One Utah

In the real world, every government policy is an experiment. We look to history to guide us but also ground ourselves in basic values.

Public education, supported by property taxes, open to everyone, is an experiment. Creating a progressive tax code is an experiment. Cutting taxes on the rich in hopes they will invest in ways that grow the economy is an experiment.

The challenge for us, in considering policy, is to examine the outcomes of previous experiments and ask what we can learn from them to apply to our own challenges.

Beginning in the early 90s, the Federal Government passed two tax increases - under the first George Bush and then under Bill Clinton. These tax increases were passed for the purposes of deficit reduction. In Clinton’s first term, the federal deficit fell by ninety percent. During Clinton’s second term, deficits were replaced by surpluses. At the same time, the nineties saw the longest peace time economic expansion in American history and, for the first time since 1973, real incomes rose for average American families. The US economy created tens of millions of jobs. Times were good and most Americans experienced them as good times.

In 2001, and again in 2003, the Federal Government passed massive tax cuts, arguing that such cuts were necessary for economic growth. By some measures, the US has achieved that growth - for instance GDP has increased - for average American workers and households, the past 7 years have felt like hard times. Real, disposable incomes have decreased. At the 2004 election neared, it was looking increasingly likely that George W. Bush would be the first president since Hoover to have a net job loss during his term in office (he ended up breaking even). Outside of the wealthy, Americans have experienced net decreases in real income and increases in cost of living that have resulted in overall losses in terms of standard of living.

Going back further, to say the 1970s, the US experienced a long period of economic stagnation, rising inflation and lowered standards of living. The Nixon administration, for instance, enacted price and wage controls to control inflation. The energy crisis of the 70s created widespread economic problems. Interestingly, the much maligned President Carter actually had a better economic record than George W. Bush in terms of overall economic growth.

The Reagan era began with a massive tax cut, followed by runaway deficits then a series of tax increases. The Reagan administration spun these tax increases as adjustments to tax law, as closing loopholes and so on. But they amounted to tax increases. The Reagan era also began the long march of de-regulation culminating with the presidency of Dubya. The 80s were also a time when government aid programs began experiencing deep cuts in their budgets. Paradoxically, it the early 80s were also the time when reforms were enacted that placed social security on sound financial footing that allowed for massive surpluses in that program (surpluses that continue today).

The 60s began with a sizable cut in tax rates - the top marginal tax rate had been 90%; it was cut to 70%. It was a decade which continued the long arc of economic growth and real improvements in living standards for most Americans. It was also an era that continued aggressive government action in the economy - in terms of creating and further improving infrastructure, investing in education, science, research, and government aid programs to the less fortunate.

The Post War era was also characterized by something unique - the lowest immigration rate in American history; by the 70s, something like 5% of the US population was born in another country; today its more than double that (not counted undocumented residents).

Regulatory laws and agencies were first instituted - on a widespread basis - in the 30s. They were later expanded and refined. By the Reagan era, a sustained assault on these agencies and policies began an era of de-regulation, culminating the Bush era policy of placing industry lobbyists in charge of regulating their industries - thus drug companies were in essence regulating and enforcing regulations against themselves, same with banks. The deregulation era has brought us the S&L collapse of the 80s and massive corporate corruption and failures of the Bush era.

All these different policies represent experiments. The presidency of George W. Bush has been an experiment in conservative economic, social and foreign policy. The Bush administration experiment has failed for most Americans. Tax cuts have not generated widespread prosperity. We need look no further back in our history than the Clinton era to see a more successful experiment.

Ideologues and free market fundamentalists will tell us - ad nauseum - that we can’t raise taxes, that doing so would be disastrous. But recent history shows that is not necessarily the case. Tax increases - linked to effective government programs - can and probably will lead to a better economy than we have now. Effective government regulation can serve to moderate the boom and bust cycle inherent in the free market.

At the campaign for America’s Future, Bill Scher calls for change in the government’s role in regulating the US economy:

Since the last seven years have seen corporate profits soaring but wages not keeping pace with inflation, the Op-Ad calls for a “new social contract” — Make it easier for workers to organize. Guarantee decent wages, pensions, health care, vacation and sick leave. Establish “full employment” as “the central target of our economic policies, with government acting, when necessary, as employer of last resort.”

All of that involves having our government get off the sidelines, where conservatism has left it, and back on the field — setting and enforcing rules of the road, and picking up the slack where the private sector falls short.

Uttering the government G-word has been taboo in our debate for a long time. But as the conservative failures pile up, that’s changing.

The Republican/conservative faith-based approach to government involves continually cutting taxes and hoping to keep everything from going to shit.

The reality based approach involves recognizing every program, every law, every policy is an experiment and knowing that you try it, if it works, you keep doing it. If it doesn’t work, you do something else. There is no single “right” level of taxation. Sometimes you increase taxes and invest the revenue in society. Sometimes you cut taxes. Sometimes you need stricter regulations. Sometimes you need more liberal ones. Government needs to be responsive to changing needs and circumstances. Government programs need to be evaluated and adjusted (or eliminated) on a regular basis. It’s about identifying and solving real problems in the real world, not applying some faith-based theory (low taxe! Free markets! laissez-faire voodoo!) and hoping everything turns our right.

This entry was posted Wednesday, September 17th, 2008 at 9:27 am and is filed under American History, American People, Bush Administration, Bush Failures, Conservative Sell-Outs, Conservatives, Democracy, Economy, Federal Budget, George W. Bush, Liars (politics), National Politics, Political Corruption, Reagan, Republicans, Society, Tax Policy, This Blog. You can leave a response, or trackback from your own site.