The Dark Age of Money: Milton Friedman and the Rise of Monetary Fascism

[Octafish]

42. David Stockman, Pruneface Budget Director, said the wealth transfer was political...

...which spells bad things for those who can't afford to buy their own government.

Taking Stockman: How Nixon, Reagan, Bush and their GOP Demolished the Economy

Pierre Tristam
FLAGLERLIVE | AUGUST 1, 2010

Back in 1981 David Stockman was the wonderkid of the Reagan administration–the director of the Office of Management and Budget who’d craft in actual budgets the trickle-down miracle Reagan had promised on the campaign trail: lower budgets, lower spending, higher tax revenue. But trickle-down economics was a wish, not a reality. It’s never worked. Lower taxes don’t generate more revenue. They generate deficits.

Reagan knew it. So did Stockman. So did their guru, Friederich von Hayek. The deficits were intentional all along. They were edsigned to “starve the beast,” meaning intentionally cut revenue as a way of pressuring Congress to cut the New Deal programs Reagan wanted to demolish. “The plan,” Stockman told Sen. Daniel Patrick Moynihan at the time, ” was to have a strategic deficit that would give you an argument for cutting back the programs that weren’t desired. It got out of hand.”

A 1985 interview with von Hayek in the March 25, 1985 issue of Profil 13, the Austrian journal, was just as revealing. Von Hayek sat for the interview while wearing a set of cuff links Reagan had presented him as a gift. “I really believe Reagan is fundamentally a decent and honest man,” von Hayek told his interviewer. “His politics? When the government of the United States borrows a large part of the savings of the world, the consequence is that capital must become scarce and expensive in the whole world. That’s a problem.” And in reference to Stockman, von Hayek said: “You see, one of Reagan’s advisers told me why the president has permitted that to happen, which makes the matter partly excusable: Reagan thinks it is impossible to persuade Congress that expenditures must be reduced unless one creates deficits so large that absolutely everyone becomes convinced that no more money can be spent.” Thus, he went on, it was up to Reagan to “persuade Congress of the necessity of spending reductions by means of an immense deficit. Unfortunately, he has not succeeded!!!” Those three exclamation points, unusually effusive for an economist, are in the original.

Keep in mind: Hayek is speaking his disillusion with the GOP’s misapplication of his theories in 1985. To this day he remains a favored mask of budget-wreckers pretending to be fiscally conservative while pushing for more tax cuts. Those wreckers are at work in Congress today as they argue for an extension of the Bush tax cuts of 2001 and 2003, which were far larger than Reagan’s of 1981 and 1986 (in 1986, Reagan agreed to some tax increases, but mostly in the Social Security payroll tax, meaning on the middle and lower classes).

Stockman resigned from the Reagan administration in 1985, himself disillusioned. Today in The New York Times, he writes a damning piece that sums up Republican duplicity on budgets and fiscal responsibility going back to the Nixon administration. “IF there were such a thing as Chapter 11 for politicians,” Stockman begins, “the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nation’s public debt — if honestly reckoned to include municipal bonds and the $7 trillion of new deficits baked into the cake through 2015 — will soon reach $18 trillion. That’s a Greece-scale 120 percent of gross domestic product, and fairly screams out for austerity and sacrifice. It is therefore unseemly for the Senate minority leader, Mitch McConnell, to insist that the nation’s wealthiest taxpayers be spared even a three-percentage-point rate increase. More fundamentally, Mr. McConnell’s stand puts the lie to the Republican pretense that its new monetarist and supply-side doctrines are rooted in its traditional financial philosophy.”

In a piece entitled “Four Deformations of the Apocalypse,” a clever play on the biblical image of the four horsemen of the apocalypse, Stockman outlines four major Republican breaks with discipline that set the stage, then compounded, American bankruptcy, beginning with Milton Friedman convincing Nixon to default “on American obligations under the 1944 Bretton Woods agreement to balance our accounts with the world. Now, since we have lived beyond our means as a nation for nearly 40 years, our cumulative current-account deficit — the combined shortfall on our trade in goods, services and income — has reached nearly $8 trillion. That’s borrowed prosperity on an epic scale.”

CONTINUED...

http://flaglerlive.com/8577/david-stockman-reagan-nixon-bush-trickledown/

"Trickle Down Government" doesn't even begin to cover what we are experiencing.