John Boehner Is Dangerously Clueless About Economics

[SecularMotion]

It's been a dismal few years for the dismal science, but even more so for the Republicans. The GOP has responded to the worst economic crisis since the Great Depression by rediscovering the failed policies of the Great Depression. Hoovernomics -- tight money and tight budgets amidst a slump -- has become the new, old dogma of the Republican Party. It's a policy impervious to empirical evidence. Or, as House Speaker John Boenher showed, unaware of it.

On Thursday, Boehner sat down with Maria Bartiromo of CNBC to talk about the economy. Here's what he said about why markets have fallen so much the past few days:

"But sell off is in large part due to the policies that we've had coming out of the Federal Reserve. You know, you can't continue to deflate our money and deflate it and deflate it-- have equity markets go-- without some change, yeah. Bernanke has made it clear he's doing these policies in the absence of the government doing its part to help improve our economy. That's why Democrats and Republicans here on Capitol Hill and the president need to deal with-- fix our tax code that would help us promote more economic growth and deal with our long term spending problem. We've spent more money than what we've brought in for 55 of the last 60 years. That ought to scare the hell out of every American."

Bookmark this, print it out, and put it in a time capsule, because this is about as wrong as anybody could possibly be about economics (excluding Don Luskin, of course). Now, Boehner doesn't put it very clearly, but when he says markets are going down because Bernanke is "deflating the dollar", he means markets are in the red because the Fed is weakening the dollar. The opposite is true. Markets sold off not because the Fed is doing too much, but because markets worry it won't do enough. As you can see below from Bloomberg, the dollar went up during the recent sell-off on Wednesday and Thursday after Bernanke explained how and when the Fed expects to wind down QE3. That's what happens when the Fed tightens policy.

http://www.theatlantic.com/business/archive/2013/06/john-boehner-is-dangerously-clueless-about-economics/277117/

[JustAnotherGen]

1. He's such an idiot!

[mazzarro]

3. Indeed - he is a BIG Idiot! -- n/t

[CanonRay]

2. You have to be clueless to be a Republican

It's a requirment for membership.

[Bill USA]

4. Republicans censured CRS report concluding tax cuts for wealthy don't produce economic growth

Republicans Censure (specifically: CRS report concluding tax cuts for wealthy don't produce economic growth) What they Can't Refute - Bruce Bartlett
http://economix.blogs.nytimes.com/2012/11/06/republicans-censor-what-they-cant-refute/?_r=0

Elsewhere, I have noted that federal purchases increased significantly under Reagan because of his military buildup and that Federal Reserve policy strongly supported growth in the early 1980s. Today, there is enormous pressure to cut spending and the Fed is severely constrained by the fact that its target interest rate is already at zero.

The appropriate response for Republicans critical of the Congressional Research Service report’s findings would have been to convene a conference, at which I am sure the author would have gladly participated, or to get the House Ways and Means Committee, which is under Republican control, to call a hearing.

Getting the report withdrawn smacks of censorship. Andrew Rosenthal, editor of The New York Times’s editorial page, commented, “Congressional Republicans seem to think that the C.R.S. should function like Pravda.” Pravda was, of course, the official organ of the Soviet Communist Party.

(more)

Economist Stands By Tax Cut Study After GOP Successfully Demands Its Withdrawal

http://tpmdc.talkingpointsmemo.com/2012/11/crs-withdraws-study-taxes-growth-mcconnell-hatch.php?ref=fpnewsfeed

The author of a Congressional Research Service study, who found no evidence that tax cuts for high income earners lead to economic growth, is standing by his work, after the legislative branch’s nonpartisan research arm withdrew the report under pressure from Republican leaders. And Democratic principals are demanding to know why CRS caved to GOP pressure.

CRS quietly and quickly pulled the six-week old report, despite the wishes of the research arm’s economic team, the New York Times reported Thursday.

“I wasn’t involved in the decision, as a matter of fact I was on vacation when the decision was made, so I can’t really add anything to what was reported in the NY Times,” Thomas Hungerford, the author of the study, told TPM in an email Thursday afternoon. “However, I certainly stand behind my work.”

Rep. Sander Levin (D-MI) — the top tax writing Democrat in the House — wants CRS to answer for its decision.

“I was deeply disturbed to hear that Mr. Hungerford’s report was taken down in response to political pressure from Congressional Republicans who had ideological objections to the report’s factual findings and conclusion,” Levin wrote in a letter (PDF) to CRS Director Mary Mazanec. “It would be completely inappropriate for CRS to censor one of its analysts simply because participants in the political process found his or her conclusion in conflict with their partisan position. I would like your explanation as to why this report was removed from the CRS website, who made that decision and what considerations led to it.”

(more)

Three Decades of Empirical Economic Data Shows That Supply-Side Economics Doesn’t Work

http://www.americanprogress.org/issues/economy/news/2012/08/01/11998/the-failure-of-supply-side-economics/

Adherents of the economic theory known as supply-side economics contend that by cutting taxes on the rich we will unleash an avalanche of new investment that will spur economic growth, and boost job creation, leading to economic improvements for everyone. For most of the past 30 years this idea has dominated the economic debate, resulting in two sustained eras of tax cuts aimed at the wealthy, separated by a brief respite in the 1990s.

Now, as our economy struggles to emerge from the deepest recession in generations—and as we argue over what to do with the expiring Bush-era tax cuts—it is more important than ever to understand one simple fact: When put to the test in the real world, supply-side policies did not deliver as promised. In fact, by every important measure, our nation’s economic performance after the tax increases of 1993 significantly outpaced that of the periods following the tax cuts of the early 1980s and the early 2000s.

Supply-side economics starts from the generally accepted economic insight that tax policy can influence private-sector decisions by changing the incentives to work and invest. But supply-side acolytes take this relatively mundane observation to an extreme conclusion. They argue that lowering taxes for people, especially for those who have a lot of money to invest, will always lead to better economic results, and furthermore, that lower taxes is the single most critical intervention the government can undertake to stimulate growth.

This assertion—that lower taxes for the rich will lead to improved economic results—is testable. Of course, pure natural experiments in economics are few and far between, but over the last 30 years the United States alternated between economic policies that were heavily influenced by supply-side ideas, then were not, then were again. This variation allows us to compare economic performance in the various eras. If proponents of supply-side theory are correct, then the supply-side eras should outperform the non-supply side era. But that’s not what happened.


(more)

recommended.