Friday, September 29, 2006
Crackpots dancing
In the months leading up to the 1936 elections, Franklin Roosevelt and his Democratic allies in Congrss enacted new spending programs to create an artificial inflationary spurt in the economy. FDR was re-elected in a landslide; however, his left-wing economic plan pushed the U.S. into a painful recession in 1937-38. In his masterwork, The Roosevelt Myth, John T. Flynn dubbed the machinations of Roosevelt and his cronies as "the dance of the crackpots."
We're now witnessing a new dance of the crackpots. Many of the Democrats who're currently running for congress have been offering increasingly silly and outdated proposals to scrap President Bush's tax cuts and enact policies to "stimulate demand." These ideas are basically warmed-over Keynesian claptrap that FDR's crackpots offered up sixty-five years ago. Unlike the present-day Keynesians in the Democratic Party, Roosevelt's crackpots had the excuse that most of their schemes had yet to be proven false.
In order to ensure continued economic growth, the government must focus its fiscal policy on removing barriers to investment. That's precisely what President Bush did when he offered a bold measure to reduce taxation. Bush's plan to eliminate the double-taxation of corporate dividends and his slashing of marginal tax rates was a good start. (GDP has grown at an annual rate of 4 percent since the Bush tax cuts were enacted in 2003.) However, accelerating depreciation schedules and slashing marginal tax rates on capital gains would help even more.
In this age of rapid globalization, the United States is now competing against dynamic economies beyond Europe and Japan (see India, China, etc.). Thus, financial and human capital must be redirected to match the products and services being offered by emerging market economies. This redirection will happen more rapidly if President Bush and Republicans ignore the new dance of the crackpots happening in the current Democratic congressional field and push hard for additional supply-side stimulus in the economy.
We're now witnessing a new dance of the crackpots. Many of the Democrats who're currently running for congress have been offering increasingly silly and outdated proposals to scrap President Bush's tax cuts and enact policies to "stimulate demand." These ideas are basically warmed-over Keynesian claptrap that FDR's crackpots offered up sixty-five years ago. Unlike the present-day Keynesians in the Democratic Party, Roosevelt's crackpots had the excuse that most of their schemes had yet to be proven false.
In order to ensure continued economic growth, the government must focus its fiscal policy on removing barriers to investment. That's precisely what President Bush did when he offered a bold measure to reduce taxation. Bush's plan to eliminate the double-taxation of corporate dividends and his slashing of marginal tax rates was a good start. (GDP has grown at an annual rate of 4 percent since the Bush tax cuts were enacted in 2003.) However, accelerating depreciation schedules and slashing marginal tax rates on capital gains would help even more.
In this age of rapid globalization, the United States is now competing against dynamic economies beyond Europe and Japan (see India, China, etc.). Thus, financial and human capital must be redirected to match the products and services being offered by emerging market economies. This redirection will happen more rapidly if President Bush and Republicans ignore the new dance of the crackpots happening in the current Democratic congressional field and push hard for additional supply-side stimulus in the economy.
# posted by Joltin' Django @ Friday, September 29, 2006 
