Rudy-onomics
It doesn't take much for a Democrat to be labeled "naive" or "unserious," something Barack Obama has been finding out the hard way of late. But Republicans can say the darnedest things without causing anyone to so much as raise an eyebrow. Consider this exchange between David Yepsen of the Des Moines Register and Rudy Giuliani in the Republican debate on Sunday:
Giuliani suggests that when he cut taxes by 25% in New York City, he ended up collecting 40% more revenue. Nevermind that this happened to coincide with the stock market boom of the late 90s. I'm sure this principle works across the board. The more you cut taxes, the more money comes flowing in. Maybe we should cut taxes to zero and use the inevitable revenue windfall to pay off the national debt, fund Medicare and Social Security indefinitely, and give every American a pony. Yippee.
Alas, Giuliani seems to be one step ahead of me. Later in the debate, he said this:
I'll never understand why Republicans are allowed to get away with this sort of fiscal lunacy. There are literally no reputable economists out there who think that further lowering federal taxes will increase federal tax revenue. There is no empirical data to support such a claim, nor is there even an economic theory which makes such a scenario conceivably possible.
There are some supply-side devotees who think that certain tax cuts can result in enough additional economic growth to offset some small fraction of the revenue lost by those cuts, but that's very different than suggesting that cutting taxes will leave you with more money to spend. The latter, which is what Giuliani is suggesting, is just total nonsense. It's the equivalent of saying that you'll pay for improving the nation's infrastructure by harvesting the power of the Force.
Yet not a single Republican in the debate questioned this "plan" for saving our nations roads and bridges. The GOP has reached a point where no one in the party is even capable of discussing fiscal issues in a way that is remotely serious or reality-based. But as Bob Somerby points out, the national press refuses to explain this to the public. They simply repeat Giuliani's statement without comment, as if he were making some sort of reasonable or non-controversial claim.
In a rational universe, this kind of clownish pseudo-economics would be exposed as such at every opportunity and, in short order, it would no longer be politically feasible to say such stupid, unsupportable things on the campaign trail. Alas, that's not the universe we live in.
YEPSEN: Mayor Giuliani, how do you answer -- in Minnesota, Governor Pawlenty, who vetoed an increase in his state gas tax said now he may consider one. Is this Republican dogma against taxes now precluding the ability of you and your party to come up with the revenues that the country needs to fix its bridges?Just shoot me. Is it even possible to a give a dumber, less serious answer to a legitimate question? How would Giuliani come up with the money to fix the nation's aging infrastructure? Why he'd cut taxes, that's how. Good grief.
GIULIANI: David, there’s an assumption in your question that is not necessarily correct, sort of the Democratic, liberal assumption: “I need money; I raise taxes.”
YEPSEN: Then what are you going to cut, sir?
GIULIANI: But wait, wait, wait. Let me explain it.
YEPSEN: What do you cut?
GIULIANI: The way to do it sometimes is to reduce taxes and raise more money. For example...
(APPLAUSE) ... I ran the city -- I ran a city with 759 bridges; probably the most used bridges in the nation, some of the most used in the world. I was able to acquire more money to fund capital programs. I reduced the number of poor bridges from 5 percent to 1.7 percent. I was able to raise more money to fix those bridges by lowering taxes. I lowered income taxes by 25 percent. I was collecting 40 percent more from the lower income tax than from the higher income tax.
Giuliani suggests that when he cut taxes by 25% in New York City, he ended up collecting 40% more revenue. Nevermind that this happened to coincide with the stock market boom of the late 90s. I'm sure this principle works across the board. The more you cut taxes, the more money comes flowing in. Maybe we should cut taxes to zero and use the inevitable revenue windfall to pay off the national debt, fund Medicare and Social Security indefinitely, and give every American a pony. Yippee.
Alas, Giuliani seems to be one step ahead of me. Later in the debate, he said this:
I would say the most -- the most sensible thing to do is to simplify the tax code, reduce taxes, keep taxes low. I don’t think -- I think the flat tax and the fair tax are both very intriguing. And if we were starting off at the very beginning with taxation, the first argument I would make is let’s not have any taxes. The second argument I would make is the fair tax or the flat tax would probably be a better way to go.Brilliant. Forget the flat tax. Giuliani should just run on a platform of having no taxes at all. It's every bit as serious as his plan to pay for infrastructure improvement by cutting taxes. And the press seems to be willing to let him get away with that, so why not carry this argument to its logical conclusion. Get rid of taxes altogether.
I'll never understand why Republicans are allowed to get away with this sort of fiscal lunacy. There are literally no reputable economists out there who think that further lowering federal taxes will increase federal tax revenue. There is no empirical data to support such a claim, nor is there even an economic theory which makes such a scenario conceivably possible.
There are some supply-side devotees who think that certain tax cuts can result in enough additional economic growth to offset some small fraction of the revenue lost by those cuts, but that's very different than suggesting that cutting taxes will leave you with more money to spend. The latter, which is what Giuliani is suggesting, is just total nonsense. It's the equivalent of saying that you'll pay for improving the nation's infrastructure by harvesting the power of the Force.
Yet not a single Republican in the debate questioned this "plan" for saving our nations roads and bridges. The GOP has reached a point where no one in the party is even capable of discussing fiscal issues in a way that is remotely serious or reality-based. But as Bob Somerby points out, the national press refuses to explain this to the public. They simply repeat Giuliani's statement without comment, as if he were making some sort of reasonable or non-controversial claim.
In a rational universe, this kind of clownish pseudo-economics would be exposed as such at every opportunity and, in short order, it would no longer be politically feasible to say such stupid, unsupportable things on the campaign trail. Alas, that's not the universe we live in.
posted by A.L. at 3:44 PM
5 Comments:
Ah, you see, you don't understand how it all works.
If you cut taxes, people have more money. They spend and invest that money, which leads to economic growth. The growth increases your tax revenues.
You have to understand how the government works. You see, the government collects money, which it calls "taxes". It then puts that money in a big pile, and sets fire to it. They money doesn't purchase goods and/or services, so it doesn't have any economic stimulus value. However, money in private hands *does* get spent or invested, and hence, makes life better, makes birds sing, makes you people fall in love, etc..
You goddamned commie, how can you deny this?
Ahem. Sorry. Got carried away trying to explain the "thought process" these folks use.
Andy says:
I: Note to other anonymous posters. Please identify yourself some how. Then it is easier for readers to follow the thread of exchanges. Like "Andy says"
above or "-Andy" below.
II: About irrationality and taxes.
I don't see why it is good to have a gas tax pay for bridges or, similarly, to have cigarette taxes pay for health care?
The government should collect revenue where it should because of
a) fairness, people and businesses with
more expendable income should pay
more.
b) incentives, things which cost the
society as a whole should be
de-incentivized (discouraged) by
taxes.
And money should be spent where it is
needed to
a) protect the people at the bottom,
and
b) best promote the general welfare.
So gas and cigarettes should be taxed. And bridges should be fixed and health care provided for children. But why link the revenue and the spending?
In the long run do we want children's health care dependent on people dying of lung cancer. Do we want bridges maintenance to be dependent on over-use
of gasoline?
Somehow, the basic function of government to promote the common welfare, by redistribution of resources and creations of incentives and dis-incentives, has been lost in the overall modern discourse.
There is no harm in noting that a given cigarette tax about matches the needs of a given welfare program. Or that to spend more you need to collect more. But the dollars should not be linked.
The linking all the more makes, for example, the government just as addicted to cigarettes as are people.
So I find this "gas tax for infrastructure" argument strange. There should be a gas tax and there should be bridge maintenance. Linking them feels illiberal to me. How do you justify spending for things for which there is no natural linking?
That a bridge collapse would then justify a gas tax feels to me an essentially republican (conservative,
head-in-sand) view that I wouldn't want to encourage.
-Andy
There have been numerous scholarly studies about the fiscal effects of tax cuts. The gist is that at most the government gets back 30% of each dollar cut. So cutting taxes is demonstrably not a way to raise revenue. It's a way to squander revenue by shifting it primarily to the wealthy, thus starving government (aka the beast).
I lived for several years in the UAE where there are no income, property, or sales taxes ... no tax of any kind. And they have a superb infrastructure ... great schools, health care for all, and you can't even find a pothole in a road. There are two aspects to how they do this:
1) The government owns all the key infrastructure, basic services, land, and natural resources. So they own and run (efficiently) electricity, telecommunications, the national airline, water, gas, ports, and of course have all the oil nationalized. They employ and train many locals in these enterprises and give decent benefits, labor stability, and pensions. Most locals prefer to work in state entities because the private sector (mostly foreign companies) is as rapacious, capricious, and anti-employee as it is in the U.S.
2) Instead of having the profits enrich major corporations and a few lucky individuals, they invest the money back into the entire society. One aspect is no taxes (although many economists have advised them to begin an income tax). And there is still plenty of room for private enterprise to do other things ... the place is booming. Oh, and they do have highly trained military and police forces ... there is very little crime, no drugs, and they can defend themselves ... but they don't engage in the ultimate waste of capital: senseless, expensive wars of choice.
The UAE approach could not work in the U.S. because virtually everything is privately owned and run here. Hence, taxes must be used to support the government. When taxes are lowered revenues are lowered ... and the national debt rises.
i'm just glad someone else was as outraged about this as i was. i mean, how many times does this pie-in-the-sky lowering taxes = more revenue meme get to get used before someone calls someone out on it. the moderator tried, by insisting twice in asking what guliani would cut, but the mayor simply sticks with his "underpants gnomes" financial theory. (for those who don't know, look up underpants gnomes in wikipedia. in this case, step one - lower taxes, step two - ..., step three - more revenue).
also, it would be good to note that guliani's miraculous cutting of taxes an increased growth coincided with not just the stock market boom, but clinton's increase in taxes. but certainly, it was new york city's cuts that gave us the 90's boom. think how great it would have been if clinton hadn't increased taxes!
I think a part of this falls into that 'media narrative' we've been discussing. But whereas Obama (and really the Democrats) are always 'naive' and ignorant about foreign policy, the Republicans are always fiscally minded and intellegent when it comes to economics. To this the media seems to be doubtless. In fact, really the only positive thing in this media narrative that elevates the Dems is their stance on civil rights, so of course all Republicans are automatically tinged with racism. It's sad that these stereotypes are accepted by not only the media, but the public since there so counterproductive. Since each side aren't really judged as people, but rather as monochromatic ideals, any particular canidate has to fight through stigma in order to make a point (sometimes just, sometimes not) about some topic which their sides isn't supposed to 'know.' But in Guiliani's case he makes the most insane populist statement (because, you know, no one wants to pay taxes (unless it's to like, keep a war going)) and no one holds his feet to the fire. Instead we much rather talk about how his daughter signed up for an Obama group on Facebook.
Post a Comment
Links to this post:
Create a Link
<< Home