27 Aug 2008

Is Tax-and-Spend Worse than Borrow-and-Spend?

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Larry Kudlow interviewed Rudy Giuliani (transcript here), and they naturally started bashing Obama. Here’s Kudlow’s question:

Kudlow: [O]ne of the big topics of this program tonight for investors is, are we going to return to a real tax-and-spend approach to economic policy, which was used in the 1970s? As you well know, it caused — it caused sluggish economic growth, it spurred inflation. Stock markets did very badly.

Hmm let’s see: High government spending, sluggish economic growth, high inflation, and poor stock market performance. Does that sound like an exclusively Democratic description?

As the chart below indicates, the S&P 500 is lower in nominal terms today than it was when George Bush assumed office.

In that same period, prices in general have risen (even according to the bogus official measures) by about 25 percent. Check out the chart below and compare the inflation record of the two Bushes against the Clinton years. (Of course the worst is Carter.)

Finally, let’s check out government spending. It’s a good thing W. won and kept out those big-spending Democrats!

In conclusion, YES I realize there are extenuating circumstances. Clinton would have spent more were it not for the Republican Congress, and George W. Bush would have spent less were it not for 9/11. And as far as the stock market, it’s not Bush’s fault that the dot-com bubble burst right when he took over.

Even so, there’s much to be said for the cranky old man’s wisdom who claims there’s not a dime’s worth of difference between the two parties. Going the other way, I also can’t get worked up when Democrats try to scare me with references to the police state under McCain. The Democrats in 2006 had a clear mandate to oppose Bush on these matters, and they just rolled over on wiretapping, war funding, etc.

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