In an earlier post, I quoted Albert Einstein’s saying that “the difference between genius and stupidity is that genius has its limits.” And then went on to argue that was certainly true when it comes to Donald J Trump.
Einstein’s more famous saying is the subject of my blog today – “the definition of insanity is doing the same thing over and over and expecting a different result.”
Which brings us to the Republican tax bill(s) which have now passed both Houses of Congress and after a Conference Committee “marriage” will be afflicted on the Nation and all of us in it.
Here is an article worth reading by economist Robert A McElvaine who has made one of this main interests a study of our (and thanks to us, the World’s) great depression of the 1930s.
He says the Republican party policy of enriching the wealthy in the belief (hope) that the wealthy, thus further enriched, will “trickle down” their riches to those of us less fortunate was one of the major factors that brought on that great depression. And, he says, the good old GOP has never let go of its policy and is clearly at it again in the tax bill.
I remember many years ago having an amiable argument with Arthur Laffer, an economist who in 1979, drew a curve on a napkin at the old Occidental restaurant in Washington.
Laffer said the curve was to demonstrate that excessive taxation leads to killing the ability of business to create jobs (you kill the “goose” that lays the golden eggs of jobs) and if you lower taxes consumers have more to spend, businesses expand jobs to fill the need and in fact, with a lower tax rate since more people can now participate in the “good life,” you broaden the base of taxpayers and thus bring in enoung money to the treasury even with a lower rate.
Well that theory does make some sense but the thing is, at some point if you cut taxes, you have cut too much.
“Where,” I asked Laffer, “is that point?”
He didn’t know saying, in effect, we would know it when we saw it. Meaning when we had cut too much, we might then adjust the rates but of course if, like the legendary Titanic example, it might well be too late if we had cut too much.
Ronald Reagan’s team latched on to the Laffer theory and curve and Mr. Reagan used it during his successful 1980 presidential campaign. His Primary opponent Georg H W Bush called it “voodoo economics.” But Reagan was elected and pushed through a big tax cut.
Guess what? After the first year, Reagan’s people having crunched the numbers looked into the “abyss” of the Laffer curve; they realized they had cut too much.
So they persuaded President Reagan we needed to raise fees for the use of National Parks and such, we needed to plug certain tax “loopholes” and (since you couldn’t get Mr. Reagan to sign on to actually raising the tax rates) you needed to put in place certain “revenue enhancers (ho, ho, a euphemism for “taxes”).
The president cheerfully signed on and one third of the big tax cut of 1981 was rescinded. But, it was not enough to keep three trillion dollars of deficit added to the National Debt by the time Reagan left office (when Jimmy Carter left office the National Debt, accumulated since the birth of the nation, stood just under one trillion dollars).
And as Robert McElvaine says in his article, the GOP simply keeps doing the same thing again and again and again and expects the different result of “trickle down” tax cuts to help all the “little people” of the Country.
Or do they really expect it to eventually work? I think many of the Republicans who voted for the new tax bill(s) know better but simply want to take care of their donors selfish needs.
So, as we say here in the Southwest, “Pray for Rain” and while you’re at it, pray that whatever emerges as a new post-Trump GOP regains its sanity.