Wednesday, June 19, 2019

It’s Time For Democrats To Drive A Stake Through The Heart Of Reaganomics

Donald Trump today awards the Presidential Medal of Freedom to Republican economist Art Laffer, the ‘godfather’ of supply-side trickle down Reaganomics. Laffer’s contributions have built a streak of unbroken Republican policy wrongness over a time and scale few policy entrepreneurs in history can match. Trump is giving Laffer the award because last year he coauthored a fawning tribute to President Trump and his agenda. Trump is known to habitually reward his most slavish supporters.

Reaganomics is President Ronald Reagan's conservative economic policy that promised to subsantially shrink the federal government and government spending, and reduce the government's influence on the economy.

Reagan’s legislative agenda implemented an era of laissez-faire economic policy that promoted unregulated “free markets” and untaxed “capitalism” where corporate tax rates and capital gains rates for individuals were effectively diminished, as near as possible, to zero.

Dubbed supply-side, or trickle-down, economics, President Reagan’s economic policy was to reduce, and where possible, elminate taxes on businesses and the wealthy in society as a means to stimulate business investment. Reagan’s theory of trickle-down economics held that corporations and the wealthy would directly invest the money they don’t pay to the government in taxes into business development, which creates jobs, and supports social institutions, which benefits society at large. The theory says that as companies get more cash from tax cuts, they will hire new workers and expand their businesses. It also says that income tax cuts to workers give them more incentive to work, increasing the supply of labor.

The idea of Reaganomics began in 1974, when Art Laffer walked into a bar with Dick Cheney and Donald Rumsfeld, who were working for the Ford administration at the time. Out of it came the “Laffer curve,” a U-shaped graph illustrating the relationship between tax rates and revenue.

The ends of the curve are basic enough – at a tax rate of 0, the government will raise $0 in revenue, and at a tax rate of 100, the government will still raise $0 in revenue because people won’t work without take-home pay. The curve connecting these numbers indicated that a lower tax rate could produce higher revenue. At the extremes, the Laffer curve is correct, but that doesn’t tell us anything about the points in the middle. Laffer’s idea, however, was that a “tipping point” existed on the continuum in between, where people’s incentives to work and invest in business development decreased because tax rates were too onerous.

From Laffer’s graph, Reagan and the Republican Party had the academic justification to justify slashing tax rates for corporations and the rich, who held “excess” money which they could directly invest in business development and altruistic social institutions and programs.

President Ronald Reagan adopted Laffer’s supply-side theory wholesale in his deregulatory and low-tax agenda. In the decades since, Laffer has clung to relevancy, appearing on cable news to vehemently defend the alleged benefits of slashing taxes, even when the evidence proved otherwise.

The conceptual flaw underlying Laffer’s entire premise is that people are not, in fact, utility-maximizing robots. They choose to work for reasons other than maximizing their incomes on the margin: habit, pride of craft, and so on. Tax rates below 100 percent probably produce the higher revenue at rates, but the curve does not resemble Laffer’s, and it does not increasingly approach zero as tax rates are raised.

Saturday, June 15, 2019

No Centrist Middle Ground for Democrats

Who said: “Socialism is a scare word (the corporate special-interest lobbies) have hurled at every advance the people have made in the last 20 years. Socialism is what they called public power. Socialism is what they called social security. Socialism is what they called farm price supports. Socialism is what they called bank deposit insurance. Socialism is what they called the growth of free and independent labor organizations. Socialism is their name for anything that helps all the people…”? It wasn’t Vermont Senator Bernie Sanders.

Who said: “We are rightly proud of the high standards of medical care we know how to provide in the US. The fact is, however, that most of our people cannot afford to pay for the care they need. I have often and strongly urged that this condition demands a national health program. The heart of the program must be a national system of payment for medical care based on well-tried insurance principles. This great nation cannot afford to allow its citizens to suffer needlessly from the lack of proper medical care”? It wasn’t Massachusetts Senator Elizabeth Warren.

Who said: “The people don’t want a phony Democrat. If it’s a choice between a genuine Republican, and a Republican in Democratic clothing, the people will choose the genuine article, every time; that is, they will take a Republican before they will a phony Democrat, and I don’t want any phony Democratic candidates in this campaign…”? It wasn’t South Bend Mayor Pete Buttigieg.

No, no, and no. These are all quotes from then–President Harry Truman, who today is generally imagined as the embodiment of a traditional mainstream Democrat. When he spoke to the 1952 national convention of Americans for Democratic Action, he had some advice to those who shared his partisanship: “The first rule in my book is that we have to stick by the liberal [FDR] principles of the Democratic Party. We are not going to get anywhere by trimming or appeasing. And we don’t need to try it.”

Moderate (centrist) Democrats in the running for the 2020 presidential race — in particular, former VP Joe Biden — are calling the party back to the centrist path Democrats have traveled since 1992. They are proposing a strategy that Truman correctly identified as a recipe for defeat.

It’s time for Democrats to heed to Truman’s advice. We have got to make it clear that when the future of every American, and the planet, is at stake, there is no centrist middle ground path.

When it comes to Social Security, there is no middle ground. When 1 out of 5 seniors is trying to get by on less than $13,500 a year, we must expand Social Security so that every American can retire with dignity and security. The House should pass legislation to expand Social Security benefits and extend its solvency for the next 60 years by requiring that the wealthiest Americans — those making more than $250,000 a year — pay their fair share of Social Security taxes.

When it comes to health care, there is no middle ground. Health care is a human right, not a privilege. And we will guarantee health care to all of our people through a Medicare-for-all single-payer system.

When it comes to providing our children with the opportunities for a better life, there is no middle ground. Making public colleges, universities and trade schools tuition-free. In a highly competitive global economy, we must have the best-educated workers in the world. Every young person in America, regardless of income, must have the opportunity to receive the education they need to get a decent job and make it into the middle class. The House should pass the College for All Act to make public colleges and universities tuition-free. Congress must also act to lift the heavy burden of student debt many Americans continue to carry 20, 30, and 40 years after they graduated.

When it comes to the massive and growing inequality in both income and wealth in America, there is no middle ground. Congress must pass legislation which requires wealthy people and large corporations to begin paying their fair share of taxes. It is unacceptable that there are large, extremely profitable corporations in this country that do not pay a nickel in federal income taxes.

When it comes to the nation’s crumbling social infrastructure, there is no middle ground. Every day, Americans drive to work on potholed roads and crumbling bridges, and ride in overcrowded buses and subways. Children struggle to concentrate in aging and overcrowded classrooms. The infrastructure that America depends on is in disrepair and crumbling — from spotty phone and broadband service and an outdated electric grid, to toxic drinking water and dilapidated levees and dams. Congress should pass a $1 trillion infrastructure plan to address these needs while creating up to 15 million good-paying jobs in the process.
When it comes to abortion, there is no middle ground. A woman has the right to control her own life, not the government.

When it comes to prescription drugs, there is no middle ground. The pharmaceutical industry can’t be allowed to continue to gouge Americans on their purchase of lifesaving drugs.

When it comes to mass shootings — with 40,000 people killed last year with guns — there is no middle ground. We must take on the NRA.

When comes to climate change, there is no middle ground. The nation must engage in bold action to combat climate change. The report from the Intergovernmental Panel on Climate Change has made it clear we have just 12 years to substantially cut the amount of carbon in our atmosphere, or our planet will suffer irreversible damage. Congress must pass legislation that shifts our energy system away from fossil fuels and toward energy efficiency and renewable energy. We can lead the planet in combating climate change and, in the process, create millions of good paying jobs.

When it comes to a living wage there is no middle ground. We must increasing the minimum wage to $15 an hour and indexing it to median wage growth thereafter.
When it comes to criminal justice reform, the right for every citizen to vote, equal rights and opportunity for all, Black Lives matter, ending privatized for profit prisons, immigration reform, ending endless wars undeclared by Congress, no middle ground.