Senate Majority “Leader” Daschle is having trouble getting his followers in line. No other Democrats want to sign on to his latest demogogic campaign to convince people that tax cuts cause recessions. Sounds like they’re running a little scared.
[Update at 10:36 AM PST]
Tony has a couple comments on this and the previous related post from last night.
My response to his comment on this post is in the comments section for it. As to the previous one, I’ll move it “above the fold.”
I don’t think that you fairly represented what I argued – again, nobody is claiming that “tax cuts cause recession”. The assertion was that “lack of confidence” in the fiscal policy “probably”(D’s word), or “mau have”(my words, had an adverse impact – neither of us say “definitley did have”. That’s precisely Daschle’s stated argument, though few people – except myself E.J. Dionne (in todays WP)- choose to read it that way.
Well, “choose to read it that way” is exactly the right phraseology. Very few others conversant with the English language would “choose” to do so. As I said in my comment in this post, I “choose” to read it the way it was obviously intended–to blame the tax cut for the recession, or at least the depth of it. As I said, if there’s a “lack of confidence” in the Administration’s fiscal policies, it’s not because of the policies themselves–it’s because of their mischaracterization by the Democrats and their willing accomplices in the press.
You refer to “talking down the economy” – when I threw that back at Bill Quick in re Mr. Bush doing the same to sell the 2001 Act, Bill argued that “mau-mauing” the economy wouldn’t have an effect, either.
There’s a more fundamental difference. When Bush was “talking down the economy,” he was simply describing objective reality–all the economic indicators had been heading down even before the election. Of course he was making the case for a tax cut. When the economy is heading into a recession, as it obviously was, it makes sense to cut taxes, and to develop a public consensus for that.
Mr. Daschle, on the other hand, is not so much “talking down the economy” directly, as attempting to talk down the people’s confidence in the Administration policy with errant nonsense (which he perhaps hopes will have the desired effect of prolonging the recession until after the election). Fortunately, it doesn’t seem to be working.
So – which is it?
As I said, you’re comparing simply describing economic reality on the one hand, with raw unfounded propaganda on the other.
In re Hoover – read over the history again: Hoover’s initial reaction was DO NOTHING, everything will be OK, the economy is FUNDAMENTALLY SOUND.
As indeed might have been the case, had he not panicked with Smoot-Hawley, and had money been looser (something over which he had no direct control, though a little jawboning might have helped).
Hoover didn’t act until after it was too late to turn things around.
As I said, it was not the timing of his actions that was the problem–it was the stupidity of them.
Finally, the argument that tax cuts spur investment is good theory, but companies are telling us what they would do with a tax cut that comes NOW – they wouldn’t use it to “invest”, they would use it to “recoup”.
What does that mean, exactly–“recoup”?
Does it mean that the money will not get spent, or invested, in something? How can that be?
Do you think that it will just sit in a vault somewhere, so that the greedy corporate executives can swim around in it a la Scrooge McDuck? I don’t really understand this comment.
As far as the causes of the depression – ask yourself why monetary policy was tightened.
Because the people running the equivalent of the Fed at that time were economic ignoramuses, and didn’t understand the problem.
Could it possibly be that when everybody tried to “cash out” it was discovered that nobody could cover the debt, and pumping the requisite number of dollars into the economy would have resulted maybe in hyper-inflation?
Nope, though it’s possible that they thought that.