I think that in the right context, exterprise zones and the like can be effective.  If you want to revitalize an area, it does make sense to do whatever you can to attract private interests to it, but you also have to understand that legitimate, long term, big money private interests have no reason at all to wish the hassles and pain of opening a business in a slum on themselves.  So, you need some public funding, as Clinton knew (though I don't think Bill went far enough) to make those areas attractive enough that private interests will assess the risks and then take the tax breaks and go there.

Sure, it's true that most everyone hates to pay taxes but I've been told many times by some big money types that though it pains them to see some of the profits go away, they realize that paying taxes at all means you're making money and not losing money.  Heck, taxes can be managed, reduced and sometime eliminated by a good accounting firm.  The same can't really be said for losses incurred from operating a business in an area with too few customers and too high costs.  Sure, a business type would prefer to make $100 tax free than $90 after taxes but they'd also prefer to make $90 after taxes than to lose $10 because they're in a bad location.  That's pretty self evident.

I'm really not opposed to giving temporary tax breaks to businesses interested in rebuilding the Gulf Coast.  I want those businesses to take the risk.  But only a fool would actually take that risk if the government doesn't step in to make the place habitable and nice in fairly short order.   

Mark -- this Republican Administration doesn't undestand the economics of development. 

When the market is working you offer nothing.  When you need to spur a certain type of business you target the financial breaks.  If environmental regs are getting in the way, first maybe they need to, second if they don't then as Republicans they should change them.  

If NO/Gulf Coast is a good place to do business then companies should want to get in and get in early.  If that is true then let the market work unfettered.  Unnecessary give aways are a waste of our tax dollars which Bush says belong in our pockets.

I just watched the "News Hour" with a panel discussing Bush's speech. No one pointed out the reality that this was staged as a photo op, probably costing NO a day in reconstruction. No one pointed out the suspension of Davis-Bacon and the potential impact this has on the wages of workers who do the rebuilding, the lack of a reference to oversight of spending that should be inherent in such aassive reconstruction effort, etc. etc. This does not mean that I do not favor using private enterprise wherever possible, only that quoting from a former Republican president, "trust but verify" is a fairly good operating principal... just as "managing by walking around". This was a speech designed to reconstruct Bush's image, with only broad platitudes about New Orleans. No one said that. I could go on as I'm sure could others, but how long is most of the media going to continue to give GWB and his administration a pass?

From someone entering his eighth decade with grandchildren who understand and use this media so much better than I, I find that it is only in the blogosphere that something that tries to approach truth lurches to emergence despite the attempts of those who will create their own reality.

Thanks,

Sam

It's false on two levels. Liberals/Democrats are absolutely interested in new and market-based approaches, if they work. And conservatives aren't really interested in those approaches, they just like having an excuse to do nothing.

That is exactly correct. It's trickle down supply side dogma all over again.

If we had done better by the poor twenty years ago, rather than spout that supply side BS, we’d be much better off today instead of rushing to the bottom. Once again the only purpose of that BS is to bludgeon to death social programs while ghettoizing and exploiting the poor, without providing opportunity for upwards mobility. Compassion? What a joke. Compassion to Republicans means donations to wealthy church patrons.

There will be massive cronyism and Republican corporate welfare under the guise of job creation. Government bashing will be revitalized, along with private sector glorifying. Once again Wall Street will be called on to run the country.

To be perfectly blunt, you’ve got a bunch of utterly desperate poor blacks, totally dislocated, worried about their day to day survival, literally. That is paired with the most well oiled and radical patronage driven corporate welfare administration in history. This “disaster” is like a dream come true for every “greed is good,” trickle-down, supply side, plantation minded, wealthy ideologue.

Republicans are going to funnel hundreds of billions to Big Real Estate, Big Private Schools, Big Agriculture, etc. There will be shoddily constructed ghettos and segregated poor communities built as basically 3<sup>rd</sup&gt world labor camps.

There will be school vouchers while public schools will be gutted, and children are corralled into Republican run for profit "charter schools" owned by a small group of tremendously wealthy Republican contributors. Those schools have already shown to do even worse by students and teachers, while extracting profits.

For decades we'll pay the debt. Those Barons who built themselves empires in the largess, and their descendants will still champion against taxes while sending massive contributions to the Republican machine from gated communities. The poor and minorities will still be just where they are.

The first thing Bush did was to cut environmental and wage standards.  Where is our press? It’s sickening.

On a personal note, I don't know how many others feel this way as well, but I’m starting to feel it truly is a moral responsibility to “starve the beast.” By which I mean follow some of my brightest and most professional friends, including physicists, computer programmers, civil engineers, etc, and just leave this country and stop consuming all US corporate products, from the media to Hollywood to tennis shoes. I’d rather pay taxes in a country that is funding public health care, and buy from companies/countries which are pro-union and more egalitarian.

It’s not that I want to abandon my country, but I don’t feel like I have a country anymore. It’s just one giant corporate whore house.

Mark Schmitt:

Excellent essay with many superb points that are very thought-provoking. Thank you.

The main thoughts it provokes in me: that of the recent DLC v. DNC divide. And I wish others would address this as well. Because the subject is always coming up here and I think how it is related to this subject is crucial.

I see the anti-DLC crowd on the blogosphere being very anti precisely the kind of stuff you are referencing, the kind of things Clinton did. I see a lot of griping about that, that the Dems should go back to being 'the party of the people' and get back to taxing 'the rich" to pay for a society of more equal incomes. (I've seen calls for going back to the 70% income tax rate, for instance.) Not 'rising tide lifts all boats,' but rather, "the government will protect, serve and help all the poor folks." Gladly invite people to disprove my preconceptions! Would be happy to hear it.

It is exactly the thing I loved about Clinton, why he seemed like a new kind of Democrat to me. Especially by his second term, but even starting with his first run.

 See, I'm a boomer (even a SDS'er in my youth! People like Todd Gitlin the way he was back then were my heroes! Hee.) I was a very disgruntled Democrat in the early 90's, really fed up with the party. And people like Kemp and Darman really did have intriguing ideas about the future, and yes, it was very true, they were hypocrites about that and never walked the walk, always caved to their party bosses.

And then the Dem primaries for 92 started. They were the most exciting thing in my voting lifetime! They took those GOP ideas, and percolated them with fresh ideas from the DLC, and then you saw them being vigorously debated by Clinton and Jerry Brown, with new ideas being thrown in! And then the 3-way general debates with Perot and Clinton and Bush, both Clinton and Perot new, exciting, pro-regulated capitalist ideas, totally making Poppy look like an old idiot, and the old Dem guard in the dust as well. It was really the first time I felt there might be a future beyond high inflation, high unemployment, high deficits and high national debt. It was really, really exciting. And guess what? That deficit and high employment I thought would exist until my entire generation died? Gone in basically the snap of my fingers. Zip. Zilch.

Why I am saying this all? I think the DLC approach to the economy is still the way to win and is still the way to help the underclass as well. And I see a very vocal sector of the Dem blogosphere very against that, angrily against it, wanting to go back to LBJ land or something, and it depresses me that all of that would be thrown away without even getting a chance to fully develop.

I remember a statement from Friedman op-ed from the first years of this Bush administration--I don't always like him but this one rang so true to me that I never forgot it: that the Bush adminstration was not showing the infinite and highly caring, detailed, micro-management of the world economy that Clinton/Rubin did; that indeed, the Bushies were laissez-faire fuck-ups, and we would be paying for it.

It only had 8 years of a chance to work, and it worked well, despite the distraction of the impeachment thing.

To sum up my opinion: And I think all this all of the talk about needing an anti-DLC Dem party is nonsense. I'm sorry they offend the egos of the 'net roots," and they should probably learn to be more sensitive about that. But they are the ones who know how to do: success at the Dem party's main goals. Puhleez stop idolizing the Dems of the 60's or 70's. They were shit heads that made a mess of this country. Just because Reagan made it worse doesn't mean that the ones that came before him did the right thing.

THANK YOU, MR. GREENBAUM!

I've heard the same sentiment for a numbe of business owners (I'm a journalist for a finance magazine) but you said it more bluntly and directly than nay of them: nobody particularly likes havng their profits reduced by taxes but, at the same time, taxes are just an expense and they are by no means the worst expense and are certainly, giving the existence of the accounting industry, the lest manageable expense.  Plus, we tax profitd and not revenues.  If you're paying even a penny, it's because you're making money and not losing it.  I don't  mean to say that our tax laws are either fair or perfect because they aren't, but I think that most business people, certainly the ones I talk to, are more concerned with other obstacles and costs than they are taxes.  Wnile there's no doubt in my mind that msot business owners would love years or profit, tax free, taxes are just a component of running a business and they don't deteremine what a business owner does and when, if there's profit to be made in what they want to do.  I can totally understand a business owner avoiding a high tax district that offers no chance at profit, but most don't turn down a good chance at profit purely because of taxes,

Incentives have a place, I think, but only in the larger context where the government helps to make communities where business can thrive. 

Puhleez stop idolizing the Dems of the 60's or 70's. They were shit heads that made a mess of this country.  artappraiser

Finally.  Someone with enough guts to "tell it like it is."

Voting Rights Act?  Affirmative action?  EPA?  Earth Day?  National Environmental Policy Act?  Fuel efficiency and safety standards?  Worker safety?

Fie!  A pox on all your houses. 

You're right, they did a ot of good  But, in the 2004 elections, only those 18-29 voted in favor of Kerry.  So... a lot of those 60s and 70s libs have turned to the dark side.

artappraiser--

Get your dates right, and we can talk. 

This is a fun, fascinating tit-for-tat.

Let me take a stab at defending the 1970s (the decade of my birth). Unemployment and inflation were troublesome, but overall those who had jobs were on many measures (especially those related to economic security) better off than they are today. Nixon effectively cut taxes on the top rate in half, but there were still fewer loopholes for the rich and corporations, and progressive taxation was as such still more than a pretense. Pensions were still by and large pensions, not 401ks. Housing was still affordable in many desirable "blue state" metro areas, as was college. Consumer goods weren't quite as ridiculously cheap, but I think a lot of Americans would prefer a good job at a fair wage with a strong pension and benefits to a dozen fifty-dollar television sets and DVD players. Which brings me to my final point about the 1970s. The clothing was a little funny (and we youngsters had little choice in the matter; I promise not to link to a picture of my five-year-old toehead self in Batman pajamas, giant sunglasses, and a San Diego Zoo captain's hat), but it was the last *great* decade for film, not to mention a much better decade for music, and network TV. The pickings are slim today.

"I bet you looked cute in those Batman P.J.'s."

You're nice, but they weren't quite as cool as my Star Wars underoos.

"I felt there might be a future beyond high inflation, high unemployment, high deficits and high national debt. It was really, really exciting. And guess what? That deficit and high employment I thought would exist until my entire generation died? Gone in basically the snap of my fingers. Zip. Zilch."

I do need to quibble with your memory of inflation and unemployment a bit.  I googled up some data for your perusal:

                 Unep   infl

1980-01-01   6.3   13.91%

1981-01-01   7.5   11.83%

1982-01-01   8.6    8.39%

1983-01-01  10.4    3.71%

1984-01-01   8.0    4.19%

1985-01-01   7.3    3.53%

1986-01-01   6.7    3.89%

1987-01-01   6.6    1.46%

1988-01-01   5.7    4.05%

1989-01-01   5.4    4.67%

1990-01-01   5.4    5.20%

1991-01-01   6.4    5.65%

1992-01-01   7.3    2.60%

1993-01-01   7.3    3.26%

1994-01-01   6.6    2.52%

1995-01-01   5.6    2.80%

1996-01-01   5.6    2.73%

1997-01-01   5.3    3.04%

1998-01-01   4.6    1.57%

1999-01-01   4.3    1.67%

2000-01-01   4.0    2.74%

2001-01-01   4.2    3.73%

2002-01-01   5.7    1.14%

2003-01-01   5.8    2.60%

2004-01-01   5.7    1.93%

2005-01-01   5.2    2.97%

I see extraordinarily high inflation and moderately high unemployment in 1980, followed by a painful spike in unemployment as inflation was brought down in 1983.  

Unemployment then slowly drifted down to a low of 5.4% in the late 1980s while inflation was held to a modest rate.  

This was followed by a spike in unemployment and a reduction in inflation during the recession of the early 1990's.  

This was followed by a gradual reduction in unemployment to an unprecedented 4% during the late 1990s bubble while inflation remained low after the recession receded.

This was followed in due course with a brief spike up in unemployment as the late 1990s bubble burst, followed by return to near "normal" rates with inflation continuing at very low rates.

While I agree that economically Clinton could have been a very serviceable Republican, I don't see any evidence in the data that he snapped his fingers and solved all our economic woes, such as they are,

200 billion dollar emergencies, including the "emergency" in Iraq, build up the deficit so high that anyone coming into office later down the road can't spend a nickle.

that's what's really going on.  this way, that money can go to republicans with construction and cleanup contracts, like the haliburton contract that went to haliburton to cleanup the navy base i think before bush or cheney even showed up in person to the gulf.

the sooner we see this obvious big picture, the sooner we can do something about it.

if you hate government and think it should be shrunk, there is a simple solution - build up a huge deficit, with the funds going to GOP campaign contributors. 

"I don't think so. The top marginal rate was still 70% in 1980 with loopholes to help mitigate the pain."

That's true, but the real rate being paid on average by the Ford Administration was down to the 30s for the top brackateers. Source: "Wealth and Democracy" by Kevin Phillips and a few other places.

"O.K. now you have changed to "real rate on average" from "the top rate".

What I meant was that Dick Nixon with the help of the fools on the Hill punched holes in the tax code big enough to drive a 1974 Cadillac El Dorado or Lear Jet through. The real rate of taxation paid by those in the top brackets was down from the sxity-something percentile the day LBJ left office to the 30-something percentile by the time Mr. Gerald Ford took office. That is what I meant by an "effective" tax cut, rather than a good old fashioned actual tax cut. He wasn't called Tricky Dick for nothing.

Not to belabor the point, but the fall in the effective (as opposed to official) federal tax rate for the top 1% of Americans was from 68.6% in 1970 to 35.5% by 1977. The source for this data is page 1112 of the Treasury Department's "Statistical History of the United States, 1976".

O.K., I understand the statistical games you are playing now.  

I misunderstood your original post and am pleased that you are not as ill informed as I originally thought.  I have no idea if your statistics are correct, but I will give you the benefit of the doubt.

I think there was a little unspoken mutual back scratching going on.  

The Republicans didn't complain too loudly about the very high marginal tax rate as long as the Democrats allowed enough ways to avoid the tax.  This allowed the Ds to brag to their liberal base that they were punishing high income people by pointing to the high marginal rate, and the Rs to explain to their pro-growth base that the tax could be avoided.

This was supposed to be a political win-win situation.  As you point out, people began to catch on to the scam and ultimately lead to the ill conceived AMT and the politically and economically wasteful debate over loopholes.