Bill Moyers and Bruce Bartlett on Where the Right Went Wrong

[Cactusboy]

video on link

 

 

Bill Moyers talks with conservative economist Bruce Bartlett, who wrote "the bible" for the Reagan Revolution, worked on domestic policy for the Reagan White House, and served as a top treasury official under the first President Bush. Now he's a heretic in the conservative circles where he once was a star. Bartlett argues that right-wing tax policies -- pushed in part by Grover Norquist and Tea Party activists -- are destroying the country's economic foundation.

 

 

here is the beginning of the interview:

 

 

 

BILL MOYERS

: Heather McGhee speaks of how the neoliberal economic experience of the last 30 years – including cutting taxes on the rich and waiting for the wealth and prosperity to trickle down -- has left her generation of Millennials standing under a spigot someone forgot to turn on. After a few drips and drops, it went dry. So did the very notion of equal opportunity for all. And today we’re living in a country deeply divided between winners and losers. Nowhere is that more evident than in our tax system – so distorted by loopholes, exemptions, credits, and deductions favoring the already rich and powerful that it no longer can raise the money needed to pay the government’s bills.

 

Among the people who saw this crisis coming was the conservative economist Bruce Bartlett, the supply-side champion who wrote the manifesto for the Reagan Revolution. Bartlett became a senior policy analyst in the Reagan White House and a top official at the Treasury Department under the first George Bush. Yet for all those credentials, he is today an outcast from the very conservative ranks where he was once so influential. That’s because Bruce Bartlett dared to write a book criticizing the second George Bush as a pretend conservative who slashed taxes but still spent with wild abandon.

 

The subtitle says it all:

How George W. Bush Bankrupted America and Betrayed the Reagan Legacy.

 

For his heresy Bartlett was sacked by the conservative think tank where he worked.

Undaunted, this card-carrying advocate of free markets and small government has been a prolific writer for popular and academic journals and has just published a new book: The Benefit and the Burden: Tax Reform - Why We Need It and What It Will Take. It’s a layman’s guide through the jungle of a tax system that, thanks to rented politicians and anti-tax ideologues like Grover Norquist, enable the one percent to make off like bandits while our national debt soars sky-high. I talked to Bruce Bartlett soon after he had finished his new book.

BILL MOYERS: You've made the point that America's top earning one percent had an effective 33.1 percent federal income tax rate in 1986, and an effective rate of only 23.3 percent in 2008. And you say if the top one percent had kept paying at the 1986 effective rate, quote, "the federal debt today would be $1.7 trillion lower." That's a lot of money.

 

BRUCE BARTLETT: Well, that's right. And when I say effective rate that means the taxes that they paid divided by their income. So that tells you what the revenue is that the government gets from taxing them. And clearly, they were doing okay at the beginning of that period.

 

And that was Ronald Reagan's administration. Up until 1986, the top marginal rate, the top statutory rate was 50 percent. Now it's 35 percent. And all the pressure is on to lower that even further. And this just doesn't make a great deal of sense to me. When people say, 'Oh, we can't raise taxes on the rich. They'll go on strike, they'll move to another country.' But within recent memory, it hasn't been that long ago that we had rates that were substantially higher. And these people did just fine.

 

BILL MOYERS: Well, when I was growing up in the '50s the top marginal tax rate, if I remember correctly, was 91 percent.

 

BRUCE BARTLETT: That's right. And I just think that there's a disconnect between the facts of what taxes do and the sort of mythology of what they do.

 

I think in many ways, the tax debate is a code for an attitude towards the individual vis-à-vis government. If you think government is bad or incompetent, if you glorify the individual against the state, then taxes is sort of your, the territory where you're going to fight these battles.

It's a signaling mechanism. It tells people you're one of us on the tax issue. You're for tax cuts and low tax rates and things like that. And that translates into an attitude towards government that goes into spending and lots of other issues.

 

BILL MOYERS: It's also a case, though, isn't it, that if you pay taxes, whatever taxes you pay, you want to get some services in return. You want your mail to be delivered on time, the potholes to be fixed, the bridge to be safe, the schools to teach your children. And there is that dissatisfaction with government because it hasn't been delivering the services that people really have a right to expect.

 

BRUCE BARTLETT: That's true. The composition of government spending has changed enormously over the last 50 years or so. The vast bulk of federal spending goes to Medicare, Social Security, Medicaid, interest on the debt. And that has a lot to do with, I think, people's attitudes towards government. They view this redistribution policy as taking from me and giving to them, so there is an

antagonistic attitude towards that kind of just shuffling money around. And, but people don't seem to be willing or able to confront that fact, and instead, have concentrated solely on the tax side of the equation. But you can't do one without the other. You just can't keep cutting taxes unless you're going to start cutting spending meaningfully, which means essentially, cutting Medicare. That is the 600 pound gorilla.

 

BILL MOYERS: You write the Bush tax cuts have added at least $3 trillion to the debt. When Bush took office, budget projections showed a $6 trillion surplus, enough to pay off the pending $6 trillion national debt.

 

Instead, by the time Bush left office, the national debt had ballooned to over ten trillion, and the Republicans are refusing to take responsibility for having driven the borrowing binge that put the nation in the hole it is in now.

 

BRUCE BARTLETT: That's exactly correct. One of the things that Bush argued during the campaign, not so much after he took office, is that budget surpluses are a bad thing. Because they might get spent. It really sounds silly when you say that. But he did say this over and over again.

 

And so, the idea of cutting taxes was a part of a policy that I call starving the beast. It's you take away the government's credit card, as Ronald Reagan said. And this will force spending down. This will shrink the size of government. And conservatives believe that there's only so much freedom out there. And the more the government, the more power government has, there's less freedom for the people.

And they have a tendency to look at this in terms of spending as a share of GDP. So it can be measured very precisely. So if the federal government takes 25 percent of GDP, then essentially, we have only 75 percent freedom. We're not 100 percent free. You know, if we could cut government spending down to 20 percent of GDP, then we would gain five percent freedom. We'll go from being 75 percent free to being 80 percent.

 

I'm serious. This is the way they think. And this drives a lot of these policies that on the surface don't make any sense. They're just about taking away the government's resources to force it to shrink to -- if you cut the budgets of the regulatory agencies, then they can't regulate. This is a good thing.

 

They really believe that there's absolutely nothing good that comes out of government, unless it comes out of the Pentagon.

And the starve the beast theory is really extraordinarily pernicious, because one of the things that it is related to is the so-called tax pledge, which my friend Grover Norquist came up with. And which has become a ban on raising taxes at any time for any reason.

 

But at the same time, all tax cuts are okay. So you just have this constant ratchet down. Every time you can cut taxes, you've lowered the threshold that you can never then go up against. So it's like you're coming down a series of stairs. And this is all very conscious, because Grover believes that if you take away the government's ability to tax, it will necessarily be forced to spend less. Government will shrink. Freedom will increase. It's that simple.