You know you’re in deep doodoo when…

December 24, 2008

You know you’re in deep doodoo when Bruce Bartlett, one of the alchemists responsible for Reaganomics, starts talking like a Keynesian. In a piece in today’s New York Times , Bartlett wrote:

Under these circumstances [a liquidity trap], when the normal rules don’t apply, the government must find more creative ways to ease credit conditions and get the economy moving again.

First, it needs to increase the budget deficit. This expands the amount of Treasury bills in circulation and is the same as expanding the money supply, which is necessary to keep G.D.P. from shrinking due to a fall in velocity.

I wonder if Bruce has figured out that the supply-side trickle-down economics, which he marketed so heavily and so effectively through the editorial page of the Wall Street Journal, are largely responsible for the pit we’ve fallen into. The policies that Bartlett cooked up for Reagan of cutting taxes for the rich while cutting safety net programs and assistance to the poor, and engineering trade policies designed to drive wages down – all have resulted in an economic trap, where the majority of Americans now (reasonably, it’s sad to say) expect to be poorer in the future, and the few who have become fabulously wealthy by diverting the trickle, are afraid to invest because nobody can afford what they might produce.

It’s a little late, Bruce, but you could make amends by getting behind the incoming president’s agenda to rebuild the American middle class.

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