In Tuesday’s Wall Street Journal, Arthur Laffer and Stephen Moore put forth an interesting yet one-sided argument about federal spending under former President George W. Bush and the current White House occupant: “Obama’s Real Spending Record.” Their op-ed comes on the same day Bruce Bartlett penned a piece for the New York Times entitled: “The Fiscal Legacy of George W. Bush.” The Laffer/Moore supposition is that both Bush and Obama “resulted in an orgy of spending” and that “tea party Republicans who took office after the 2010 elections have completely altered” the spending landscape. Mr. Bartlett agrees with Messrs. Laffer and Moore that responsibility for ballooning deficit spending must clawback to the Bush 41 administration as well.
Laffer, Moore, and Bartlett are all Republicans. And while they all give blame to the last two administrations, their similarities dissolve when we turn to the issue of taxes instead of spending.
Time and time again in the Laffer/Moore op-ed, the authors insist that raising taxes now would imperil our already-weakened economy and send us into a deeper recession (despite having had 27 straight months of growth). They use as examples the Smoot-Hawley tariff bill and former President Franklin D. Roosevelt’s tax increases in 1936 as reasons the Great Depression lasted longer than it should have. Perhaps but I’d prefer to look at a more time-relevant economic model that may shed some light on how today’s economy functions instead of an economy of almost 100 years ago.
What Laffer and Moore leave out is that former Presidents Ronald Reagan, George H.W. Bush, and Bill Clinton ALL raised taxes and put our economy on three separate tracks that merged into a single track of prosperity. Yes, Reagan signed into law several major tax reductions but he also signed into law tax increases eleven times! By many accounts, Bush Sr. lost his re-election bid in 1992 because he went back on his promise to never raise taxes yet that single act helped set the stage for Clinton’s economic prosperity!
It’s normal within the Beltway that surrounds Washington, DC to only get half the story. And that’s why it was so important for Bartlett’s piece to go to press the same day as the Laffer/Moore piece. So let’s compare Laffer/Moore to Mr. Bartlett, a conservative who worked for both Reagan and Bush Sr. One could call him a “reformed” supply-sider economist. As he states in his column, the 1990 and 1993 budget votes that increased taxes and put “Paygo” spending rules into effect are responsible for the proceeding years’ balanced federal budgets. Couple those tax increases with a slower rate of government growth (than the Bush Jr. years) and what did we get? Massive job creation, balanced federal budgets, and an electorate that liked that type of economic prosperity.
Fast forward to the period between 2001 and 2008 (Bush Jr. presidency) where we had the slowest job growth in this country in almost 50 years. This in light of the 2001 and 2003 tax cuts? This in light of spending by a GOP-controlled House (until 2007), a GOP-controlled Senate (until 2007), and a GOP-controlled White House? IF tax cuts always create jobs, then I’m forced to ask this very simple question: WHERE THE HELL DID THOSE JOBS GO DURING THE BUSH ADMINISTRATION? When Bush left office, we were hemorrhaging over 700,000 jobs a month. I’m sorry but that is not an economic policy that works.
These are facts. They cannot be disputed. They CAN be left out of columns by conservatives but they won’t be left out of columns I write.
We cannot just cut our way back to economic prosperity. Likewise, we cannot just tax our way back to an economic surplus. It must be BOTH targeted tax increases and spending decreases to put us back in the driver’s seat of the world economy. I would argue forcefully that we should take the best parts of the Laffer/Moore/Bartlett models and use the smart parts to get us to a place where GDP grows, where consumers spend wisely, where federal and state governments grow smartly, and where we can see the light coming from an economic horizon again.
I’ve never forgotten that oft-forgotten quote from then-Speaker Newt Gingrich when he spoke of out of control government spending and specifically Medicare:
OK, what do you think the Health Care Financing Administration is? It’s a centralized command bureaucracy. It’s everything we’re telling Boris Yeltsin to get rid of. Now, we don’t get rid of it in round one because we don’t think that that’s politically smart, and we don’t think that’s the right way to go through a transition. But we believe it’s going to wither on the vine because we think people are voluntarily going to leave it—voluntarily.
Don’t be fooled. What the Arthur Laffer’s and Stephen Moore’s of the world want is to starve government, to watch the entire federal system wither on the vine. They’ve made their views on a radically smaller federal government well-known over the years, Mr. Moore more so when he was the founder and president of the conservative Club for Growth. Before that stint, Moore was the chief architect of the highly-regressive “flat tax” when he worked for then-Rep. Dick Armey (TX). Armey is now known for being the money man behind the tea party movement and was a Gingrich lieutenant after the 1994 GOP takeover of the House of Representatives.
Partisans on both the left and the right will decry this column and I’m not offended by that. But as a student of Washington, DC with a penchant for history, I am of the mindset that we take the good parts of the past, recreate them to fit today’s economy, all the while innovating and thinking outside the box.
After all, that’s how this neat little country was founded 236 years ago and maybe it’s not such a bad thing to remind ourselves of that more often than not.