Taking the Mask Off The Regulatory Boogeyman

...and he regulates too.
“Supply side economics.” “Trickle down economics.” “Voodoo economics.” Call it what you may, but the theory is that if you put more money into the hands of the wealthiest Americans, they will be empowered to create jobs to the benefit of the rest of us.

Since Ronald Reagan started marketing this theory, America has doubled down on it. Literally. As we saw this week, over the last three decades we have more than doubled the income share of the top 1% of Americans, recently rebranded “Job Creators.”

So, how’s supply siding going for us? Despite the fact that we have armed the Job Creators with massive infusions of new resources – exactly what the supply siders said we must do – the Job Creators obviously aren’t creating jobs.

Given that embarrassing reality, the new explanation served up by the Job Creators and their political allies is that regulations are just too darn burdensome to allow the Job Creators to work their job creation magic.

For instance, Wisconsin Congressman Paul Ryan (R-WI) had me choking on my Cheerios this morning during this NPR interview:

NPR reporter Ari Shapiro: …we asked Ryan why that wealth isn’t translating into new jobs.

Ryan: I have toured over 200 business in my congressional district asking this very question, and I get the same answer these days. Uncertainty on taxes, uncertainty on regulations… Over 4,200 regulations are coming out of the federal government this year. Over 3,500 came out of the federal government last year. So to me businesses need to have some degree of certainty if they’re going to plan or take a risk.

If the Packer’s underachieve this weekend, or there is inclement weather in Janesville, expect Representative Ryan to blame it on the regulations in our midst.

Just as with the claims about the wonders of supply side economics, the mainstream news media has not sufficiently questioned the “regulations kill business” claims. They usually report the “jobs kills business” claim as if they are noting that “the sun rose over the horizon this morning.” Self-evident.

But if reporters looked at the industries that have been the subject of the most regulations in recent times, health care and energy, they would see that they have among the highest earnings per share in the S&P 500.

If reporters asked Bruce Bartlett – conservative economic guru to Ronald Reagan, George H.W. Bush, Jack Kemp and Ron Paul – he would tell them that there is “no hard evidence” to support the claim that regulations are the principal factor holding back the economy.

If reporters asked economists about the regulatory environment, they would learn that 80% of economists surveyed by the National Association for Business Economics rated the regulatory environment for business and the overall economy as “good.”

To be fair, the Wall Street Journal did survey economists about the principal factor holding back the economy, and learned that 65% said “lack of demand,” not government policy. But the Journal then proceeded to continue skapegoating regulations in their subsequent reporting and editorializing.

Finally, if reporters checked Bureau of Labor statistics, they would see that employers say that less than 00.03% of mass layoffs in the most recent quarter were due to government regulations or intervention. The number one reason, according to employers, was “lack of demand.”

Lack of demand. Not lack of resources in the hands of the wealthy few. Not too much regulation. Lack of demand from the people whose income is stagnating compared to the Job Creators.

The evidence completely discredits the de rigueur skapegoating of regulation. This evidence argues for a long overdue end to the failed trickle down experiment, and a move to demand side stimulation, policies that put more money into the pockets of consumers who buy stuff and less money into the pockets of wealthy people who can afford to horde cash.

It also argues for better reporting of economic evidence.

– Loveland

9-9-9: Simply Trickle Down

Simplicity is the foundation of many a great sales pitch: “$5 foot longs.” “Jobs, jobs, jobs.” “99 cents tacos on Taco Tuesday.” “Buck beer night.” Pitches that state their value proposition concisely, specifically, and memorably are powerful in both the retail and political marketplace. And at first blush, Herman Cain, the former Godfather’s Pizza CEO, looks to have himself an awesome presidential pitch strategy in “9-9-9.”

Under Cain’s “9-9-9” proposal, a big chunk of the federal tax code would be replaced with a flat 9% federal income tax, a new 9% federal sales tax and a 9% federal corporate tax. Like many great sales pitches, Herman’s husksterism is elegantly simple, digestible, understandable, symetrical and memorable. Moreover, “9-9-9” has the all the appeal of an IED planted alongside the IRS headquarters, a popular proposition among just about all taxpayers, particularly GOP activists.

Politically speaking, “9-9-9” just flat out sells. Almost overnight, it has made Cain — who also has swell ideas about electrocuting Mexicans and banning government service based on religious affiliation — a GOP presidential front-runner.

But at some point, even wildly popular political pitches get dissected by journalists and opponents. When that happens, I’m not convinced that the Niner Designer will survive the economic vivisection.

Tax experts such as a former chief-of-staff of the non-partisan congressional Joint Tax Committee, are now finding that “9-9-9” represents a tax increase for every household earning under $120,000/year. A family of four earning about $90,000/year would pay about $5,000 more annually. (In Cain currency, that’s roughly 417 one-topping medium-sized pizzas per year.) At the same time, under “9-9-9,” billiaonaire Warren Buffet last year would have paid no income tax.

In fact, a President Cain with a “9-9-9” in place would probably redistribute more of old Joe the Plumber’s wealth than any President in American history. The trickle down economics imbedded in Cain’s “9-9-9” might make even old Arthur Laffer blush.

So sure, simple sells, and right now simplicity is raising Cain. But will it sell long enough to make Citizen Cain our next President? Nein, nein, nein.

– Loveland

Minnesota’s Reagan?

Former Minnesota House Speaker Matt Entenza’s critics derisively labeled him “Taxandspendza” because he rejected the “no new taxes” gospel preached by Minnesota Taxpayer League disciples.

But now that the DFLer is running for Governor, has he undergone political plastic surgery? Consider his commentary in today’s Star Tribune:

“We cannot simply tax our way out of our deficit; we must grow our way out of it.”

Hey, wait a minute. That sounds vaguely familiar. I’m having flashbacks to the early 1980s. I’m listening to a presidential address, with Oingo Boingo on the turntable in the background:

“Governments don’t reduce deficits by raising taxes on the people; governments reduce deficits by controlling spending and stimulating new wealth.”

Continue reading “Minnesota’s Reagan?”