Friday, January 1, 2010

Airbrushing history

I'll admit I find Scott Brown's campaign ad a little creepy. There's something about the conjured screen static taking over and the archival footage of John F. Kennedy giving way to some supposed morphic equivalency between JFK and... Scott Brown. The 30 second spot goes to that dark heart of black and white televised nostalgia mongering in much the same way the full length movie Pleasantville did.

I'll admit Lloyd Bentson's famous advice to Dan Quayle came to mind. Scott Brown, you're no John F. Kennedy.

But to give the Divil his due, Senator Brown does remind us that tax-cuts in and of themselves aren't the property of one political party or one set of economic principles. They are tools in the toolbox to be considered. Tax cuts, why not? There is some dimension to the question, if not to the weird image play at work in Brown's asking of it.

But giving a look to the context of the tax cuts Kennedy proposed (which were finally put into effect well after he was dead) it is worth realizing that the structural concern —as Kennedy conceived of it— underlying a lagging economy as we moved into 1960's was the problematic prospect of a massive and growing federal surplus as we got "the economy moving again."

Herbert Stein writing for the WSJ put it this way: "

In fiscal 1961, when Kennedy came into office, the federal deficit was about 0.6% of gross national product. But the administration believed that the budget would be in surplus, given the existing tax rates and expenditure programs, if the economy were at full employment. It believed that even with lower taxes or higher expenditures the budget would be in balance if the economy were at high employment.

The administration believed that there was a long-term problem of fiscal drag. It thought that in the long run the potential growth of total output was 4% a year, without counting on increased growth from tax reduction or other structural reforms. But this potential growth rate would not be achieved with existing tax and expenditure policies, because they would yield excessive surpluses, which would depress demand. So the long-run growth problem was to get rid of these troublesome budget surpluses.

With some exceptions, the administration did not care much about balancing the budget, except as a useful political slogan. Walter Heller, Kennedy's chief economist, referred to balancing the budget as "the Puritan ethic," at a time when that epithet was considered dismissive.

Cutting taxes was not Kennedy's first choice for getting rid of those troublesome surpluses. He had plans for many expenditure increases - for defense, education, urban renewal, regional economic development, worker training and medical care for the aged."

So, as Steven Greenberg pointed out, writing for back in 2004, there is really some problem "portraying Kennedy as the ideological kin of Reagan and Bush on tax policy." There is just some problem with airbrushing out the context for Kennedy's proposal and pretending he is some spiritual ancestor to the mania for tax-cuts as a cure-all —to what some would describe as Voodoo Economics. Unlike 8 x10 glossy portraits, air brushed centerfolds —or even clever video effects, economies have a three dimensional reality to them that's worth considering on the whole.

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