Ellington

What are the four "deformations" of the modern day GOP that helped send the economy in the crapper? David Stockman, head of OMB under Reagan, is unhappy with the debt load carried by the country, particularly over the past 40 years. And who does he blame? Republicans.

This debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party's embrace, about three decades ago, of the insidious doctrine that deficits don't matter if they result from tax cuts.

Stockman's demons are two-fold: the welfare state and the warfare state. Speaking of their efforts in 1981, Stockman says Reagan came into office trying to cut taxes (top marginal rates at the time were 70%, dropping to 50% with the 1981 act) and cut spending, but ran into his own party.

Soon, the neocons were pushing the military budget skyward. And the Republicans on Capitol Hill who were supposed to cut spending exempted from the knife most of the domestic budget — entitlements, farm subsidies, education, water projects. But in the end it was a new cadre of ideological tax-cutters who killed the Republicans' fiscal religion... the new tax-cutters not only claimed victory for their supply-side strategy but hooked Republicans for good on the delusion that the economy will outgrow the deficit if plied with enough tax cuts.

But didn't the Bush tax cuts solve all those issues?

By fiscal year 2009, the tax-cutters had reduced federal revenues to 15 percent of gross domestic product, lower than they had been since the 1940s. Then, after rarely vetoing a budget bill and engaging in two unfinanced foreign military adventures, George W. Bush surrendered on domestic spending cuts, too — signing into law $420 billion in non-defense appropriations, a 65 percent gain from the $260 billion he had inherited eight years earlier. Republicans thus joined the Democrats in a shameless embrace of a free-lunch fiscal policy...

The other two points are the vast increase in size of the financial sector in this country: But the trillion-dollar conglomerates that inhabit this new financial world are not free enterprises. They are rather wards of the state, extracting billions from the economy with a lot of pointless speculation in stocks, bonds, commodities and derivatives.

And fourth: The fourth destructive change has been the hollowing out of the larger American economy... borrowing from abroad, off-shoring jobs, trading high-dollar jobs for low-wage service industry stuff.

This is a fascinating perspective from a lost generation of the GOP -- the GHW Bush-style conservatives who shunned the "voodoo" economics of the supply-siders and the neocon policies of the modern platform. (There's even an anti-corporatist strain in here that would be worth pursuing by Democrats if they ever got their own thumbs out of the pie.) Good stuff in here.

Previous Comments

ID

159155

Comment

Wow, a thoughtful and responsible conservative stance instead of the wild-eyed fear-mongering so popular among Republicans and tea partiers these days. Nice. More please.

Author

Ronni_Mott

Date

2010-08-05T20:27:45-06:00

ID

159156

Comment

Agreed. I so appreciate thoughtful conservatism. We just don't see it often enough. There is too much re-pasting of talking points without any sort of independence thinking or factchecking. I wish we'd hear more of these kinds of voices locally as well. This, alone, is a remarkably honest statement: This debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party’s embrace, about three decades ago, of the insidious doctrine that deficits don’t matter if they result from tax cuts.

Author

DonnaLadd

Date

2010-08-05T20:31:38-06:00

ID

159162

Comment

It's actually pretty straightforward and I'm glad to hear someone like Stockman articulate it. When you're in a cyclical recession, you need to have the fiscal discipline to spend. Allow government to subsidize infrastructure, invest in future innovation (particularly R&D along the lines of ARPA projects, pure science, academic research) and pump up GDP. When you're in an expansion, you collect taxes. Save. Balance the budget. Pay down deficits. Cut spending. Shore things up for another rainy day. As people have had to say to Barbour in recent months "It's raining." That's when you spend the rainy day funds. When it's sunny, you collect taxes. And you collect them from the people who are making money hand-over-fist and aren't likely to suffer from it. We've experimented with trickle-down now for 30+ years, and the dog just don't hunt. In the W.R.S.T.D. we're living and breathing the idiocy of voodoo economics. What do we do now? It's a deep hole. Still, we've got one choice -- spend against the business cycle and then, once we're out of the woods, tax and save... it just makes sense. ... By the way, Stockman's other point that's totally worth revisiting is the expansion of the albatross that is the financial markets: The third ominous change in the American economy has been the vast, unproductive expansion of our financial sector. Here, Republicans have been oblivious to the grave danger of flooding financial markets with freely printed money and, at the same time, removing traditional restrictions on leverage and speculation. As a result, the combined assets of conventional banks and the so-called shadow banking system (including investment banks and finance companies) grew from a mere $500 billion in 1970 to $30 trillion by September 2008. THIS is where we need reform. Massive, fundamental reform that is probably on the Constitutional level. We need to re-define corporate structure. We need to re-define public ownership. We need to redefine banks and investment banks. Probably most fundamentally, we're going to need to redefine campaign finance, because if you don't, we're going to get the same crop of dunces we've got up there now in the Senate, blocking anything meaningful and letting through the least their lobbyist buddies will allow.

Author

Todd Stauffer

Date

2010-08-05T23:55:58-06:00

ID

159188

Comment

But with the recent Supreme Court ruling on allowing corporations to spend as much money as they want on campaigns, campaign finance reform will be harder than ever to get done.

Author

golden eagle

Date

2010-08-08T11:56:12-06:00