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Thread: Republican Economic Policy

  1. #1
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    Default Republican Economic Policy

    Stimulus, needed or not, and "deficits don't matter" when they're in office. Austerity and deficit hysteria when Democrats are in office. (source)

    Loathsome creatures.

    Republicans Stopped Sabotaging the Economy Because They Have the White House Now
    By Jonathan Chait

    During the Obama era, Democrats frequently believed, but only rarely uttered aloud in official forums, that the Republican Party was engaged in economic sabotage. Not a coldly conscious plot, exactly. But it seemed just a little too convenient that the party had reversed its fiscal ideology at precisely the time when doing so would damage Democrats and thereby smooth the GOP’s return to power.

    Now that Republicans have reversed their position once again, also in a way that happens to redound to their political benefit, the answer seems a little more clear. Republicans have used their control of government to virtually double the budget deficit, which had been hovering around half a trillion dollars per year, and will now likely run well over $1 trillion — during the peak of an economic expansion. There is no economic rationale for this behavior. Their policy is simply to support fiscal contraction under Democratic presidents and fiscal expansion under Republican ones. Cynicism is the only basis to explain their behavior.

    During the Bush administration, the party followed Dick Cheney’s famous dictum, “Reagan proved deficits don’t matter,” as a basic guide. Republicans financed two large tax cuts, a Medicare prescription-drug benefit, two wars, and a large domestic-security hike entirely through higher borrowing.

    Importantly, in addition to supporting permanent deficit increases, they also supported temporary deficit increases in order to ward off recessions. When the economy slowed in 2001, Republicans supported a Democratic plan to mail out short-term tax credits. Here, they were following the perfectly sound logic of Keynesian economics, which held that during a recession, the government should boost demand by temporarily increasing the deficit. Even committed right-wing ideologues like Grover Norquist and Paul Ryan supported fiscal stimulus explicitly on these grounds. (“I like my porridge hot,” said Ryan at one hearing, explaining why he agreed with the Keynesian arguments made by Republican economist Kevin Hassett that it was vital to inject demand into the economy as quickly as possible.)

    When the economy entered another recession at the end of Bush’s second term, Republicans again overwhelmingly supported another temporary stimulus bill. In February of 2008, Congress voted, by margins of 380 to 24 and 81 to 16, to mail out flat checks to every American household in order to stimulate more spending. “This is the Senate at its finest, recognizing this was an opportunity to demonstrate to the public that we could come together, do something important for the country and do it quickly,” said a satisfied Mitch McConnell.

    As it turned out, what looked like a mild recession at the beginning of 2008 developed into a global economic crisis of staggering size. By 2009, the economy was plunging into the deepest crisis since the Great Depression. But at that point, which also coincided with partisan control of the presidency changing hands, Republicans decided they no longer agreed with Keynesian economics. Or they believed the scale of the crisis somehow failed to justify the cost to the Treasury. So thoroughly and so rapidly did this conversion permeate the Republican Party that, by the time Obama took office, it was almost impossible to find a conservative of any sort who had a kind word for the stimulus. Even the most open-minded conservatives seemed more concerned about deficits than the calamity of unemployment that could top double digits. “The issue is the risk the Democrats are taking, period, by spending enormous sums that aren’t obviously justified by the current crisis,” wrote Ross Douthat in February 2009.

    Republicans whipped themselves into a frenzy over the debt, which threatened a “debt crisis,” even a Greece-style social upheaval. In 2011, Republicans cited this urgent fiscal threat to justify their extraordinary tactic of threatening to refuse to lift the debt ceiling, possibly triggering global economic calamity, in order to coerce Obama to adopt their policies. Obama mistakenly took the threat as an opportunity to enter into long-term fiscal policy negotiations. The end result of the fiasco was “sequestration”: caps on the discretionary portion of the federal budget. Obama assumed that, since the caps were designed to be painful rather than to identify tolerable savings, and since they squeezed defense spending in particular, Republicans would be willing to negotiate to lift them.

    They weren’t, though. Republicans instead decided sequestration was wonderful, the crown jewel of their achievements since taking control of Congress. Sequestration made for bad government, and dragged down the economy, but since Obama didn’t like it, Republicans decided they wanted to keep it. Eventually, when defense cuts bothered them too much, they negotiated deals to slightly alleviate the caps year by year. But their insistence that lifting the caps be paid for by finding offsetting savings made it hard to negotiate much relief.

    The solution to this problem turned out to be simple. Once a Republican held the White House, Republicans simply abandoned the whole idea that sequestration, or anything at all, needed to be paid for. They have happily reverted to the Bush-era practice of putting everything on the national credit card. Not only has this allowed them to cut taxes and lift sequestration, they are also ready to finance an infrastructure bill through deficit spending — a position they adamantly opposed under Obama.

    Republicans are implementing fiscal stimulus on the largest scale since 2009. One could make the case (as Eric Levitz does) that, despite low unemployment, additional stimulus is still justified in order to heat up the labor market enough to produce really strong wage growth. I’m more persuaded by the need for stimulus when unemployment was above 6 percent, and that it’s no longer worth the additional debt. Alternatively, one could oppose stimulus now and also in 2009, if you seriously oppose it always. But supporting fiscal stimulus now with unemployment close to 4 percent while opposing it when unemployment was far higher is a position no economist in the world would justify.


    And yet that literally-no-economist-supported stance is in fact the stance of the overwhelming majority of the Republican Party.

    Whether this represents a conscious strategy of economic sabotage is not exactly an answerable question. The human brain is very good at concocting rationales for our self-interest. Republicans found reason to be receptive to arguments for Keynesianism under Bush, to reject them under Obama, and then to forget their old position under Trump.

    What is beyond dispute is the partisan benefit to the Republican Party of these reversals of fiscal conviction that occur every time the White House changes hands. When Democrats passed major social legislation, they had to scratch and claw to offset every dollar of spending — alienating powerful constituencies by making them pony up to cover the cost of Obamacare. Republicans, on the other hand, have had the luxury of letting other people worry about how to pay for their priorities. Obama had to govern with the headwind of a congressional party obstinate about maintaining economically harmful spending caps that it’s now admitting — by voting to remove them — it didn’t even like.

    This remarkably bad-faith fiscal policy does not present Democrats with any attractive options. On the one hand, they probably don’t want to withhold support for important spending programs just to make life difficult for Trump. On the other, they also don’t want to go along with a system in which the government systematically understimulates the economy under Democratic presidents and overstimulates it under Republican ones. The second option is probably the less-bad of the two. At the very least, Democrats should be prepared for the inevitable hypocritical GOP flip back to hysterical deficit-hawkery that’s bound to come whenever Democrats win the next presidential election.
    "For a successful technology, reality must take precedence over public relations,
    for nature cannot be fooled."

    Richard Feynman

  2. #2
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    Default Re: Republican Economic Policy

    I posted the following in the thread "The stock market this afternoon" but it may be even more appropriate here.

    Today I heard the first rumor about possible reduced production at Ford KTP in the 2nd quarter. From someone who is plugged into Detroit.

    We build the Super Duty 250, 350, 450 and 550 pickup trucks. Most of our trucks are purchased by the businesses in fleet orders. We have always been a leading economic indicator. We get hit first in a recession and recover first.

    Just a heads up. Trump and the Republicans MIGHT be campaigning for the mid-term election in the midst of an economic slowdown. If so, who thinks Trump will continue to happily claim ownership of the economy?
    War is peace.
    Freedom is slavery.
    Ignorance is strength.
    Trump is doing beautifully.

    "OK. Fine. So he exaggerated a little on that."





  3. #3
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    Default Re: Republican Economic Policy


  4. #4
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    Default Re: Republican Economic Policy

    Quote Originally Posted by Tom Montgomery View Post
    Just a heads up. Trump and the Republicans MIGHT be campaigning for the mid-term election in the midst of an economic slowdown. If so, who thinks Trump will continue to happily claim ownership of the economy?
    Talk about conflicting emotions!

    Sure, I'd love to see Trump tagged for some economic downturn.. not necessarily because he caused it (Presidents have relatively little influence over either the economy, or the stock market), but because, having falsely taken credit for the economy, I'd love to see him try to spin a downturn as being someone else's fault....

    On the other hand, from a personal economic point of view, I'd rather see the market recover, after what looks like (this morning, anyhow) as a normal and fully expected correction. Some of the market pundits I read are confident that a correction is all that this past week's tumble actually is... arguing that corporate profitability is still at an all-time high.

    Sure, I'm hoping for a blue wave in late 2018... but it doesn't have to be based on the economy.... better to be based on whatever Mueller has, and reveals.
    "Reason and facts are sacrificed to opinion and myth. Demonstrable falsehoods are circulated and recycled as fact. Narrow minded opinion refuses to be subjected to thought and analysis. Too many now subject events to a prefabricated set of interpretations, usually provided by a biased media source. The myth is more comfortable than the often difficult search for truth."







  5. #5
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    Default Re: Republican Economic Policy

    Please, take Oklahoma!

    https://www.washingtonpost.com/blogs...=.86ca281abc62


    So on the whole, while Republicans in Washington won’t be able to turn the entire country into Oklahoma overnight, they’re going to give it their best shot. And they’ll keep saying that if we just cut taxes for the wealthy and slash social spending, everything will work out great. No matter how many times they’re proved wrong.
    Last edited by LeeG; 02-09-2018 at 09:31 AM.

  6. #6
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    Default Re: Republican Economic Policy

    It’s pretty obvious, cutting revenues/taxes doesn’t cut the deficit.

    https://talkingpointsmemo.com/edblog...-about-deficts

    It’s remarkable the degree to which television commentators are embracing interpretations of Republican fiscal profligacy which are either oblivious, unschooled or simply dishonest. One line has it that Republicans are shedding their former obsession with spending and deficits. Another had it that Republicans are realizing that their ‘base’ doesn’t really care as much about deficits as they thought. They really agree with Trump, who doesn’t care about deficits. All of this is nonsense – not based on a theory or interpretation but simple history and experience. In a word, facts. Deficits go up, often dramatically, under Republican governance and usually go down under Democrats. This isn’t an interpretation. It’s a simple fact. Nor is it an artifact of history or coincidence. It is because Republicans don’t care about deficits.

  7. #7
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    Default Re: Republican Economic Policy

    Republicans care about deficits only when they're out of power. Cutting taxes for the rich, that they like all the time.
    "For a successful technology, reality must take precedence over public relations,
    for nature cannot be fooled."

    Richard Feynman

  8. #8

    Default Re: Republican Economic Policy

    With the tax cuts and this new budget trillion dollar deficits yearly are going to be the new normal in 2019.
    https://www.google.com/amp/s/www.for...d-economy/amp/

  9. #9
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    Default Re: Republican Economic Policy

    The current Republican economic policy is akin to strip mining. The point is to extract the maximum financial benefit for the mine owners as quickly as possible regardless of the effects on the environment and without any consideration for what happens after the mine is played out. As long as the owners have made big money, nothing else matters.

    The Republicans and their wealthy backers are strip mining the economy without thought or care for the long-term effects.
    I rather be American than a Republican.

  10. #10
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    Default Re: Republican Economic Policy

    David G
    Harbor Woodworks
    http://www.harborwoodworking.com/boat.html

    "It was a Sunday morning and Goddard gave thanks that there were still places where one could worship in temples not made by human hands." -- L. F. Herreshoff (The Compleat Cruiser)

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