Earth to the Republican Party: David Stockman, the architect of Reaganomics, declared on NPR that “Reagan would never support extending the Bush tax cuts.” Stockman took this assertion a step further in calling out the Republican leadership for perverting the notions of fiscal conservatism and betraying what the Party used to stand for. He laid his harshest blame on the Bush administration.
“Only by reducing the growth of government, can we increase the growth of the economy.” ~~ Ronald Reagan
Republicans like Sarah Palin are attempting to disingenuously wrap themselves in Reagan’s mantle when they claim that the Obama administration will be raising taxes on mom and pops across the nation. What they are referring to is the question of whether or not to extend the Bush tax cuts for the wealthy.
Republicans claim that to not extend the unpaid for tax cuts is the same as raising taxes, and they are misrepresenting just who will get hit with higher taxes under the Democrats proposed plan. They are also betraying the theories behind Reaganomics as they do so.
Director of the Office of Management and Budget under Ronald Reagan, and the architect of Reaganomics, David Stockman is convinced that Reagan would never support extending the Bush tax cuts.
Stockman is a conservative Republican who is calling out the current Republican push to extending the Bush tax cuts. Stockton was interviewed on NPR’s August 7, 2010 edition of All Things Considered.
It should be noted that Stockman, creator of the supply side economics/low taxes theory as a way to stimulate growth, became disillusioned with Reaganomics, after he saw the military budget balloon out of control along with the tax cuts which were intended to be for the people going to special interest groups.
Stockman felt the Government wasn’t collecting enough to cover it costs. Stockman left his post in 1995 after Reagan seemed disinterested in his concerns.
William A. Niskanen, chairman of the Cato Institute and a member of President Reagan’s Council of Economic Advisers from 1981 to 1985, wrote a fascinating essay on Reaganomics for the Library of Economics and Liberty. Yes, this is clearly an ultra conservative site, mixing economics with liberty as it does, but I highly suggest reading this informative article.
While it certainly doesn’t tell the other side of the story, and you should bear in mind that as an economic adviser of Reagan’s he may not be completely objective, the man makes some great points. He describes the basis of Reaganomics as:
“Reagan’s 1981 Program for Economic Recovery had four major policy objectives: (1) reduce the growth of government spending, (2) reduce the marginal tax rates on income from both labor and capital, (3) reduce regulation, and (4) reduce inflation by controlling the growth of the money supply. These major policy changes, in turn, were expected to increase saving and investment, increase economic growth, balance the budget, restore healthy financial markets, and reduce inflation and interest rates.”
Anyone interested in the ideology of fiscal conservatism should read people like this. Only then can we really grasp just how far the modern day Republican Party has jumped the fiscal shark.
Stockman, calling the Republicans out on this fact, objected to extending the Bush tax cuts, saying, “So we’re spending $3.8 trillion in defense, non-defense, entitlements, everything else, and we’re taking in only 2.2 trillion. So we got a massive gap. You have to pay your bills; you can’t keep borrowing from the rest of the world at that magnitude, year after year after year. So in light of all of those facts, I say we can’t afford the Bush tax cuts.”
He further suggests that many of our current economic problems are due to the Republicans financial management.
Transcript courtesy of http://www.npr.org/templates/story/story.php?storyId=129052425&ps=cprs”>NPR:
Mr. STOCKMAN: Because the Republicans abandoned their old-time fiscal religion in favor of two theories, which I think are now proving to be both wrong and highly counterproductive and damaging.
One was monetarism, which said let the dollar float on the international markets. Let 12 men and women at the Fed decide whether to raise or lower interest rates, and use the Fed to try to run this massive economy. What they’ve done instead is run the printing press; they’ve flooded the world with dollars. The whole monetarist policy has been a mistake.
The second thing was the perversion of supply side. Yes, there was a good idea that in certain circumstances, lower tax rates will encourage economic activity and savings. But when you make it a religion, when you make it a catechism and you say you cut taxes no matter what the circumstance, what the season, what the condition, then I think the whole idea has been perverted.
By getting off track over the last 30 years, the Republican Party has basically given up its historic view that the key thing was financial discipline, financial responsibility, and that we had to live within our means. Today, we have two free lunch parties and as a result, we’re borrowing ourselves into grave danger with each passing month and year.
When it comes to financial discipline, even the architect of supply side economics says the current Republican leadership is being disingenuous when they say that the current tax cuts should be extended.
“They (the Bush Administration) sold out the birth right of the Republican Party.”
Stockman is no fan of the Obama administration’s financial actions, either; particularly Stockman does not think Obama should extend tax cuts to the middle class, as he is wont to do.
Stockman, a conservative Republican, feels he’s been moved to the “unwashed” middle and claims he’s had enough of the “crony capitalism”. The architect of Reaganomics does NOT support the current Republican leadership who are ironically wrapping themselves in their warped version of Reaganomics in order to attach their irresponsible ideas to the idolized former President.
By Reagan’s standards, the modern day Republican Party is not a party of fiscal responsibility or discipline. Niskanen is absolutely correct in his final assessment of the Reagan Revolution, which is that while political demand for government services keeps growing, the American people don’t want their taxes raised. This is a problem.
In other words, we are a nation of children being led around by even more hapless leaders who refuse to do the hard work of actually paying for the goodies they hand out, like tax cuts. The only party with the guts to stand for raising taxes on anyone is the Democratic Party, who are pushing to not extend Bush’s tax cuts to the top 2% of the wealthiest in this nation.
Even the architect of Reaganomics can see the inherent problem in the modern day Republicans’ fiscal platform.