A Jigger of Extra Debt
Editor’s note: We always welcome aricle submissions from you, our readers. Today’s article comes from Max (aka Birdpilot).
There is the concept of the “baseline” in a number of fields. And of diminishing returns.
One establishes that baseline, then jiggers with something to see how that affects the process. If the jigger demonstrates an improvement against that baseline, it can be incorporated into the new baseline. Or, possibly, one can remove the jigger, return to the baseline, and try a new jigger.
In any case, if the jigger creates a negative effect, causes a decline against the baseline, one can remove that jigger, return to the baseline, and take the lesson to heart. Obviously, allowances are made for short-term loss for longer term gain, if one is smart. But a negative return should be tossed in the dustbin.
Recently, we have a baseline that can be used, the last couple years of the Clinton administration, for an economic comparison against following “jiggers”. We can, and have, debated the overall effectiveness of the Reagan tax cuts (net, after the subsequent increases) and deficit spending (quintupling the debt in the 12 years) and the way it affected job growth and inflation in the 1980s and early 1990s. And the effectiveness of the policies of the Clinton years. We know that 40 percent more jobs were created and that inflation was at reasonable levels in the mid– to late-1990s. And we know, as compared to the Reagan/Bush I years, we were in a surplus budget situation, paying down the federal debt — something fiscal conservatives dream of every night. Clinton also signed into law the repeal of Glass-Steagall late in his term.
Then Bush II was elected and added a jigger. He doubled down on the “supply side” theory with more Reagan style tax cuts, further deregulation, or lack of enforcement of existing regulations. He added to that a significant increase in spending, with a resulting end of the surplus and, eventually, a doubling of the federal debt. Although inflation stayed at reasonable levels, job growth of only 1.9 million (even the “inept” Carter, during double digit inflation, oversaw over an increase of over 10 million jobs, with a significantly smaller population!!). The Glass-Steagall repeal came into full flower under Bush as well. And then an economic crisis second only to the Great Depression. Looks like diminishing returns.
So, that jigger seems to have produced a negative effect versus the baseline.
The Obama administration attempted to return to the baseline, proposing tax increases on those making over $250,000 per year and reregulating the financial industry, though not nearly as heavily as under Glass-Steagall; because of Republican opposition, these attempts were either kept to a minimum or not enacted. And, because of the economic hole and the attempts to climb out, without paying for even part of the latter, deficits that have increased the debt by 60 percent in a little over three years. But, in spite of the headwinds, almost four million jobs were created in that time.
With this election year, we have a Republican ticket and party platform that wants to triple–down on the supply side cuts. They have presented economic plans that will dig the the hole deeper in the short– to mid-term, not even ending annual deficits for over two decades! And not a single detail of how even that would be accomplished. They actually want to reapply the jigger that ended the paying down of the debt, doubled that federal debt, generated fewer than two million jobs in eight years — and expand on it! If the Bush policies showed diminished returns versus the Reagan years, creating a deep hole, the stated policies of Romney would give us greatly diminished returns, and an even deeper hole, if enacted.
This being the case, not only should the Republican ticket and plans be rejected, it’s time to return to the baseline, announcing that the tax rates will return fully to the Clinton levels as certain target gross domestic product growth and employment levels are reached, and that Glass-Steagall will be reenacted in full.
- John Boehner’s 1998 Glass-Steagall Flashback — Would You Like A CD With That Auto Insurance Policy? (dailybail.com)
- MUST SEE GRAPHIC — How The Too Big To Fail Banks Were Born (dailybail.com)
- Want 1990s Job Growth? Go Back To Clinton-Era Deregulation (openmarket.org)
- Clinton Vs. Clinton (And Obama) On Deregulation (openmarket.org)