Let’s See If I Can Fit Both Feet In Here

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.

[End Update]

Dodging Cosmic Bullets

The Instapundit points to this article in the BBC. Apparently, a 300-meter object came within a whisker (in cosmological terms, as such things go–it was not quite as close as the Moon) of hitting us. If it had, it would have been a very bad day for whichever continent it hit, unless it hit in the ocean (actually more likely, since that’s what constitutes a majority of the earth’s surface), in which case all of the surrounding coastlines, and objects on their edge, would have been temporarily moved inland a few hundred miles.

Dr Benny Peiser of Liverpool John Moores University, UK, told BBC News Online: “The fact that this object was discovered less than a month ago leads to the question of if we would have had enough time to do anything about it had it been on a collision course with us.

“Of course the answer is no; there is nothing we could have done about it.

“It is a reminder of the objects that are out there. It is a reminder of what is going to happen unless we track them more efficiently than we do and make better preparations to defend our planet,” says Dr Peiser.

Glenn correctly points out that one of the reasons that having robust space capabilities (I really dislike the term space program, because it connotes so much of what’s wrong with the way that we do space) is important is that because until we have large-scale habitation off planet, our species (and most others on the planet) will remain vulnerable to this “all eggs in one basket approach.”

But there’s one other comment to make. In the above quote, in which Dr. Peiser says “there is nothing we could have done about it,” the tense is correct, but it implies that this condition was inevitable, and will remain true forever, when in fact, with different choices made decades ago, there might have been something that we could have done about it.

Also, we may be able to do things about it in the future, even with only a month’s warning, or even a week. But it means getting serious about developing space capabilities. Unfortunately, space remains unimportant to the nation, and NASA is important only to those who directly benefit from the pork that it generates. In order for this to change, events like this need to get more publicity, and the public discourse on the subject has to get much more thoughtful.

The Battle Has Been Joined

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.

Be Careful What You Wish For

Senator Lieberman is about to start up his Enron investigation. The conventional wisdom in the press is that this will uncover all kinds of skullduggery linking the Bush Administration to the failed company as a result of campaign donations and close ties of the principals to the Administration members, including W.

But the Democrats will have to be very careful when they turn over that particular rock–you never know what will crawl out. According to Accuracy In Media:

…it was the Clinton administration that did favors for Enron, and received large donations in return. Time magazine reported in 1997 that Clinton chief of staff Mac McLarty reached out to Enron Chairman Ken Lay, at President Clinton?s urging, and for nine months closely monitored a $3 billion dollar power-plant project in India. Four days before it was announced that Enron won the contract, it gave over $100,000 to the Democratic Party. Robert Rubin had worked closely with Enron when he was with Goldman Sachs. He recused himself from dealing with Enron matters during his first year in the White House as Clinton?s economic adviser, but not when he became Treasury secretary in 1994. According to the Houston Chronicle, Enron got permission to build a pipeline from Mozambique to South Africa after National Security Adviser Anthony Lake threatened to withhold aid to Mozambique if it didn?t approve the project….

Also, from the Center For Public Integrity:

Kenneth Lay, chairman and chief executive officer of the Enron Corporation, accompanied Secretary of Commerce Ronald Brown on the trade mission to India in January, 1995.

In India, Enron signed a contract for a 2,000 megawatt power plant in Dahbol worth an estimated $400 million. Enron also won a contract to build a $920 million power plant on the West coast of India and a $1.1 billion contract for offshore gas and oil production.

Rodney L. Gray, chairman and chief executive officer of Enron International accompanied Brown on the trade mission to Russia in March and April of 1994.

In Russia, Enron signed a deal to develop a market for Russia gas in Europe.

During the 1991-92 election cycle, Enron gave $28,525 to the Democratic party while Brown served as the chairman of the Democratic National Committee. Enron gave $42,000 to the Democratic party in the 1993-94 cycle.

Sounds like “Enronomics” might turn out to be a double-edged sword…

US, Banana Republic

Reader Robert Martin has some further thoughts on the airline security fiasco.

They’re all worth a read, but I particularly agree with his final comment.

In all, the visible presence of heavily armed troops in airports is only a public relations gesture that makes no genuine contribution to security. It serves only to fool those who will be fooled by such things. In the meantime, we get to look like a banana republic that is anticipating, undergoing, or recovering from, a coup.

Biting Commentary about Infinity…and Beyond!