In the past few weeks, I've heard lots of Republican talking heads make some pretty
damning arguments about "liberal" Democratic economic policies and Barack Obama's "wasteful" spending plans. The arguments
may sound convincing at first blush, but the Republicans aren't offering any serious alternatives. So I did some research
and came up with a quick list of four things Republicans don't want you to know about the economy.
1. Tax cuts don't always work.
In 1929, Herbert Hoover cut marginal
tax rates to the lowest level in modern history (24 percent) and the economy still collapsed. In 1982, Ronald Reagan slashed
taxes to the lowest level in 50 years and, in return, unemployment soared to the highest level in 50 years. In 2001 and 2003, George Bush cut taxes twice and yet unemployment rose to 6 percent. And that's to say nothing of
the 2.6 million jobs lost in the final year of the Bush administration.
Tax cuts are politically popular, but they are not a panacea for our nation's economic
woes. Cutting corporate tax rates won't stimulate the economy or create new jobs if there's no demand for the goods and services
that businesses produce. And cutting estate taxes and capital gains taxes will primarily benefit the wealthy. Despite the
GOP claims to the contrary, when you give rich people money, there's no guarantee they will use it in ways that will trickle
down to the masses. If we're going to cut taxes, then tax cuts should be targeted to businesses that hire new workers or invest
in infrastructure, or they should go to middle-class Americans, who have been losing their jobs, their homes, their health
care, and their savings in the Bush economy.
2. Higher taxes don't necessarily hurt.
Nobody likes to pay taxes, but don't believe the hype that tax increases on the
wealthy will hurt the economy or kill jobs. In 1944, Franklin Roosevelt raised
marginal tax rates to an astoundingly high 94 percent and yet we still had almost
full employment (1.2 percent unemployment), thanks to the war. Taxes fell after
the war, but in 1951, Harry Truman raised taxes again (from 84 to 91 percent)
and yet unemployment dropped by 50 percent. In
fact, from 1947 to 1973, median family income rose 2.7 percent a year, even while the top marginal tax rate was never lower
than 70 percent, twice the current rate.
Perhaps the best example of the utility of tax increases comes from recent history.
In 1993, Bill Clinton defied every single Republican in the House of Representatives
and raised marginal tax rates to almost 40 percent. Despite GOP predictions that
businesses would go bankrupt and workers would be laid off, the U.S. enjoyed the longest peacetime economic expansion in
That doesn't mean we need to raise taxes right now in the midst of the recession, but
it does mean we shouldn't be afraid of higher marginal tax rates or of allowing the Bush tax cuts to expire in 2010. Republicans
often complain that higher taxes will kill the economy, but there's not much evidence to support those fears.
3. Democrats are better at balancing the budget.
Republicans love to talk about balancing the federal budget...when somebody else is
in charge of it. But during eight years of the Bush administration, we hardly heard a whimper from Republicans about balanced
budgets, even as Democrats complained about the huge cost of fighting two wars and cutting taxes.
The truth is that no Republican president
in my lifetime has ever balanced the budget. But the Democrats have balanced the budget five times during the same time span.
Clinton did it four times and Lyndon Johnson did it once. The last Republican
president to balance the budget was Eisenhower.
Yes we do need to balance the budget eventually, but this is not the right time. To
do so would mean cutting government programs that serve those most at-risk in society and it would slow down the chance of
recovery as the lack of government spending would contract the economy. But still, if you really want to balance the budget,
the Democrats, historically speaking, are far more likely to do it.
4. Democrats create more jobs.
Republicans love to crow about the Reagan economy, but it pales in comparison to Bill
Clinton's record. The U.S. economy created 21 million new
jobs in the Clinton administration.* That's more than the last three Republican
presidents, including Ronald Reagan, combined. And despite the GOP argument that the Republican Congress deserves credit for
the Clinton economy, the truth is that seven million of those jobs were created in the first two years when Democrats, in
control of both houses of Congress and the White House, raised taxes with virtually no Republican support.
But it's not just Clinton. Despite the
well known economic woes the country faced under Jimmy Carter, the U.S.
economy added 8 million new jobs from 1977 to 1980. That's more new jobs under 4 years of Carter than under 12 years of both
Bush presidents combined. And for all the right-wing complaints about the failures of LBJ's "Great Society," they fail to
mention that the economy created 10 million new jobs during Johnson's tenure, with a Democratic president and a Democratic
Congress, while fighting the Vietnam War and authorizing a massive expansion of the welfare state to include Medicare and
The truth is that nobody has all the answers to our current economic problems. But
to believe Republicans lately requires us to forget the successful history of Democratic presidents and to ignore the failure
of the most recent Republican president. It was George W. Bush, after all, who squandered the Clinton
surpluses, ran up the biggest deficits in history and doubled the national debt.
While we embrace President Obama's spirit of bipartisanship and unity, Democrats should
not forget their history and must not let the GOP browbeat them into silence and submission.
* There are three things missing from this discussion. 1) that the neoliberal monetary expansion through
loose credit instituted through the federal reserves brought on the job expansion, it also is the cause for the collapse. Clinton and the Congress then is much to blame as Bush for the collapse. The expansion during the Clinton years was just part of the bubble. 2) that
economic strength is built upon an increasing wages (real buying power) of the white and blue collar workers (not through
increasing credit). 3) This requires tariffs and pro-union laws. Roosevelt knew this.
Corporate media has a
strong bias against item 3.