#128 Do They Really Understand? Federal Debt con’t (Part 8)

Scene: Jordan and Sandy, a former business colleague, are having coffee. The discussion begins Entry #121,. This segment is a continuation of Jordan’s description to Sandy of a conversation with the Speaker of the House and the Senate Majority Leader, which begins Entry #123

John Boy: “Let me repeat the questions. ‘What was wrong with tax cuts under Bush 43?”

Mackey: “Yes, Jordan, what was wrong with them?”

Jordan: “Two fold. First, Bush 43’s economic policy created huge deficits. Remember CBO (Congressional Budget Office) had predicted budget surpluses for a number of years into the future. Rather than reducing Federal debt…as many Republicans are wont to do…the tax cuts make the debt much worse.”

Mackey: “And what was the second reason?”

Jordan: “Let me add to the first. Remember guys the US was at war with Iraq so military expenditures are starting to soar…and we’re cutting taxes. Doesn’t seem very Republican-like to me.”

John Boy: “OK, Jordan, what was the second reason?”

Jordan: “You guys always interrupt someone when they are speaking?”

John Boy: “Yes, just finish and quit evading the question.”

Jordan: “The tax cuts were weighted heavily toward upper income.”

John Boy: “Everyone…well most everyone…got a tax cut. So the middle class benefitted. Why are you always so worried about the middle class? The wealthy pay way more than their fair share of taxes.”

Mackey: “Right. What’s your problem?”

Jordan: “Just how short is your collective memory? We just talked people needing money to buy things. No money, no purchases, no demand and no new jobs. And, therefore less income for the wealthy. Remember?”

Mackey: “You keep trying to convince us the Republicans economic theory…”

Jordan: “…Trickle-Down theory. And pardon me for interrupting.”

Mackey: “Trying to convince us the Trickle Down theory doesn’t work. You know, like a waterfall, those at the bottom benefit from the work done at the top. You know, workers at the top of the income scale and moochers at the bottom.”

Jordan: “I’ll ignore your last comment. You guys are old enough to remember the 1980 presidential campaign.”

John Boy: “Unfortunately, we are old enough. And so are you.”

Jordan: “George Herbert Walker Bush, eventually #41, was running against Ronald Reagan to be the Republican presidential nominee. And what label did Bush put on his fellow Republican’s economic policy? The Trickle Down theory.”

Mackey: “He called it ‘voodoo economics’ or something like that.”

Jordan: “Voodoo economics…and truer words were never spoken.”

John Boy: “The voodoo economics label was campaign talk.’

Jordan: “Spoken during the campaign, yes. But merely ‘campaign talk’ as you claim, no. The label was spot on.”

Mackey: “But the economy expanded under Reagan. Proves he was right.”

Jordan: “One more time, let’s look at the Federal debt as a percent of GDP. Under Reagan what happened?”

John Boy: “I know, I know. Under Mr. Conservative, Ronald Reagan, the Federal debt nearly doubled as a percent of GDP. That’s still hard for me to believe.”

Mackey: “Seems as if someone is cooking the books.”

Jordan: “Forget the conspiracy theories about distorting the data. Remember the data were gathered when Reagan was president.”

Mackey: “But all those liberal bureaucrats in Washington hated Reagan and they fudged the data to make him look bad.”

Jordan: Guys, whether you like it or not, economic growth under Reagan was a case of Keynesian economics at its best. Reagan, the great communicator, roped you in to believing it was Trickle-Down economics.”

Mackey: “Why doesn’t Trickle-Down work. Seems as if it should.”

Jordan: “Let’s go back to basics. Add $1,000 to the income of someone making say $20,000-$30,000 per year. What will they do with the money?”

John Boy: “Spend it all.”

Jordan: “What about $1,000 to people who make say $100,000 per year?”

Mackey: “Might spend some of it. Same with people making more than $100k. But most over $100k won’t even notice.”

John Boy: “Mackey, we keep falling into Jordan’s traps.”

Jordan: “John Boy, these aren’t traps. Just facts.”

John Boy: “I know but your approach is frustrating.”

Jordan: “Truth is sometimes frustrating.”

John Boy: “You know it is, especially since we’ve been preaching the opposite for so long.”

Mackey: “Preaching what?”

John Boy: “That Keynesian economics does not work and the most effective way for economic growth in a recession is to cut back on Federal spending, not increase it.”

Jordan: “Maybe it’s time to put away the ideologue rhetoric and start focusing on solutions. The US had a Revenge Revolution and then threw out many sitting members of Congress. The public said it was time to rethink policies like tax cut that benefit the wealthy and don’t create good jobs.”

John Boy: “Alright, we can make some policy changes. But…and I emphasize but…we don’t want another Obama Administration fiasco.”

Jordan: “What was the alleged fiasco?”

Mackey: “Alleged? The fiasco was huge deficits. Wild spending on health care. The Administration was absolutely out of control. Obama ruined the country. He caused the Revenge Revolution.”

John Boy: “Mackey, raise your right hand and repeat after me. ‘Beginning now and henceforth I will think before making what are really outrageous political statements.”

Mackey: “OK, no more statements without thinking first. What’s the issue in telling the truth about Obama? His fiscal deficits made Bush look like a piker.”