The Myth of the Republican Economy

I had a back and forth exchange with my realtor about 10 years ago about taxes.  He was trying to make the point that democrats don’t work hard enough at limiting spending.  That taxes were/are out of control.  Jeff was an educated guy, super sharp and personable so the exchange was pleasant.  It was one of those rare debates where I’m engaging with a conservative and he literally had an answer / good comeback for every single point I made.

He’s right.  Taxes are too high.  As a general rule, our government officials waste an awful lot of money.  Jeff brought forth example after example and it became hard to counter. In the end, after thinking about it I came to agree with a lot of what he was saying.

But it didn’t turn me into a Republican or a conservative and here’s why:

The Republicans are full of shit when it comes to their economic strategy.  

They want the label of ‘deficit hawks’ but they are in fact worse at bringing down the debt than democrats are.

They want the label of ‘job creators’ but in fact job growth has been slower while Republicans have held the Oval Office.

They want us to believe that they are the party of smaller government but in fact they have grown the government more than the democrats have.

It’s a pattern of say one thing, do another.

And the thing that ticks me off the most is that the notion that the economy will somehow grow faster under Republican leadership goes pretty much unchallenged by the media.  Here are a few charts to help debunk this myth.

What other conclusion can you draw from this chart?  Democrats are job creators, Republicans, not so much.

Democrats-create-twice-as-many-Jobs

What’s interesting about this next chart is when you observe the trend starting with the Reagan tax cuts, or the start of ‘trickle down.’  My takeaway is that there’s a significant slope up on the Federal Debt starting with Reagan.  Clinton helped curb it for a little bit, then GW Bush added more tax cuts and the slope continued up. Meanwhile the banks were deregulated and we got hit with The Great Recession which Obama inherited in his first month of office.  The debt increase under Obama was 90% due to the bank failures of 2008 and the subsequent bailout.

The funny thing is, I still recall the outright screaming from some conservative friends on Facebook for Obama to do something as they watched the 401k balances dwindle daily.  They were begging for him to print money.  It was actually entertaining to watch.  And print money they  did.  The banks got bailed out at Tax payer expense.

Democrats went about adding regulations on banks so this couldn’t happen again.  These are the same regulations that Trump just rolled back.  So if the banks get in a world of hurt again, it’s clearly on Trump and the Republicans.

800px-US_Federal_Debt_as_Percent_of_GDP_by_President

This last chart once again debunks the idea that Republicans are job creators.  Reagan had decent numbers but there’s more to the story.  Bush 41 and 43’s numbers stink.

I worked in aerospace for the entire decade of the 1980’s at Boeing up in the Seattle area, so I remember this well.  During Reagan’s first term, there was continued escalation of the arms race with the former Soviet Union.  I saw it every day at work.  Boeing is like most aerospace companies in that it has a commercial side and a military side.  During Reagan’s first term, the commercial side of the business was sucking wind.  Demand for the new fleet of 757’s and 767’s wasn’t matching expectations.  The job economy was terrible.  Interest rates with double digits.  My first home loan was at 12.5%.

The military side of the Boeing however, was picking up the slack for the slumping commercial side.  That probably saved my bacon in retrospect.  At least there was a place to go for a lot of people in Boeing commercial who they needed to cut.

Then something extraordinary happened that would affect the economy in ways that people forget.  The Soviet Union collapsed and that brought about the end of the Cold War.  I give Reagan credit for this.  It was a huge gamble to out-spend the Soviets into submission in the arms race.  But his gamble worked. Ironically the Soviets were dirt poor due to engaging in a fruitless 10 year war with Afghanistan.

For the economy this meant that we as a country, no longer needed to invest billions of dollars into making bombs each year.  At work, the military side of the company started to scale back and suddenly the commercial side picked up.

It’s amazing what happens when you start to invest in products and services that actually have some sellable value.  But the savings to the US economy for not having to compete in the arms race was HUGE.  And it wasn’t just Boeing. Enginneering talent across the country got put to work for better purpose, designing iPods and iPhones instead if ICBMs. Exports increased dramatically. This more than anything explains why jobs started picking up and continued to flourish under Clinton and the dot com boom.

But because of the timing of it, and the fact that Reagan’s infamous trickle down strategy started around the same time, people confuse the ensuing economic prosperity with the tax cuts when in fact they had nothing to do with the tax cuts and everything to do with the end of the Cold War.

presjobs

So here we are 30 years later with Republicans that same trickle down canard. People are not informed enough to understand that contributing to inequality is not how you grow the middle class.  FDR proved that beyond any reasonable doubt.  But every election cycle the Republicans roll that turd out as the answer to all of our prayers.

So yes, taxes are too high.  I AGREE WITH YOU.  Let’s fix the exorbitant amount of waste in government spending by all means.

What should we do about it?  How about learning from our own past history and using what worked?

In my opinion, everything is ripe for review.  Every nickel of spending.  What I am NOT in favor of is blanket cuts which is what Republicans propose.  Blanket cuts are a cop-out because they say “We are spending too much on medicare so we’re going to cut it by 25% and then let the chips fall where they may.”  Well, grandma gets screwed in that scenario and that’s not right.

If you want to cut waste, lets find some waste and cut it.  But don’t propose blanket cuts that screw the poor.  That contributes to inequality.

I’m going to assert that there’s more low hanging fruit in white-collar banking fraud, money laundering and tax cheats (see Trump, Donald J.) than there is in entitlements.  But republicans don’t seem to want to talk about that for some strange reason.  Oh, right.  The donors.

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