they called it "Rubinomics" , we once had responsible people in charge

[virtualobserver]

Gore's big mistake was coming up with an alternate tax cut rather than standing up for fiscal discipline.

Now some Democrats are playing the same game, fortunately we have Howard Dean supplying some fiscal sanity to the debate.

Robert Rubin explains how serious the situation is.


-snip

After Clinton took office, the Great Fiscal Debate mutated. In 1993, the debate was between supporters of Clinton’s economic plan—which included revenue increases, principally an income tax increase on the top 1.2 percent of taxpayers and a small gas tax—and opponents who argued that tax increases of any kind would harm the economy. “I believe this will lead to a recession next year,” Newt Gingrich said at the time. “This is the Democratic machine’s recession and each one of them will be held personally accountable.”

The 1993 deficit reduction program was a test for supply-side theory. Instead of the job losses, increased deficits, and recession the supply-siders predicted, the economy had a remarkable eight years—the longest period of continuous economic expansion yet recorded. That success created an immense anger on the part of some conservatives, who saw a policy they decried led to conditions they said wouldn’t occur.


http://www.msnbc.com/news/991181.asp?0sl=-12

[Kolesar]

1. Rubin was on ABC/This Week/Sunday and was excellent

I think that he was on This Week with George Stephanopolous. I could not find the story on ABC's website, though.

Rubin's summary: we must get these deficits under control and fast or there will be a whole world of trouble.

[lancdem]

2. Bob Rubin was one of the best Treasury secretaries

this country has ever seen. Period.

[Catfish]

15. I agree n/t

[Kolesar]

3. Supply side/voodoo economics is disproven

Per Mr. Rubin's article:
The 1993 deficit reduction program was a test for supply-side theory. Instead of the job losses, increased deficits, and recession the supply-siders predicted, the economy had a remarkable eight years—the longest period of continuous economic expansion yet recorded. That success created an immense anger on the part of some conservatives, who saw a policy they decried led to conditions they said wouldn’t occur.

It's sheep we're up against:
As the deficits diminished and a surplus emerged during Clinton’s second term, the debate evolved again. Conservatives now argued for “giving back” the large projected surpluses to taxpayers in the form of a tax cut. We felt that continued fiscal discipline—in this case, beginning to pay down the federal debt—would best promote growth. What’s more, Social Security and Medicare were facing huge deficits once the baby-boom generation began to retire.

All of this argued against massive tax cuts. But the surplus left the Democrats in a tricky situation. Most voters don’t even understand the difference between the government’s annual deficit and its accumulated debt. So it was almost impossible to explain why entitlement obligations we faced decades down the road meant that a government that was running a surplus should use the money to pay down its long-term debt instead of refunding it to taxpayers.

==-==-==-==-==-==
It seems to me that this brilliant writer has released this material just in time for the 2004 presidential election. I hope the Democrats can capitalize upon it.
edit:the attribution

[virtualobserver]

4. it is disproven, but Democrats have not made the easy comparison

Under Reagan and Bush we cut taxes, and we created giant deficits.
Under Clinton we raised taxes and cut spending and the economy boomed.
Under Bush II we cut taxes and the deficit exploded again.

How hard could it be to make this argument in a tv spot.

[ProfessorGAC]

5. Right You Are

I published a paper in 1997 that got me loads of hate mail from conservatives, in many fields, that mathematically proved, among other things;
- that the 80's economic boomlet was an illusion,
- that the recession of the late 80's/early 90's was the fault of those Reagan policies,
- that the raising of marginal tax rates by 41 and Clinton were responsible for the balancing of the budget,
- that spending controls on discretionary dollars put in place by Clinton in '93 and '94 had more causative impact on deficit reduction than anything the Repub Congress did,
- that the market bubble had no correlative impact on the economy, (vice versa was not the case)
- that hyperkeynsianism is only effectie in times of true and major national emergency and that in other circumstances would not provide sustainable economic stimuli, and,
- that tax cuts targeting the highest income earners does not increase long term investment and does not increase income to the federal gov't, other claims to the contrary.

If those 7 points, all demonstrably true from the actual data, don't prove that supply side theories are fatally flawed, nothing does. Because every one of those 7 points show that the opposite of supply-side predictions were the actual results. Everything they predicted for supplyside, and everything they decried about the alternate approach of 1993 - 1998, turned out to be false.
The Professor

[Kolesar]

6. So..you don't think the Market Bubble Collapse hurt Consumer Confidence?

I could not help that workers who suddenly had tens of thousands of dollars in their 401k accounts were pumping up consumer spending because they felt rich. When their accounts collapsed by >30%, they quit spending.

I have only heard this referred to. I don't have any data.

The GOP (Grover Norquist) have stated that they wish to superinflate the federal debt just to destroy Social Security and Medicare. I could see the retirement ages for both programs being raised. SS would go to 70 years. That is an ipso facto cut in benefits.

Note: the material in my last post was from Robert Rubin's book (except the comment at the end and the sheep remark).

[David__77]

7. I am studying this debate in school now...

I am writing a research paper on the question of the relationship of interest rates and the federal budget deficit. It is interesting to see the sophism that the "supply siders" have employed in order to deny such a relationship.

I find it especially peculiar since they claim that "tax cuts stimulate consumption" while simultaneously claiming that budget deficits caused by tax cuts reduce consumption thereby negating any effect on the interest rates (this is called "Ricardian equivalence").

[Gulf Coast J]

9. I thought Ricardian equivalence was something else

My understanding is that Ricardian equivalence states that given a tax cut that will cause budget deficits, consumers will save their extra income to make up for future increases in taxes needed to pay off the debt. The opposite would be the Keynsian case where demand is a function of disposible income (which goes up with a tax cut), and budget deficits don't influence consumption patterns.

[Catfish]

14. Ricardian Equivalence

My memory of Ricardian Equivalence is similar to yours. Taxpayers perfectly save the equivalent of what is needed to offset the deficit. I didn't find the theory compeling when I first studied it and I don't now. I think that reputable economists know that ongoing large Federal deficits exert upward pressure on interest rates and cause a crowding out of private investment. Supply side theory has been debunked over and over, in my opinion. Of course, I only think economists are reputable if they agree with me.

[kentuck]

10. Tax cuts would stimulate consumption if they didn't run up....

huge deficits. Deficits are a tax increase. Because the debt is larger, the amount of taxes needed to pay the interest on that debt is larger also. That would require a tax increase if all other spending remained the same. This has no stimulative impact on the economy at all. In fact, it is the reverse.

[kentuck]

8. And Jr is taking us down that same road again...

But this time, there is no tech revolution to save us, as it did under Clinton.

[virtualobserver]

11. well, exports are up......

we are exporting a record number of high-tech jobs.

[AP]

12. In no way is Rubin endorsing Dean in this article.

He says that running defecits can be good and that it's wrong to give back surpluses in the form of tax cuts.

Dean says he won't run defecits and if he runs a surplus, you get it back as a tax cut.


To run a cyclical deficit—a short-term and temporary deficit in conjunction with a recession or slowdown—isn’t necessarily bad and at times may be entirely sensible.
...
As the deficits diminished and a surplus emerged during Clinton’s second term, the debate evolved again. Conservatives now argued for “giving back” the large projected surpluses to taxpayers in the form of a tax cut. We felt that continued fiscal discipline—in this case, beginning to pay down the federal debt—would best promote growth. What’s more, Social Security and Medicare were facing huge deficits once the baby-boom generation began to retire.
...
One major impediment to serious discussion of our fiscal morass is that it immediately raises the question of whether the country now needs to raise taxes to deal with the deficit. My view is that the fiscal deterioration caused by the current fiscal policy will inevitably mean shared sacrifice, as it did in 1993, and will involve both spending and tax measures. But whatever the eventual solution, the president and congressional leaders of both parties should get together—sooner rather than later—to deal with what has become a serious threat to our future well-being.

[virtualobserver]

13. but not good in this case......................

and I'd like to see the context of the Dean surplus tax cut statement if you have one.

[AP]

16. ...

"You folks at Cato," he told us, "should really like my views because I'm economically conservative and socially laissez-faire." Then he continued: "Believe me, I'm no big-government liberal. I believe in balanced budgets, markets, and deregulation. Look at my record in Vermont." He was scathing in his indictment of the "hyper-enthusiasm for taxes" among Democrats in Washington.

http://www.weeklystandard.com/Content/Public/Articles/000/000/003/073ylkiz.asp

It's also what he did in VT. When he had a surplus, thanks to an expanding economy, he cut taxes for everyone, rich and poor, despite the fact that state taxes were already regressive. When Clinton had surpluses, he did what Rubin descrbed -- they didn't cut taxes (why would he? everyone was doing great and it wasn't needed), they shored up the infrastructure and the safety net.

[virtualobserver]

17. Vermont is in great shape.....

unlike most states these days. I guess Dean knew what he was doing.

And he didn't write any blank checks for wars that we didn't need and can't afford.

Dean is criticized for cutting taxes, and he is condemned as someone who wants to raise taxes. Dean didn't have a 6 trillion dollar debt in Vermont, so his strategies will be different for the US.

Clinton and Rubin righted the economy by raising taxes and cutting spending and that is what Dean wants to do.



I wouldn't be stunned if Robert Rubin comes back into the government no matter who wins on the Democratic side.

[AP]

19. Clinton raised revenue by making the tax code a little more porgressive

he dropped taxes on some and raised taxes slightly on others. Dean wants tor raise taxes on everyone by going back to a code which is a more progressisve than the the 2002-03 code, but less progressive than the 2001 code. But, most importantly, he says almost nothing about wanting to be more progressive with the tax code and he calls "middle class tax cuts" "upper middle class tax cuts" to make speople in the middle class think their loyalties should lie with the super-wealthy. He doesn't look at the middle class as the people who have been made to carry the biggest burden of carrying this economy (which benefits the top quintile the most). He looks at them as the people who are going to help him balance the budget by paying taxes, rather than by working and saving and getting richer.

[DemocratSinceBirth]

18. Bob Rubin Is Also An Unabashed Free Trader

as am I...

I think it's intellectually dishonest to embrace Bob Rubin when he says something you like about defecits and then ingore what he has to say about free trade.....


It seems all our candidates are abandoning free trade and Bush is no free trader either as exhibited by the steel tarrifs his maladministration has enforced.....