This Salon piece on "The final nail in the supply side coffin" is making the rounds, which is great inasmuch as anything pointing out that corporate profits are quite robust during our wageless, jobless, pointless Recovery is a good thing. That said, I have a bone to pick. As ready and eager as I am to mock the ridiculous sorcery that is Supply Side Economics, I am even more eager to object when people use such phrases as slogans rather than to refer to a specific set of ideas. While cutting corporate taxes is a supply side idea – and since no one has to pay them anyway it doesn't much matter what the rates are on paper – cutting the individual income tax isn't. And that has been our primary, if not only, economic policy preference since the 1970s.

Cutting the income tax is a demand-side solution. And that – far moreso than actual supply side ideas – has proven useless in spectacular fashion as a driver of economic growth. The theory is to give wage-earners more money to spend, which is great except that A) most wage-earners are already paying so little in Federal income tax that the cuts have little substantive impact, B) cuts are always lavished on a small population of high earners who are more likely to save than spend, and C) the civil religion of debt repayment, coupled with staggering levels of household debt, ensure that income tax cuts are just a way to funnel some money to banks and mortgage lenders.

We could talk all day about the pluses and minuses of various economic policy prescriptions. Instead, the debt ceiling nonsense brings up a much more interesting issue: the Obama administration, perhaps even more than any previous one, casts in high relief the fact that the United States does not have bad macroeconomic policy. It has no coherent economic policy at all.

Let's say you have a restaurant. It's an Indian takeout joint. Business isn't going well, so you try lowering your prices. Then you try increasing them. Then you try adding a frozen yogurt bar in the front lobby. Then you change the entire concept from Indian takeout to neo-American bistro cuisine. Then you change back to all Indian food but you change the name to P.J. Pickleshitter's BBQ Pit and Family Restaurant. To say that you would have a bad business plan would be inaccurate because you have no business plan at all. You're just drunkenly careening from one idea to another, none of them related or building upon previous steps you've taken, blindly hoping that something will work.

In the span of two years we've gone from Obama the Keynesian (although he showed his true colors early on by caving and making the bulk of the stimulus useless tax cuts) to Obama the Spending Cutter. Think about that. He came into office with an $800 billion spending package and now he's agreeing to an even larger amount – rumored to be over $1 trillion – in spending cuts. Regardless of how you feel about either of those individually, it's pretty clear that they make absolutely no sense together. None.

When Nixon said "We're all Keynesians now" it wasn't his ringing endorsement of Keynesianism but an acknowledgment of the consistent, dominant idea guiding US economic policy since the 1930s. What are we now? Neither party has anything that resembles an economic policy, with the Democrats a limp combination of neoliberalism and whichever way the wind is blowing that day and the Republicans pretty much devoted to low taxes as an end rather than a means. Thus we end up with Reich/Clinton DLC horseshit or Frankenstein's monsters like Paul Ryan's "roadmap" combining sharp reductions in government revenues with plenty of big government (military, handouts to key constituent industries like agricultural subsidies, etc.)

Is it any wonder that nothing changes, let alone improves? We can't commit to one economic policy for more than 18 months. Arguably we haven't committed to any policy at all in forty-plus years but instead have approached economic policy buffet style, choosing all the cakes and pies while leaving the nasty green vegetables behind.

24 thoughts on “NULL POLICY”

  • This isn't limited to economic policy. Do we have a consistent policy on anything besides throwing black men in jail?

  • @Fossella – Reminds me of a joke doing the rounds in my hometown. It's about policing policy down here, Down Under. But I believe it applies to the States, too.

    Two white guys and a black guy are out in the yard, first day in prison, discussing their respective crimes.

    White guy # 1 says "I tried to kill a black guy, they gave me two years. Said if he'd actually died, I woulda done five to ten."

    White guy #2 replies "Huh. I tried to kill a white guy. Got five years. They told me if he hadn't pulled through, I'd have got fifteen."

    Black guy says "I didn't have a light on my bicycle. Got twenty years. Judge said I woulda got thirty if it had been night time."

    Badoom, tish!

  • eau, reminds me of not a joke about twenty years ago, drunk woman kills two guys on bicycles at night, with lights, gets off because they were just little bicycle lights. Maybe she was hot.

  • I guess Fossella pretty much stole my point too. Lets look at energy (please). Not to bring in Jim Kunstler, but the dude really thinks global fossil fuel is not going to be around for another hundred years, probably not ten years. What are we doing to create a transportation that isn't as dependent on fossil fuels? Nothing. I'd like to have the train system of 1940 please. Support obama, believe in the past! It just doesn't have the same ring say as "thinking of a brighter future." I feel like the problem is in the whole system of politics and government – as soon as you are elected you have to begin thinking about re-election nonsense – which means you actually prefer having problems than solving problems (then you couldn't talk about it during the re-election campaign).

  • You're right, Ed, that the policy hasn't been consistent. But what has been consistent is this: rich people have continued to vacuum up more of other people's money, while the rest of us have seen less and less. And I don't think those two things are unrelated. The people who benefit from economic chaos are the ones who can most easily grab, and then squirrel away, whatever's flying around in the maelstrom. That's the whole "financial services industry" is designed to do. It provides ways for people to pass money around among themselves, claiming increased value for every transaction, and then paying themselves off by involving all the rest of us in their Ponzi scheme.

    Neat trick if you have no soul.

  • Middle Seaman says:

    The discussion reminds me of a long joke I am not going to tell (my policy). We had different times. The collapse started with Carter, the first totally inapt president elected for no reason. He wasn't even a Democrat. Reagan had a clear policy: let take as much money from the non rich as he can get and give it to the rich. This policy continued to this day with a hiatus during Big Dawg's days who raised marginal rates from 33% to 39%; the Democrats couldn't stand him. (He was from Arkansas.)

    Then W raided the economy of behalf of the rich and otherwise was even less capable than Carter (not that easy). Surprisingly enough, Obama adapted all of W's policies and traits. The Democrats love him (if they is such a thing as Democrats).

    The policy is actually quite clear; it just leads us to El Salvador. (Are we there mom?)

  • You know I was going to do a post on the Andrew Leonard piece — I have it all ready to go — making basically the same point.

    Because yesterday John Boehner thought he was oh-so-cute to ask "where are the jobs" at that Twitter town hall event POTUS had, and because Democrats can't make a case to save their lives, Obama sorta blew him off. But he should have said, "good question, where are the jobs? We've had tax cuts since 2001 and they haven't done squat for us. We just renewed those same tax cuts and we got nothing."

  • Even a couple of years ago I'd have objected to the null policy idea in favor of outlining a consistent policy of Reaganish wealth shifting beneath a veneer of bread and circus. But I think that's passed. Ed's right, there's no economic policy any more and things have the look of a rush toward the exits – and grab whatever you can on the way out. Obama's just a steward on the Titanic appealing futilely to the economic elites for a calm evacuation.

  • @Andy,
    This occured to me as I thought about Prince Richard M. Daley's abrupt exit from mayoral politics, after he desperately pawned off Chicago's parking meters like a junkie with a stolen CD wallet.

    Smarter politicians know damned well what's coming – the "compromisers" are way past desperate to just-for-god's-sake keep the facade up for a few more months until we think of something, and the more shamelessly corrupt scumbags are cashing in and getting out before it caves.

  • Frankly, it look like Obama's a DINO. And that the Republicans rule the country, with their crazy-ass and failed ideas, even when they're the minority party and out of power.

  • @PWL

    Did we sit thru the same movie?

    PPACA – aka Obamacare

    No hearings
    No Rs included in any conferences
    No Rs voted for the Bill (178 Nays in the House, 39 Nays in the Senate)
    Senate passed it late on Christmas Eve with no one who voted on the Bill having read the 2300+ pages.

    Total Cost: ~1.5 Trillion (including the double count on the $500B Medicare swap and I didn't include the separate Doc fix)

    Whatever your complaints are w/ the Bill (i.e. giveaway to insurance industry, no public option, etc.) Rs (most of whom I don't like) had nothing to do w/ it. Obama-Reid-Pelosi were your tri-captains on that team. Yeah I just luv that glittering jewel Ms Nancy "(guffaw, guffaw) We have to pass the Bill to find out what's in it. (guffaw, guffaw)"

    "Stimulus Bill" – $787B plus interest over $1 Trillion

    Again the same routine

    No Rs voted for it in the House and only Spector (soon to switch to D) Snowe and Collins (reliable RINOs they) voted aye in the Senate.

    At the SCOTUS;

    2 libs nominated
    2 libs confirmed

    These are major BHDs and there's more, but I'm tired (poor baby)

    Your side has accomplished much, but you want us to be FranGerTaly 'rat now.' We are not there yet, but hang on for another 10 years.


  • We have a similar null policy around preparing for climate change. I've given up on the idea that we'll actually prevent climate change, but we should at least be working on some contingency plans. But apparently we can't event do that because it would unfairly promote "science" over "wishful thinking."

  • @bb in GA

    Uh, you're assuming republicans hierarchy has supported negotiation or working with democrats toward shared goals (some aspects of health reform in principle are actually conservative). Instead, when allowed to participate, they added an unbelievable number of useless amendments to stall the process, as well as nullify the effect of the legislation by filling it with loopholes.

    It isn't to say democrats are perfect, because they have many specific faults. But blaming them for the republican's desire to avoid actual governance is not fair, at all.

  • Tim:

    The Rs had no power in the PPACA process – NONE.

    They could offer no amendments in the House and they did not have the power to filibuster in the Senate. In the end, it was an all D affair all the time.

    It feels like you are hammering me w/ D spin. To my knowledge, Rs were not allowed to participate.

    No hearings held
    No meetings attended by Rs
    No ammendments can be taken on bills when they are not allowed by the House majority. They added no amendments AFAIK.

    Remember, the House is key here – iron rule Nancy allowed NOTHING.

    You can fuss about Rs not being big boys/girls in the participation game, but I don't think that is anything but spin.

    Ds made it, Ds own it – deal with it. (And I don't even like Rs)


  • Your point isn't actually correct, because the tax cuts in question are a mixture of income tax cuts, primarily directed at high earners, capital gains tax cuts, AMT "fixes", corporate tax cuts, etc. All of these, including high earner income tax cuts, are properly considered supply side tax cuts.

    When you talk to people about why you want to cut taxes for rich people, those who try to make a policy argument for it other than "fairness" don't defend it on the basis that those people will BUY more (yachts, Rolexes, islands, fill in the blank), but rather that they will invest it productively.

    I have yet to hear a demand-side rationale for high earner tax cuts.

  • "it's pretty clear that they make absolutely no sense together."

    It makes perfect sense if your goal is simply to get a deal. And getting a deal, any deal, makes perfect sense if you truly believe that you were elected to be post partisan. When that is your only goal, all deals are good deals.

    What these guys have never realized is that when voters heard "change," what was in their minds was not what was in Obama's mind. That's why he got shellacked in the midterms. He changed the wrong things, and kept the wrong things (and people) as well.

    What's really bothering me right now is that, despite all the evidence, he doesn't seem able to figure this out. That's not good.

  • President Obama may be the biggest political disappointment in my 46 years on this mortal coil. Not that I expected him to change everything for the better in one fell swoop but it's his constant dithering on different issues (helthcare, education, foreign affairs et. al.) that is driving me to drink even more these days.

  • N Pelosi has got to end up being one of the almost all liberal politicians in the actual region. It's onerous with regard to me personally to believe just how folks can certainly reelect her in their particular correct intellect.

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