiver]

Greedy. Only concerned about re election. The political class has done enormous damage, promising the world to what ever group would deliver on election day. The hell with everyone else. That’s why people flocked around the idea of a TEA party. I’ve noticed some self appointed state presidents of TEA parts. That is impossible, there is no leader. It’s an idea, a movement. No leaders, no one speaks for me, thank you.

[GeronL]

Yes, massive new taxes and higher debt and strangling the economy with regulations like Cap N Trade would have the economy hopping.

/sarc

[A Strict Constructionist]

“So I’d replace “helpless and blind” with “shortsighted and greedy.””

You pretty much nailed it. The old “as long as I’ve got mine” rule is alive and well in the GOP. I’m not sure we will be able to change things as long as WS can run amok and be bailed out with our tax dollars.

Changes are needed. I figure if they make sense to the common man and po WS they probable have a good chance of being in the right direction.

[Jabba the Nutt]

Bingo! Next to McCain's picture in the dictionary for weasel, is a picture of David Stockman.

AND for pete's sake, it's not a "balanced budget" we need, we need a radical downsizing of the size, scope, power, regulations, etc., etc., etc. of the Federal Government. We could run a 100% budget deficit of $500 billion dollars, if we cut the budget of the Federal Government to $500 and eliminate all taxes.

That would be better than "balancing" Obama's vastly expanded Federal Government spending spree with higher taxes. Of course, the budget couldn't be "balanced that way, because it would collapse the economy.

Stockman: wrong then, wrong now, weasel always.

[A Strict Constructionist]

“basis of their innovation, creativity,”

This only works for those that produce real things. WS has managed to put us in a mell of a hess with their innovation and creativity in producing figments of the imagination.

[Vendome]

stuntman is an idiot and a shill for the other team

[Notary Sojac]

There's no easy fix.

The truth of this thread distilled to four words.

Liberal solutions are wrong and will make things worse.

Conservative solutions are partially correct and may get us back to a growing economy in a couple of decades.

I say "partially correct" because there are still too few conservatives who are committed to reversing the bailouts.

[Skepolitic]

The main thing wrong with this article is that its indictment is partisan. The truth is that both political parties are to blame.

Stockman is not disappointed in Democrats for behaving like liberal Keynesian panderers. That’s to be expected. He’s disappointed in Republicans for behaving like liberal Keynsian panderers, which their leadership did with few exceptions.

In essence, the article is critical of two intellectuals who offered revolutionary approaches to resolving the malaise of the 1970s: Milton Friedman and Authur Laffer.

Friedman was a genuine champion of liberty, but his theory on floating exchange rates was fatally flawed because it assumed that the USG, the Fed, and other central banks would behave responsibly and make decisions with a long-term time horizon. His rationale was that politicians and central bankers would respond to market signals, and that US politicians and the FRB in particular would act to preserve the dollar’s value in a manner befitting the reserve currency of the world.

Laffer correctly argued that, if set too high, increases in tax rates can actually reduce tax revenues. This is obvious to anybody who works for a living, but many Democrats can’t comprehend this fact. Laffer’s famous curve also indicates that that there is a revenue-maximizing rate at which any reduction in tax rates reduces tax revenues. This, too, should be obvious, but it escapes many Republicans. In the 1980s, Laffer argued that the best way to cut the deficit was to reduce income tax rates, and thereby stimulate economic growth and increase tax revenues. The fatal flaw in this theory was that it did not address USG spending and regulation. It assumed that the USG would behave responsibly and make decisions with a long-term time horizon. Politicians and pundits talked about cutting spending, but instead Congress spent every additional dollar of tax revenue and a whole lot more. And it wasn’t just the Democrats. George W. Bush touted Medicare Part D, the largest new welfare entitlement program in fifty years, as a proud accomplishment. Only 19 House Republicans voted against Medicare Part D.

Thus, the monetary and fiscal ideas of Friedman and Laffer suffer from the same flaw: they assume that it is possible to have good government, one that behaves reponsibly with a long-term time horizon. Through the 20th century, the USG was probably the least bad government in human history, but even it failed.
Ronald Reagan put it well: “Government is not the solution to our problems; government is the problem.”