One of the problems facing the Republicans is that they have contradictory impulses. For example, they’re opposed to using taxpayer dollars for pretty much anything, whether that is expanding unemployment benefits or bailing out failing banks. But, at the same time, they have so fetishized free enterprise and Wall Street, that they’re as horrified by the prospect of ‘nationalizing’ banks as they are about the prospect of government subsidized health care. The problem here is kind of obvious. You cannot be simultaneously against bailing out banks and against nationalization.
There might be a kind of middle ground where banks avoid outright nationalization because they are bailed out, but there is no magic Republican formula where the government does nothing and the banks recover to health on their own.
People are sensing that the Republican positions on banking, housing, and jobs lack coherency. You hear people saying that the ‘Republicans have no ideas’ or that the ‘Republicans are being the party of ‘no”. What this really means is that the Republicans ideology precludes them from adopting or supporting policies that are now inarguably necessary.
At the root of the problem is the Republican’s positions on taxes, on government spending, and on federalism. A government that never raises taxes loses the ability to adjust taxes to the needs of the time. Such a policy is a like a broken clock. It will sometimes be the right policy to cut taxes, but with Republicans those instances will be strictly by accident and not design. Meanwhile, they will get it wrong every single time that conditions call for raising taxes.
The GOP’s aversion to government spending causes other problems. Such an ideology helps hold down and rationalize spending, but it is useless in a severe recession when interest rates have been reduced to near zero. There is currently no other way to stimulate the economy than to increase government spending dramatically, because monetary policy has no more room to cut rates. A secondary problem caused by the GOP’s anti-spending ideology is that it is not consistent with a party in the majority in Washington. When the Republicans control the appropriations committees, they will spend money. But they won’t raise taxes to match that spending, so they will cause crushing deficits every single time they come to power in Congress. This is guaranteed because the Republican ideology doesn’t take into account the human nature of their own politicians.
Finally, the Republicans’ preference to leave power in the hands of the states and to limit the power of the federal government, is completely ill-suited to recession conditions where the states are facing record deficits but are Constitutionally precluded from running deficits. To get a sense of the scale of this disconnect, let’s remind ourselves of something I pointed out yesterday in relation to the California budget crisis:
To be sure, none of the GOP lawmakers who demanded that the state close its $42-billion shortfall without raising taxes detailed the doomsday cuts that approach would entail, nor did the activists who lobbied against the tax increases. If the state had laid off its entire workforce of 238,000 — every prison guard, firefighter and clerk — it still would have fallen billions shy of a balanced budget.
If you take the Republicans’ rhetoric at face value, they would have California reject federal money because federal money shouldn’t be spent on states’ needs, they would have California refuse to raise taxes because taxes are already too high, and they would welcome the laying off of all 238,000 state employees because the state government does nothing of value and just wastes resources. When nearly a quarter million newly unemployed people stop paying taxes because they have no income and when they start defaulting on their car and home loans, and this causes the budget to get worse and more banks and businesses to fail, the Republicans will argue that it is result of Democratic policies.
What this really amounts to isn’t just a failure of imagination. It’s a life lesson in the non-rational nature of Republican ideology in general. It works in good times to a certain non-idealized degree, but it completely lacks situational flexibility. It becomes bankrupt and bankrupts the institutions it controls at the same moment that conditions make its basic irrationally manifest. It will always happen this way, which is why we desperately need the Republicans to become a rational opposition party. Otherwise, we’ll always be in a blackmail situation where no matter what the Democrats do, we cannot afford for them to lose.
We have had a major change in global banking and finance what with all those derivatives and securitized mortgages. Plus, we cannot keep financing our consumption through constantly borrowing money. The times they are a changing. The Republicans, however keep chanting that old mantra about not increasing taxes and not giving the federal government any more power.
But, as you say, BooMan, the national government must do certain things to avoid economic disaster which things cut against the grain of GOP principles. So what’s to happen? Either the Republicans smarten up or they follow the path of the dodo bird, the saber tooth tiger and tyrannosaurus rex. It’s called evolution and Charles Darwin was certainly not a member of GOP. Guess it’s a case of the Republican Party being most unfit.
“..but there is no magic Republican formula where the government does nothing and the banks recover to health on their own.”
Well, there is the Ron Paul wing which would simply let some banks fail assuming others would eventually take their place.
That doesn’t allow for recovery of all banks (which was your requirement for a GOP plan), but rather would benefit the ones who’ve displayed good judgment or were not involved in the failed sectors of the marketplace.
It is their belief that a short, sharp shock would lead to a stronger economy in less time than a ‘lost decade’ approach that includes price controls, floors, etc.
Awesome, because that worked out so well for Herbert Hoover.
-Jay-
If you want to go into it, there are other prongs of that approach that would work to mitigate the issues that prolonged the Hoover era of the Great Depression.
For example, they also want to peg our currency to gold among several other steps that would change the playing field dramatically from Hoover era economic function.
However, like almost all Libertarian ideas, if you do just one piece of it, you get disastrous market distortions, as Hoover (and more recently the GOP) found out.
Since we are NOT going down that road wholeheartedly, I certainly agree the idea is invalidated as a current policy option.
However, it IS a coherent GOP-championed idea. Just one no one has the appetite for experimenting with at this or any other time.
You assume that Republicans have an ideology. That might have been the case at one time, but nobody who’s paid attention for the last half-century or so can think that the “no new taxes” “no big spending” talking points are anything more than cynical campaign slogans. Modern Republicans, as pointed out, always increase the deficit when in power. I don’t think this is because of “the human nature of their own politicians”, but because their true ideology in no way opposes spending.
Their real ideology is now out there for all to see: Tax the poorest Americans most and spend give the money to the rich and corporate. They are not against taxation — they are against progressive taxation. This root imperative drives their political maneuverings in arenas large and small — from favoring sales taxes over income taxes to forcing compromises that will give banks and their honchos far more free money than they deserve. And of course the GOP’s eagerness to throw money away on military, prison, and agribiz subsidies, for example, is legendary.
So I have to disagree that they are irrational. They know exactly what they want and their politiking is generally quite consisent in its aims. This is a political/ideological battle, not a psychiatric one. As a coworker once said of the boss, they are wrong and bad. That’s what we have to work with.
Shorter GOP:
We hate government.
Trust us to run the government.
I don’t understand why the progressive/Democrats continue to refuse to properly examine the structure of the Republican Party. A quick look at the boring details of the current make up of the Republicans will answer many questions as to the cause of the inconsistency, contradictory, and at times irrational positions that they cling to and publicize as core Party principles.
Go back to Reagan and the movement of disgruntled members of the Libertarian party into the Republican Party. During Reagan’s administration the Republican Party consisted of the three following main groups; the Libertarians, former southern Democrats known as Dixiecrats, and members of the western faction made up of Goldwater Republicans. In the years that followed, the Libertarians moved to the position of Party control, leaving the other two groups still struggling to gain control of the Party. In actuality, the Libertarians achieved their position by demonstrating that their ideology has a strong national following through the large number of elected representative they have placed in both chambers of Congress.
The contradictions that exist in the Republican Party today are the EXACT SAME contradictions that originally split the Libertarian Party back before Reagan ran for President. Since the Libertarian purist position is for NO GOVERNMENT AT ALL, one might suppose that they would be against Government spending on anything. However, they did not object to excessive spending when the Republican Party was in the majority. This seems to conflict with their basic ideology, but they have the twisted rationale that fiscally BLEEDING the government to death will of necessity lead to SMALLER Government. But in the same rationale (from their perspective), the wasted funds must not be used for social programs, as this will lead to increasing the size of Government. Among the more radical Libertarians, even the prospect of a severe national depression would be desirable if the result actually brings down the Government.
This IMHO is the positions of the current Republican Party in the year of 2009. The only analogy to creating reason, rationale, and responsible decision making among the Republicans at the present time in essence would be like “herding cats”.
I would argue that the Dixiecrats took over and that there are about three libertarian Republicans left in Congress that are not named Ron Paul.
I would agree with this. The Republican Party co-opted a lot of libertarian language, and makes good use of it when it comes to doling out tax cuts, but there are very few actual libertarians in Congress.
The “Dixiecrat” Republican Party (which I agree is in the majority now) uses the language of libertarianism to attempt to hide their racism and sexism. It’s been the preferred method since Reagan, and speaking from experience once those of a libertarian bent wake up and realize that they’re being played it becomes really fucking obvious what the Republican Party is doing.
By their own accounting there are three strains of conservatives – Social Conservatives (SoCons), Fiscal Conservatives (FiscCons), and foreign policy conservatives (split between PaleoCons and NeoCons). Belief that a rising tide would lift all of their ships they stuck together for almost 30 years, but in this drought there is nothing to keep these often mutually-exclusive factions together – SoCons need a strong central government to enforce their values, FiscCons need a week central government to enable their fiscal liberty, NeoCons want an active militaristic government, PaleoCons have absolutely no desire to be the world’s policeman.
It was bound to blow up sooner or later, the time is simply now.
Conservative fiscal policy just doesn’t work-period. In fact, it’s a total failure guaranteed to bite you in the ass. It just doesn;t work.