DAVID STOCKMAN

Revived this weekend by CBS’ 60 Minutes, the old “boll weevil” and Reaganaut David Stockman, Pres Reagan’s OMB Chief, began a revival of his economic portfolio with a suggestion of a high tier tax on the wealthy which would sustain US fiscal stability. Calling proposed deficits  demagogic (cf 60 Minutes) and now runs my opinion:  he is right if the budgets are as such alone and infinitum, he sees America saved by a tax on the top wealth-holders of America.  Safe and sound politics too, because like judges sometimes, they socialize with no one.

Political humor and economic sardonyx aside, the tax would sustain the deficit spending option with a reduced deficit (reduced by reason of revenues),  lessen the crowded arena of international debt  and its amassment and sustain the engine of the economy.

QE2 as FED Chief Bernanke recommends now would not be cast aside.  Rather, taken soberly,  this quantitative easing 2 (QE2 is a money supply expansion continuation/renewal  via the Fed’s expanded borrowing (buying US notes/bonds) would strengthen and offer gilded options for lessened borrowing, and would sustain a merger of European and Asian resolve for continuing economic stimulation of the global economy.

All government borrowers need to remember the revenue arm.  Few nations have the natural resources wealth of OPEC nations, and we are not the world largest gold & gas producer.  Recollecting Stockman’s Lasser curve opinions as VOODOO ECONOMICS, [Lasser saw a deficit hike for the  tax cut spur new growth and the new revenues would reduce the deficit] , Stockman shyly acquiesced to the Keynesian spur of the Star Wars Reagan program–but took a licking for public differences.

But the important matter is a floor.  Taxes pay government expenses–not borrowing alone, and there are not enough mineral royalties.  His advice is well regarded and timely.

Should Congress, even the the Cong. John Boehner – who’s Dad’s public house isn’t exactly overflowing with these high tier taxables agree (as he noted he might cf CBS face the Nation on tax s for the wealthy referencing continuing the stimulus tax cuts) then the FED and Bernanke have the maneuvering room they need.

NB that the Fed will not wholly please Stockman and his gold bug solid tangibles hedge fund mind at times and never will, but the recourse is rational.