Tax Cuts and Economic Growth

Every election season we run through this:  conservatives say tax cuts lead to more disposable income, which leads to more spending, which leads to economic growth.  The key point here in that money sent to the government does not contribute to economic growth (see Y = C + I – G + (X – M)).  Liberals argue that growth occurred with high marginal rates (90% was the highest) after World War 2, and that the Clinton years saw growth even though Clinton raised taxes.

How to sort this out, since both sides are referencing facts?  I think this article by Jim Pethokoukis at the American Enterprise Institute is a good first step in understanding those views.  Jim believes, like I do, that marginal tax cuts (tax cuts by tax bracket) will spur economic growth.  Take a look, and let me know what you think in the comments.


Democratic Party Tolerance

I’m behind the media curve on this, but this is hilarious.  Please enjoy.

Daily Show:  Just How Tolerant is the Democratic Party?

Ban Corporate Profits!

This is precious.  Absolutely precious.

The Clinton Boom Years

Some nice thoughts below on the Clinton boom years.  This definitely needs to be considered in light of Bill Clinton’s speech at the DNC.

The first flaw, described here and here, is that President Clinton raised taxes and the economy boomed. The flaw in the narrative is it ignores the passage of time—four years, to be exact. The timeline matters. Clinton raised taxes in 1993 just as the economy was set to take off from a recession, and instead job and wage growth sputtered for four years. The famous Clinton era boom started four years after the tax hike, in 1997, and was triggered at least in part by the Republican tax cut of that year. Four years may seem like a detail, but details like this matter.

Rest of the article is available from the Heritage Foundation.

Convention Thoughts

Confession time:  I do not particularly enjoy the conventions.

As I have considered politics I have concluded there are three streams always running through every discussion pertaining to politics.  The first, and the most obvious one, is messaging.  Messaging encompasses what we see daily on networks and cable news.  All sides arguing for their opinion and trying to “message” their message and ideas to others.  Messaging typically breaks people down into groups or classes by race, ethnicity, state, gender, etc., and attempts to tell each group something they’ll like to build a coalition.  This is the most “political” of the three streams and the one I dislike the most.  Usually, it is based in fact and inconvenient facts are cast aside (one example).  The second stream is what I call the “policy” stream.  This stream considers “realities” and attempts to decipher which idea, which policy, is best.  The third and final stream is the philosophy stream, which deals with ideology of each side, what their worldviews are rooted in, where their biases and blindsides are, and how that encourages their thought.

All three of these are interconnected.  I prefer policy discussions (auto bailout versus no auto bailout, tax cuts versus status quo versus tax increases) and looking at political philosophy over messaging, but without messaging no good idea can gain traction.  Someone has to talk about it, and they must speak well and in a convincing manner.

Which brings me to the Republican and Democratic National Conventions.  Or the Republican and Democratic Messaging parties.  Every pundit and junkie out there is talking about each sides messaging and whether it worked.  Did the Republicans humanize Mitt Romney and emphasize their “job builder” and “company builder” credentials enough to appeal to those who are without jobs?  Did the Democrats convince Americans Paul Ryan’s budget is bad and President Obama is still the same Obama you fell in love with in 2008?  We will see.  Polling coming out September 14th and September 17th will give us a good idea of where each party leaves the convention.

But this polling only tells us what people are thinking (or feeling) post convention.  Does that really give us a heartbeat on the American psyche after 4 years of President Obama’s administration?  Sort of, but I wonder whether his “likable” or “popularity” ratings in November is going to matter.  Neither the Republicans and Democrats laid out a clear and concise plan for the next 4 years (Mitt Romney’s plan to create jobs was a template) and I believe the side that starts talking about exactly how they plan to achieve their goals has a really good chance of pulling ahead at the final weeks.  Ideas (and good messaging) are going to win this election and I firmly believe the side that fails to talk about specifics is going to lose.

Romney-Ryan 2012

One of the first posts on A Slice of Polis, dated August 30, 2008, commented on the pick of Sarah Palin as John McCain’s VP running mate against the Obama-Biden ticket (Obama had selected Biden about 1 week before) and immediately stole the spotlight from the media show that was Barack Obama for President (I will ignore for now the post recommending that McCain pick Kay Bailey Hutchison by my colleague).  The pick fired up the conservative base, consolidating it behind a less than exciting candidate.  Palin has been the subject of so many left wing media jokes about foreign policy, Alaska, Momma grizzly bears, and her song Trig, that what was lost in the pick was the risk McCain took.  He pick a nobody, with zero experience (granted a bit more than then Senator Obama), as a lightning rod.

Ultimately the pick did not work, though I believe this had more to do with the economy slipping into recession than McCain, Palin, or then Senator Obama.  Obama running on hope and change coincided very nicely with the economic downturn, just as FDR’s election 76 years earlier fed off of Herbert Hoover’s atrocious economic decisions and the Fed’s incompetent handling of the beginnings of the Great Depression, propelling him to an election less about him and more about him not being the other guy.

This brings me right into Romney’s decision to select Paul Ryan as his running mate.  There will be speculation about why Romney made this selection.  I think it shows us a couple of things about Romney.  First, he is focused on the economy and the conservative vision of how the government interacts with it.  Second, he wants the economy to be the story, and a Ryan pick should steer the conversation in that direction.  Third, Romney wants the debate to be about policy this cycle, rather than popularity. “likability” (which is a dumb polling metric), and good looks.  Need-to-dos rather than want-to-dos.  Economic growth rather than government growth.  A friend of mine sent me a text this morning and said he has heard more substantive policy discussion this morning (it is 8:19am CST as I write this sentence) than we’ve heard for months, including in the Republican Presidential Primaries.  For that I rejoice.  Fourth, Romney wants this election to be about Obama’s record.  Fifth, Romney thinks he can make Obama’s record, particularly on the economy and probably to a lesser degree on his policy of government expansion, the story of the election.

Sixth, Romney thinks he can win the messaging war.  I will conclude with this point because it is why Romney chose Paul Ryan.  If Romney did not believe he could win a war of messaging (this includes, in my definition, both positive messaging about your campaign/candidate, and negative messaging about your opponent) and a war of ideas he would have picked a personality firebrand like Chris Christie or rising star like Marco Rubio (I do believe Rubio would have been an incredible pick.  His time is coming.).  I believe this is a good thing for the country and the election as a whole.  Political theater requires crazy attacks and stupid stuff to be said by nutcases in order to maintain some semblance of spotlight in between messaging cycles, but the craziness needs to be sandwiched between legitimate and productive discussion of ideas.  Romney is telling Obama he is going to have a conversation about ideas in this election.

If President Obama agrees to discuss ideas or responds with continued slandering and negative attacks remains to be seen.  Strap on your seat belts and please dress responsibly.  There will be plenty of mud thrown around until November and everyone is going to get hit.

Start a Fire

I’m chuckling to myself this morning just a bit thinking about the summer of 2008, a long four years ago, when Nathan Tilly and I sat down and decided we should start a blog.  In hindsight I think I was motivated by two things:  1) to join the conversation of ideas, and 2) allow our own thoughts to be tested by the fires that allowing others to read entails.

With yet another presidential election just a few short months away I do think it is time to return to some irregular blogging.  Important events, be they electoral contests or political debates, require thought (and therefore writing) to carefully consider each side.  It is time I began, once again, and refine my thought.

I look forward to your viewership.