A POORLY KEPT SECRET:

The Neoconomists: The Bush administration's other revolutionaries. (Daniel Altman, May 10, 2004, Slate)

While neoconservatives in the Bush administration remake American foreign policy, another cadre of ideologues—call them the neoconomists—is busy attempting to transform American society.

The revolution in economic policy is not being televised. There was no big speech by President Bush to mark its birth, no "Axis of Evil" catchphrase designed to capture headlines. Yet it is every bit as dramatic and risky a change.

The neoconomists have one goal: to increase the rate at which the economy grows by changing how the nation uses its resources. It is a worthy goal, too. Following such as path could lead to a period of untold prosperity, with living standards rising faster than ever before. Or it might not. But even if the plan works, it might just lead to the collapse of the capitalist system. [...]

[They] postulate the following chain reaction:

1. Government cuts tax rates on savings and wealth.

2. Saving by households—bank accounts, stocks, bonds, etc.—increases.

3. More money becomes available to American businesses, since they're the ones offering the bank accounts, stocks, bonds, etc.

4. Businesses spend more on machinery, software, and other capital, as well as on research and development.

5. The nation's output of goods and services grows, and technological innovation accelerates.

6. Incomes and living standards rise more quickly for several years and perhaps forever.

With George W. Bush's cooperation, the first steps have already been taken. So far, the president has signed bills eliminating the estate tax, lowering the tax rates on dividends and capital gains, and helping companies to reduce the tax they pay on their profits. In addition, by cutting rates for "ordinary" income, the Bush administration has lowered taxes on interest payments, rental income and income from mutual funds, and pensions and retirement accounts. (Though slated to be temporary, the Bush administration is campaigning to make its tax breaks permanent.) All of these changes make it relatively more attractive to accumulate wealth than to spend money.

In addition, the White House is pushing for an initiative that would almost single-handedly accomplish Hubbard and Lindsey's goal: a huge expansion of tax-free savings accounts. And the growth of these tax-free savings accounts would dovetail well with the White House's plan for reforming Social Security, which calls for the creation of another type of tax-free investment account for every working American.

Strange, and here we thought it was called the Ownership Society and was a theme of everything from his election campaign to his last State of the Union. That was even televised here in the boondocks.

Posted by Orrin Judd at May 11, 2004 9:16 AM