Asymptosis

You remember David Stockman, right? Reagan’s “whiz kid” budget director? He’s the man who engineered the last thirty years of Republican dominance by implementing The Reaganomics Strategy: borrow money from our children and from abroad to buy votes at home with the “I’ll cut your taxes” pander.

Stockman has never been the type to twirl his finger in his cheek and actually proclaim that Reagan’s economic vision had any roots in reality (aside from the political reality that “deficits don’t matter”). He’s repeatedly acknowledged–even as early as ‘81–that the whole thing was a scam. (That’s not exactly the word he used, but…) Check out this Wikipedia page for details, and links to more.

Well now–after years as a top Wall Street private-equity and hedge-fund hotshot who’s very, very clear on how the world works–he’s demonstrating that clear-eyed side once again. Here he is on February 5, on PBS News Hour with Paul Salmon, commenting on “Starve the Beast”:

The lesson of the last twenty five years is that it doesn’t work.

Here’s the whole video. (Start about 6:30 to skip the fairly predictable indictment of the too-big-to-fail financial institutions and somewhat more surprising endorsement of Obama’s proposal to tax them.)

Stockman continues:

You can keep cutting taxes until you reach the point where this year, the year just ended, we spent 3.6 trillion and we only collected 2.2. We are now so far out of kilter that it’s irrelevant. Taxes are going to have to be raised. The beast needs to be trimmed back, but it can’t be starved enough to even begin to cope with our fiscal problem. And this is where I think all the politicians are faking, in both parties but the Republicans especially. The Republicans think their mission in life is to cut taxes. Sorry, game over. We’re now in the tax raising business, and we’re going to be in the tax-raising business for the next decade.

The bill is due. And yes, Virginia, there is a difference between the Democrats and the Republicans. The Democrats have certainly used and benefited from the pander (Clinton: “The era of big government is over”), but today’s Republicans still either believe or choose to pretend to believe in what Reagan’s own VP, the first George Bush, so aptly called “Voodoo Economics.”

Today’s Republican politicians are either 1) craven liars, or 2) intentionally self-deluded zombies, while most Democratic politicians are just limp-wristed, politically motivated collaborators. It’s pretty obvious which is worse. (I won’t get into the voters except to say that Democrats who vote against their own best interests do it because it’s the right thing to do–economically and morally–while Republicans who vote against their own–and everyone else’s–best interests do it because they’re idiots.)

It’s damned unfortunate that we have to raises taxes now, during a downturn that shows every sign of lasting for years, because raising taxes hurts economic growth over the short term. But after thirty years of magical thinking, it’s time to pay the bills.

The good news–for those of patient merit—is that in the long run, paying for the amount of government that’s necessary to maintain and promote prosperity results in (surprise) more prosperity.

Saving the best for last, there is this remarkable interchange in the Stockman interview, at about 2:00:

Salmon: Listening to you I’m struck by the fact that I can imagine critics on the left saying exactly the same thing.

Stockman: I’m mortified by that thought. But at some point you have to ask, what’s good policy?

Here’s one aggrieved citizen who wishes that point had arrived–that David had asked that question–oh, about thirty years ago?

Asymptosis Economics, Politics, Rhetoric