Wednesday, May 24, 2017

Former Chairman of the Council of Economic Advisers Warns on Trump Budget: It Looks Worse Than Reagan's Disaster

Jason Furman, chairman of the White House Council of Economic Advisers under President Obama, correctly cnotes:
President Trump has outdone Ronald Reagan in at least one respect: unrealistically rosy forecasts for economic growth. In 1981, President Reagan’s first budget predicted growth well above the consensus of private forecasters, in a bid to justify large tax cuts and increased defense spending. When the promised growth did not materialize, the deficit and debt ballooned.
Now Mr. Trump is leading the economy down a primrose path that is even more unrealistic.
It should also be noted that Trump's thinking is very much in line with the thinking of the godfather of neoconservatism Irving Kristol, who was a major driver behind the Reagan budget that exploded the deficit. He justified the deficits, just like Trump is now with his talk of priming the pump.

David Stockman who was OMB director at the time wrote in his 1986 book, The Triumph of Politics: Why the Reagan Revolution Failed:
In 1980, before any of this fiscal disaster had happened, Irving Kristol was a guest speaker before the House Republican Caucus....
"Don't be foolish!" he told the Republican politicians. "Your constituents are the elderly, the farmers, and the veterans. Don't alienate them, don't cut their programs.
Kristol had always been a trend setter, and that day he outdid even himself, Standing before the nation's conservative party, he invented the most fabulous free lunch fiscal theory ever proposed... 
How you were supposed to have the giant tax cut he also endorsed that day and still exempt two thirds of the welfare state from spending cuts he didn't explain. 
[F]or five years Kristol has not altered his message: Don't cut spending it's bad politics. Don't raise taxes its bad politics. Don't worry $200 billion deficit nothing to fear because they'll go away on their own...

Kristol's free lunch economics is the worst kind of intellectual sophistry there is. The politicians inherently go for free lunches anyway, For one of the nation's leading conservative intellectuals to rationalize such destructive policies and urge the conservative political party to adhere to them is unpardonable.

Every several months now Kristol appears right on schedule on The Wall Street Journal Op-ED page, with another tiresome rendition of It's all going to be okay, Jack.

1 comment:

  1. In my study I keep my copy of Time Magazine from March 5th, 1984, and one the cover is the title "That Monster Deficit, America's Economic Black Hole." I was 30 years old at the time, and I had hated deficit spending since the days of Lyndon Johnson's "Guns and Butter." After watching this annual film noire exercise in futility for over 50 years, I have to say I am of the opinion that Congress has always loved the idea that Americans are their indentured debt slaves.