Dean Baker seems to have finally lost all contact with reality, as yesterday he went totally, completely and utterly batshit crazy over tax cuts and investment by Apple Inc.
My favorite was his statement that the columnist he is criticizing, “doesn't seem to have a clue why the government taxes in the first place,” and proceeds to tell us that, “The reason the government taxes is to reduce demand in the economy. The purpose is to prevent the economy from overheating and experiencing inflation.”
I mean, I knew that Baker was unconcerned by the amount of the federal debt, an attitude which has always struck me as a bit bizarre. I never in my wildest imagination, however, thought that he believed that all government operation, things like national parks, highways and the military, should be financed entirely and only by borrowed money and increases in the government debt.
He appears to be of the modern school of thought that citizens should reap the benefit of government services and benefits without having to pay anything for them. Citizens at least think that somebody else, “the rich,” should pay for those benefits, but Baker seems to think that they should be paid for by just borrowing more money.
He expands on his “taxation to reduce demand” theme by adding that, “When the economy is near full employment we face the standard story where we have to tax to finance spending. In other words, if we want additional spending we have to pull demand out of the economy to open the space. However, when we are below full employment, the government is not constrained by its tax revenue.” I have no idea what any of that means, don't think that he does either, and included it here merely for it’s entertainment value.
He goes on in the same column to say that the government will not benefit from Apple paying $38 billion in taxes on the repatriation of funds from overseas because the money is, “already being held in the U.S., its ownership is just attributed to a foreign subsidiary,” which ignores the fact that it was not being taxed and now is, and that having $38 billion is better than not having $38 billion.
He asks the question, “How would the world be different if Apple still held its money overseas and we had the Fed credit the government with another $38 billion to count against its debt?” Because, apparently, the money that the Federal Reserve Bank creates out of thin air for "Quantitative Easing" is the same thing, in Dean Baker’s feverish little mind, as real money which will be paid by Apple in the form of taxes.
He then repudiates one of his favorite rants about how the media is “mind reading” when they say that “Republicans think blah, blah, blah” merely because Republicans say “blah, blah, blah,” when he says that Apple’s claim to be spending $20 billion on capital expansion and pay raises is due to the tax cut is not true because they would be doing that anyway without the tax cut, because businesses “make investments and raise wages all the time,” but that, “They usually don't go to such great effort to put on a public display” about it.
Actually, they do, but let’s not split hairs with an economist who has totally lost his mind.