CNBC Demonstrates Why Liberals Don't Understand Economics
Doesn't it amaze you when some liberal media member actually claims that raising taxes is good for the economy, and uses the Clinton Era to prove his or her specious point?
Such transpired Tuesday afternoon when CNBC's Trish Regan invited liberal columnist David Sirota on to discuss president-elect Barack Obama's plans to get the economy rolling again.
True to the liberal motif, Sirota spoke fiscal and economic non sequiturs that only the deluded and/or uneducated could possibly agree with (video embedded right):
Ummm, no David, that's not what occurred over fifteen years ago, for you, like most of your liberal brethren, conveniently forget that the '90s recession actually ended in the first quarter of 1991.
DAVID SIROTA, LIBERAL COLUMNIST: Well, we have a history of knowing that when you raise taxes on the very wealthy, and you use it for spending and economic stimulus, that can build the economy. That's what happened in 1993 when President Clinton came into office. So, Grover's arguments...
TRISH REGAN, CNBC ANCHOR: Okay, so wait, I want to stop you there. You're saying Clinton raising taxes actually resulted in stronger GDP growth?
SIROTA: What I'm saying is the entire economic package that he presented did, and that the entire economic package was in part funded with a tax on the wealthy in order to spur the kind of spending and stimulus that needed to happen. The point here is that we need an economic stimulus. We should be okay with some modicum of deficit, but we should also be looking to make sure the deficit doesn't get out of control to create high interest rate pressure. And I think that we have a history in this country of knowing that if you raise taxes in an appropriate way on the very wealthy that that can create an economic boom. That is what happened over fifteen years ago.
As tables available at the Bureau of Economic Analysis show, the Gross Domestic Product grew 2.6 percent in the second quarter of 1991, 1.9 percent in Q3, 1.9 percent in Q4, 4.2 percent in Q1-1992, 3.9 percent in Q2-1992, 4.0 percent in Q3-1992, and 4.5 percent in Q4-1992. As such, the economy had been growing for a full seven quarters before Clinton was inaugurated.
Sadly, liberals choose to ignore this inconvenient truth, and instead falsely claim almost ad nauseum that Clinton's tax hikes caused the '90s economic expansion.
In fact, the 3.3 percent growth in 1992 exceeded the 2.7 percent growth the economy experienced in 1993 the first year after Clinton increased taxes. Two of the four years in Clinton's first term produced lower growth rates than the year before he raised taxes. And, the average yearly growth rate in Clinton's first term was 3.2 percent, less than the year before he took office.
What most liberals also choose to ignore is that the real explosion in the economy began in 1997 when Clinton finally agreed to tax cuts the Republican Congress had been pushing for since they took over in 1995. The GDP grew 4.5 percent in 1997, 4.2 percent in 1998, 4.5 percent in 1999, and 3.7 percent in 2000. This is an average yearly growth rate of 4.2 percent, a full percentage point (or 31 percent!) better than during his first term when taxes were higher.
Moreover, the real explosion in revenues also occurred after taxes were cut in 1997. After Clinton's tax hike, revenues grew by $362 billion from 1992 to 1996, or 33 percent. By contrast, once the GOP finally got Clinton to cut taxes, revenues grew by $572 billion, or 39 percent from 1996 to 2000.
Sadly, such facts didn't prevent Sirota from continuing with his inanities:
The issue here is you have to ask "what is the prudent course of action?" Are we risking too much by creating a bigger deficit by not raising some revenues or should we not raise taxes at all? What I'm saying here is very clear. In the recent history of this country, we have had a very clear example where a past administration saw a recession, saw that prudently raising taxes on the wealthy in order to fund an economic stimulus was something that brought the economy back. We have that history.
Ummm, no, we really don't. After all, besides how wrong Sirota was concerning GDP growth and tax revenues, this economic stimulus in Clinton's first term was a figment of his imagination.
Spending under George H.W. Bush rose by 23 percent from FY 1989 thru FY 1993. Spending only grew by 13.5 percent during Clinton's first term. As such, where was the added stimulus, David?
Add it all up, and Sirota really has absolutely no clue about what happened economically or fiscally during the Clinton years.
Maybe more importantly given our current economic condition, Sirota also seems clueless about the history of over-concern for deficits when the economy is in a recession. Maybe he should learn from Nobel Laureate Paul Krugman who surprisingly got something right on ABC's "This Week" a few Sundays ago:
PAUL KRUGMAN, NEW YORK TIMES: What actually happened was, you know, there was an enor, there was a collapse in the financial system, which was not restored for a long time. There was a persistent deep slump in consumer demand, and therefore no investment demand and so you're stuck in this trap. Roosevelt got the economy moving somewhat. By 1937 things were a lot better than they were in 1933...
GEORGE WILL: And then they tanked (?)...
KRUGMAN: ...then he was persuaded to balance the budget, or try to, and he raised taxes and cut spending, and the economy went back down again, and it took an enormous public works program known as World War II to bring the economy out of the Depression.
Quite right, although Sirota appears to disagree with this. On the other hand, that shouldn't be a surprise, for Sirota's historical knowledge of events transpiring since he was born is just as lacking.
After all, also missing in Sirota's view of the Clinton Era was the fact that the Governor from Arkansas didn't campaign on tax hikes. Quite the contrary, he promised middle class tax cuts.
Weeks after he was elected, the 3rd quarter GDP numbers came in stronger than expected, and the FY 1992 budget deficit came in higher than projected. This is what led President Clinton to raise taxes in 1993, as an economy that he had claimed for months was still in recession actually no longer needed stimulus in his view, and fighting the deficit became priority one.
Such explains the tax hikes as well as the slowing in spending growth.
Though this is indeed easily verifiable recorded history, Sirota like so many of his liberal media colleagues doesn't have a clue.
Yet, his misguided opinions feed the minds of liberals who read The Nation and the Huffington Post, as well as viewers of MSNBC's "Countdown" and Comedy Central's "The Colbert Report."
And you wonder why liberals are so clueless when it comes to economic and fiscal issues?