When reports emerged that the Obama administration was looking at additional spending measures to spur job creation in the wake of September’s employment report, Republicans immediately claimed that the administration was simply “preparing to push for more of the same flawed tax-and-spend policies,” while advocating yet another variation of its standard collection of tax cuts.
But Bruce Bartlett — former economic adviser to President Reagan and a Treasury Official under President Bush Sr. — hasn’t gone down that road and thinks that the Republican party “no longer has a credible economic policy.” He’s particularly put off that the party “continues to advocate tax cuts even though the recent Bush tax cuts led to only mediocre economic growth and huge deficits.”
“So much of what passes for conservatism today is just pure partisan opposition,” Bartlett has said. “What remains is a caricature — that there is no problem that more and bigger tax cuts won’t solve.” And when CNBC’s supply-side ideologue Larry Kudlow (a former Reagan official himself) asked Bartlett whether tax cuts would have been preferable to stimulus spending, Bartlett replied with this:
I don’t think tax cuts would have done any good whatsoever for the current economic problems that we have today. The problem is workers don’t have incomes to tax, because they’re unemployed, corporations don’t have profits to tax, because they’re losing money, and investors are sitting on huge capital losses, not capital gains…I think that today we have the same set of problems that we had in the 1930’s with a lack of demand, and we need to get monetary policy mobilized and that requires spending in the economy to increase and that’s what will get us out of the crisis.
Bartlett certainly befuddled Kudlow, who could only say “I don’t understand your analysis…What is it you’re saying here?”
But Bartlett is absolutely right — private spending has collapsed, consumers are saving more than ever, and government is the only entity available to fill the output gap, or the difference between what the U.S. is able to produce and what it’s able to sell. And with unemployment still creeping upward (and the underemployment rate at 17 percent), its becoming clearer that current spending still may not be filling that gap.
According to a new Economic Policy Institute-Hart Research poll, 71 percent of Americans support putting unemployed people back to work at government-funded public service jobs that help meet community needs (the number actually rises to 74 percent when the example of President Franklin Roosevelt’s Civilian Conservation Corps is invoked). With so many idle resources, it simply makes sense for them to be employed in a useful manner, a notion which Bartlett accepts, much to Kudlow’s chagrin.
Of course, even Kudlow doesn’t actually have any problem with government spending — as long as that spending is concentrated on Wall Street.