The Lileks Zone

The Recession, Explained

Anyone who’s been awake in the last two years knows there’s contentious debate about the causes of the Great Recession. A natural contraction, exacerbated by hamfisted policies executed by people whose business experience consists of playing “Monopoly” when they were twelve? Too many bad loans given to people who showed up for closing wearing cardboard shoes and pants held up with a rope? The inevitable comeuppance you get when reality crashes into arcane financial theories? Pelosi & Co. showing up in 2006 to drape lead weights around the economy’s neck? George Soros, sitting in his underwater lair, stroking a white fluffy cat, commanding his minions to cry havoc and let loose the dogs of war?

We have an answer now. Up here in Minnesnowcold, as Hugh likes to call it, long-time Congressperson Jim Oberstar is having a hard fight against Chip Cravaack. The debates have been testy, and the audience occasionally has declined to extend the awed silence naturally owed a figure of Oberstar’s stature. From the StarTribune account of the most recent debate:

On whether Congress should extend President George W. Bush’s tax cuts,
Cravaack said they should be extended to rejuvenate business growth.

Oberstar said he would eliminate the tax break for the top 2 percent of the income bracket, claiming that the Bush tax cuts “put us into this recession that we’re in today.”

Well. There you have it. Recessions are caused by insufficient taxation. This is a novel theory to most of us, but no doubt an item of faith in Oberstar’s world. You don’t just get out of recessions by taxing more, you avoid recessions by taxing more. The fact that the economy took off after the tax cuts is irrelevant; any subsequent contraction can be laid directly at the well-shod feet of the people whose property was not subjected to the exquisitely calculated confiscation policies of the state. Brilliant.

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