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RedditAt a time when the scale of corruption in Congress has risen to obscene heights, the fight to achieve a clean government has heated up–and the good Senator from Wisconsin, Russell Feingold, is admirably spearheading the campaign to usher in a new era.
Feingold, who with John McCain led the fight for passage of campaign finance reform, understands the importance of this fight better than anyone. So, this month, the tough-minded reformer introduced the Lobbying and Ethics Reform Act in the Senate (Martin Meehan has similar legislation pending in the House). Once again, Feingold is doing good service to his nation by pushing into the next frontier of reforming lobbying corruption in Washington.
The bill's key provisions are designed to reduce the power of special interests by forcing lobbyists to file disclosure reports quarterly instead of twice a year, prohibiting lobbyists from taking trips with members of Congress and their staffs, and requiring former members of Congress and some senior executive branch officials to wait two years after leaving government service before working as a lobbyist. And, as Feingold told The Hill, the bill would prohibit "lobbyists from giving gifts to members" or staff and require "members and campaigns to reimburse the owners of corporate jets at the charter rate when they use those planes for their official or political travel."
Such a law--and, sadly, in these political times, its chances of passage aren't great--would arrive just barely in the nick of time. The Center for Public Integrity published a must-read study in April showing that lobbyists have spent almost $13 billion since 1998 seeking to influence federal legislation and federal regulations. "Our report reveals that each year since 1998 the amount spent to influence federal lawmakers is double the amount of money spent to elect them," the Center's executive director, Roberta Baskin, pointed out.
Other findings are equally heart-stopping. More than 2,000 lobbyists in Washington had previously held senior government jobs, and in the past six years, "49 out of the 50 top lobbying firms failed to file one or more required forms." According to other reports that the Center recently put out, some 650 foreign companies are lobbying the federal government on issues important to them, and spent more than an estimated $3 billion to influence decision-making at the federal level in 2004.
On the home front, pharmaceutical companies have made their corporate jets available to the likes of Senate Majority Leader Bill Frist and House Speaker Dennis Hastert--and the entire industry has spent more than $750 million on lobbying since 1998, outpacing every other industry. According to USA Today, Big Pharma has 1,274 lobbyists, "more than two for every member of Congress."
But we need to look beyond the numbers, and understand what happened in 1995 when the GOP launched its infamous K Street Project, to really understand why the corruption has metastasized with such velocity. That was the beginning of the push to put "conservative activist Republicans on K Street," as Americans for Tax Reform president Grover Norquist told journalist Elizabeth Drew--a concerted effort to install ideological comrades-in-arms who could steer money to the GOP, promote conservative causes in Washington and keep Republicans in power for years to come. (To learn more about the K Street Project, read my colleague Ari Berman's good piece.)
By 2003, the Republicans had achieved the goal of seizing control of K Street. That year, the Washington Post reported that the GOP had seized "a significant number of the most influential positions at trade associations and government affairs offices and reap[ed] big financial rewards." The Post added that "several top officials at trade associations and corporate offices said privately that Republicans have created a culture in Washington in which companies fear hiring Democrats for top jobs, even if they are the most qualified."
We know that in recent months, lobbyist Jack Abramoff and House Leader Tom DeLay have grabbed the headlines--Abramoff, in part, because he paid for Tom DeLay's trip to London and Scotland in 2000 and stole millions of dollars in fees from his clients; and DeLay, in part, because he repeatedly violated House ethics rules. In fact, from April 1 to June 30, DeLay accepted almost $800,000 in contributions from corporate lobbies ike the telecommunications and real estate industries--a sure sign that the corruption continues unchecked, as the progressive group The Campaign for America's Future has argued.
But it's equally important to remember that the corruption comes not only from DeLay, Abramoff and cronies but also at virtually every level of the Republican-dominated Congress. The Hill, for example, reported a couple weeks ago that congressional staff have become so brazen that they "actively solicit lunches, drinks and other favors from K Street"--acting as if lobbyists are providing them with "their personal expense account." When one Senate aide ran into a lobbyist at the Capital Grille restaurant, he asked the lobbyist to foot the bill.
"The arrogance that brought Republicans into power is arrogance that will take them out of power, and that's what you see more of on the Hill," a Republican corporate lobbyist told The Hill.
Feingold's legislation is an essential step on the road to clean government. Citizens who care about their country's democracy need to fight for organized people against organized money, fighting for a transparent democracy while exposing the DeLay-Abramoff-K Street triangle for the corrupting force it truly is.
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Katrina vanden Heuvel
Thoughts on politics, current affairs, riffs and reflections on what’s in the news and what’s not--but should be.
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Corrruption is not a partisan political issue, or shouldn't be. If Democrats want to gloat at Tom DeLay's scandals and think they're above that sort of thing, the Republicans can point to Dan Rostenkowski and Edwin Edwards. We can even reach back to the days of Boss Tweed (yes, he was a Democrat).
Character is not a partisan issue. It isn't a function of political ideology. There can be crooked liberals as easily as crooked yuppie fascists and honest conservatives as well as honest social democrats.
It becomes a more serious matter when the corruption is at the top, corrupting all below either by speading the ill-gotten wealth or cowering those who would blow the whistle.
The Republicans must step away from Tom DeLay. If not, his corruption will poison them.
Posted by Jack Rabbit at 07/25/2005 @ 11:24pm
Frank, I'm not disagreeing with you, either. I think the Feingold bill is a good basis for legislation and should go forward. Some form of it should become law.
It's not really a personal slap at any one to pass this legislation. If Tom DeLay wants to see it that way, that's his problem.
You're right about the situation being disheartening.
Posted by Jack Rabbit at 07/25/2005 @ 11:41pm
You guys have absolutely nailed it. This is far from a partisan issue. I am certainly no fan of DeLay and his ilk, but we will never truly have a responsive government until we acknowledge that corruption knows no party. This would be a good time for progressives to point out that Democrats have some housecleaning to do if they are to be taken seriously as an opposition party.
Certainly our conservative friends in this forum share some common ground with us here?
Posted by jkoyon at 07/25/2005 @ 11:57pm
We have always had citizens petitioning their representatives in Congress, to attend to their special problems. That is what lobbyists do, it has gone on since the start of the Republic. There is nothing wrong with it.
It is the election campaign money angle that has made the lobbyists problematic. Re-election is a central if not the principal concern of most legislators, and elections have become enormously expensive. That remains the crux of the problem. Politicians have found, the easiest way to secure the enormous sums competitive campaigns require is trading lobbyists access for campaign donations. From there the stink eminates.
Campaign costs keep rising. Politicians keep raising more and more dough by promising access. As soon as McCain/Feingold closed one door others were found. The problem yet requires a solution, an entirely new approach. Look at this possibility: [xellex.freehomepage.com]
Posted by nacl at 07/26/2005 @ 12:54am
NACL, I agree with you about the problem with campaign contributions. But I think that there is a problem with unfettered access to legislators for corporate lobbyists, too. Who are our legislators beholden to: us, or the big business lobbyists who buy them $200 lunches? There are senators and representatives who just plain don't give a rip about their constituency besides who low they can go without risking losing the next election; lying, cheating etc. have become commonplace.
I think restrictions on lobbyists' powers and access will be helpful. Legislators are supposed to be working for us.
Posted by rob.olywa at 07/26/2005 @ 01:23am
This is probably one topic where there will be little animosity between left and right. Although I would say conservative especially we who lean libertarian probably would register fewer complainst about lobbying.
From what I can read of this new proposal it won't really do much to end lobbying as Feingold and other would like to see. In fact it's mostly about more timely reporting. That's a good thing and should be as timely as possible and then widely reported and let voters act accordingly.
Here is one of several sites tracking all forms of political giving including lobbying money. It's pretty thorough.
http://www.politicalmoneyline.com/
Posted by love liberty at 07/26/2005 @ 01:56am
Petitioning and squeezing our legislators to attend to our various special needs is how representative democracy is supposed to work. That is what they do, the lobbyists for industrialists and unions, affirmative action proponents and libertarians, Muslims and Jews, senior citizens and environmentalists, etc. It is perfectly legitimate.
The fly in the ointment is money. When one group is in a better position to supply campaign contributions than another then lobbyists become implicit corrupters.
If that money angle were eliminated, if politicians had an easy way of raising funds, one independent of money bags, if politicians were free to ignore the financial clout of lobbyists, then lobbyists would turn benign. Then lobbyists would merely help legislators put issues in sharper focus.
The problem is not lobbyists. The problem is financing campaigns in a way that leaves politicians independent of their money source.
Posted by nacl at 07/26/2005 @ 09:04am
No, Dean did not use my method.
Dean's personality inspired a lot of people to become enthusiastic enough to write a small check. Even if that can be repeated, and it might, it won't solve the overall campaign financing problem as it besets hundreds and even thousands of candidacies for all sorts of public offices.
Proposed is a way any legitimate candidate can without hoopla secure substantial campaign financing from people who will have no further claim on that politician. Because they will have already received their reward, a desirable collector's item.
Posted by nacl at 07/26/2005 @ 09:25am
To be fair: We the people have empowered our leaders and CEO's to continue this corruption. Lets face it... and lets take on SOME of the responsibility for it. We the people reward or look the other way when OUR Rep or Senator fudges. We continue to BUY product from CEO's who fudge or steal. We continue to support, campaign for, vote for OUR guy regardless of why he wants the job, how he got there or even who paid for him to be there.
So we can lament over the corruption of the two parties, we can even name names...but in the same breath that we are doing THAT.. lets be honest and admit our own complicity in the mess.
Posted by Jazzee at 07/26/2005 @ 10:25am
a friend of mine sent this. he's one of those math whizzes who works in the field and thought that this rap is not too far off. but as for corruption, the idea here is that the access these people (special interest groups) seek, and get, furthers the divide of rich and poor. a free market? ha. it's state socialism for the rich.
have a nice day.
Legendary Funds Manager Predicts Utter Global Collapse Stemming From Bursting of Property Bubble
Blames Bush-Cheney "regime"
In a recent interview on CNBC with Ron Insana, one of the "old-timer" funds manager, Julian Robertson, predicted "utter global collapse" as a consequence of the bursting of the world-wide property bubble.
Often called "Never Been Wrong Robertson", the former head of Tiger Management (once the largest hedge fund in the world), is extremely worried about the speculative bubble in real estate.
Specifically, he is very worried about a world that is sustained by American consumer spending which is in turn 1/4 sustained by a property bubble. He predicts that 20 million people could lose their homes once the property bubble bursts.
Even more worrisome, he thinks central banks around the globe out of desperation will try to re-inflate the world economy with more liquidity that will create an inflationary spiral unseen in the economic history of mankind.
"Where does it end?", Insana asked Robertson. "Utter global collapse," he answered. But not just economic collapse ... collapse of epic proportions. Collapse and disintegration of all infrastructure, including government. Inflation will run into the double and triple digits. "Food production will fall. People will be carrying around U.S. dollars in wheelbarrows like Germany," he said.
There will be "total collapse of public infrastructure. Total collapse of medical care systems. All public pension plans, Social Security will collapse. All corporate pension plans will collapse."
"The American consumer is effectively now supporting the rest of the planet," he continued. "Consumption rates in all other nations are falling, have fallen to the point that the tax revenues to governments, that the business and industries those nation states are providing is now a net negative number relative to total debt service and public cost, that this exists in virtually every nation state on the planet now."
And for much of this "doom", interestingly, he blames the Bush-Cheney "regime".
"They have now consolidated power and money on the planet to the maximum extent possible. The planet's net liquidity, that is its, net free cash flow. Is now a negative number. The planet is not simply sinking into a sea of red ink; it is already sunk. The people just don't realize it yet," he said.
According to Robertson, "the Bush-Cheney regime is preparing the nation for transition from democracy into dictatorship because a dictatorship will be necessary to control, in 5 years time, food and water riots." He said "the federal government, that part of Patriot II Act, the internal exile, that the government is going to have to build now huge detention compounds on federal lands, probably in the West where the land is available, to potentially house 50 million or more citizens that will be in financial ruin."
In 10 years time, whoever is left will be effectively starting again, he said.
"More importantly, and I'm trying to think how we imply this or how we express this to the people, what extraordinary times we are living in and how the destruction of the planet has been engineered by the Bushonian Cabal from 1980 to 1992, and then from 2001 to present, which has effectively destroyed the economic liquidity of the planet," he said.
Robertson ended the interview by saying that he hopes he is not alive to see this.
"The lucky ones are the ones who are my age now," he said.
Posted by dabar at 07/26/2005 @ 11:00am
Frankgrits, sorry man, I mean I enjoy your usual handwringing analysis, but it is a great time for the US economy. Unemployment rates continue at very low rates, mfg up, GDP up, stocks up, housing starts up, inflation low, the dollar recovering against the Euro, life is good!
Stocks overcame early nervousness and finished the day near session highs, as upbeat economic and earnings reports provided a floor of buying support for stocks across the board that continued to strengthen into the close of trading... While the absence of stronger sector leadership midday kept the major indices mired in relatively tight trading ranges, the 2:00 ET release of the Fed's Beige Book became the catalyst behind late-day buying efforts that helped the S&P finish the day at a new four-year high and all ten economic sectors close to the upside... The Fed's report to be used at the upcoming Aug 9 FOMC meeting noted continued economic expansion without sparking inflation concerns, lending further support behind an unexpected rise in June durable goods orders... As a leading indicator of manufacturing activity, durable goods orders rose a very strong 1.4% (consensus -1.0%), following an upwardly revised gain of 6.4% (from 5.5%) for May - the strongest monthly increase since July 2002...
The fact that 29 of the 38 S&P 500 constituents reporting quarterly results this morning exceeded expectations, coupled with some afternoon short covering, as the bears again struggled to keep the markets nervous for long, also provided some additional support heading into the close...
Posted by love liberty at 07/27/2005 @ 7:32pm
Notice how the weak LIBS are always being Debbie Downers, Gloom & DOOMERS, defeatists you name it. Is that the kind of mentality you want to governing your countries families security?? I THINK NOT
Posted by aludra at 07/27/2005 @ 8:02pm
Please don't respond to the simple-minded, poorly educated righties who lurk here. The conversation inevitably spirals down to their level and renders the thread moot. If you want to hear similarly inane repetition of Republican talking points, just watch Fox News or listen to Rush.
Posted by bookmanjb at 07/27/2005 @ 8:21pm
In this age of wars based on lies, outing of a CIA operative, intrusion into family affairs, selection of a President by a Supreme Court, voter balloting manipulation, high budget and trade deficits, outsourcing of jobs, Abu Ghraib and Guantanamo Bay Gulags, and the hatred of America by the rest of the world; and you're bent out of shape over a few ethically-challenged Congressman - what is a person to do?
Oh I know; re-elect the rascals as we always do.
Posted by oraibi1952 at 07/27/2005 @ 10:44pm
Zero, I understand and appreciate the data sources you cite, but they overlook a key element in today's economy, the independent contractor. Some do this purely by choice, many others I will admit were forced into by a combination of factors, some out of the individuals control.
I know, that's what I am and millions like me who are no longer part of the labor measurement. The following information highlights the depth and range of this developing option.
While there is widespread belief that independent contracting is growing rapidly as a work option, there is little hard data to support that yet, not because it is not true, but because very little data has been collected on this as a work option. The Bureau of Labor Statistics (BLS) just started tracking the number of independent contractors in 1995. From that limited data, it is estimated that 6.7 percent of the total working population makes a living in full time independent contracting and at least 60 percent of all businesses use independent contractors. Additionally, about 20 percent of the work force is working part-time (less than 35 hours per week) and about two percent are employed by temp agencies. According to BLS reports, independent contractors have more stable employment arrangements than wage and salary workers, have higher median weekly earnings when working full time ($523 compared to $510 for traditional workers), and are older and more highly educated than the traditional work force.
Among the higher paying occupations include Insurance (my profession), real estate, loan brokers/agents, consultants, and tech writers. Most of these professions earn 6 figure incomes. We file Schedule C's as most are not incorporated.
As to the dollar, your point about the Euro is well taken, but also as has been done many times previously, the Bush Administration deliberately let the dollar devalue so as to increase exports. Now they are engaged in pushing the dollar back up.
The deficit situation as we both know is laid directly at the feet of China. That is our albatross at this point in time. Our government (choose your Administration), and yes corporations, are guilty of feeding this beast. Now the proverbial cows have come home to roost and we don't know how to correct the situation.
I watched from Tawain during the early 90's (I lived there setting up a fledging aerospace manufacturing company) as Boeing and McDonnel Douglas shifted production to China. There was a legitimate trade agreement behind it called the Offset Program. The US and the two Aircraft mfg'rs Boeing and Douglas were required by trade agreements to award manufacturing work as an offset as a percentage of the value of Aircraft purchased within those nations. That is why until recently, Japan was the largest producer of Boeing parts outside of the US. In theory, this was a great program, but China used it to the max under Clinton resulting in the barely played out scandal when Douglas shipped classified equipment to China that was approved by Clinton. This was heavily reported in the Hong Kong version of the Wall Street Journal at the time, but never got the full attention it merited here in the US. The reason I know so well, that was my task in setting up a Taiwan mfg; grab a piece of the Offset Program pie that had to be given out to qualified Taiwanese manufacturers. In Taiwan it didn't work because of the Government itself and its so-called private aerospace firm, Taiwan Aerospace (actually funded by the Taiwan Govt). The company was a joke in terms of capability and marketing, even though it's President Danny Ko, was a former Program Director at Douglas.
China had and still has a determined attitude that has allowed them to capture a good deal of our manufacturing and that of other countries.
One of the truly ironic things about this is that Taiwan (and don't we all remember the "made in Taiwan" jokes) has shifted much of their manufacturing in textiles, pharmaceuticals, and other goods to China because of the cheaper labor. In fact, the real trend today that worries China is that Japan, Taiwan, and others are now outsourcing to Vietnam and Indonesia.
So the merry go round, goes round and round. I have spent years intimately involved in all this before I got out and I have to say I don't really know where it's headed next--can we all say AFrica?
Posted by love liberty at 07/28/2005 @ 01:48am
With record budget and trade deficits, the chickens are coming home to roost. Optimism of LL notwithstanding, the loss of manufacturing jobs to low-wage countries signals the demise of the middle class. The stock market is a meaningless indicator, since it only marks the success of capital, not workers. Paul Craig Roberts, Treasury Dept. official from the Reagan Administration, writes powerful stuff at Counterpunch site on the economic threat to this country from the twin hydras of budget and trade deficits. (There are thoughtful, honest Republicans out there who really care about this country)
Posted by philbq at 07/28/2005 @ 10:12am
Frank: "If that sounds defeatist, I'm sorry but until the people who live in the red states begin to realize that they also have lost their country, nothing will change in the corruption machine."
Red Stater here, and I realise we HAVE lost the country, but we lost it many years ago when the Supreme Court took the bible out of our schools, which led to babies having babies, rampant drug use and the general social decay of our society. One needs to merely look at the timeline.
You're absolutely right however in your point that Americans are free to vote their concience, they just need to realise that it doesn't really matter who they vote for in terms of a party, as BOTH parties have become nothing more than a political arm of the companies, corporations, and special interest groups that fund them.
Have a great day!
Todd
Posted by Oksportsguy at 07/28/2005 @ 10:28am
With record budget and trade deficits, the chickens are coming home to roost. Optimism of LL notwithstanding, the loss of manufacturing jobs to low-wage countries signals the demise of the middle class. The stock market is a meaningless indicator, since it only marks the success of capital, not workers. Paul Craig Roberts, Treasury Dept. official from the Reagan Administration, writes powerful stuff at Counterpunch site on the economic threat to this country from the twin hydras of budget and trade deficits. (There are thoughtful, honest Republicans out there who really care about this country)
You know Phil, if I depended on the pessimistic views of you, Frankgrits, and even Mr. Paul Craig Roberts, I would be selling my home and moving quickly to somewhere like the Philippines or El Salvador (surely not Europe because there you can truly see an economy that is in shambles).
Fortunately, the real data contradicts the pessimists and is available for honest and open minded people to judge for themselves.
http://www.economicindicators.gov/
Here is the Bureau of Labor Statistics Report for the 1st Quarter of 2005 for Manufacturing
Productivity rose 4.4 percent in manufacturing in the first quarter of 2005, as output grew 3.5 percent and working hours of all persons declined 0.9 percent (seasonally adjusted annual rates). In durable goods industries, productivity grew 6.3 percent, as output expanded 5.5 percent and hours fell 0.8 percent. In nondurable goods industries, productivity rose 2.4 percent, reflecting a 1.3 percent increase in output and a 1.1 percent decrease in hours (tables 3, 4, and 5).
Hourly compensation in manufacturing rose 6.2 percent during the first quarter. This increase reflects a rise of 6.5 percent in the hourly compensation of persons in durable goods industries and an increase of 5.7 percent in the hourly compensation of workers in nondurable goods industries. Real hourly compensation, which takes account of changes in consumer prices, rose 3.8 percent for all manufacturing workers.
Unit labor costs rose 1.7 percent in manufacturing during the first quarter. In durable goods industries, rapid productivity growth offset most of the increase in hourly compensation and unit labor costs increased by just 0.2 percent. In nondurable goods industries, where productivity grew at a slower rate in the first quarter, unit labor costs rose 3.2 percent.
In all three sectors (Business, Nonfarm Business, and Manufacturing), hourly compensation and unit labor costs grew much more rapidly during the fourth quarter of 2004 than announced on May 5. In the business sector, hourly compensation growth was revised up from 4.9 percent to 11.1 percent and unit labor costs were revised up from 1.1 percent to 7.1 percent. In nonfarm business, hourly compensation growth went from 3.8 percent to 10.2 percent and unit labor costs went from 1.7 percent to 7.7 percent. In the manufacturing sector, hourly compensation growth was revised up from 7.1 percent to 10.4 percent and the increase in unit labor costs was revised up from 0.8 percent to 3.9 percent. The revisions to fourth quarter data were large enough to change movements in the annual averages for these measures. For the full year 2004, both hourly compensation and unit labor costs increased more than previously reported in the business and nonfarm business sectors. In the manufacturing sector, hourly compensation increased 0.2 percentage point more--and unit labor costs declined 0.2 percentage-point less--than originally reported.
http://money.cnn.com/2005/07/10/news/economy/tool.reut/
(over 20% increase in machine tool capital investments May 2004-May 2005)
And Budget Deficit Falling as Promised By President Bush WASHINGTON, July 13, 2005
(AP) After three years of steadily climbing budget shortfalls, President Bush finally had some good fiscal news Wednesday: Surging revenues and a steady economy have led to a steep drop in the expected deficit for this year.
The annual White House midyear budget report projects that this year's deficit will drop to $333 billion, $79 billion below last year's record red ink and almost $100 billion less than earlier estimates.
As for Mr. Roberts who was once considered a villain of the highest sort by the left during Reagan, you must understand his current motives. He dislikes the Bush family. He has not abandoned his views on Reagan economics and even contradicts columns he writes in left wing publications like Counterpunch.
Here is an example:
http://www.townhall.com/columnists/paulcraigroberts/welcome.shtml
Reagan changed the world Paul Craig Roberts
June 7, 2004
"President Ronald Reagan's stature will grow as his achievements come to be more widely recognized.
Few Americans realize that President Reagan's economic policy won the Cold War by rejuvenating capitalism. Members of the Soviet Academy of Sciences, with whom I spoke in Moscow during the Soviet Union's final months, agreed that it was President Reagan's confidence in capitalism, not his defense buildup, that caused Soviet leaders to lose their confidence.
Unlike many "Soviet experts" in the West, the Soviets themselves were aware of the failures of their economic system. Although their failing economy seemed impervious to reforms, the Soviets took comfort in American stagflation and the various diseases that afflicted the British and European economies.
The Soviets heard from Western economists about worsening "Phillips curve" tradeoffs between employment and inflation, and the inability of Western economies to grow without inflation. The Soviets saw the West's economic difficulties as an offset to their own and had no reason to panic and give up the struggle.
Ronald Reagan took away the Soviets' comfort factor when he said that the "Phillips curve" and falling U.S. productivity were the results of the wrong policy mix, not inherent features of a market economy. The U.S. economy, in other words, could be easily fixed, but the Soviet economy could not.
Reagan then proved his point by slashing tax rates from 70 percent to 28 percent and presiding over a record economic expansion while inflation fell. Margaret Thatcher achieved a similar renewal of the British economy, and the French followed by privatizing their socialized economy.
The Soviets saw that the jig was up. Released from suffocating economic policies, Western economies moved ahead rapidly, while the Soviet economy ground to a halt and declined.
Reagan revitalized the U.S. economy. He abandoned the Keynesian policy mix of monetary expansion to stimulate demand and high tax rates to restrain inflation -- which was obviously not being restrained by Keynesian demand management. Reagan got the supply-side message that high tax rates were restraining real output while money growth pumped up demand, thus causing inflation.
Reagan did as the supply-side economists recommended. He reversed the policy mix. Monetary policy was used to control inflation, and tax rate reductions stimulated real output.
Reagan's policy was a success. But at the time it was misunderstood. Accustomed to thinking of tax cuts as a demand-side measure to stimulate consumer spending, the entire economics profession, along with the Federal Reserve, the Republican Senate and most of Reagan's own government, predicted accelerating inflation.
Supply-side voices were drowned out. Even Alan Greenspan predicted that inflation would explode. He told Fed Chairman Paul Volcker at a July 1981 meeting of the Fed with its economic consultants (at which I was present as the administration's representative) that monetary policy was a "weak sister" and could "do nothing other than a weak rear-guard action" against Reagan's "inflationary" tax cut.
The opposition to Reagan's program caused many of his political appointees to abandon his agenda. They feared that support for Reaganomics would make them unpopular with the establishment and damage their future careers. Consequently, they added their voices to those decrying Reagan's economic policy.
The supply-side enclave at Treasury fought Reagan's government for Reagan, but in the end Reagan chose to govern by appealing directly to the people over the heads of both his own government and of Congress. Instead of firing disloyal aides, he simply ignored them.
This practice allowed Reagan to be successful without spokesmen for his policy. But it was a leadership style that allowed opponents to control the explanation of his policy. To this day, the erroneous belief persists that Reagan won the Cold War with a military buildup but damaged the economy with deficits.
The greatest myth of all about Reaganomics is that the administration made a "Laffer-curve" forecast that the tax rate reductions would pay for themselves. Reagan's budget deficits are regarded as proof that supply-side economics failed.
As official government documents show, the administration made a static revenue forecast that the tax cuts would lose $718 billion in tax revenues over the forecast period. The budget deficits resulted because inflation fell even faster than the administration predicted, wiping out $2.4 trillion in nominal GNP during 1982-86, a dramatic reduction in the tax base. This unanticipated disinflation also built into the budget higher levels of real spending than the administration had intended.
The predicted inflation never materialized from the "Reagan deficits" because the deficits themselves were the direct consequence of the collapse of inflation. Treasury supply-siders predicted the disinflationary expansion. But their prediction was ignored, because it conflicted with the Keynesian interpretation of fiscal policy and the economic establishment's belief in the "Phillips curve."
Reagan changed the world because he did not believe capitalism was a spent force. He liberated our economy and chased away the "malaise" that had paralyzed the Carter administration and given hope to Soviet leaders."
Well, I have enjoyed this little economics lesson. Hope springs eternal for those who see sunshine vs those who only see clouds.
Posted by love liberty at 07/28/2005 @ 11:35am
please don't cite more bullshit from the Bush Administration. If you think the massive budget and trade deficits mean nothing, you are living in a dream world. If you think the loss of manufacturing jobs with good wages means nothing, you don't understand supply and demand. Without good wages, there is weak demand, and the capitalist system doesn't work. It is called overcapacity- too many things and not enough buying power to purchase them. This is already occurring in sectors of the consumer economy. But since you are into faith-based economics, everything looks great to you. Dream on...a crash is coming.
Posted by philbq at 07/28/2005 @ 12:27pm
By the way, LL: even though you are full of goofy bullshit, I kinda like you. You are a nice person, although deluded. I voted for McGovern, so you can guess my age.I am proud to have demonstrated against the immoral war on Vietnam. My morals have not changed.
Posted by philbq at 07/28/2005 @ 12:35pm
"Dream on...a crash is coming"
ALMOST SOUNDS LIKE WISHFULL THINKING COMING FROM THE DEBBIE DOWNERS,THE DEFEATISTS,THE CRY BABIES ETC..SO VERY SAD
Posted by aludra at 07/28/2005 @ 12:37pm
Well, Philbq, I kind of like you also and I'm not surprised you voted for McGovern, that's consistent.
I met McGovern and Kerry when I was in VVAW (I was until they found out I was a Republican). I joined not because I agreed with them, but it was hard to assimilate in college with kids who knew nothing about what we veterans went through...made conversations pretty limited.
I do want to try and correct you on your dismissal of the gov't data. As you well know, most of the pencil pushers in the various departments in DC are career civil servants who are there year in and year out no matter which party is in power. The data is the data.
Additionally that is why I also inserted the Machine Tool orders data which is a key indicator of what is happening with manufacturing. It is put out by the Machine Tool Industry and has been relied upon by both economists and manufacturing companies for decades as a barometer of what is happening in manufacturing. When I was an executive in the mfg world, I relied a great deal on that for determining the validity of our own business forecasts..Companies don't buy tooling if they have no orders. It really is a sound indicator.
Also the Dems don't disagree on the reduction of the Budget Deficit, they just don't agree openly that it will continue (as perhaps they should as the opposition party seeking to regain control).
Posted by love liberty at 07/28/2005 @ 12:48pm
We could debateeconomic data all day long, but since the Bush mob are masters of misleading half-truths, their credibility is nil. The only govt. source that is believable and non-partisan is the Congressional Budget Office. Anything from the Bush Administration is suspect. My overall point is that the economic situation is scary, with huge budget and trade deficits, and debt interest payments of $400 billion yearly. You cannot deny that good-wage manufacturing jobs are disappearing to low_wage countries. I do not understand how you think the economy is doing well. I am worried about the future of this nation.(I personally make a good living as a guitar instructor)
Posted by philbq at 07/28/2005 @ 2:09pm
By the way, McGovern was an honerable man, a WWII bomber pilot, and would have made a great president. The nation would have been better for it. I am proud to have voted for him.
Posted by philbq at 07/28/2005 @ 2:13pm
ok Phil: you don't trust the figures from Commerce and BLS, only CBO; I've got them for you:
http://www.cbo.gov/showdoc.cfm?index=6060&sequence=1&from=0
According to CBO's forecast, in 2005 and 2006, the U.S. economy continues to grow at a healthy pace. Although investment by businesses is not expected to grow as rapidly as in 2004, such spending will probably still lead the economy's continuing expansion. Moreover, the caution that has characterized firms' decisions over the past three years appears to be dissipating, and businesses seem to be having greater difficulty meeting increases in demand with their current workforce; as a result, hiring should accelerate. Growth of productivity, which has been exceptionally strong since 2001, is expected to slow relative to its rate in the recent past but to continue at a pace similar to the long-run average. Thus, CBO expects that real GDP will grow by 3.8 percent in calendar year 2005 and 3.7 percent in 2006, before slowing to a pace of 2.9 percent for the 2007-2015 period (see Summary Table 3).
Also, regarding the constant fear of foreign investment, more from the CBO; Here i am exracting from the Data table in a July 12 2005 report.
Foreign holdings of US Assets (including treasury notes, bonds, etc.) are smaller in 2004 as a percentage of GDP than they were in 1992 or 2000.
http://www.cbo.gov/ftpdocs/65xx/doc6542/07-12-CurrentAccount.pdf
Also to provide some perspective: here is the analysis by the CBO on their accuracy in forecasting job and wage growth compared to the White House:
Taxable Income. One of the greatest sources of error in budget projections is in forecasting taxable income. The errors in the first step of such forecasting, the forecast of nominal GDP growth, were discussed above. The errors in the second step--the forecast of the relationship of major components of taxable income to nominal GDP (particularly the "high-tax" income share of GDP)--are discussed here. The most important component of taxable income for revenue projections currently is wages and salaries. Because the Blue Chip does not forecast wages and salaries, CBO's forecast record cannot be compared with that of the private-sector survey in this respect.
The accuracy of CBO's and the Administration's forecasts of the two-year change in the wage and salary share of GDP has been identical for the period since 1980 (see Table 9). Moreover, the pattern of errors has been similar: both forecasters experienced a string of underpredictions of income growth in the forecasts they made between 1995 and 2000, and both forecasters made their largest errors by overpredicting growth in the forecasts they made in 2001 and 2002.
Statistics, I spent an entire career around statistical figures; just tell me what you want and I can get it (as can anyone else who wants to justify a position up or down).
So, it comes down to belief system, I see the glass half full, you see it half empty; same glass. and there is the rub of politics!
Posted by love liberty at 07/28/2005 @ 3:50pm
Hey Lovely,
Just like you said yesterday when I posted the DOD figures for troop recruitment...your playing with fire confusing these LIBS with facts. But I sure admire your determination
Posted by aludra at 07/28/2005 @ 3:56pm
If you think the current economic situation (huge trade and budget deficits, loss of manufacturing jobs, debt to China, wage stagnation, etc.) is a positive, you are living in a dream world. A reckoning is coming...
Posted by philbq at 07/29/2005 @ 02:09am
Are you speaking as an economist, or are you simply repeating the gibber you want to believe?
I'm not an economist and I don't like the enormous deficits and the trade shortfalls. But I also know that we have an almost $12 trillion economy. When it boomed a few years ago, with a few curbs on spending, the deficits turned into enormous surpluses and the entire national debt was in line to being easily sopped up.
What we now have is the lowest unemployment in the West, 3+% growth and a healthy stock market.
Nor do I understand the fuss about our debt to China.
As of March 2005 foreign govts owned $1.67 trillion of US treasury securities. Of that total $680 billion were held by Japan and $223 billion by China. [gillespieresearch.com]
Posted by nacl at 07/29/2005 @ 08:02am
Comeon Philbq, you said you wouldn't accept the data I supplied by the BLS and Commerce because they are controlled by Bush. You said you only trusted the CBO.
I furnished the recent data by the CBO that echos the White House data plus has a comment that their forecasts on Wage and Salary as percentage of GDP has been identical to the White House.
Fair is fair Phil...
Posted by love liberty at 07/29/2005 @ 12:23pm