The debate over the probably unconstitutional debt ceiling limit that no other country has ever had with almost no commentators in this country realizing this has made me think about some other matters tied to this that are also essentially unprecedented but that are rarely pointed out. I am thinking about the fact that George W. Bush did something that certainly no other US president has ever done and that as near as I can tell no other national leader in any nation in history has ever done. That is, to start major wars while cutting taxes at the same time. Numerous studies have made it clear that along with the recession the main reasons we went from budget surpluses under Clinton to massive deficits under Bush were this combination of starting wars and cutting taxes.
I suspect that he had a model, or thought he did, the late Ronald Reagan. Now it is true that Reagan supported increasing defense spending and cutting taxes, and did so, although he also supported some tax increases, particularly the whopping one for social security that largely offset his income tax cuts. One might argue that he had a war, the Cold War. But it was cold, and he had a habit of avoiding letting it get hot, including pulling troops out of Lebanon when they were attacked, something that led Osama bin Laden to view the US as weak, although he did invade Grenada, a one day affair. So, indeed, the image of Reagan, who was more politically popular than W's dad, the more fiscally responsible Bush Sr. who coined the term "voodoo economics" to describe the policies of Reagan, may well be what W and his followers and much of the media are thinking of. After all, Reagan is a divine being, and he sort of did it, so what is the fuss?
5 comments:
There was no fuss.
For them.
Didn't Grenada run two days? I distinctly remember the SNL "Time-Life 48 book series" (one for each hour, starting with Hour 1: Breakfast).
(For those too young to remember, the NYPost cover photo on the day after the war was planned to be the cover of the next Village People album. On a more serious note, for those TYTR, the 241 people killed in the Lebanon barracks bombing far eclipsed the eight deaths that cost Carter the 1980 election. But one was a USNA graduate and the other made Hellcats of the Navy.)
Re: "the main reasons we went from budget surpluses under Clinton to massive deficits under Bush were this combination of starting wars and cutting taxes..."
This sounds sort of familiar: "[President Johnson] also knew that if he raised taxes to pay for the war, the public would demand an immediate halt with an intensity that he could not resist. Johnson relied on borrowing, which raised interest rates. Michael Perelman. Econospeak. ‘Financial Catastrophe: Here We Go Again’. 20th September 2008
Perhaps it is true that the act of raising taxes may not make it possible to raise the 'real' resources necessary to fight a war. It could just as well depress the entire national economy (and especially) in the context of a great depletion of key natural resources.
I get the impression, looking at the economic history of the last 40 years, that Reagan, Bush Sr, Clinton, Bush Jr and Obama have essentially given up on the prospect of a viable national US economy. It is possible that they and other 'leaders' may be consciously orchestrating the gradual demise of modern (national) economies around the world in order to institute something entirely different?
At least LBJ did not cut taxes, he merely failed to raise them (except for a one year income tax surcharge).
Apparently, it lasted longer than one year:
"We should also consider occasional surtaxes, like the 10 percent Vietnam-era levy that brought the real top rate from 70 percent to 77 percent in 1969. The surtax itself fluctuated. It was 7.5 percent in 1968 and 2.5 percent in 1970."
http://wallstreetpit.com/52171-our-ever-changing-permanent-tax-rates
I wish I knew more about it, whether it was added to all brackets or just the top marginal (I believe it was the later).
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