Daschle’s lies and his attempt to sabotage the US economy

Last January I predicted that Daschle and his fellow patriots on the Hill were moving to try and sabotage any economic recovery so that they could blame the continuing recession on President Bush’s economic policies (Democrats move to sabotage US economy). Since then the situation has deteriorated with the Daschle led Democrats shamelessly lying to their constituents and the media about the tax cuts and what really caused the recession.

Dick Morris, former adviser to Clinton, has publicly said that the Democrats are working to sabotage economic recovery. In his own words:

Daschle revealed his ruthless contempt for Americans’ welfare when he refused to schedule a vote on the energy security bill because it would interfere with his fund-raising tour. Daschle is deeply concerned about the welfare of the unemployed that when Sen. Charles, Grassley, the Finance Committee’s ranking Republican, offered to extend benefits for workers who had used up the benefits, Daschle and his fellow Democrats rejected the offer. The opportunity to cause more economic misery and then blame it on Bush was just too good a chance to pass up. So not only is Daschle planning more unemployment for Americans he is even fighting against more energy for them. What a sweet guy.

With a Goebbelesque flourish in perfect keeping with Daschle’s deceitful strategy DCCC Chairman

Let’s do this by the numbers so that even callous economic dummies like Daschle and Lowey can understand it. Last October was the 15th consecutive month that manufacturing had contracted. That means for those like Lowey who can’t count that manufacturing officially went into recession in September 2000. Now if my memory serves me right, and I’m sure it does, the priapic Clinton was still president.

Our readers will know that I frequently stated early last year that the US economy was going into recession. I emphasised that recession would first emerge in manufacturing and then work its way down through the production structure until it reached the point of consumption, which is exactly what happened. It should be self-evident, therefore, that the recession was well underway during the last three months of the Clinton administration. No matter how dumb Lowey is, and she’s pretty dumb, she cannot possibly be ignorant of this fact, particularly when we consider that it was discussed at length in every leading paper. And in my book that makes her an unmitigated and callous liar.

Which brings me to the lying Daschle. His claim that tax cuts caused the recession are utterly absurd. As I have already pointed out, America went into recession last year under Clinton. Moreover, even though the recession has only been made official from March this year the tax cut bill was only passed in June. Perhaps the brilliant Senator Daschle and the equally brilliant little Miss Lowey could tell us how June’s tax bill was able to trigger a recession in March. (It should be noted that even if the March date for the recession was correct it would still mean that recessionary forces must have been operating for sometime beforehand). Blaming the recession and the shrinking surpluses on tax cuts is like blaming the fire brigade for fires. The sequence is so blindingly out of order that even most of media hasn’t swallowed the Daschle line, at least not yet.

What Daschle has not been called upon to explain is how tax cuts can cause a recession. If he were right about the tax cuts then consumption would have fallen. But consumption continued to rise even as manufacturing contracted, something else I predicted. To my knowledge no economist ever called tax cuts contractionary. On the contrary, they are usually opposed for being too expansionary! According to the Keynesian Paul Samuelson:

“...dollars of tax reduction are almost as powerful a weapon against mass unemployment as are increases in dollars of government expenditure. Such a program may involve a larger deficit than would an expenditure program. But it also means that there is no expansion of the government’s sector of the economic system,” Economics.

But there is nothing special about deficits or surpluses and the idea that the latter is some kind of safeguard or guarantee against recession is absurd. Those who believe this nonsense ought to be reminded of the fact that there was a surplus in 1929, but that didn’t stop the Great Depression. The government also had a $3.5 billion surplus in 1960, just as the economy slid into recession.

It would pay to return to the lessons of the ‘30s to see the damage that raising taxes during a recession can do. In 1930 Hoover raised government expenditure. Did the economy recover, Sen Daschle? Of course not. By 1931 Hoover was desperate to counter the growing deficit so he raised taxes in December. (Let’s call Hoover’s action the Daschle option). In 1932 Congress passed the Revenue Act which introduced a huge range of tax increases. Funny thing, Senator, the economy still didn’t recover. As for the deficit, instead of being wiped out by tax increases, tax revenue actually fell. During this period the fiscal burden of government rose significantly. Needless to say, the economic activity remained severely depressed.

Roosevelt was every bit as bad as Hoover, raising taxes significantly in 1935. And what was the result of these tax increases. The economy remained depressed while federal expenditure steadily rose throughout the depression. As for the deficit, it averaged 3.6 per cent of GNP during this period and unemployment averaged 18.6 per cent.

And what does Daschle, Lowey, Dodd and their supporters demand? Tax increases. The very same medicine that contributed to the Great Depression. They could always point to Clinton’s 1993 tax increases as a guide. I wouldn’t if were them. Those tax rises only appeared to be successful because of the Fed’s reckless monetary expansion. In other words, the tax increases were underwritten by an extremely loose monetary policy.

Once the real effects of monetary policy started to emerge in the form of a continuing contraction in manufacturing the need for tax relief would make itself felt. And just as a rising government burden as a proportion of GDP helped sabotage economic recovery in the 1930s the same will happen today. Revenue has risen from 17.6 per cent of GDP in 1993 to a record 20.6 per cent in fiscal 2000. To argue that the road to recovery lies on imposing an even greater fiscal burden on the private sector defies both economic theory and economic history.

But the likes of Daschle care nothing for these things — winning power and keeping it is all that matters to them. Daschle’s Gospel is now Politics After the Attack, written by Democratic strategists James Carville, Stanley Greenberg and Robert Shrum. And there is nothing in this manual about patriotism, responsibility, integrity or concern about national security or the common good. This is a manual for grabbing power, which is what these destrustocrats are all about.

Great post, Jean.

Expect more and more of this kind of perverse brand of "economics" as we draw closer to '02.

These socialist slugs can never find a reason to offer a tax cut under ANY circumstances!....This current national crisis and it's effect on this economy is as profound an example of their "politics over common sense" that one can site.

NOTHING is above their miserable politics.

This was a given. The demoRats don't want to sound unpatriotic, so they have to do something to bash the President before the elections.
Its the economy stupid is a catchy little phrase, gee where have we heard that before?

Daschle is an enemy of the United States, and President Bush will have to stop him or we are all in trouble.

I wish Gerard Jackson's writings were published more widely in America. He sees the situation more clearly than most Americans do.

Oh, so true Janet. Where in the lamestream American press could we ever find honest prose like this:

No matter how dumb Lowey is, and she’s pretty dumb, she cannot possibly be ignorant of this fact, particularly when we consider that it was discussed at length in every leading paper. And in my book that makes her an unmitigated and callous liar.

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