Well, I’ve finally found a (sort of) explanation for Tom Daschle’s rants. Tony Andragna has been defending his nonsensical assertion that the Bush tax cuts have exacerbated the recession over at Quasipundit. He says:
Neither Tommy D’ nor myself argues that the tax cut per se deepened the recession, but the lack of confidence in this administration’s fiscal policy, especially as regards the return to deficit spending, definitely could have had some impact.
Well, I don’t think that’s what Tommy D’ is arguing, though I suppose it’s possible that you’re channeling him. In fact, I haven’t heard Tommy D’ make an argument at all–just issue fatuous nonsense. But if that’s what you’re arguing, then you don’t really have a case, unless you’re saying that in order to instill “confidence,” we have to cater to the economically ignorant.
Deficit spending doesn’t cause recessions. And concern about deficit spending doesn’t cause recessions, unless the public has been propagandized by the likes of Tommy D’ to believe that they do (i.e., “talking down the economy”). Would it sound a little too cynical if I point out that it’s not in the Democrats’ political interest to see an economic recovery prior to November?
This argument is pointed up by what actually happened in the instance that Bill cites – the Depression wasn’t the effect of a single event, but a chain reaction flowing from lack of confidence in the government’s ability to deal with the problem.
No, the Depression was caused by too-tight money after the crash, and then compounded by the Smoot-Hawley tariff bill, which, with its retaliatory companion bills overseas, signicantly reduced trade and made the situation global.
If Hoover had done something – anything – instead of nothing, the the Depression may well have been avoided.
He didn’t do “nothing.” He did things to make it worse. Like encouraging and signing Smoot-Hawley. He even did things that modern-day liberals would have him do, like creating the RFC.
Sure, “deficit spending” is one of the tools that a government ought have the ability to use in fighting downturns – nobody argues to the contrary. Daschle’s complaint over handling of the downturn is that the GOP “made a huge tax cut their number one priority — ahead of everything else — and discarded the framework of fiscal responsibility”(italics mine).
Those two things (tax cuts and fiscal responsibility) are not in any way inconsistent, if you believe that cutting tax rates grows the economy (which leads to tax revenue increases, even as rates are reduced). Apparently, you don’t believe that, despite all the historical evidence for it.
IOW, there is an argument that the GOP made our long-term situation less secure with their use of fiscal policy in trying to fix a short term problem, and this insecurity might have had an adverse impact on the recovery.
I find it amusing that Democrats are now concerned about “fiscal responsibility.” They never used to care, as long as they could get all the revenue they needed for their programs.
More to the point, the projected deficits are less a of function of spending than they are of a failure to collect enough revenue to cover all of the things that the government – yes, even under Mr. Bush’s plan – wants to do (some of us argue that sans the recession Mr. Bush’s numbers still never got there). That might seem an inane distinction, but the point is that spending is the cure to downturns, not tax cuts.
No, the point is that recessions are solved by spending and investment. Tax cuts accomplish both (since the money that the people don’t have to pay in taxes will be either spent or invested). Government spending can accomplish both, but it’s usually much less effective at either than letting individuals make the choices.