Joe the Plumber ‘Nomics (Part 2)
Let me just get one thing straight from the very beginning. I do not, in any way, begrudge conservatives or conservatism. I am conservative in quite a few ways. No, I don’t care if gays get married, and I don’t believe it is a threat to the makeup of the nuclear family. I am, however, a strong proponent of “pay-as-you-go” economics. This is an economic style that believes the government should not borrow money to spend money (unless during a national emergency, which our economic crisis most certainly is). I am going to, however, explain and provide different examples that suggest the current Republican party has abandoned real conservatism for a radical ideology.
I pick on Joe the Plumber because he so perfectly embodies what the current Republican party has become.
The radical change in the current Republican party can be most visibly noticed in foreign policy. Republicans and conservatives have traditionally been the party of a modest foreign policy. Our founding fathers frequently warned of “entangling alliances,” but beyond that, Republicans generally viewed a bold foreign policy as too economically costly. Even the Godly Ronald Reagan was fast to withdraw troops from Lebanon as he realized the irrationality of Middle Eastern politics. But the most notable shift was after 9/11. President Bush (the title of President is for life) campaigned against Al Gore in 2000 on the premise of a “humble foreign policy.” His campaign argument was that the United States was far too involved in the affairs of foreign countries.
But after 9/11, the Bush Administration’s foreign policy took a sharp turn, and adopted the radical “Bush Doctrine.” To paraphrase, the “Bush Doctrine” simply states that the U.S. is able to take military action against any country hostile to its interests. Sounds harmless and logical, right? Wrong! This is an overly vague statement that left the law open for abuse. The Bush Administration invaded Afghanistan (which may have been the correct move at the time), Iraq (which was illegal based on international law), backed the Ethiopians as they invaded Somalia (and we also allowed North Korea to illegally sell weapons to Ethiopia), sold weapons to Taiwan in a move that clearly escalated tensions with China and would have loved to invade Iran if they would have been able to. The tension between the United States and the rest of the world could easily be felt, even among our strongest allies.
As for economics, the remaining conservatives were ditched long ago for the dogmatic ideology of tax-cuts championed by Ronald Reagan. As soon as President Bush took office, he passed massive tax-cuts through Congress. Now don’t interpret my writing incorrectly, President bush inherited a recession, and it is clearly the economically sound policy to cut taxes during a recession. Tax-cuts generally relieve the pinch tax-payers feel, and also generate economic activity through spending and investment. But to cut taxes for an entire term, and then to renew them in his second term was simply irresponsible. It defies the laws of economics. While cutting taxes during a recession is smart policy, taxes are generally supposed to be raised eventually, as spending increases and economic activity picks up momentum.
But the Bush Administration somehow managed to renew his tax-cuts until 2010, when they are set to expire. Does anyone want to know the total cost of these tax cuts? An estimate (which will differ depending on where you retrieve your information, but will be in the general vicinity of the number provided) is around $860 billion.
Does this remind anyone of a number recently being thrown around Capitol Hill? It is fairly close to President Obama’s $787 billion American Recovery and Reinvestment Act. The Republicans were violently opposed to it on the grounds of the bill violating their principles of fiscal discipline. I am understanding of 9/11 changing the principles of a political party’s foreign policy (although I strongly disagree with Republican foreign policy), but to hear the Republicans argue so vehemently against this bill simply made me feel ill. I will explain why.
Tax cuts are not a genuine strategy. It was claimed to be a strategy that would generate more revenues than taxes would, but we now know that was not true, because our deficit is the highest it has ever been, approaching $1 trillion fast (if not already there). The rationale behind the strategy was that people would use their tax-cuts to either create economic growth through investment or generate revenues by spending them in the consumer market.
Is anyone comfortable with an economic strategy that is so vague?
To make matters worse, President Bush slashed the capital gains tax in half. This may have seemed like a good move, slashing the capital gains tax in half is clearly an incentive for people to make money through investment, but this simply led to a massive orgy of irresponsible investment. Yes, this is all connected with the housing bubble, failing investment banks and subsequently (and currently) collapsing global economy. The bottom line is that the President has a powerful podium that can influence, literally, the atmosphere and mental-state of the country. President Bush’s policies led us down a road of irresponsible investment that has permanently scarred our reputation as the most trust-worthy country with regards to banking and investment.
Now we hear the Republican Party up-in-arms over President Obama’s stimulus package. They mock it as “wasteful government spending.”
Here are the proponents of the stimulus package:
- $288 billion of tax relief.
- $144 billion of state and local fiscal relief.
- $111 billion of infrastructure and science.
- $81 billion of protecting the vulnerable (uncomfortably vague for me, personally).
- $59 billion of healthcare.
- $53 billion of education and training.
- $43 billion of energy.
It seems like President Obama’s stimulus plan is a REAL strategy for the direction in which he wants to take the country. President Bush’s strategy (which is still dogmatically embraced by the Republican Party) is simply cutting taxes, and hoping people use them to do what is best for the country.
President Bush’s (and the Republican Party’s) strategy seems like “wasteful government spending.”
Let me be very clear. I do not hate conservatives. I wish we had some genuine conservatives with power in the Republican Party, because as a voter, I want a genuine choice.
To be continued, if you made it this far, thanks for sticking with it. Feel free to comment on this, but try to exercise a little class….
No related posts.
Hey Brian, the economy is an impossible subject that I don’t really understand myself, but I’d like to make some counter-arguments to some points you brought up.
1. Capital gains tax cuts – I believe in these. Investment is a good thing for everybody, because it allocates wealth where the most promise of future gain is. If you make it cheaper for people to do a little research, find a company they see promise in, and invest in it, that will beat out doing nothing with money. Our current crisis isn’t the result of making investment too cheap – it’s the result of those investors being lied to, and not understanding the ridiculous accounting practices of most companies that both report and project unrealistic value. I think at the end of the day, we want more money in the hands of investors, not less.
2. I’m a bit confused why we need a stimulus bill at all. I have to admit, I was swayed by the article “The Audacity of Doing Nothing.”
http://blogs.law.harvard.edu/philg/2009/02/11/the-audacity-of-doing-nothing/
This isn’t to say I think there aren’t things that can be done – securities oversight is severely lacking, but things like science and energy research aren’t going to do much for the economy. As a personal aside, if I had control of the budget, the first thing I would do is suspend NASA for about ten years. What the hell are we doing playing in space when we can’t get anything right down here?
3. I think that invading Iraq was an unforgivable blunder, but I would never take a cent away from the American military. Our military strength is the only reason we’re sitting around posting on message boards instead of ducking bullets. I agree with a policy of not looking for wars, but it’s a strange world. What the hell is North Korea doing? It makes no sense, but putting money in the military is just like wearing your seat belt – just has to be done.
4. The “economy” makes no sense to me. At this point I’m convinced it’s a pseudo-science. I can’t believe we have a currency backed by nothing. I can’t believe a stock market exists. When I ask “experts” these questions, I’m thoroughly unconvinced of their intelligence. I think we should at least have a few people working on a contingency plan in case the western world has been playing Monopoly for the past 150 years.
On a recent Daily Show, Stewart asked some treasury department suit “Aren’t we just making all this stuff up?” We are. And I understand that if we didn’t have our little theories and projections we’d have nothing, since vacuums can’t exist, but we could fill that vacuum with better stuff.
Hagana,
Thanks very much for the comment. While the immediate response is for most people to assume that more money in the hands of investors is always a positive, I would like to offer some points. Don’t get me wrong, I appreciate the thoughtfulness of your response.
Capital gains taxes act as an unofficial regulation on investments. Homeowners in America pay little to no capital gains taxes. Like you said, researching is important, but it is my opinion that investors are more likely to research thoroughly if they know they will have to pay a tax on their earnings. It is my view that a capital gains tax at the rates under President Bush discourages long-term investment and encourages short-term investments. I am not advocating taxing capital gains to the sky, but I do believe slashing them to the rates under President Bush (and to have them even lower for homeowners) is an incentive for irresponsible investment. I am firm in my belief that the slashing of the capital gains tax was a major contributing factor to the casino-like atmosphere that developed in the past 20-30 years, and culminated under President Bush. America was investor-friendly even before President Bush slashed the rate, so I am going to have to respectfully but strongly disagree with the sentiment that lowering a tax is always a positive. Especially a tax such as this, which is in reality a for of regulation in and of itself.
I am aware of the argument of doing nothing, and I strongly disagree with that. Not only is the tax relief that was the main proponent of the stimulus plan important for middle class folks struggling to pay their bills, but the extension of unemployment insurance is also crucial to preventing despair in such an atmosphere. We learned that valuable lesson during the Great Depression. Despair leads to civil unrest. I think doing nothing would be disastrous, because there are so many pressing problems that have been put off for years. This current economic crisis is a financial crisis, but is is also a culmination of the affects of putting problems off for future generations.
Well, investment in scientific development would absolutely stimulate the economy. It has already been accepted that the majority of the 600,000 plus jobs we have lost in the past five months are not coming back (they are obsolete jobs). This is a signal that we need to change direction, and a heavy investment in scientific development (particularly sustainable technologies) would create loads and loads of jobs for the economy (just my humble opinion).
I know it is popular to criticize a program like NASA, but the technology developed in these programs is used for many other things as well. Especially the relationship between NASA and the military. I am not a proponent of making our military less powerful, but the reality is that we are spending more on defense than every other nation on Earth combined, and meanwhile, our healthcare system is broken. This is unacceptable. I am a big supporter of the military, and I do not want to see cuts in the military or NASA. I do, however, acknowledge an unsustainable reality, as painful as it may be.
I am a full-fledged supporter of military action against North Korea. We should form an alliance with China, and allow the Chinese government to take the most drastic action. You know you are pathetic when Chinese rule is a step-up.
You are correct. The economy is just an idea created by people. That is why we are frozen right now. Human confidence has eroded. There are many reasons for that, and if we both pretended like there was one reason for it, then we would be kidding ourselves. This current crisis is a culmination of many different things.
My next piece is centered around healthcare, and it seeks to explain how it is our single-longest term threat to fiscal responsibility. I hope to hear your thoughts on that piece.
Thanks a lot for the comments. They were helpful.
1. Capital gains taxes
I can see how if you make it too lucrative for people to invest, you risk having a population that doesn’t save, much like ours, so I see your point. I still lean towards thinking that it would be better to give people incentives to invest in growth opportunities, but I think more of the blame for our current problems are rooted in the deregulation of the 90s.
2. I realize the risk of doing nothing is civil unrest, but I think that if the government were to do nothing, the people would do something, and not necessarily something unproductive. I’ve read that despite the lack of capital, new ventures and new business ideas are growing. Maybe this unemployment will make our nation more creative in finding ways to make themselves useful, when before they were building Hummers. I’ve been frustrated looking for a job as an attorney, and have decided to join a software startup this summer that I think has some promise. But I do understand the idea of keeping despair away – I just think that the administration could reframe this entire situation into an opportunity rather than a crisis.
3. NASA was a bit of a cheapshot – I looked at their books and found out they don’t actually get a whole lot of funding anyway. But I think putting money into research just for the sake of research is irresponsible. For instance – alternative energy. We burn coal, oil, and natural gas because it burns, and we haven’t found anything else that burns like it (except nukes). I’m not sure that just because we want to invent an alternative fuel source, we can. Same way we couldn’t figure out how to turn lead into gold.
Healthcare is something I’m completely unfamiliar with, look forward to your thoughts on it.
Just kind of scanned all this but I gotta disagree with Hagana’s very last point. Research for the sake of research is pretty important. IBM (who I work for) became a big money because they invested in research during the Great Depression. When the country got out of the recession and the government was looking for someone to handle all these new systems, only IBM was there.
The alternative fuel thing is important because existent sources are all non-renewable until we all turn into fossils. NASA may be science fiction now but who knows fifty years down the line? Medical research looks like it’s going nowhere (where’s our AIDS cure?) but if/when successful the gains will be much more than the costs. The point of research is to stay ahead of the curve when things get better or when the shit hits the fan for everyone else.