Amity Shlaes, the disinformation bunny, is still going. In the latest issue of Imprimus, a publication of Hillsdale College, is a transcript adapted from a recent talk she gave there during a conference on the Income Tax, sponsored by Hillsdale's own Center for Constructive Alternatives and the Ludwig von Mises Lecture Series. Right away, you know this is going to be good. The Title of her contribution is Calvin Coolidge and the Moral Case for Economy. Of course, by economy, she means austerity.
There is so much wrong here it's both impressive and depressing. Rather than give her the full FJM treatment, which would take more time and energy than she deserves, I'll just hit on a couple of the lowlights. Here is her opening paragraph.
With the Federal debt spiraling out of control, many Americans sense an urgent need to find a political leader who is able to say "no" to spending.
Here we go. Her first sentence is an exercise in right wing talking point mythology. I've already exploded the 'Obama is a profligate spender" myth, here, here, and here. Further, we have just lived through three years when federal spending was close to flat line, as Graph 1 shows.
There is no comparable period in post WW II history. Graph 2 shows the next flattest era under Eisenhower, when spending grew by about 50% over the term.
To say federal dept is "spiraling out of control" is not merely disingenuous. It is a sign that either Shlaes has no earthly idea what she's talking about, which in an alleged journalist, is unforgivable, or it's a bare-faced lie, which is unforgivable for anybody. And if many Americans are feeling the urgent need to curtail spending, it's because they have been lied to so repeatedly and often that they have no idea what the truth is. The truth is that if we have a debt problem, it is due to a shortfall in revenues.
Yet they fear that finding such a leader is impossible.
Its not clear who made Shlaes the spokesperson for this sorry, disenfranchised segment of the population, nor that this is indeed what they fear. Perhaps we should introduce Shlaes and the rest of these Real Americans to the real President B. Hoover Obama.
Conservatives long for another Ronald Reagan.
This is probably correct, though as Shlaes goes on to demonstrate, conservatives in this way - and, alas, typically - are rather badly disconnected from reality.
He was of course a tax cutter, reducing the top marginal rate from 70 to 28 percent. But his tax cuts - which vindicated supply side economics by vastly increasing federal revenue - were bought partly through a bargain with Democrats who were eager to spend that revenue.
The reality is that Revenue growth under Reagan was the worst of any 20th century President, post Eisenhower, except for the unfortunate Bush, Sr. under who's regime Reagan's buzzards came home to roost. And was it really the Democrats who spent that anemic revenue stream, or did it go to Reagan's Star Wars fantasy?
Reagan was no budget cutter. In fact, the federal budget grew over a third during his administration.
Here, she finally gets something right, if by "federal budget" she means Total Outlays, and by "over a third" she means over 80% [as measured from 1980 to 1988.]
Things get really egregious further on in the section titled "The Purpose of Tax Cuts." She informs us that President Coolidge and Treasury Secretary Andrew Mellon campaigned to lower top rates from the 50's to the 20's.
Mellon and Coolidge did not win all they sought. The top rate of the final law was in the forties. But even this reduction yielded results - more money flowing into the treasury - suggesting that "scientific taxation" worked. By 1926, Coolidge was able to sign legislation that brought the top marginal rate down to 25%, and do so retroactively.
Let's have a look at how more money flowed into the treasury. In 1919-21, when the top marginal rate was over 70%, receipts were over $120 million. By 1925, when the top marginal rate was 25%, receipts were in the $60 to 90 million range, and by 1929 had declined to about $50 million. As Graph3 shows, Shlaes' lie is simply astounding.
So here's the reality. A decade of tax cutting and deregulation led us into the Great Depression, the worst economic collapse of the 20th century. [You might note that the following decades of high tax rates and robust regulation were free of these horrible events.] And what happened most recently? A decade of tax cuts and deregulation - the end game of three decades of this supply-side approach - led to the greatest economic collapse since the Great Depression. Significantly, the major deregulations of big finance came at the end of Clinton's term, less than a decade prior to the financial melt down.
The extraordinary thing isn't that right wingers lie. The simple reality is that they can't make their case without lying, because it has no merit. The extraordinary thing is that their lies are so easily rooted out and refuted, in the era of free and easily accessible information, but so few people will take the required few minutes to go ahead and do it.
Shlaes' presentation is just one more manifestation of the right wing ploy of denying reality. Sadly, it works, because you really can fool a lot of the people a lot of the time.