Below, you’ll see a video in which David Stockman totally trashes “immoral” tax cuts, says needing TARP is an urban legend, and Hank Paulson is incompetent and reckless.
The man who advised the famed tax cutting President on Reaganomics has switched gears, but, take into consideration a few things.
First, that Stockman has been trashing Reaganomics and the Bush tax cuts all over town recently (on 60 Minutes, the Colbert Report), and second, that his media frenzy is probably in large part because he’s writing a book on the financial crisis and what he says appeals to the sentiment of pretty much everyone on Main Street.
Third, that Stockman was indicted on charges of accounting fraud related to his role as chairman of Collins & Aikman, an auto parts supplier.
“You’re kidding yourself if you think cutting taxes is really cutting taxes,” says David Stockman, the former budget director for Ronald Reagan, in a recent interview with Reason.Tv.
“We’re simply deferring massive taxes unfairly and immorally putting huge debt burdens on future generations and that is just wrong.”
Speaking of debt, this is what he thinks of TARP and Hank Paulson. (Watch the full interview below.)
Interviewer: Why was TARP a bad idea? I mean we have President Bush, President Obama, we have Tim Geithner, we have a bunch of Nobel Prize-winning economists, we have Warren Buffett, who all say TARP is the reason we’re still talking, the reason we still have lights on.
Stockman: First of all, that’s urban mythology. I don’t think there was panic on Main Street in America. What there was was that the big pyramids of debt were crashing down on Wall Street and had we allowed nature to take its course, maybe the Goldman Sachs stock would have gone down to $10, but that’s their problem and the problem of the financial speculators who owned the stock. Not a systematic problem for the economy.
Maybe a couple of banks would have been closed by the FDIC, and whether you believe in deposit insurance or not, it was there, and that was the function of deposit insurance.
Interviewer: Why did that win the political battle?
Stockman: Because Paulson, frankly, is the most incompetent, reckless Secretary of the Treasury we’ve had in modern history if ever. And he had no schooling in public policy and he had no schooling in the longer term issues of fiscal management or even what sound money is all about, for crying out loud.
And as a result, as the crisis metastasized, and he got all these panicked calls from his buddies on Wall Street, who were seeing their pyramids of debt come crashing down, and particularly when the stock of GS began to plunge, he panicked. There was no philosophy behind it, there was never any analysis done. This whole idea that there was systemic risk is just a term made up by people looking for ways to meddle in the economy and he ran with it.