The rhetorical trajectories of Washington can be bemusing to behold.<\/p>\n
In the past week, the White House had taken up the mantra, \u201cParty of No,\u201d and this weekend even conservative leaning Sunday talk show panels and interviewers adopted the chant.<\/p>\n
As in, when it comes to the president\u2019s program for reviving the economy, all the Republicans can say is \u201cno.\u201d<\/p>\n
Yes, the president wants another, how many more dollars packaged as what program now.\u00a0 Can you imagine?\u00a0 The GOP says \u201cno.\u201d\u00a0 We\u2019re going to tax all those rich people.\u00a0 Again, the GOP says \u201cno.\u201d\u00a0 \u00a0You get the idea.<\/p>\n
But it is all a rhetorical fog.\u00a0 There are real choices on the table for dealing with the impending second dip in the economy.\u00a0 They are not between no and yes.\u00a0 They are between two distinct strategies for economic revival \u2013 and each strategy has a history.<\/p>\n
Strategy A is what Washington rhetoric calls the \u201cno\u201d strategy: lower tax rates, reduced and restrained regulation, and cuts in spending.<\/p>\n
Strategy B includes the administration and Democratic Congressional majority\u2019s higher taxes not just on the \u201crich\u201d but on nearly everyone.\u00a0 It also includes expansive and arbitrary regulation and unimaginable (until recently) boosts in spending.<\/p>\n
As I say, both options have been tried repeatedly in modern times and with consistent results.<\/p>\n
Strategy A was imposed on the Truman Administration after the GOP took over Congress in 1946.\u00a0 A boom followed.<\/p>\n
Building on the legacy of spending restraint in the Eisenhower years, it was tried again when the Kennedy tax cuts went into effect, producing another boom.<\/p>\n
It was the Reagan strategy in the early \u201880s, with the longest peacetime expansion in American history the result.<\/p>\n
In a replay of the late \u201840s, the Gingrich Congress imposed a capital gains tax cut and spending restraint on Bill Clinton, again producing a boom.<\/p>\n
How about Strategy B?<\/p>\n
We can debate whether spending, taxing and more regulation helped during the early Roosevelt years.\u00a0 But, as Amity Shlaes reminded us in her now classic history of the Great Depression, The Forgotten Man<\/em>, there was a second depression, a double dip, if you will, in the late \u201830s.\u00a0 That was when more taxing, spending, and expansive regulation were the policies of the day.<\/p>\n The late \u201860s and the 1970s saw major increases in spending, regulations (until the late \u201870s), and (through the interaction of inflation and marginal rates) taxes, ultimately producing the worst economic crisis between then and the Depression.<\/p>\n And today, again, we have a government well into that so often toxic policy mix.<\/p>\n It is an enduring rule of thumb that presidents need about a year and a half in office before they can be blamed or take credit for the state of the economy.\u00a0 They have to have enough time to win enactment and implement their policies.\u00a0 Then they must wait for those policies to work their way through the economy.\u00a0 For example, though passed in \u201981, Reagan\u2019s tax cuts were not implemented until \u201883, and that\u2019s when the boom of the \u201880s began.\u00a0 Similarly, Bush owns the initial downturn and last year\u2019s revival.\u00a0 Obama owns the double dip.<\/p>\n In other words, Mr. Obama and his Congressional allies want to keep to a policy course that has backfired every time it has been tried, including now.\u00a0 When another set of programs is put on the table, all they can say is \u201cno.\u201d<\/p>\n But that isn\u2019t the whole story.<\/p>\n