Combating Swiftboat Economics
John McCain has explicitly embraced President Bush's economic policies. This means that McCain is running on the worst economic track record of any president since the Great Depression.
In a normal world, this would be a problem for McCain, since the economy is clearly the most important issue in voters' minds. However, in Swiftboat land, reality gets turned on its head. McCain is trying to make the economy a weak spot for Obama, just as Bush made John Kerry's Purple Hearts a liability for him.
Just as Kerry's war record was not a cause for shame, it is not Senator Obama who should have to worry about a bad economic record. The policies he has endorsed, including higher tax rates for Senator McCain and his rich friends, produced solid economic growth under President Clinton. It is John McCain who is Mr. No Jobs in this story.
The record is as clear as night and day. During the eight years of the Clinton administration, when rich people paid the same tax rates proposed by Senator Obama, the private sector added 15.8 million jobs. By contrast, in the seven years and six months of the Bush administration, when rich people paid the Bush-McCain tax rates, the private sector added just 3.5 million jobs. And, it is losing jobs at the rate of almost 100,000 a month as President Bush prepares for retirement.
While job growth is probably the most important measure of the economy's health, almost every other measure also showed that the economy performed better with the Clinton-Obama tax rate than the Bush-McCain tax rate. The real wage for the typical worker rose by 6.6 percent in the Clinton years. By contrast, wages have risen by just 1.0 percent in the Bush years and are now falling. At the current rate of decline, real wages will be lower in January of 2009 than when President Bush took office in 2001. The typical family's income rose by 15.3 percent under Clinton, it fell by 1.6 percent under Bush.
In short, the facts show that Senator McCain's efforts to portray Obama as a job killer are utter nonsense. The economy had its most prosperous period in 30 years with the tax rates Obama is proposing. President Bush then cut taxes for the rich, and the economy turned in its worst performance since the Great Depression. While the tax rates are hardly the whole story behind the prosperity of the Clinton years or the economic deterioration of the Bush years, the record makes a mockery of the scare story that McCain has been pushing in his ads.
If the media did their job, they would ridicule Senator McCain for trying to pass off such nonsense. This should be a far more serious matter than Reverend Wright's views of race relations or even Obama's flag lapel pin. But, if it is not aggressively countered, Swiftboating can work.
The story is simple, Kerry was a war hero and the Clinton-Obama tax policies create jobs. Bush was a draft dodger, and the Bush-McCain tax policies cost jobs, although they do make the rich even richer. Got it?
The story is simple, Kerry was a war hero and the Clinton-Obama tax policies create jobs.
The fact that jobs grew while Clinton's first and second tax policies were in effect does not prove that those "policies create jobs."
Correlation is not causation.
August 18, 2008 5:01 PM | Reply | Permalink
Well if Obama can't use the economy as a positive issue for his campaign he doesn't deserve to win. The economy has tanked under Bush's leadership and McCain is offering more of the same.
I don't really think that there is 'the proof' that the Clinton tax policies spurred job growth either. And actually I think Clinton/Rubin/Greenspan handling of the economy directly lead to the problems we have now.
August 18, 2008 6:07 PM | Reply | Permalink
And please don't forget, it was the Clinton cap-gains tax cut that immediately preceeded the budget surplus.
August 18, 2008 6:13 PM | Reply | Permalink
shooter242 says;
"And please don't forget, it was the Clinton cap-gains tax cut that immediately preceeded the budget surplus."
Wasn't there also a tax increase in there somewhere?
The tax increase all the Republican "economists" in Congress, like Dick Armey and Phil Gramm predicted would put us in a recesion, cost the U. S. hundreds of thousandsd of jobs and put us into large deficits?
August 19, 2008 9:50 AM | Reply | Permalink
August 19, 2008 11:23 AM | Reply | Permalink
Yes, the hikes of 1993, which would have been working their way through the economy for 4 years come 1997.
Tha cap gain tax cut was in 1997, what year did we first hit a surplus?
August 19, 2008 11:51 AM | Reply | Permalink
1999 according to the CBO
August 19, 2008 12:34 PM | Reply | Permalink
So you're saying two years of the cap gains tax cut turned the deficit into a surplus?
http://research.stlouisfed.org/fred2/data/FGDEF.txt
Look at the deficit since the tax cut of'93, the deficit was coming down regardless of the cap gains tax cut of 1997
1993-01-01 -300.6
1993-04-01 -268.0
1993-07-01 -274.0
1993-10-01 -251.3
1994-01-01 -232.2
1994-04-01 -190.3
1994-07-01 -211.3
1994-10-01 -215.5
1995-01-01 -215.2
1995-04-01 -195.3
1995-07-01 -198.7
1995-10-01 -178.7
1996-01-01 -182.1
1996-04-01 -143.1
1996-07-01 -133.1
1996-10-01 -108.7
1997-01-01 -89.2
1997-04-01 -69.1
1997-07-01 -35.0
1997-10-01 -30.0
1998-01-01 13.0
1998-04-01 28.9
1998-07-01 60.4
1998-10-01 53.0
1999-01-01 79.4
1999-04-01 104.6
1999-07-01 107.8
1999-10-01 122.7
August 19, 2008 6:43 PM | Reply | Permalink
Try this link instead. It shows actual receipts from cap gains reported and tax paid.
You'll notice that even though the rate drops by about a third, the receipts accelerate. It's even more striking when you compare receipts as a % of GDP. Also notice the bump in revenue when it drops to 15% in 2003.
August 19, 2008 8:13 PM | Reply | Permalink
shooter42 says:
You were insinuating that the cap gains tax cut was responsible for the surplus, when the numbers I posted showed we were on the way to surplus BEFORE the tax cut.
We entered surplus on 1/1/98, there's no way a cut in cap gains tax cut in 1977 could be
responsible for that.
Where was the budget just prior to the tax cut,
surplus, deficit or balanced?
August 20, 2008 9:41 AM | Reply | Permalink
August 18, 2008 6:21 PM | Reply | Permalink
Wrong.
This meme that "it's your money" is simply not true.
I'll borrow an analogy from Thom Hartmann: Suppose I walk into a store with one dollar in my pocket. The dollar is my money. But then suppose I pick up a candy bar and start eating it. That dollar is still in my pocket, but it is no longer "my money". I've taken something of value, and I owe the dollar to the store.
Now consider instead that I live in the United States of America. Yes, I have some money. But my life and property are protected by the the police and the fire department, I drive on paved roads, I buy food that I know is safe to eat because there are standards and enforcement, et cetera, et cetera . These are all things of value, for which I owe money. So it is not "my money" -- not all of it, anyway.
A simple minded phrase, like "it's your money", may sound nice. But it's still simple minded.
And wrong.
-- ARG
August 19, 2008 11:47 AM | Reply | Permalink
Or how about this... quite a few people don't pay taxes, or receive enough from the government to cover said taxes. Can we ban such people from the rule of law, or the roads?
Or maybe you think private property should be abolished, like in communism? I'd be more than happy to come over and pick through your things to see what I can use.
OK, OK, I'll take pity on you. You're putting up a badly formed argument most commonly used to justify progressive taxation. But that doesn't work too well either because the rich pay more than their fair share of the taxes.
Let me leave you with this thought. Who is greedier, the person that wants to keep more of what they earn, or the person that covets those earnings for themselves?
August 19, 2008 1:17 PM | Reply | Permalink
shooter, your counter "arguments" are extremely weak.
Nothing I said indicates that I think it makes sense for me to send you (or anybody else) money directly.
Nobody in this country pays no taxes. (Except, possibly, a few criminals.)
I didn't say private property should be abolished, and I don't understand how the concept of taxation in exchange for government services can be even remotely construed as "communism".
Your statement that "the rich pay more than their fair share of the taxes" is just your opinion. I think the rich benefit much, much more from the commons and the security provided by the governement and therefore rightly pay a larger percentage. (And remember that Warren Buffet says he pays a lower percentage of his income in taxes than his secretary does. Doesn't seem fair to me.)
Sorry, dog. You'll have to do better than that.
-- ARG
August 19, 2008 2:31 PM | Reply | Permalink
August 19, 2008 3:54 PM | Reply | Permalink
Bingo. You'd say it. I wouldn't. So it's your opinion. Which is totally wrong (in my opinion).
I'd say they're not paying nearly enough! Under Eisenhower, the rich paid more than that. Under Nixon, the rich paid more than that. Under Reagan, the rich paid more than that (even after his tax cuts).
So thanks for the link, but you haven't convinced me of anything except that YOU believe the rich pay more than their fair share of taxes.
-- ARG
August 19, 2008 6:00 PM | Reply | Permalink
OK, now you have my curiosity up. In your world, how much should the top 20% pay of the total federal tax bill for individuals?
August 19, 2008 7:52 PM | Reply | Permalink
shooter,
you refer to the 20% at the top as "the rich" when, according to that table, their after tax income is only
$172,000 in 2005. I wouldn't define 172K as rich.
Warren Buffet is rich, not $172,000. As a matter of fact, Obama is going to give that $172,000 person a tax cut.
Look at the top 1% = $1,071,500 income, and 5% = $369,800 income who I say are more THE RICH, and see what their "share" of the federal tax was;, not 86%, which you refer to, but
38.8%...60.7%...respectively.
By the way, what % of the total income did the top 1 and 5% earn in 2005?
August 20, 2008 12:05 PM | Reply | Permalink
shooter242 says:
Since you mentioned "fair share", the only "Fair" Tax would be a tax where everyone pays the same dollar amount. Since the government offers us all the same services; you, me,Warren Buffet, Bill Gates should all pay the same. All we need to do now is figure out what that dollar amount is.
August 20, 2008 11:20 AM | Reply | Permalink
Wow. Is this side of TPM always so pedantic? Doctrinaire?
August 18, 2008 6:36 PM | Reply | Permalink
Unlike the other side of TPM, we on this side try to maintain a bit of intellectual integrity.
August 18, 2008 8:01 PM | Reply | Permalink
Haha. Defensive peeps on the this side of TPM? Guess so.
(FWIW, I was referring to shooter's comment above, I just forgot to hit the reply button.)
August 18, 2008 9:17 PM | Reply | Permalink
We're more attentive, too.
August 18, 2008 9:27 PM | Reply | Permalink
You're more of a lot of things, but this isn't really the subject of this thread.
You don't see anything wrong or misleading about the above?
August 18, 2008 9:32 PM | Reply | Permalink
Customer,
wasn't McCain against the Bush tax cuts?
August 19, 2008 9:28 AM | Reply | Permalink
Not at all. What do you think is wrong with it?
August 19, 2008 12:31 PM | Reply | Permalink
shooter,
McCain didn't vote against Bush tax cuts?
NORTH CONWAY, N.H. (AP) — Taking aim at a rallying John McCain, New Hampshire front-runner Mitt Romney said Saturday that his GOP presidential rival had failed "Reagan 101" by twice opposing President Bush's tax cuts.
http://www.usatoday.com/news/politics/election2008/2007-12-23-romney-mccain_n.htm
and in McCain's own words;
http://www.youtube.com/watch?v=6F1IuoR-o24
August 19, 2008 6:52 PM | Reply | Permalink
Re: John McCain has explicitly embraced President Bush's economic policies.
McCain has embraced almost all of Bush's policies, and I for one am quite surprised by that. I expected that one he had the nomination in the bag he'd take a page from Nicholas Sakoszy's campaign notebook and run away from Bushism, maybe even actively run against Bush. Seemed to me that would be the only way to win the election. Any theories why he hasn't gone that route? He's probably walk with ease to the White House if he took that route.
Re: Correlation is not causation.
True, but the history of the 90s does prove that tax inceases of Clintonian magnitude do not damage the economy or cost jobs. That alone does not disprove Supply Side economics, but if one accepts that theory then the 90s prove that our tax rates are well below the inflection point where tax increases do cause problems.
August 18, 2008 8:20 PM | Reply | Permalink
I am just as opposed to the right's absurd claim that Clinton's 1993 tax increase harmed the economy.
On the other hand I believe the late 1990s surplus (Clinton unwilling to battle Congress and get it spent on education and infrastructure) was a cause of the 2003 recession and the 2003-5 job recession. And a good deal of that decision stemmed from Clinton's Grover Cleveland-esque "balance the budget" -- let's put a lock on the Social Security cash box -- mentality.
August 18, 2008 8:55 PM | Reply | Permalink
Correction: "2001 recession and 2001-3 job recession"
August 18, 2008 9:34 PM | Reply | Permalink
Re: John McCain has explicitly embraced President Bush's economic policies.
JonF, only since he decided to run for President. :)
August 20, 2008 12:10 PM | Reply | Permalink
Re: JonF, only since he decided to run for President. :)
Yes, and I'll be damned if I can figure out why. McCain's strategy should be to distance himself from Bush somehow, even run against some aspect of Bushism. He probably can't do that onm social issues ghiven the lock the Social Conservatives have on the GOP (and social conservatismis about the only aspect of conservatism that hasn't been damaged by Bush: it's far from universally popular, but it's no less popular than it was four or eight yaers ago). And McCain's own beliefs keep him from running away from the Iraq War, though I once had a wan hope he might try Nixon's or Eisenhower's line ("Peace with Honor", "Bring the boys home"). So that leaves Bushonomics, which he never really supported, as the best place to dissociate himself from Bush. Why doesn't he? Even the Big Money interests have concluded Bush's policies suck, so McCain wouldn't lose Wall Street if he called down anathema on Bushonomics.
McCain has sometimes been compared to Teddy Roosevelt, but along with a certain jingoism on foreign policy, Roosevelt was also known for the Square Deal and for facing down the oligarchs of a century ago.
August 21, 2008 7:31 PM | Reply | Permalink
"Correlation is not Causation"
Hume argued that all causation is is constant correlation (first x, then y). To my knowledge nobody has been able to show otherwise.
Obviously in Economics we don't even have a decent data base to assert constant correlation as we do in, say, physics with, say, the law of gravitation.
Ellen says
On the other hand I believe the late 1990s surplus (Clinton unwilling to battle Congress and get it spent on education and infrastructure) was A CAUSE of the 2003 recession and the 2003-5 job recession.
Now we get into multiple causation, contributing causation, and precipitating causation. All pretty tricky stuff.
Popular amongst philosophers is the counterfactual theory of causation
"If Clinton had done what Ellen thinks he should have done, there would not have been a recession".
Problem with these counterfactual accounts is that there is no empirical evidence to fall back on since per stipulation the antecedent is false.
So all in all I give this one to Baker since Ellen has not offered any better causal account for what in fact happened.
August 18, 2008 10:57 PM | Reply | Permalink
. . . I give this one to Baker . . . .
Why?
Don't the identical objections apply -- all things not being equal pre- and post-1993 and there being no counterfactual.
Indeed, of the numerous other causes of job growth in the '90s we can cite the continuing worldwide reduction in interest rates, the growth in the level of "animal spirits" due to cheap money and creative accounting, the coming of age of the internet and its build-out, increasing productivity, cheap commodities.
August 19, 2008 12:02 AM | Reply | Permalink
Exactly Ellen.
They are identical objections. So I give it to Baker because you made the objection first and then proceeded to do the same thing you objected to.
In the social sciences it is an intellectual nightmare.
August 19, 2008 12:55 AM | Reply | Permalink
Hasty reply. Sorry
You are saying that all things are NOT equal since what you describe is a sequence of events that did in fact happen and are therefore not counterfactual.
However on closer analysis the same objection applies because you have to ask yourself "had those things you enumerate (the antecedents) NOT happened, would there still be a recession?" That's the full-blown counterfactual again.
Generally the social sciences--more than the hard sciences--are plagued by these problems of causal connections.
August 19, 2008 1:04 AM | Reply | Permalink
Even if the recession did happen absent the antecedents, it does not mean that the antecedents would not have caused a recession too. It just means that the recession that did happen had OTHER antecedents that caused the recession.
Same effect different causes.
August 19, 2008 1:16 AM | Reply | Permalink