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Robert Rubin on U.S. Policy
By JLP | January 24, 2006
Sorry for the lack of blogging this morning. My wife has been sick for two days now (I think she’s getting better) and I used this morning as an opportunity to get some new brakes and tires put on her car. It is amazing how fast you can spend $857! WHOOSH! Just like that, $857 was sucked out of our checking account. Oh well, I had set money aside for these repairs so I knew they were coming.
While I was waiting for my tires, I had some time to read the paper. There was a pretty good editorial ($) by Robert Rubin. I say “pretty good” because there is one area where he has selective memory. Here’s the part I’m talking about:
The proponents of supply-side theory who assert that tax cuts will wholly — or even significantly — pay for themselves (through increased growth and federal tax revenues), appear to be no more accurate now than they were in the ’90s. Then, they argued that tax increases included in our plan to address fiscal deficits were likely to lead to massive job loss, but what followed instead was the longest economic expansion in our history.
Sure, we had economic expansion in the 90s. Nobody is doubting that. But, I can sum up the reason for the expansion in one word: INTERNET. The internet boom drove the economy in the 90s. And, as we all know now, a lot of it was hype. How many of those jobs that were created in the internet bubble were then LOST when the internet bubble burst?
I do agree with what he thinks our economic policy should include:
(1) We should re-establish sound fiscal conditions for the intermediate term (the 10-year federal budget window) and put in place a real plan to get entitlements on a sound footing for the long term. (2) We need a strong public investment program — paid for, not funded by increased public borrowing — to promote productivity growth, to help those dislocated by technology and trade, and to equip all citizens to share in our economic well-being and growth. (3) We must pursue an international economic policy that continues global integration, especially multilaterally, and proactively addresses our other international economic interests, including combating global poverty. (4) We should work toward a regulatory regime that meets our needs and sensibly weigh risks and rewards.
The big question is: how do you bring Republicans and Democrats together to get anything done? They seem so far apart with neither party wanting to give any ground.
Okay that’s it for the political stuff for now.
Topics: Miscellaneous | 2 Comments »
January 24th, 2006 at 5:16 pm
Well, that’s the billion-dollar question isn’t it. If we could bring Republicans and Democrats together to get something done, we wouldn’t have Medicare and Social Security systems gradually going broke.
January 27th, 2006 at 11:04 pm
It is becoming clear that supply side has not always trickled down. It did trickle under Reagan but it appears that it is not trickling under Bush. This is because there is no spending on business upgrades with all the money corporations have on hand. It is more likely that they will spend in other countries and will leave this country holding the bag. BTW 1.1 percent growth on a yearly basis in the fourth quarter. That looks like the trickle machine is just not allowing that trickle to happen. How many more years of Bush can we take before the middle class is toast in the good ole USA? The housing bubble may burst. When home builders put a sale on and take one hundred thousand dollars off the price, the guy who bought at regular price is already upside down! Gary