A Nobel Prize winning idea

I know nothing of economics, can't even balance my own checkbook. But for what I am about to propose , consideration for the Nobel Prize should not be out of the question. Think about it. Paul Krugman won. His contribution to the field , as far as I can tell, is pretty much : the government can never tax too much, nor spend too much. That's worked well. But give him credit for persistence, and never having to say "I'm sorry, I was wrong." Then there are the recent winners--Carter, Gore, Arafat, and taaa dummm.... Barack himself. The Prize is devaluing quicker than our dollar.

Anyway, my proposal: the Callaghan Curve. As I previously stated, I know nothing of the dismal science, but I do know something of human physiology. Arthur Laffer has given us the Laffer curve, which we conservatives have hung our hats on since Reagan. And I may add, we and the Country have done quite well with it . Now our liberal/progressive buddies are yapping about how great things were in the Clinton years : the Clinton tax rates were just ducky, they are the best rates we could ever have blah...blah...blah. The implication is that these rates sit at the the top of Laffer's curve .

My suggestion is that we look at tax revenue as we would a human body. Here there is something called the Starling Curve. Looks pretty much like the Laffer Curve. It examines the amount of blood the body has, and compares it to how well the heart pumps it out. Essentially, how efficient the heart is at getting blood to where it is needed. The point, as the curve shows, is that you can only give a human so much blood until performance goes downhill. Because we are dealing with a living organism , we must think more dynamically.

Things often change. Has the patient suffered a heart attack and damage to the heart done? Is there too much adrenaline circulating ; too little adrenaline? Depending on these and other variables, we are continually moving up and down the curve. The exact effect of a given volume of blood will depend on where the patient is on the curve , and may only be defined by a matter of trial and error.

Now for the Callaghan curve. It is essentially the Starling Curve. All these curves look the same, only the labels on the axis change, as do the accompanying explanations. On my horizontal axis I have the "proportion of revenue confiscated by the Federal Government." On the vertical axis, there is "societal benefit". The idea is that the Federal Government needs some money for infrastructure, safety net for the disadvantaged, defense etc. But give it too much and overall benefit declines. Money is wasted, distribution to the unproductive is increased etc. At the very apex of the curve the poor are taken care of, while the more productive entities of society are allowed to expand and grow. Everyone benefits.

But now, our economy has suffered a shock. We have had the economic equivalent of a heart attack. Here is where thinking in the more dynamic manner of the Starling Curve is helpful. During the Clinton years we were at a much more healthy point on the curve. Pushing more money into the Federal coffers shifted our situation up toward the apex. Not now. During the last two years our Government has spent billions upon billions of borrowed money trying to jump start the economy. The money has been largely wasted, with very little to show for it, save for that of an active imagination. The Federal Government has therefore shown, by its inability to use these large sums productively, our location on the curve. Giving it more funds will do nothing but push us over the top.

All this to say essentially, that we would be crazy not to extend the Bush tax cuts for everyone. I await my early AM call from Norway.