No Defense for Obamanomics

J.D. Foster / March 09, 2009

Laura Tyson’s “In Defense of Obamanomics” in the Wall Street Journal Monday well portrayed the view of history and government from the classical American socialist perspective – more government is inherently better (except when it involves national defense), higher taxes are inherently better, especially when falling on the most productive, and citizens really can’t get along adequately without giving up more freedoms to the nanny state.

Nowhere is this perplexingly twisted view of reality made more clear than in her statement that “the strong expansion of the 1990s proves that the tax rates on income, capital gains, and dividends in the Obama budget will support {italics added} rapid economic growth and substantial income gains at the top.” Conservatives have often been accused (sometimes fairly) of arguing that tax cuts pay for themselves. Ms. Tyson is now arguing a converse point: Less after-tax income at the top means more after-tax income at the top. Alice, you’ve escaped from Wonderland.

In fact, as I pointed out in detail in a paper last year, the Clinton tax hikes (which Obama would reinstate and build on) reduced the economy to anemia through the first Clinton term. The “strong expansion” didn’t occur until congressional Republicans forced the President to restrain spending and cut taxes. (more…)