Partly as a result of the recent turmoil on Wall Street, there has been more discussion of Republican and Democratic economic policies. This strikes me as a salutary shift. Unfortunately, I’m afraid that much of the discussion is based on false/misleading information. For example, here are two claims that I’ve heard very often recently: (1) the current Bush administration created a lax environment for Wall Street firms by extensive deregulation and (2) the same Bush administration slashed taxes on the very wealthy. Can anyone tell me a bit more about this? The reason I ask is that I thought both deregulation and the cutting of taxes might more fairly be attributed to the Clinton administration than to the Bush administration. If that’s right, then it would be misleading at best to blame the Republicans for those actions. But I don’t know enough about either administration’s activities to be confident about that. So does anyone know more about this?
Sydney
Alan Schmierer
Hi S.,
I think your point is more or less fair about (1): e.g., Glass-Steagall was repealed in 1999, and that’s what allowed all this investment-bank-commercial-bank mix-up stuff to happen. Note that by that point the Congress had had strong Republican majorities for five years (Phil Gramm, John McCain’s top financial adviser and probable Treasury Secretary pick if he is elected, was one of the sponsors of the bill to repeal Glass-Steagall).
A separate question is the degree to which lax regulation, lax enforcement of existing regulation, and closed-off possibilities for new regulation of an increasingly complex financial landscape, respectively, are responsible for the situation we currently find ourselves in: this is something wonks know about but ordinary people haven’t thought too much about. I think but am not certain that the prevention of new regulation was put in place under a Democratic house and Republican legislative branch.
In re: (2): no, Bush’s tax cuts on the unbelievably wealthy have gone far beyond anything Clinton countenanced. One way you can see this is by looking at the difference between what would happen to the superrich under Obama and McCain, since the main (maybe only, as far as income tax goes?) difference between their plans is that Obama would let the Bush tax cuts go when they expire, while McCain plans to renew them. Here’s a link to some charts about the tax plans: http://freakonomics.blogs.nytimes.com/2008/09/16/competing-tax-plans-two-perspectives/ .
(There’s also the very simple http://alchemytoday.com/willobamaraisemytaxes.html )
Cheers,
Alice