Trickle, Trickle, Trickle....

"Trickle-down economics." "Voodoo economics." "Reaganomics." Ooh, I'm getting a chill down my spine. I am referring, of course, to the poorly understood and very maligned idea that is "supply-side economics," with a title much newer than the idea itself. What is it, and why do liberals say it doesn't work? Let's discuss.

What we call supply-side only got its name in the '70s, thanks to some of Nixon's economic people, and frankly, that alone should be reason to look for a new title. But it has a long pedigree, going back to Adam Smith and other greats of the time. It's not so much a philosophy of the size of government as a question of how to get the most bang for your (literal) buck where state revenue is concerned. And it is a simple idea, really: Very low taxes may not bring in a sufficient amount of revenue, but high taxes strangle the productive capacity of taxpayers, causing them to earn less income, therefore they pay fewer taxes, therefore the government gets less revenue as well. The trick is to find an optimum tax rate at which citizens earn the most income and pay the most taxes. In twentieth-century circumstances, that generally means tax cuts, especially on the most productive members of society--the rich.

There have been lots of criticisms of this idea, some of them rather sophisticated and pointed, admittedly. All too often, though, especially when voiced by partisan leftists, such critique devolves into "tax cuts for the rich," "Republicans looking out for their fellow fat cats," etc. And also, liberals have claimed that these policies don't work, that they only benefit the wealthy and end up causing economic slumps down the road.

What actually happens when these "unfair" tax cuts go into effect? Let's look at one of the more famous extended examples of this working, those terrible "Roaring Twenties" of the Coolidge presidency.

After a nasty recession in the early '20s, Harding and then Coolidge pushed through, over intense opposition from progressives in Congress, a drastic tax cut. Top rates went down to 25 percent, lower than they have been at any point since. What happened? Well, if you're even passably familiar with 20th-century America, you probably know there wasn't a sudden economic collapse, a bankrupt government, a disintegration of law and order, etc. U.S. GDP grew by 59 percent between 1921 and 1929, and even more importantly, during this same period, annual tax revenue over the same period grew from about $300 billion per year to $700 billion per year.

But the other feature of these 1920s tax cuts is especially worth dwelling on. So top earners, i.e. the rich, saw the greatest reduction in tax rates. That means the rich bore less of the total tax burden under Republicans Harding and Coolidge, right? Well, actually, no. Statistics show that when the first of the 1920s' Revenue Acts was passed, those making over $100,000 paid about one-third of all taxes per year. By decade's end, after all the tax cuts had taken effect, said group paid two-thirds of the total burden. Conversely, while those making over $100,000 saw their average income increase by a healthy 15 percent, those earning between $10,000 and $100,000 saw a whopping 84 percent growth in income. In other words, the farther down the economic ladder one was, the better deal one got from these "tax cuts for the rich." It might be noted further that minorities weren't excluded from this good fortune; black Americans saw a rapid improvement in their standard of living over the decade, until by 1930 their unemployment rate was slightly below that of whites.

Since I mentioned "Reaganomics" as one of the derogatory terms used by critics of supply-side policies, it bears mentioning how things went when similar policies were tried in the '80s. Reagan began his administration with across-the-board tax cuts, provoking the inevitable caterwauling from liberals; once more, the government did not fall apart, but saw a doubling in annual income tax revenue over the course of the '80s. Moreover, the top 1 percent's share of the tax burden rose by 40 percent, despite having their income tax rates lowered from 70 to 28 percent, while the bottom 60 percent saw a 20 percent drop in its share. As in the '20s, there was remarkable growth among the lower and middle classes, with particular expansion among middle-class and small business-owning African-Americans.

That these periods of prosperity were followed by economic downturns in the '30s and early '90s should be taken into account, of course. But by the same token, we cannot and should not ignore the very real economic improvements up and down the ladder that took place after the implementation of supply-side policies. They made a positive difference in America.

But if liberal mockers of supply-side really want a target to unload on, I can give them one just as good as Reagan. Namely, a President who cut the tax rate for top earners from 91 to 70 percent, proportionally a far greater cut than, say, G.W. Bush undertook; a man who argued high taxes caused low revenue and defended tax cuts on capital gains as a means of "obtaining capital and thereby the strength and potential for growth in the economy." His name was John F. Kennedy.

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Book Thread!

Since apparently it's a slow-news/throw-everything-at-the-post-and-see-what-sticks week for the blog, I thought I'd just talk about a couple books that have come out recently. And yes, they're history-oriented, because that's what I do, but they're also books conservatives should check out.

While there are a lot of new good books out right now, I thought for today I'd focus on two biographies. They're both well-written and about important people, and they reveal some things about the past.

Coolidge: By Amity Shlaes

Shlaes is also the author of The Forgotten Man, a somewhat revisionist history of the Great Depression, and by "revisionist" I mean she definitely does not portray it as the story of FDR arriving to save us all from our laissez-faire sinfulness. So, clearly a woman who should be given the benefit of the doubt, and her biography of our 30th President more than justifies this trust. Stylistically, I thought the book maybe left a bit to be desired in how it abruptly shifted from one aspect of Coolidge's presidential life to another, but that's a rather pedantic, nitpicky criticism. As to what she actually has to say, her portrait of "Silent Cal" absolutely shatters the frequent image we have of a cold, callous man who did nothing to help the country. Coolidge, who had warm relationships with his family and friends, was also a principled man who was not only active in his own way, but had to really fight to carry through his vision of what the government and the country should be.

The pro-business climate of the '20s, for example, did not just happen--progressives in Washington fought to block plans for low income taxes and reductions in spending, and it required a great deal of tenacity and maneuvering by the President to overcome them. The flip side of Coolidge's reticence was his ability to make his opponents underestimate him, and time and time again he used that to blindside them. Partly he did it with a careful command of the facts--he clearly pointed out that everything they knew suggested tax cuts would actually increase government revenue over the long run, and sure enough, he was right. I have never yet met a liberal who will admit to this unfortunate truth, or who even seems aware of it.

Perhaps the most interesting that comes through in Shlaes' book is Coolidge's vision of the presidency as an institution. As the author has said in interviews, he interpreted his position quite literally--as "Presiding Officer." He would do what he needed to do to preserve or enhance national security or prosperity, but beyond that, it was his job to give his fellow citizens as free a hand as possible, and not to micromanage their affairs. Indeed, that was why, despite immense popularity, he chose not to run for another term in 1928; staying in Washington much longer, he feared, might inflate his ego and corrupt his principles. Thinking of how far we've fallen from that view, I could almost cry.

Karl Marx: A Nineteenth-Century Life: By Jonathan Sperber

Okay, full disclosure on this one: I know Sperber, a professor at the University of Missouri, and in fact he is currently my graduate advisor. No, that does not make this a shameless plug. Actually, being no conservative himself, he finds the idea of Karl Marx as a bloodthirsty totalitarian rather humorous. (My moonlighting as a right-wing blogger, if he knew about it, probably less so.) So you're definitely not going to find anything in this biography about how terrible Marx and Marxism were and are.

Why am I bringing it up, then? Well, it has a lot of keys to Marx's psyche and thus to how he developed his "philosophy." The book's main theme is that the Communist founder was more of a journalist than a careful theoretician; were he alive today, he would likely become a blogger. (The author's words, not mine. Just clarifying.) He wrote better in catchphrases and slogans than in lengthy treatises; everyone knows "Workers of the World, Unite!" but even his most devoted followers never made it through Das Kapital.

Plus, a look at Marx's personal affairs makes it much easier to understand how he could have such an inhuman outlook on the world. Only a handful of people could ever stand the guy; he belittled and alienated practically every one of his political colleagues at some point, and indeed probably delayed the growth of a broad leftist movement because of the rivalries he got bogged down in. And while he clearly loved his wife and kids, he also had no problem taking advantage of the family maid and then getting his poor friend Engels to take responsibility for the result nine months later.

Now, Sperber pedals some of this a bit more softly than I am here, and treads rather lightly on the issue of Marx's anti-Semitism. But unlike many historians of a leftist persuasion, he lets the facts speak for themselves, and they reveal a very smart, very harsh, very flawed individual who undoubtedly would have been quite the dictator if he'd ever had the chance.

*****

So those are my mini-reviews for the "Conservative Book Club," as it were. I could probably go on if I had the time, but let's turn it over to you. Any thoughts on these books? And are there other recent publications you would recommend?

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Rebuilding The Republican Party: History of the Party

Today we continue our series on Rebuilding the Republican Party. So far we have laid out a new statement of principle for the party, and we discussed the importance of the Constitutional separation of powers, particularly as it applies to judicial activism and the improper shift of power (czars) from the legislature to the executive. Now, we step back slightly and outline the history of the Republican Party.

The left distorts the party's history to keep their own interest groups brainwashed and angry, but the fact is that (like them or not) the Republican Party has been the driving force behind almost every important innovation in United States governance since the Civil War.

Read on, you will be surprised.

The Republican Party (GOP) was founded in 1850 by anti-slavery activists, though its intellectual roots go back to the founding of the republic. Within a few years of its founding, the Republican Party replaced the Whig Party, which had itself replaced the Federalist Party, as one of the two main political parties of the United States.

The first official meeting of the Republican Party took place on July 6, 1854 in Jackson, Michigan. In 1856, the party became a national party, when it nominated John C. Fremont for President. He ran under the slogan: “Free soil, free labor, free speech, free men, Fremont.” These were references to the party’s opposition to slavery and its support for granting western land to settlers free of charge.

In 1860, Abraham Lincoln became the first Republican to become President of the United States. Lincoln gained national prominence after his run for the United States Senate in 1858, when he failed to unseat Stephen A. Douglas, the incumbent Democrat. As part of that campaign, he and Douglas engaged in a series of seven famous debates that became known as the Lincoln Douglas Debates.

Republicans End Slavery and Guarantee Rights For All

In 1861, the Democratic Party-dominated South, seceded from the Union, beginning the Civil War. President Lincoln struggled between 1861-1865 to defend and reunite the Union. During the war, President Lincoln signed the Emancipation Proclamation, freeing the slaves. At the same time, Congressional Republicans passed the Thirteenth, Fourteenth, and Fifteenth Amendments to the Constitution. The Thirteenth Amendment outlawed slavery. The Fourteenth Amendment guaranteed equal protection of the law for all persons, and prohibited the state from depriving any person of life, liberty, or property without due process of law. The Fifteenth Amendment guaranteed all citizens, of any race, the right to vote.


“Four score and seven years ago, our fathers brought forth on this continent, a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.”
-- Abraham Lincoln

In February 1870, Republican Hiram Rhoades Revels was sworn in as the nation’s first African-American United States Senator. The following month, Republican Joseph Hayne Rainey became the first African-American member of the U.S. House of Representatives. In 1872, Republican Pinckney Benton Stewart Pinchback became the nation’s first African-American governor, when he became governor of Louisiana.

Nearly one hundred years later, Republican support was crucial for the passage of the Civil Rights Act of 1964, which outlawed racial segregation in schools, public places and employment. Desegregation of the military was completed by Republican President Eisenhower ten years prior. President Eisenhower also enforced the Supreme Court’s decision in Brown v. Board of Education.

Republicans Pass Women’s Suffrage

In 1896, the Republican Party became the first majority party to favor women’s suffrage. This eventually resulted in the Nineteenth Amendment, which guaranteed women’s right to vote. Republicans controlled twenty-six of the thirty-six state legislatures that ratified the Nineteenth Amendment. In 1917, Jeanette Rankin, a Republican from Montana, became the first woman elected to Congress.

Republicans Protect America From Anti-Competitive Monopolies

Protecting the country and the free market from the abusive powers of monopolies and oligopoly trusts became a driving principle of the Republican Party in the 1890s.

In July of 1890, Republican Senator John Sherman introduced legislation to protect the free market from the distorting power of monopolies and other anti-competitive arrangements. This act was signed into law by Republican President Benjamin Harrison, “to protect trade and commerce against unlawful restraints and monopolies.” This historic legislation, the Sherman Antitrust Act, remains the fundamental antitrust law in the United States today.

Republican President William McKinley thereafter appointed the U.S. Industrial Commission on Trusts, which investigated the market distorting practices of oligopoly trusts created by many of the industrial titans of the era, the so-called “Robber Barons.” Republican President Theodore Roosevelt, who earned the nickname the “Trust Buster”, seized upon this report to break up these anti-competitive arrangements, as did Republican President William Howard Taft, ushering a period of tremendous economic growth as the American economy and the nation's small businesses were freed from predatory economic practices.


“We demand that big business give the people a square deal.”
-- Theodore Roosevelt

Republicans Create the FDA

Republican President Roosevelt, promising a “Square Deal” to the average citizen, became the first President to seek to protect the consumer from the hidden dangers of impure food and bad drugs. The responsibility for monitoring food and drugs was given to the U.S. Department of Agriculture Bureau of Chemistry, which eventually became the Food and Drug Administration.

Republicans De-Politicize The Federal Workforce

In 1883, Republican President Chester A. Arthur created the bipartisan Civil Service Commission, which required that most federal jobs be awarded on the basis of merit rather than the “spoils system.” The most famous commissioner of the Civil Service Commission was Theodore Roosevelt.

In 1938, the Republicans worked with Democratic Senator Carl Hatch to pass the Hatch Act, which forbids federal employees from engaging in political campaigning on the job; forbids officials paid with federal funds from promising jobs, financial assistance, contracts or other benefits to coerce campaign contributions or political support; and prohibits the use of federal funds for lobbying. This act was in direct response to discoveries that funds allocated to the Works Progress Administration had been misused by WPA staff members and local Democratic Party politicians to promote the Democratic Party in the 1938 congressional elections.

Republicans Promote Environmental Conservation

The Republican Party has a strong tradition of environmental protection. Abraham Lincoln set Yosemite apart for public use. Republican President Ulysses S. Grant created Yellowstone National Park. Theodore Roosevelt established the Forest Service to promote environmental conservation and to protect federal land. He also achieved passage of the Antiquities Act, which allowed him to designate historic landmarks as national monuments, allowing for their protection and preservation. Additionally, he created fifty-three national wildlife refuges and eighteen national park and preserves, including the Grand Canyon, Devils Tower National Monument in Wyoming, and the National Bird Preserve on Pelican Island, Florida.


“To waste, to destroy, our natural resources, to skin and exhaust the land instead of using it so as to increase its usefulness, will result in undermining in the days of our children the very prosperity which we ought by right to hand down to them.”
-- Theodore Roosevelt

Republican representatives cosponsored the Wilderness Act of 1964, protecting wilderness areas across the United States. President Richard Nixon pushed for the Clean Air Act, which set standards for pollution emissions, and for the Endangered Species Act, which sought to protect endangered species and their ecosystems. Other environmental acts promoted by Republicans addressed toxic substances, safe drinking water, oil pollution, and river preservation, among others. President Nixon also created the Occupational Health and Safety Administration to protect workers’ safety.

Republicans Bring Economic Prosperity

Republican policies have always brought economic prosperity to the United States. Republican President Calvin Coolidge observed that “the business of the American people is business.” Coolidge’s administration decreased personal income taxes in 1924, ushering in the period of unparalleled economic growth which became known as the “Roaring Twenties.”


“Collecting more taxes than is absolutely necessary is legalized robbery.”
-- Calvin Coolidge

In the early 1900’s, President Theodore Roosevelt created the Panama Canal, shortening the distance from New York to San Francisco by 8,000 miles. The Panama Canal remains one of the most important routes for world trade to this very day.

Ronald Reagan became President in 1980, promising a combination of tax cuts and decreased regulation. This policy, labeled Reaganomics, led to the longest period of uninterrupted economic growth and prosperity in American history.


“The government’s view of the economy could be summed up in a few short phrases: if it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
-- Ronald Reagan

In 1994, the Republican Party seized the majority in the House of Representatives for the first time in forty years. The Republicans immediately turned to balancing the federal budget, which they cut by 10%; reforming the welfare system, which had discouraged work; improving Medicare, which was nearing insolvency; and commissioned the first independent audit of Congress in its history. These policies led to a surge in growth and prosperity, and brought about a surplus in the national budget.

Republicans Keep America Strong

After decades of isolationism, Theodore Roosevelt steered the United States more actively into world politics. His foreign policy, which he characterized as “Speak softly but carry a big stick,” included sending the Great White Fleet on a goodwill tour of the world, ensuring construction of the Panama Canal, and mediating an end to the Russo-Japanese War, for which he won the Nobel Peace Prize.

President Warren G. Harding, who coined the phrase “founding fathers” in his keynote address to the 1916 Republican National Convention, negotiated the Washington Naval Treaty in 1923, which slowed the world’s naval arms race, reduced tensions between western navies, and ultimately led the United States to develop naval aircraft carriers, which allowed America to defeat Japan in World War II and which remain the basis of American military power throughout the world today.

President Eisenhower championed the creation of the nation’s interstate highway system in 1956.

Ronald Reagan rebuilt America’s military, which had languished after Vietnam, and won the Cold War, bringing down the Soviet Union and freeing millions of Eastern Europeans from communist oppression.

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