While there has always been significant opposition to the “tax and spend” policies of liberal Democrats, the alternative Republican strategy of “don’t tax and spend” hasn’t done anyone any favors either (with the exception of the wealthiest sliver of our society).
David Stockman, Reagan’s OMB director, directs attention to the politically expediency but fiscal folly of the current GOP efforts to extend the Bush tax cuts and how the GOP leadership have betrayed the principles of fiscal responsibility that once served as a cornerstone of the party. And this betrayal didn’t just happen overnight.
Precipitated by Nixon’s abandonment of the gold standard back in 1971, which permitted the Treasury to print money like, well, like paper, the public debt exploded under Reagan (and continued under Bush, Sr. and Clinton) as the federal government fueled both a welfare and warfare state while simultaneously cutting taxes, reducing federal revenues by 2009 to 15% of GDP. George W. Bush closed the deal by abandoning all fiscal restraint, chopping taxes, passing a $1,000,000,000,000 unfunded Medicare prescription drug plan, and waging two wars without paying a dime. As Stockman puts it, “Republicans thus joined the Democrats in a shameless embrace of a free-lunch fiscal policy.”
The ultimate nail in the coffin for the American economy has been the expansion of the financial services industry, which produces nothing but binary bits of digital currency, which evaporate just as quickly as they appear, leaving nothing of tangible worth in their wake. An industry, by the way, which now holds the federal government hostage. For those who fear a government takeover of the private sector, a mere cursory review of recent events should dispel that myth. Corporate lobbyists write our laws, including healthcare reform and finreg, and shamelessly game the system to their own advantage. Washington’s running Wall Street? Hardly. Who got the money? The fat cats on Wall Street! Who spent the money? Washington! (and lest we forget, TARP was George Bush and Hank Paulson’s baby, rubber stamped by a feckless Congress scared shitless by the specter of another Great Depression). And who got the bill? John Q. Taxpayer.
Meanwhile, the middle class slowly sinks into the sunset, as American corporations morph into multi-nationals, shifting both jobs and production overseas into cheaper labor markets and leaving the US of A with a shell economy consisting of little more than service industries catering to a consumer society. Increasingly, most American workers are simply doing each other’s laundry. And the natives are getting restless.
Don’t misunderstand my intent. I’m not looking to give the Democrats a free pass on this unmitigated disaster. They own every bit as much of it, if not more, than the Republicans. What drives me crazy is the hypocrisy of the GOP when, to quote Stockman once again, “it’s a pity that the modern Republican Party offers the American people an irrelevant platform of recycled Keynesianism when the old approach — balanced budgets, sound money and financial discipline — is needed more than ever.”
For an even gloomier take on Stockman’s op-ed piece, read Paul Farrell’s commentary on the WSJ’s Market Watch website.
http://www.marketwatch.com/story/reagan-insider-gop-destroyed-us-economy-2010-08-10?pagenumber=2
