Three Economic Grinches This Year
Wednesday - December 01, 2010
The Christmas season has sneaked up on me again: decorations and carols at the malls, container loads of fir trees arriving on Honolulu docks, Salvation Army bell ringers outside Longs, and the unofficial American post-Thanksgiving holiday - Black Friday.
The last, of course, is the day on which all good Americans are urged to spend, spend, spend: on little Jimmy and Kate, on Grandma and Grandpa, on assorted aunties, uncles, cousins, wives, mothers, girlfriends, boyfriends, workmates, playmates, neighbors, the postman, the garbage man - indeed, anybody, anybody. Just spend.
And remember, the seasonal letters from my credit card company tell me “you need not pay now.” While just spending, just charge it.
“Spend and charge, spend and charge” at 12 or 18 or 20 percent (or whatever our very lax laws against usury will allow) has become, of course, more than a holiday season dictate of the banking industry. It has become our national economic ethos, one that has come to dominate our political economy since the end of World War II.
From VJ-Day 1945 to the holiday season 2010, we Americans and the people we’ve elected to office have spent and charged to our hearts’ content. In all those 65 years, only two presidents - Republican Dwight Eisenhower and Democrat Bill Clinton - racked up budget surpluses, and they for only a couple of years in each of their two-term presidencies.
Every holiday season has its Grinch, however, and this year there are three. We’ll start with former Clinton chief of staff Erskine Bowles, and former Wyoming Republican Sen. Alan Simpson. They co-chair President Barack Obama’s bipartisan deficit commission, and they issued a summary of their recommendations Nov. 12.
They counsel “shared sacrifice” by the American people, starting with a 10-percent cut in the federal work force by 2015; a 15-percent cut in White House and congressional budgets; closings of one-third of the nation’s overseas military bases; a three-year freeze on federal salaries and bonuses; elimination of the mortgage interest deduction on second residences, home equity loans and mortgages over $500,00; a 15-percent increase in federal gasoline taxes; and raising the Social Security retirement age to 68 or 69 by 2050, among other things.
Both Republican and Democratic leaders have howled over various aspects of the summary. Nobody likes the Grinch who would caution against “spend and charge” and urge “shared sacrifice.”
The third Grinch to decry our great, half-century-old holiday from fiscal responsibility is David Stockman.
I first became aware of him back in the early 1970s. My first political mentor, a southwestern Michigan Republican congressman named Edward Hutchinson, voted against all three articles of impeachment brought by the committee against President Richard Nixon.
That was not a popular thing to do in 1974, even in Michigan’s staunchly Republican 4th Congressional District. A native of St. Joseph’s, Mich., Stockman was a bright, well-financed young Republican who threatened to run against Hutchinson in 1976. Hutchinson chose retirement over a potentially brutal campaign, and Stockman went to Congress for two terms.
In 1980, Stockman became President Ronald Reagan’s director of the Office of Management and Budget. For three years, he defended “supply side” economics, i.e., the doctrine that if you slashed taxes prosperity would necessarily follow. To some extent, it did. But unbalanced budgets also have brought us from approximately a $1 trillion national debt in 1980 to our current $14 trillion figure.
In a 1981 Atlantic Monthly article, OMB director Stockman said as much. Reagan reprimanded him, but Stockman survived the Gipper’s first term, resigning in 1985.
Since 1980, pledges of never voting for a tax hike have become a Republican mantra, never mind the nation’s trillion-dollar deficits. Their victories in this year’s congressional elections rested on their promises to not allow any of President George W. Bush’s tax cuts to expire on Dec. 31.
In short, the Republicans’ response to any call for fiscal responsibility has been “spend and charge.”
In recent essays and interviews, Stockman has called for allowing all of the Bush tax cuts to expire. And he’s called the Republican’s continued embrace of supply-side economics “delusional.”
As I said, every holiday season has its Grinch.
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