Mitch McConnell gets lectured in The New Republic for his "economic ignorance" by a writer peddling a load of liberal crap:
On CNN’s “State of the Union” Sunday, incoming Senate Majority Leader Mitch McConnell said that Republicans in the 114th Congress will focus on blocking environmental and healthcare regulations: “We need to do everything we can to try to rein in the regulatory onslaught, which is the principal reason that we haven't had the kind of bounce-back after the 2008 recession that you would expect.” But that is exactly the wrong lesson to take from the slow recovery. Rather than laying the foundation for the GOP’s agenda, McConnell is betraying his ignorance on economic issues.
After the financial crisis struck, consumers cut back on their spending and businesses stopped investing. This created a shortfall in aggregate demand—people weren’t buying enough stuff. As consumers stopped buying goods and services, businesses were forced to fire workers, who then cut back their purchases—a vicious cycle. The government’s role is to fill the shortfall in demand, which it can do either through fiscal or monetary stimulus. We’ve done both in the past few years. The stimulus pumped hundreds of billions of dollars into the economy through targeted tax cuts and spending programs. The Federal Reserve cut short-term interest rates to zero to spur investment and used unconventional monetary policy tools like large-scale asset purchases to lower long-term rates. . . .
[. . .]
McConnell’s real sin Sunday was his belief that “regulatory onslaught” has been the “principal reason” for the slow recovery. Republicans have made this argument throughout the Obama presidency. If we would only cut government spending, eliminate red tape, and cut taxes for the rich, they say, the economy would thrive. The problem is that these are all supply-side solutions intended to increase productivity and prevent government from crowding out investment. Yet, the economy has faced a demand problem. The GOP’s job agenda, or what they call a jobs agenda anyway, does little to address it.
Excuse me, but isn't it just possible that there are both a supply and demand problem? Certainly demand went down as the financial crisis hit, which started the downward spiral the writer describes. But when demand is suffering, the last thing you want to do is discourage supply. If he doesn't think government actions like taxing and regulating affect supply, he's living in a fantasy land. Just consider one thing, the mdecial device tax used to fund paart of Obamacare. That threatens the supply, which drives up the cost, which further dampens demand. He quotes Paul Krugman with some enthusiasm, so you know this is not a "government should know when to just get out of the way" type of guy.
Comments
It was deregulation in the form of the repeal of Glass-Seagull pushed through a GOP controlled congress and signed into law by a Democrat President that allowed the banksters to gamble with other peoples money and crash the world economy. Now McConnell want's more of the same. Have we forgotten the definition of insanity? To address Leo's claim of a supply problem all I can say is, really? Look at all the idled factories and manufacturing facilities only working one shift. If there was a supply problem manufacurers couldn't keep up but that is not the case. They aren't operating at capacity because there is no demand for what they make. If demand was there, manufacurers could and would ramp up to meet demand.
Why is there no demand? Since the time of St. Reagan wages have been flat while most of the gains created by the productivity of the American workers have gone to the top. Benefits have been slashed for workers, wages stagnant, prices creeping up but not wages. Education costs through the roof, higher and higher deductables if you were lucky enough to still have health insurance, traditional pension plans scrapped for 401K's where you assume all the risk and Wall Street can get their hands on managing the money for a small "fee". Americans tried to maintain their lifestyle by getting second jobs, having the spouse work, then overuse of credit cards and finally home equity loans. The average American is out of disposable income, the golden goose has been cooked. Until more money gets in the hands of average Americans,the game is over and no amount of tax cuts for billionares and corporations will change anything as the found money will go for bonuses at the top and stock buybacks, never wage increases. Eliminating all regulations won't cause someone to spend if they haven't got the money to spend.
Mitch McConnell don't get it and neither does Democrats cuddling up to Wall Street. All any of them are concerned about is kissing butt to keep their 110 days of work a year jobs, leaving the door open for life after politics with cushy million dollar salaried jobs on Wall Street waiting like Eric Cantor did. Payback for a job well done.
As Thomas Sowell concluded, we can have the imperfections of the market or we can have the imperfections of government action.
One is as bad as the other, and we will always have the pontificating finger waggers blaming someone.
At least with the market, as imperfect as it is, we have the aggregate of what people freely choose based on their own wants, needs, expectations, etc. I don't especially care for the government trying to tontrol the supply OR nudging my demand one way or the other.