Romeny’s Voodoo Economic Plan – Part 2 of the Double R Medicine Show
The heart of Romney’s case for his presidency is his business experience and his economic insight. In order to effectively evaluate and expose the fallacious and deceptive nature of these assertions, it is necessary to spend some time and effort recognizing and appreciating the distinction between sound, supported theories and fetching, fabricated stories. It is a bit of a slog, but as FLOTUS said on 4 September 2012, “We learned about honesty and integrity – that the truth matters…that you don’t take shortcuts or play by your own set of rules…and success doesn’t count unless you earn it fair and square.” To do justice to the magnitude of Romney’s arrogance and subterfuge in this area, some heavy intellectual lifting is mandatory.
Mitt Romney claims we should think of him as the guy who will fix the economy by utilizing all the private-sector wisdom that he got from Bain Capital and applied at the Salt Lake City Olympics. It is his best chance to weasel his way into the presidency, but it is also highly deceptive and blatantly dishonest. Romney’s claim to fame and case for his election only makes sense until and unless one thinks about them.
Romney relies on people going into a trance when the economy and the federal budget are discussed. He offers some buzz words and tells a story which can lull people into a false sense of security. He knows he is doing this and that is what makes his approach so deplorably deceitful.
To fully understand the fallacious nature of Romney’s so-called plan, we must first identify and appreciate the crucial distinction between a conceptual model [aka a theory] and a narrative tale [aka a story]. In economics there is one validated and credible model and there are a number of stories offered as challenges to it. The validated and credible model is often called Keynesian Economics. The stories offered as alternatives include monetarism, the Austrian School, neo-classical economics, and of course, supply-side economics. Each of these four has proven to be fanciful and their applications all have repeatedly failed ignominiously in practice in a variety of countries.
One must understand that a theory is a set of propositions based on acknowledged facts that attempts to provide a rational and elegant explanation of cause-and-effect (causal) relationships among a group of observed phenomenon. The word’s origin (from the Greek thorós, a spectator), stresses the fact that all theories are mental models of the perceived reality. In other words, it is inaccurate and perhaps knowingly deceptive to dispute any theory by saying it is not a fact. Theories are explanatory reasoning based on known and acknowledge facts. Theories are subject to revision as new facts are discovered and these new discoveries are confirmed.
Examples of theories include evolution, gravity, quantum mechanics, the heliocentric model of the solar system, and Keynesian economics. In layman’s terms, if something is said to be “just a theory,” it usually meant to it is a mere guess, or it is unproved. It might even lack credibility. Properly understood and used, however, a theory is an explanation of phenomena that is generally accepted as being true because it is based on large amounts of empirical evidence. http://www.wilstar.com/theories.htm
Heliocentricism is the astronomical model in which the Earth and planets revolve around a relatively stationary Sun at the center of the Solar System. The word comes from the Greek (????? Helios “sun” and ??????? kentron “center”). Historically, the heliocentric model was opposed to geocentrism, which placed the Earth at the center. The notion that the Earth revolves around the Sun had been proposed as early as the 3rd century BC by Aristarchus of Samos, but had received no support from most other ancient astronomers or philosophers.
In the 16th century a fully predictive mathematical model of a heliocentric system was presented, by the Renaissance mathematician, astronomer, and Catholic cleric Nicolaus Copernicus of Poland, leading to the Copernican Revolution. In the 17th following century, Johannes Kepler elaborated upon and expanded this model to include elliptical orbits, and supporting observations made using a telescope were presented by Galileo Galilei. The heliocentric model eventually vanquished the rival geocentric model because the accumulation of empirical evidence was more elegantly and rationally explained by the heliocentric model. That is how science and truth oriented thinking works – evidence is the parent of belief, not the other way around.
As a further clarification let us compare and contrast the geocentric model of the solar system with the heliocentric model.
In astronomy, the geocentric model (also known the Ptolemaic system), is the theory that the Earth is the orbital center for all celestial bodies. This model served as the predominant cosmological system in many ancient civilizations such as ancient Greece. Therefore, most Ancient Greek philosophers assumed that the Sun, Moon, stars, and naked eye planets circled the Earth.
Two commonly made observations supported the idea that the Earth was the center of the Universe. The first was that the stars, sun, and planets appear to revolve around the Earth each day, making the Earth the center of that system. Further, every star was on a “stellar” or “celestial” sphere, of which the earth was the center, which rotated each day, using a line through the North and South Pole as an axis. The stars closest to the equator appeared to rise and fall the greatest distance, but each star circled back to its rising point each day. The second common notion supporting the Ptolemaic model was that the Earth does not seem to move from the perspective of an Earth bound observer, and that it is solid, stable, and unmoving. In other words, it is completely at rest. Therefore, the geocentric model had a basis in the empirical observations accessible to our ancient and medieval forebears. It thus qualifies as a theory.
Because this is so crucial to decoding and debunking Romney’s Voodoo Economics, one more comparative example of rival theories – evolution versus creationism, is provided.
Evolution is a scientific theory used by biologists to explain how animals and plants changed over a long time, and how they have come to be the way they are.
Scientists know that living things have changed over time, because they can detect their fossils in the rocks. So scientists know that the animals and plants of today are different from those of long ago. The further back in time scientists go, the more different the fossils are found prove to be. These demonstrable changes show evolution has taken place. That evolution has taken place is a fact, because it is overwhelmingly supported by many lines of evidence. At the same time, evolutionary questions are still being actively researched by biologists, paleontologists, geneticists and probably scientists from other relevant specialties. New evidence would lead to modifications of details of the existing theory, but it would be unlikely to refute the theory.
Comparison of DNA sequences allows organisms to be grouped by how similar their sequences are. In 2010 an analysis compared sequences to phylogenetic trees, and supported the idea of common descent. There is now “strong quantitative support, by a formal test”, for the unity of life. The theory of evolution is the evidence-based foundation of modern biology. Nothing in biology makes sense without it.
Creationism is religiously based narrative tale stating that humanity, life, the Earth, and the universe are the creation of a supernatural being, most often referring to the Abrahamic God. At least since the 1920s, Abrahamic creationism in America has contested scientific theories, such as that of evolution, which derive from natural observations of the universe and life. Fundamentalist creationists of the Christian faith, the most common variety in America, usually base their belief on a literal reading of the Genesis creation narrative. Bluntly put creationism as it is active and current in American culture and politics today is based on a story, not on empirical evidence. In the context of the momentous 2012 elections, a sound economic model, Keynesian theory, struggles against the sociopolitical equivalent of the Ptolemaic model of the solar system in astronomy or Abrahamic creationism in biology. In order to make sound choices in this election we must recognize that the competitors are not equivalent. One is a valid and validated theory. The other [voodoo economics] is a myth or a story filled with verbiage and rationalizations, but devoid of merit and veracity.
What is sound thinking in astronomy and biology is effective in politics and economics. Although not as rigorously empirical and quantitative, politics and economics are amenable to rational analysis and empirical evidence. As Michelle Obama remarked on 4 September 2012, “We learned about honesty and integrity – that the truth matters.” With the examples from astronomy and biology firmly in mind, let us consider the Voodoo Economics of Romney and his fellow Repugnicans.
The Keynesian model has several things which demonstrate its validity. First, it is a model, not just a prediction about the impact of spending increases. So one can ask about the other predictions of that model as opposed to rival models and one can check the record to find answers. Anti-Keynesians assured us that budget deficits would send interest rates soaring; Keynesian analysis said they’d stay low as long as the economy remained far from full employment: score one for the Keynesian model and a goose egg for the Anti- Keynesians. Second, there are some features of the Keynesian model that can be tested separately. Keynesianism isn’t just about price behavior, but it does generally assume sticky prices — and there is overwhelming evidence, from a variety of sources, that prices are indeed sticky. Third, there is plenty of evidence that monetary policy can move output and employment — and it’s very hard to devise a model in which that is true that doesn’t also say that fiscal policy can be effective, especially when you’re up against the zero lower bound. Fourth, while there is not a lot of postwar experience with fiscal stimulus, there is a lot of experience with anti-stimulus, that is, austerity. Austerity turns out to be consistently contractionary. It is hard to construct a rational and sound model in which austerity is contractionary but stimulus isn’t expansionary.
Keynesianism is a model of the way the world works, and it seems the world does indeed work the way the model suggests. Now it is common to use computer generated models to test and or explore all manner of phenomena in the hard and social sciences. The Keynesian model implies that fiscal stimulus will work under such conditions as we now face. In truth, moreover, the Keynesian model has passed the test of events with flying colors, while the voodoo model has been totally and repeatedly wrong.
Whether it is called Voodoo Economics, supply-side economics, or some euphemism such as the Chicago School, trickle down or Reaganomics, this bogus economic system generates policies and practices that allow the super wealthy to pay little in taxes, eliminate critical regulations that protect us and allow businesses to exploit developing nations that have little to no protections for workers or the environment. By whatever label it is marketed voodoo economics is junk science perpetuated by partisan think tanks that hide behind half-truths, poll-tested messages and a reliance on repeated media failures to ask the pertinent and crucial question: Does it actually work? The answer is no.
History tells a convincing tale.
In 1981, when the first “supply-side” era was ushered in, federal deficits exploded, wages stagnated and economic growth stalled.
In 1993, as taxes on the wealthy and big corporations were raised slightly, economic growth exploded, wages went up and the federal deficit turned into a surplus.
Then in 2000, the Bush tax cuts reversed this progress. Federal deficits hit historic levels, and wages began to drop even though worker productivity went up. After eight years, we saw the largest crash since the Depression.
No amount of slick marketing presentations, focus group tested words and phrases, or facile prevarications about the recent historical record will make voodoo economics any more beneficial and effective than any other application of voodoo ritual and practice.
The Romney Budget Proposals
During his campaign, Governor Romney has made four proposals that would significantly affect the overall level of federal spending, taxes, the deficit and America’s economic vitality:
1. Cap total spending: “Reduce federal spending to 20 percent of GDP by the end of my first term” and “cap it at that level.”
2. Increase defense spending: “Set a core defense spending floor of 4 percent of GDP.” “Core defense spending,” as Governor Romney defines it, encompasses 93 percent of the national defense budget function.
3. Cut taxes: Continue current tax policy by permanently extending the 2001 and 2003 tax cuts and other tax cuts that are scheduled to expire, further reduce income tax rates by another 20 percent (the top tax rate thus would be 28 percent), eliminate the estate tax, eliminate the taxation of investment tax for people other than those with high incomes, reduce the corporate income tax, and repeal the taxes enacted in the 2010 health reform legislation.
4. Balance the budget: “I am planning on getting a balanced budget.”
The chart below shows severity of the cuts the Romney’s voodoo requires with and without the balanced budget hokum.
“The cuts that would be required under the Romney budget proposals in programs such as veterans’ disability compensation, Supplemental Security Income (SSI) for poor elderly and disabled individuals, SNAP (formerly food stamps), and child nutrition programs would move millions of households below the poverty line or drive them deeper into poverty. The cuts in Medicare and Medicaid would make health insurance unaffordable (or unavailable) to tens of millions of people. The cuts in non-defense discretionary programs — a spending category that covers a wide variety of public services such as elementary and secondary education, law enforcement, veterans’ health care, environmental protection, and biomedical research — would come on top of the deep cuts in this part of the budget that are already in law due to the discretionary funding caps established in last year’s Budget Control Act (BCA).” http://www.cbpp.org/cms/?fa=view&id=3658
In essence if Romney does the voodoo he promises so fervently to do, he would destroy the federal government as we have come to know and depend upon it over the last sixty years. How can any American seek the presidency and simultaneously pledge to devastate in six years the Republic he aspires to lead?
“Romney further elaborated on a few core principles about his budget plan. He would decrease and cap all federal spending at 20 percent of GDP, down from its current level of 24 percent of GDP. Within that, core defense spending would have a floor of 4 percent of GDP, leaving 16 percent for everything else. Furthermore, Romney would also spend far less than Ryan on non-defense programs, including entitlements. To stick to his budgeting principles, Romney would have to cut $7 trillion from all non-defense programs, and he would have to cut $9.6 trillion if he wanted to balance the budget, as he’s also promised, the CBPP says. The Ryan plan would cut $5.2 trillion from entitlements and non-defense discretionary spending. “Thus, Governor Romney’s ten-year cuts would range from one-third deeper than those in the Ryan budget to almost twice as deep as the Ryan cuts” the CBPP concludes.”
All that is wild enough, Romney must cut federal spending by between $6 and $7 trillion over the next decade to hit those targets. As Suzy Khimm of the Washington Post details, Romney’s budget promises already require cuts far in excess of what even Paul Ryan’s budget proposed. Romney promises that there will be no other changes to Social Security or Medicare for those over 55, which means neither program, can be cut for the next 10 years. But once you add up Medicare, Social Security and defense and you’ve got more than half of the federal budget. So Romney expects to be taken seriously when he vows to make the largest spending cuts in history while protecting or increasing spending on more than half of the budget. This recalls the line from Blazing Saddles – “When you do that voodoo that you do so well!” It was spoken by a corrupt politician to a band of thugs. This call to action fits right in with Romney and the Repugnicans.
Romney, as usual, doesn’t go into the specifics as to what programs he would actually cut. His running mate, however, does: Ryan’s budget gets nearly 62 percent of its non-defense savings from Medicaid, food stamps, and other programs that aid lower-income Americans, the CBPP says. Romney would have to cut far deeper into those and other programs to achieve his more Draconian budget targets.
The Ryan budget which Romney called marvelous and vowed to sign if it came to his desk as president is the only somewhat detailed document available for assessment. The single largest difference between the Repugnican proposal and President Obama’s is in the tax section: Repugnicans have voted for raising $2 trillion less in revenue than the White House proposes. In the president’s budget, the increased revenues come mostly from higher taxes on the wealthy. So that’s the first big gap between the two proposals: Under the Repugnican budget, revenue would be lower, and the distribution of taxes more regressive, than under President Obama’s proposed budget.
On the spending side, the Repugnican’s biggest cuts come from health-care programs. They eliminate the $1.5 trillion that the Affordable Care Act uses to purchase health insurance for 30 million Americans. Then they cut Medicaid and related health programs by $770 billion — or by about a third. Medicare takes $200 billion in cuts on top of that. This graph from the Congressional Budget Office’s analysis of Repugnican’s budget tells the story:
To appreciate the audacity of the Repugnican budget and economic proposals, think about the image below.
This cartoon is worth at least 1,000 words! It tells the fate awaiting America if voters fail to cut through the voodoo and reject Romney’s self-serving, superstitious nonsense. The option Romney and the Repugnicans advocate is described best by Mackenzie MacHale, the Executive Producer on the HBO series Newsroom, going back to voodoo economics would be the equivalent of “cheating on the perfect man with the guy who dumped us.”
Romney has asserted his claim to the presidency on the basis of his business acumen and economic expertise. This claim is balderdash. He has financial acumen, not business acumen. He is no more qualified to be president on that basis than would be the unredeemed Ebenezer Scrooge. His economic expertise is nothing but a parroting of what is in effect a cult and it reveals and reflects ignorance and wishful thinking more that insight and worthy proposals.
We have an opportunity and indeed an obligation to reject an economic model that has proved a disastrous failure for our nation along with the voodoo Bokor striving to cast its spell on us once again. Let us believe in science, not voodoo, and vote rationally, rather than fearfully or resentfully in the 2012 election
In the accompanying video, Professor Robert Reich concisely explains the nonsensical and harmful nature of the voodoo economic scheme pushed by Romney and his idea man, Ryan.
Tags: dishonesty, Election 2012, evidence, Keynesian economics, Larry Conley, romney, story, Supply Side, Theory, Truth, Voodoo economics