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Bush's Worst Appointment
Yet?
Read Jeffrey
St Clair's blazing expose of the new Interior Secretary nominee
, Dirk Kempthorne, and make up your own mind. Even in the dingy
history of Idaho's predators, Kempthorne stood proud as the dingiest
of them all. Now he's poised to seize his place in history. Will
he be the sleaziest Interior Secretary in history, sleazier than
Watt, fouler than Fall?
More on the great Israel Lobby debate! Norman Finkelstein cuts
a new path, asks "Are the Neo-Cons really committed Zionists?" "Bliss was it
in that dawn" Not in Michigan! Raymond Garcia describes
Dem governor's appalling plan to scapegoat youth and teachers. Plus the full print version of Virginia
Tilley's savage dissection on this website of the double-standard
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Now!
Former US Senator and Treasury Secretary
Lloyd Bentsen has passed away. Bentsen was a Texas Democrat
and was President Clinton's first Treasury Secretary. As Chairman
of the Joint Economic Committee of Congress, Bentsen played a
key role in the replacement of Keynesian demand management with
supply-side economic policy. The 1979 JEC Annual Report stated
that stagflation, the major problem of that time, was the result
of policies that stimulated demand while retarding supply. In
the chairman's introduction Bentsen recognized "an emerging
consensus in the committee and in the country . . . that the
major challenges . . . are on the supply side of the economy."
The report concluded that supply-side
incentives had "been badly neglected as a way of fighting
inflation." Keynesian demand management had proved to be
impotent, because "even if demand is high, capital spending
and the supply of output in general may be low if the after-tax
real rate of return is inadequate."
Under Bentsen's leadership,
the 1980 Annual Report, "Plugging in the Supply Side,"
disavowed the practice of fighting unemployment with inflation
and inflation with unemployment. The report acknowledged that
policymakers had made mistakes by viewing tax cuts "solely
as countercyclical devices designed to shore up the demand side
of the economy."
The proprietors of the econometric
models that policymakers used to formulate US economic policy
got the message that the days of demand management had passed.
At a Joint Economic Committee hearing on May 21, 1980, the forecasters
were asked if they had plugged in the supply-side. Alice Rivlin,
director of the Congressional Budget Office, testified that the
models were beginning to incorporate the direct effects of fiscal
policy on supply, thus moving away from the focus on the short-run
effects on demand. Otto Eckstein testified that "the mistake
we have made over the last 20 years is that we have always looked
at the short-run demand effects, and have thereby ignored what
we are doing to the long-run growth potential of the economy."
He admitted that it had been costly to ignore the effects of
fiscal policy on the supply side of the economy.
Prior to President Reagan's
election, congressional Democrats had started the Supply-Side
Revolution. The original instigator was Republican Jack Kemp.
Kemp was addressing a real problem, not just playing politics.
Democrats, who controlled Congress, saw the point and took the
lead in implementing the new policy.
It is part of leftwing mythology
that Ronald Reagan deceived the country and implemented "trickle-down
economics" in order to enrich the already rich. But as
the Democrats realized, stagflation was destroying their constituents,
not the rich. Supply-side economics broke the back of stagflation.
We have not seen it since.
A quarter century ago Congress
still had members who were accustomed to lead. They could think
for themselves and did not rely on the executive branch or on
lobbyists to tell them what to do. Lloyd Bentsen was one of
those leaders.
Paul Roberts was Assistant Secretary of the Treasury
for Economic Policy in President Reagan's first term. He was
staff associate, Joint Economic Committee, for Senator Orrin
Hatch. He is the author of The Supply-Side Revolution
(Harvard University Press, 1984)
Now
Available
from CounterPunch Books!
The Case
Against Israel
By Michael Neumann
CounterPunch
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