Conservatism failed? It has hardly been tried

There we were, cruising toward a gubernatorial election in which the two leading candidates tried to outbid the other on school spending while talking up their fiscal conservatism, when a statistic got in the way.

The intriguing thing about Georgia’s tumble down the jobless-rate rankings isn’t that Jason Carter’s campaign has jumped on it; that’s only natural. It’s the way the suddenly intense focus on the economy is getting at the core governing philosophies of the right and the left.

And in turn, it’s the way Carter, a self-proclaimed fiscal conservative, has to thread the needle of saying he won’t raise taxes while so many of his supporters suggest Georgia’s problem is it doesn’t tax and spend enough.

Thus does this election threaten to become something that may not work to Carter’s favor: a referendum between the low-tax, small-government conservatism preached by Republicans, and the high-tax, growing-the-public-sector leftism of the modern Democratic Party.

Carter can try to tamp down the tax-hike talk all he wants. No one believes he can raise school spending dramatically and expand Medicaid and avoid raising taxes substantially. His critics on the right certainly don’t buy this. Nor do those on the left who would howl at the budget cuts needed elsewhere to pull off such a trick.

And so these folks on the left are turning the discussion into one about the alleged failure of conservatism, as evidenced by Georgia’s economic shortcomings. While Georgia’s economy certainly ought to be performing better, it’s quite a stretch to say our problems are caused by a strict adherence to conservatism.

Consider a few basic principles:

The tax burden should be as low as possible. Yes, state taxes represent a smaller share of per capita GDP in Georgia than any other state (using fiscal 2011 figures, the latest available). But our state also leaves more funding of government to the local level than all but five other states. So, the truest comparison considers state and local taxes. Combined, this burden on Georgians is 35th-highest, not 50th, and above a lot of other red states.

And after adjusting for inflation, the amount of state and local taxes paid by the average Georgian from 2003 (our first year with a GOP governor) through 2011 was actually 2 percent higher than in the nine years before that.

Taxing consumption is preferable to taxing income. Taxing income makes it harder to save and invest, whereas taxing consumption encourages saving and investment. Yet, income taxes still represent a larger share of Georgia’s general state revenues than consumption taxes — by an average of $2 billion per year in recent years.

Tax rates should be low and the base broad. Georgia’s top marginal income-tax rate was 6 percent before the GOP took over. It’s 6 percent now. The difference is a few states have lowered their rates below ours during that time. What’s more, tax cuts in Georgia have tended to carve out more exceptions rather than broadening the base.

In some ways, this isn’t a comfortable discussion for Republicans either. But it’s the discussion Georgians need.

Reader Comments 0

142 comments
Kyle_Wingfield
Kyle_Wingfield moderator

Debbie: One photo, fine. Two photos, OK.

Fourteen photos?!?!?! That's a bit much.

DebbieDoRight
DebbieDoRight

@ThulsaDoom -  "Its much easier for them to just keep regurgitating "trickle down"- an economic philosophy that doesn't even exist, except for in the minds of progressives. "


Trickle down has morphed to mean a whole lot of names for the SAME theory:


"Trickle-down economics" is most closely identified with the economic policies known as "Reaganomics" or laissez-faire. David Stockman, who as Reagan's budget director championed these cuts at first but then became skeptical of them, told journalist William Greider that the "supply-side economics" is the trickle-down idea: "It's kind of hard to sell 'trickle down,' so the supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' theory.


The economist John Kenneth Galbraith noted that "trickle-down economics" had been tried before in the United States in the 1890s under the name "horse and sparrow theory." He wrote, "Mr. David Stockman has said that supply-side economics was merely a cover for the trickle-down approach to economic policy—what an older and less elegant generation called the horse-and-sparrow theory: 'If you feed the horse enough oats, some will pass through to the road for the sparrows.'" Galbraith claimed that the horse and sparrow theory was partly to blame for the Panic of 1896.[13]

Proponents of Keynesian economics and related theories often criticize tax rate cuts for the wealthy as being "trickle down," arguing tax cuts directly targeting those with less income would be more economically stimulative. Keynesians generally argue for broad fiscal policies that are directed across the entire economy, not toward one specific group.[citation needed]

In the 1992 presidential election, Independent candidate Ross Perot called trickle-down economics "political voodoo."[14]

In New Zealand, Labour Party MP Damien O'Connor has, in the Labour Party campaign launch video for the 2011 general election, called trickle-down economics "the rich pissing on the poor".


************************************************************************************

Oh how I just love to prove you wrong!!  It just brings a song to my heart. 

MarkVV
MarkVV

Let’s look at this question of conservative/liberal policies a little differently.While Georgia is nominally a red state, there is no doubt that it also has a strong Democratic presence. If we, for the sake of argument, roughly substitute Conservative for Republicans and Liberal for Democrats, should not the state policies reflect this division of the will of the people, and be a mixture of conservative and liberal policies? Should one ideology be forced on the (substantial) minority? Or, to put it differently, is it not appropriate that the state government policy is NOT clearly conservative?

FIGMO2
FIGMO2

I'm all for tax policies that fill my coffer as opposed to those of politicians.

For some strange reasons, our liberals can't grasp the concept of expanding the tax base. The more people with disposable income, the greater the economic stimulation.

Why I like the consumption tax? Not only does it broaden the tax base, it encourages smart consumerism. 

Relative to the chicken and egg question...

What came first? Government or poverty? Government!

And in the case of government? LBJ's "Great Society".

Available for viewing online...Benefits Street 

The left should be angry at how we treat those at the bottom. Instead, they're angry at people talking about it

http://www.spectator.co.uk/features/9116701/britains-dirty-secret/

Tiberius-Constitutionus
Tiberius-Constitutionus

Isn't President Reagan's legacy of supply-side shenanigans the ultimate proof of conservatism's failure? 

straker
straker

1Robert -  "are you saying four years is enough to turn something around"


No, that is not what I asked.

HeadleyLamar
HeadleyLamar

Conservatism Failed ? It has hardly been tried.


Tell that to Kansas

straker
straker

Kyle, are you saying that, in the nearly 4 years Deal has been Governor, he has not had a "strict adherence to conservatism"?

DebbieDoRight
DebbieDoRight

@FIGMO2  --  "What came first? Government or poverty? Government!"


Poverty.  Government was started, (a FORM of government), due to the "strongest will survive" rule.  So all those weak people who, singularly, were being beaten and abused by the "strongest / bully" could band together to form a coalition and out bully the bully.


Without government, the State of Georgia would right now be in a turf war with Alabama and Florida over water rights. 



TheRealJDW
TheRealJDW

@FIGMO2


No problem with expanding the base.  For example limiting deductions for a taxpayer making $200K+ is expanding the base.  Charging a family of four earning $35K sales tax on purchases is not...it is just "fishing in the wrong hole".

Kyle_Wingfield
Kyle_Wingfield moderator

@Tiberius-Constitutionus Here are revenues as a percentage of GDP by presidential term from Truman's second (i.e., after WW2) through Reagan's second:

Reagan II: 17.6%

Reagan I: 17.4%

Carter: 18.3%

Ford/Nixon II: 17.3%

Nixon I: 17.3%

LBJ: 17.6%

LBJ/JFK: 16.9%

Eisenhower II: 16.8%

Eisenhower I: 17.1%

Truman II: 16.7%

So, with the exception of the Carter years, revenues as a percentage of GDP had never been higher than during Reagan's second term. His supply-side cuts generated growth that drove revenues higher. This really shouldn't be in dispute.

1Robert
1Robert

@straker  Are you saying four years is enough to turn something around ?  Obama had had 6, when will the meek inherit the earth ?

TheRealJDW
TheRealJDW

@Kyle_Wingfield @Tiberius-Constitutionus


I notice that again you left out the other side of the coin...deficits.  Those drive revenues as well and if you lay those onto your table you will see a different picture emerge.  


It was not "supply side" alone that drove the engine...it was unprecedented spending. Strip that out and the numbers are not so rosy. 

TheRealJDW
TheRealJDW

@Kyle_Wingfield @Tiberius-Constitutionus


Well you ascribe Reagan to tax cuts...at least as much of the growth driven by Reagan came from increased government spending.  The two in combination resulting in deficits that we have today.


As for dwarfing, a few points.  First Obama, to say nothing of Clinton et al has outpaced Reagan on unemployment numbers...


"“As this unemployment chart shows, President Obama’s job creation kept unemployment from peaking at as high a level as President Reagan, and promoted people into the workforce faster than President Reagan.

“President Obama has achieved a 6.1% unemployment rate in his sixth year, fully one year faster than President Reagan did.  At this point in his presidency, President Reagan was still struggling with 7.1% unemployment, and he did not reach into the mid-low 6% range for another full year.  So, despite today’s number, the Obama administration has still done considerably better at job creating and reducing unemployment than did the Reagan administration."


http://www.forbes.com/sites/adamhartung/2014/09/05/obama-outperforms-reagan-on-jobs-growth-and-investing/



As for the whole Republican vs Democratic meme relative to the economy....


From a Princeton University analysis in 2013...


"Specifically, the U.S. economy performs much better when a Democrat is 

president than when a Republican is.   This paper begins in Section 1 by documenting this stunning fact. The fact is not “stylized.”   The superiority of economic performance under Democrats rather than Republicans is nearly 

ubiquitous; it holds almost regardless of how you define success. By many measures, the  performance gap is startlingly large"


You can plow through the 47 pages here...


http://www.princeton.edu/~mwatson/papers/Presidents_Blinder_Watson_Nov2013.pdf


Or visit this handy dandy website that presents much of the same data with these key findings...


  • Since World War 2, 55,794,000 jobs have been created under Democratic Presidents, while 38,256,000 jobs have been created under Republican Presidents
  • Jobs have grown an average of twice as fast annually under Democratic Presidents than under Republican Presidents
  • Nine of the last ten recessions have occurred under Republican presidents.
  • Republican presidents' deficits are twice as large as Democrats' and nearly twice as high as a percent of GDP.
  • GDP grows 52% faster under Democratic presidents.
  • Businesses invest more than two times as much under Democratic presidents.

http://www.presidentialdata.org/


The real problem is not that we "have not tried Conservatism" but that many of us continue to believe is could work in spite of all the evidence to the contrary. 





HeadleyLamar
HeadleyLamar

@Kyle_Wingfield @Tiberius-Constitutionus What happened to the debt during those years ?


.The Reagan economy was a one-hit wonder. Yes, there was a boom in the mid-1980s, as the economy recovered from a severe recession. But while the rich got much richer, there was little sustained economic improvement for most Americans. By the late 1980s, middle-class incomes were barely higher than they had been a decade before — and the poverty rate had actually risen.


http://www.nytimes.com/2008/01/21/opinion/21krugman.html?_r=0


Yes those shenanigans.

332-206
332-206

@1Robert @straker And the prior 8 years of Perdue contributed exactly what?

TheRealJDW
TheRealJDW

@Kyle_Wingfield @TheRealJDW


You say that but I have not seen that.  Last Republican to propose such a dastardly thing was Dave Camp.  Pretty sure he is still dining alone in the House Dining Room.

Kyle_Wingfield
Kyle_Wingfield moderator

@TheRealJDW "President Obama has achieved a 6.1% unemployment rate in his sixth year, fully one year faster than President Reagan did"

Ahem. The peak unemployment rate Reagan had to deal with was 0.8 points higher than the one Obama dealt with. And it makes no difference at what point a particular rate was achieved relative to when each became president. Rather, it matters how fast they hit that level relative to peak unemployment. Properly viewed that way, Reagan and Obama hit 6.1% (as arbitrary as that number is) in virtually the same amount of time: 55 months for Reagan, 56 months for Obama. And again, that was with Reagan having a higher starting point by 0.8 points.

What's more, if you add up the deficits as a percentage of GDP, Reagan had 33.2 points through eight years; Obama is already at 31.8 points just through five years, and that's not even assigning him any responsibility whatsoever for FY09.

There's no comparison here.

ThulsaDoom
ThulsaDoom

@HeadleyLamar @Kyle_Wingfield @Tiberius-Constitutionus


And one more thing on Mr. Krugman's opinion piece that you just posted. I just read it. I was looking for Mr. Krugman to offer some empirical data to support his view. He offered none. The piece was nothing more than rhetoric- long on hyperbole, short on factual evidence supportive of his view.

ThulsaDoom
ThulsaDoom

@HeadleyLamar @Kyle_Wingfield @Tiberius-Constitutionus


The rich got richer during the Reagan years? The empirical data is in dispute with that. According to the Federal REserve Survey of Consumer Finances Survey in 1989 There was a 40.4% median wealth gain among those with incomes between $10,000 a year and $20,000 a year, compared with a 5.4% increase for those earning more than $50,000.


Furthermore, Krugman has been discredited so many times its not even funny. He's the same guy who latched onto many a study showing that the middle class has been shrinking over time on a graph. The sleight of hand is that he and other sources use a fixed interval to show middle class incomes. Naturally, as real incomes rise over time the distribution curve of people in the middle class moves to the right- more middle class families are actually becoming richer. But with a fixed interval its going to give the statistical illusion that the middle class is shrinking. And in a way its shrinking alright- its shrinking because more and more middle class families are getting wealthier. 


Furthermore, Alan Greenspan also noted that little had changed in these years regarding "income inequality" and John Weicher also did a study and found that the distribution of wealth was about the same in 1992 as it was in 1983.  

Kyle_Wingfield
Kyle_Wingfield moderator


@HeadleyLamar "The Reagan economy was a one-hit wonder"

As opposed to the Obama economy, which is a hitless wonder.

Kyle_Wingfield
Kyle_Wingfield moderator

@HeadleyLamar "What happened to the debt during those years ?"

Democrats in Congress refused to cut spending. 

Kyle_Wingfield
Kyle_Wingfield moderator

@TheRealJDW Haven't seen what? Are you arguing that expanding the sales tax base isn't expanding the base?

TheRealJDW
TheRealJDW

@Kyle_Wingfield @TheRealJDW


Didn't look at the chart did you?  The rates were EXACTLY equal in month 17 of each Presidency.   That is the whole point from an equivalent position they drove different results.  


At the end of 67 months Reagan was higher.  Net net he got more volatile results and slower gain.


As for "no comparison"...sure there is you just can't process the fact that Obama (The Hated One) has better results that Reagan (The Revered One)  EVEN while not having that government spending engine backing him up. 

Tiberius-Constitutionus
Tiberius-Constitutionus

@Kyle_Wingfield @HeadleyLamar I think if you assess things honestly, it's more nuanced than that.  The  unemployment rate is down sharply.  The stock market has more than doubled.  The real estate market has recovered nicely.  Consumers are spending more.  Federal deficit has been cut in half. Etc.


Could it have been better?  No question about it.  Had the GOP come to the party at the beginning, things could be much better.  But given where we were thanks to W and his merry band of GOP waggoneers, and given the GOPs obstructionism since 2010, things are actually quite good.

HeadleyLamar
HeadleyLamar

@Kyle_Wingfield @HeadleyLamar Wrong LOL


Reagan was elected in 1980, so the 1981 budget was inherited and he had no control over it. That 1981 federal budget was $542 billion. In his first year in office, that budget jumped 10%, to $595 billion. The last budget over which Reagan had control, 1989, was $933 billion. Reagan left the federal budget 1.72 times larger than it was when he took office.


Now, the counter argument to this from Republicans is to claim that it’s Congress that really controls the budget and it was the Democratically-controlled Congress that passed huge budgets that Reagan didn’t want. But that is, in fact, totally wrong. First of all, Republicans controlled the Senate for the first 6 years of his 8 year presidency, while Democrats controlled the House — so power was divided. Only in the last two years — 87 and 88, hence the 88 and 89 budgets — did the Democrats control both houses of Congress.

So let’s look at the difference between Reagan’s proposed budgets and the budgets actually passed by Congress during that time. Here’s a chart of those figures from the Government Printing Office.


In 1982, Reagan proposed a budget of $508 billion; Congress passed a budget of $515 billion, a $7.1 billion increase.

1983: Congress passed a budget $8.7 billion higher than Reagan requested. 1984: Congress passed a budget $17.1 billion lower than Reagan requested. 1985, $5.3 billion lower than Reagan requested. 1986, $13.1 billion lower. 1987, $3.7 billion lower. 1988, $4.7 billion higher. 1989, $14.1 billion higher.


The final result: in those 8 years, Congress passed budgets $4.7 billion lower than the budgets Reagan requested. So much for the ridiculous claim that Reagan was a fiscal conservative and an enemy of big government.


http://scienceblogs.com/dispatches/2011/02/07/fact-checking-palin-on-budget/



Kyle_Wingfield
Kyle_Wingfield moderator

@TheRealJDW No, I didn't look at your chart. I looked at the actual BLS data. And what you are missing is that the recession of the early '80s hadn't yet peaked in month 17 of Reagan's presidency.

And I'd say the same thing about your apparent hatred of Reagan, but that, like all other appeals to fact and reason, would fall on deaf ears with you.

Such as the fact that this "not having that government spending engine backing him up" is pure, unadulterated, partisan fantasy.

Average spending as percentage of GDP never rose above 22.8% during Reagan's presidency. Not once. But it surpassed that level in each of the first three years of Obama's presidency. For the umpteenth time, this chart could be your friend if you were interested in the truth: http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200

You are really off the deep end with this one.

Kyle_Wingfield
Kyle_Wingfield moderator

@HeadleyLamar "He handed Bush a surplus."

As well as a recession and a false sense of national security.

Kyle_Wingfield
Kyle_Wingfield moderator

@Tiberius-Constitutionus If you compare his record to the bottom of a deep recession, of course he's bound to look good. If you compare it to other times when we were five years removed from the bottom -- as an actual economist would do it -- it looks a lot worse.

TheRealJDW
TheRealJDW

@Kyle_Wingfield @TheRealJDW


Taxes are the subject at both levels and as I said before I don't consider charging a sales tax on lower income purchasers a valid expansion.  Nor is replacing one tax with another..that is a substitution. 

TheRealJDW
TheRealJDW

@Kyle_Wingfield


So your argument is that Reagan should get credit for taking longer to correct a smaller Recession?


From point zero or the recessions end...+46 months in both cases unemployment had improved to the 7.5% level...which ignores the facts that Obama's Recession was much more severe and he had to CUT government jobs vs going on a hiring spree. 


As for hating Reagan...don't...voted for him....but I know now that he was wrong and a simple look at the data is all it takes...from Princeton again...


"Specifically, the U.S. economy performs much better when a Democrat is president than when a Republican is. 

This paper begins in Section 1 by documenting this stunning fact. The fact is not “stylized.”  The superiority of economic performance under Democrats rather than Republicans is nearly  ubiquitous; it holds almost regardless of how you define success. "



Kyle_Wingfield
Kyle_Wingfield moderator

@TheRealJDW Yes, but you argue one case when it suits your ideology and the other case when that's necessary.

Kyle_Wingfield
Kyle_Wingfield moderator

@TheRealJDW a) In terms of the jobs market, the 81-82 recession was worse. That's in part because the recession was made worse by the Fed's money-tightening policy. It was the right thing to do in the long run, but in the short run it prolonged the pain.

b) My entire point is that he didn't take longer to correct it. He reached the same unemployment rate (the one your source picked, 6.1%) in the same amount of time even though he started with a worse unemployment rate.

c) Once again, you are ignoring the facts. In Obama's first year in office, spending (adjusted for inflation) was 17.7% higher than the year before. (Set aside the question of who is responsible for that spending; that is what the spending was in any case.)

The largest increase Reagan ever oversaw was 7.6%, and that was in 1985, well after the recession was over. Spending wasn't even cumulatively 17.7% higher than before Reagan took office until 1985. There simply is no truth to the ideas that Reagan spent his way out recession and/or that Obama didn't.

TheRealJDW
TheRealJDW

@Kyle_Wingfield @TheRealJDW


Such as...I have been consistent in calling for a small VAT with exclusions for low earners combined with an income tax on the top 20% or so of the highest earners.   There is no one case or the other.

TheRealJDW
TheRealJDW

@Kyle_Wingfield @TheRealJDW


You left out the small detail that the 17%, which came from Bush anyway, was all there ever was.  5 years later spending was 60B LOWER.  Net average increase EVEN using Bush's expenditure was a little over 3%.


Reagan drove 6% plus gains EVERY year,.  At the end of his first 5 years was MORE THAN 66% higher compared to that less than 17% number. 


You might be familiar with this link.


http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?DocID=200&Topic2id=20&Topic3id=23

Kyle_Wingfield
Kyle_Wingfield moderator

@TheRealJDW "Reagan drove 6% plus gains EVERY year"

Only if you use the nominal figures; but remember, inflation was a helluva lot worse in the 1970s-80s. So it's only right to use inflation-adjusted figures, which show he had an increase of even 3.6% only once (7.6% in 1985).

And as I have explained ad nauseum in the past, when you have a 17% increase in the first year and only back off it, you are reaping the benefits of that huge increase each and every year.

TheRealJDW
TheRealJDW

@Kyle_Wingfield @TheRealJDW


Both are consumption tax, but I would prefer a VAT instead of a sales tax.  I think a VAT's focus on value is more appropriate than a focus on end price.  

TheRealJDW
TheRealJDW

@Kyle_Wingfield @TheRealJDW


No you are not...spending...even under the stimulus was booked in the years spent not approved.  Benefit occurred as money was spent but doesn't linger.  Particularly when most of the money went to items such as unemployment under Obama and jobs under Reagan.


Now you want to talk adjusted...it only gets worse from Ronnie's perspective


From in 2009 dollars Ronnie's 1980 spending was $1.496 T which had risen to $1.774 by 1985.  Average increase 3.71%


From in 2009 spending was $3.517 trillion which rose....oops sorry DECLINED to $3.234 trillion for a average reduction of 1.6%.


Same link.


Kyle_Wingfield
Kyle_Wingfield moderator

@TheRealJDW Neat little trick you played there ... 1980 (year of election) for Reagan, 2009 (year after election, and oh just coincidentally the year of a 17.7% spending increase) for Obama.

You are something else.