StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

Dissenting from the Conservative Othodoxy on Taxes

23 Oct 2009
Posted by Bruce Bartlett

A person well known in conservative economic circles sent me an e-mail today making these observations:

During the 8 Reagan years, when marginal rates were sharply cut (but deficits were substantial), equities on the NYSE and the S & P 500 about doubled.

During the 4 Bush 41 years, when the top MTR was increased (only slightly), equities rose about 50%.

During the 8 Clinton Years, when MTRs were substantially increased, equities tripled, deficits turned into large surpluses (as far as the eye could see, leading some to fear that the Fed would be unable to conduct monetary policy if the public debt was redeemed).

The market today is roughly where it was (a bit higher) when Bush 43 took over, who cut MTRs, but ballooned the deficit.

So, Bush 41 and Clinton raised MTRs without tanking the economy, and Clinton left Bush 43 with a fabulous fiscal situation.

So much for the Republican argument that reducing MTRs is the nirvana of tax/economic policy and raising MTRs its death knell.

What is curious to me is that this person asked that I not use his or her name if I used this information even though there is nothing remarkable about it and is based on easily available public data. I can only assume that this person does not want the aggravation of disputing the conservative orthodoxy, which holds that tax cuts are the be-all and end-all of economic policy and that all tax increases bring economic disaster.

It's sad that this person feels that he or she can't simply state these facts openly. But I also sympathize. I know better than anyone the price that is paid for dissenting from a political position widely held among one's friends. Almost daily I hear from one of them that it's so sad what has happened to me and how painful my betrayal is to them.

Those with skins less thick than mine can be forgiven for wanting to keep good relations with their friends and live their lives in peace. But if everyone takes this position the result is disaster when politicians assume a consensus view on some public policy issue among those on their side who are considered experts. That is what happened in the George W. Bush years. Gross incompetence and tragic errors were aided and abetted by the silence of those who knew better but said nothing.

Sadly, the silence continues. That is why I say many of the things I say in the ways that I say them. I'm not just speaking for myself, but for others who fear retaliation or alienation if they were to publicly agree with me. That's okay. The truth is the only ally I need.

Tax Orthodoxy

Bruce - thanks for sharing that with us. In some ways very sad indeed at the extent to which ideology has substituted for rigor. My great learning over the last 18 months, moving from an intellectual agreement to an emotional grasp, is how much we are rationalizing animals not rational ones. And willing to use our forebrains to pursue conclusions that our hindbrains have already reached. Or worse how immune we are to reasoned discourse.
Didn't Samuel Johnson say something about "when a man's livlihood depends on his not understanding the truth you can count on him to continue to ignore reality"?
Physics has a way of winning in the end though at a terrible price. Doug North pointed out years ago that when policy decisions were necessary and the consequences of ideologies are not immediately observable that they will be tested as people go with their emotions and beliefs. Think of political economy as the largest experimental field science around and the economy as a giant experimental farm.
p.s. - for conservatives to give up on tax cuts means giving up on one of their religious shibboleths important to their power. Their self-interest is so strongly attached to it they can't afford to challenge them.

invalid interpretation

Do not these polices take long periods to be enacted and reacted to in our economy? For instance when Clinton came in he has a previous admin ground work laid that had the economy turn up as he took office. All he did was not 'foul up'- with the help of a hostile congress pushing him toward fiscal responsiblity. As the parties/policies have changed it takes a lack of knowledge of how things work or an ulterior motive to make the seemingly obvious but distorting statements you did. It takes a deeper examination of the lead lag times of policies to see the truthful results.


I suggest you look at the immediate and parabolic increase in Debt/GDP ratios starting in 1981, only to decrease in 1994-2001 (which went parabolic again) to see that you do not have a monopoly on truth, but a full and comfortable grasp of delusion.



Are those, including your current/former friends and associates, who criticize you for "betrayal" actually making a moral/ethical argument that you should not have openly opposed ongoing policies that you believed were greatly harmful to America? How do such dialogues go when you speak directly with them? I mean, by what moral perspective would loyalty to some "side" based on ideology and/or party and/or school of economics outweigh the civic duty of seeking to prevent/halt/mitigate great harm to the nation? Is it some rationalization via generalization, as in "Our 'side' is better for the nation across all (or some broader set of) issues, so what's best for the nation overall is that we gain/maintain strength overall"? Is it some ethical objection akin to some violation of privilege (privileged access to people, information, "private" conversations, etc.)? Or is it simply some crude, narrow, self-absorbed and self-serving, and perhaps social relationship-based view that "You turned on me, man! I don't care what your reasons were, how valid they are or how important to the nation your message is"?

Re: your penultimate paragraph, the importance of that point -- and the importance of more experts choosing your course over the easy, self-serving course -- cannot be overstated. A point I make often and emphatically is that, far too often (and apparently increasingly), experts (e.g., economists) on whom the public and political leaders depend for identifying and determining the respective magnitudes of various trade-offs associated with policy options -- so that, armed with a sense of the trade-offs, we can each apply our personal values and priorities in choosing among the options -- are skewing their presentation of the trade-offs (either deliberately or due to insufficient vigilance against their own biases) as they advocate for policies they prefer based largely on their personal values and priorities (and/or on their vested professional and/or social interests). So we see economists like Paul Krugman and Dean Baker on the left, and their counterparts on the right, frequently spinning as if they were bound to a defense lawyer-type role of "zealous advocate" rather than (1) making a good-faith effort to accurately represent trade-offs, and (2) if they wish, adding their case for preferring particular trade-offs and associated policies based on what they consider appropriate morality, values, priorities, etc. Leaving aside professional and social reasons for the hyperpartisan, often misleading "zealous advocate" behavior, it's as if they have arrogantly decided that their personal moral framework and calculus and their priorities are so clearly "best" for the nation that pursuing their preferred policies is an "ends justifies the means" situation, and thus they may abuse their credibility as experts on the analytical matter of trade-offs and misrepresent what those trade-offs actually are.

We need fewer "zealous advocate" hyperpartisan experts and more (and more high-profile) good-faith expert analysts and advocates.

Good Faith

There is no demand for good faith analysis. Think tanks, the media and the rest of the policymaking community are only interested in totally predictable responses to every issue--either the left/Democratic line of the day or the right/Republican line of the day, both of which are determined solely by what is in their political interest at that moment. If its political interest changes tomorrow the line will change and all of the spokesmen for that side will simply switch gears without ever taking note of their inconsistency. Just look at the incomprehensible Republican position on Medicare.

Alternatively, everyone will adopt a phony consistency by proposing the exact same policies regardless of the circumstances, with no effort made to explain why this is the case. In other words, a one-size-fits-all policy. It saves time on thought and analysis.

I agree that skewed,

I agree that skewed, hyperpartisan "analysis" is generally more marketable and increasingly so, driven by the mutually-reinforcing forces of media fragmentation, partisan media, increasingly hyperpartisan public who gravitate toward ideologically-reinforcing media, and politicians who exploit it all and whom the public rewards for it. And as for the blatant hypocrisy we often see -- whenever the shoe is on the other "side's" foot -- I always say that both sides call each other hypocrites, and they're both right. It's almost amusing that often some hyperpartisan is pointing emphatically to the hypocrisy of the other for shifting positions on some matter while ignoring the fact that he/she and his/her side has similarly done a 180.

But I do believe in fighting the good fight as I think you've done, both for the public benefit of whatever extent of good-faith analysis is out there now, and to encourage more of it in hopes that the public's appreciation of it will grow (or at least hold steady rather than continue to decline in favor of people just wanting their existing/preferred assumptions confirmed). It may be that, whenever the fiscal sh*t hits the fan, soon thereafter the public will come to realize how all the hyperpartisan spin played a large role in the size of the problem and thus the severity of necessary sacrifices, and, hopefully accelerated by advocacy efforts by groups such as the Concord Coalition, there will be something of a shift from an emphasis ideological identity toward "responsibility" as a badge of identity and values (in combination with ideology, but constrained by realistic assumptions and practical considerations), and greater demand for good-faith expert analysis will emerge. In other words, to some extent America will grow up and say "Don't just tell me what I'd like to hear. Tell me what you really believe to be the truth. I can handle it. And I can then make smarter choices."

Recent comments


Order from Amazon


Creative Commons LicenseThe content of is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 3.0 United States License. Need permissions beyond the scope of this license? Please submit a request here.