Have we reached “peak Trump”? Is there no way out of the swamp? Former Reagan Administration senior official David Stockman joins today’s Liberty Report to discuss his upcoming book, Peak Trump: The Undrainable Swamp and the Fantasy of MAGA. Why are we in such a mess? How have the neocons taken over this administration and is there any hope? Tune in to today’s Ron Paul Liberty Report:
Reprinted from The Ron Paul Institute for Peace & Prosperity.
7 thoughts on “Peak Trump: Ron Paul interviews David Stockman”
David Stockman was one of my conservative heroes during the Reagan years. He was the one person in the Administration who seemed to have an honest understanding of economics. It’s nice to see that his experiences with the reality of the DC swamp have made him go all the way to describing himself as a libertarian, rather than a conservative. He could have sold out, given up any modicum of principle, and simply become a multi-millionaire Republican Party establishment hack. I would venture to say he and I have some policy differences, but it’s always nice to see when someone embraces their best, rather than their worst, instincts.
My recollection of Stockman’s economics from those years (based on e.g. The Triumph of Politics) was that he was all-in on “supply side” economics, which is twaddle. He was smart enough to understand that the commonplace observation codified as the Laffer Curve, while true, didn’t mean that DC could just go on an endless spending spree and expect increased tax revenues to exceed the avarice of politicians, though.
Yes, supply side is bogus, but my observations were that Stockman was quite critical of the spending increases that the Administration put forth. He approved of the so called tax-cuts, but he did so with the understanding that there would be spending cuts along with them.
My own recollections (I was alive back then, but not as politically conscious as I am now) were that Stockman was not endorsing the supply side theory so much as his own idea that cuts in government spending were necessary, and that tax cuts would put pressure on Congress and the administration to cut spending. The irony is that, for whatever reason, tax revenues overall increased by 60% in Reagan’s two terms, yet spending increased almost 100%. This certainly disproves the idea that there was ever a revenue problem, and that it has always been a spending problem.
In any event, Stockman was just about the only person with an official capacity in DC, who actually worked toward spending cuts. Unless you are saying that his rhetoric was a lie, and he was just like all the others. If that is the case then, of course, you could always be right.
No, I don’t think Stockman’s rhetoric was a lie. He did end up getting shoved out of the Reagan regime, after all, precisely because he resisted giving every cabinet secretary all the money they wanted and, as you say, insisted that the tax cuts needed to be accompanied by spending cuts.
But supply-side economics is, perversely, a departure from sound economic policy in the direction of central planning. Its premise is that instead of production being driven by diffuse demand, money should be concentrated in the hands of a few who “know better” what should be produced. True, the central planning class in question was, broadly and not very honestly defined, “entrepreneurs” rather than government bureaucrats, but the principle was the same. And in practice, the “entrepreneurs” intended to benefit were the businesses who already had the clout to make themselves part of the political class, not the guy in his garage designing a better mousetrap.
“But supply-side economics is, perversely, a departure from sound economic policy”
Perhaps the most damning thing about it was that the stated goal was to increase the federal govenment’s revenue. What person in their right mind would wish to give even more money and power to the federal government?
I think you’re mixing up two different things.
The Laffer Curve is an interesting but much over-used (and badly used) observation: There is a tax revenue curve with a top to it. That is, as you raise taxes, revenues go up … until the taxation gets onerous enough that additional earnings beyond bare subsistence strike people as not worth the input, beyond which point tax INcreases produce revenue DEcreases.
Supply-Side Economics is, in bare basics, the claim that high tax rates on the high end of the income scale depress entrepreneurs’ incentive to innovate and invest — that lowering those taxes on “the rich” will mean more economic activity and more jobs.
“Reaganomics” relied on an unsupported assertion that top marginal tax rates were on the “far” side of the Laffer Curve to justify applying supply-side economics to those rates. The notion that tax revenues would increase was the cherry on top. It happens that they APPEAR to have been right about where the tax regime was on the Laffer Curve, but if they hadn’t been they would have found a different excuse.
I’m an anti-taxer in general, but to the extent that there IS taxation, I’m not a supply-sider, I’m a demand-sider, precisely because I prefer decentralization. Leaving an extra dollar in each of one million hands produces more economic information of value than leaving one million dollars in one hand. That is, a million people out spending a buck each will tell producers what they “should” produce much better than will one guy shopping around for an opportunity to invest his million bucks in.
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