Jul 042010
The following illustrates the best reason to not listen to the nonsensical arguments between Republicans and Democrats. The corruption of politics has made these parties almost identical.
The old saying about a “dime’s worth of difference” may no longer be correct, but it is incorrect only as a result of inflation. While one party may be worse than the other, they are both bad. Voting for the lesser evil is still voting for evil.
The Tweedle Dee and Tweedle Dum of Fiscal Policy
by Dan Mitchell
The fault line in American politics is often not between Republicans and Democrats, but rather between taxpayers and the Washington political elite. Here are two examples that symbolize why economic policy is such a mess. First, we have President Bush’s former top aide, Karl Rove, making the case in the Wall Street Journal that the Obama Administration has been fiscally irresponsible. That’s certainly true, but as I’ve pointed out on previous occasions (here and here), Rove has zero credibility on these issues. In the excerpt below, Rove attacks Obama for earmarks, but this corrupt form of pork-barrel spending skyrocketed during the Bush years. He attacks Obama for government-run healthcare, but Rove helped push through Congress a reckless new entitlement for prescription drugs. He attacks Obama for misusing TARP, but the Bush Administration created that no-strings-attached bailout program. These are examples of hypocrisy, but Rove also is willing to prevaricate. He blames Obama for boosting the burden of government spending to 24 percent of GDP, but it was theBush Administration that boosted the federal government from 18.2 percent of GDP in 2001 to 24.7 percent of GDP in 2009. Obama is guilty of following similar policies and maintaining a bloated budget, but it was Bush (with Rove’s guidance) that drove the economy into a fiscal ditch.The president’s problem is largely a mess of his own making. Deficit spending did not begin when Mr. Obama took office. But he and his Democratic allies have supported, proposed, passed or signed and then spent every dime that’s gone out the door since Jan. 20, 2009. Voters know it is Mr. Obama and Democratic leaders who approved a $410 billion supplemental (complete with 8,500 earmarks) in the middle of the last fiscal year, and then passed a record-spending budget for this one. Mr. Obama and Democrats approved an $862 billion stimulus and a $1 trillion health-care overhaul, and they now are trying to add $266 billion in “temporary” stimulus spending to permanently raise the budget baseline. It is the president and Congressional allies who refuse to return the $447 billion unspent stimulus dollars and want to use repayments of TARP loans for more spending rather than reducing the deficit. It is the president who gave Fannie and Freddie carte blanche to draw hundreds of billions from the Treasury. It is the Democrats’ profligacy that raised the share of the GDP taken by the federal government to 24% this fiscal year. This is indeed the road to fiscal hell, and it’s been paved by the president and his party.Second, we have the amusing spectacle of Nancy Pelosi actually claiming that paying people to remain unemployed is a good way of creating jobs. She is being appropriately mocked for this assertion, but keep in mind that this she is accurately regurgitating standard Keynesian theory. It doesn’t matter that Keynesianism didn’t work for Hoover and Roosevelt in the 1930s, didn’t work for Japan in the 1990s, and didn’t work for Bush in 2008. Proponents of this approach have a childlike faith in the Keynesian model and its ability to generate very specific (albeit completely inaccurate) numbers. Here are two videos that offer the policy-wonk version of a steel cage match. In one corner, we have the Speaker of the House arguing that subsidizing joblessness is a “stimulus” strategy. In the other corner, I explain why transferring money from the economy’s left pocket to the right pocket is not a recipe for growth.
Monty
Not sure I see the plan there, since the current administration is speeding the destruction of what is left of the education system and our Founders built a system that requires an informed electorate. Building from ashes with a population with no appreciation of the Creator, which the Founders believed in and relied upon, and no work ethic, is not likely to yield much, particularly when there will be a government presiding over the ashes and it will have the bigger guns.
I say it is better now to work with the intellectual and moral capital we still have and preserve the country from the ash heap. And in our country that involves using political parties, either the ones that exist, or new ones. None of the new ones have any credible record of doing anything, so I recommend we seize the Republican Party and make it the Party of the American Idea. I prefer this to waiting for a smoldering mound of ashes is all we have before believing good things can happen. You are very good with economic analysis. If you could take a class in optimism you could be a big part of the resurgence. Cast off the doom and gloom and quit looking forward excitedly for the pile of ashes to build on, and start thinking about preserving what we have instead. Ludwig would find the idea of capital preservation prudent.
Regards
Kent Ramsay
Monty,
Since we live governed by a criminal enterprise with essentially absolute power, what do you propose?
Kent,
I am afraid that we will have to rebuild from the ashes.
An utter and total economic collapse will occur because we have passed the tipping point. Neither party will/can stop it. No politician has the guts to run on a platform that states: “Vote for us and we will eliminate 50% of social security, welfare programs and Medicare.” Thus, we drop deeper into the economic hole, waiting for markets to terminate the scam.
When markets call an end to the nonsense, the economy will collapse. At that point the country will either revert to its roots (the Constitutional basis of government) or it will degenerate into a totalitarian state.
I don’t like the ending and fear the worst (see Hayek’s Road to Serfdom chapter on Why the Worst Rise to the Top). I didn’t design this mess, nor am I able to design a way out. Unfortunately for us, Mark Twain’s statement does not apply here: “If stupidity got us into this mess, why can’t it get us out?” (paraphrased from memory so likely not correct).
Once we abandoned the Constitution, it was inevitable that we would reach such a dismal situation. The only question was when. History is replete with criminal governments. Ours was unique for a short time (approximately 150 or so years), only because of Constitutional constraints and the Rule of Law. Arguably, both are now inoperative or so weakened as to be ineffective.
Power taken is never given back, at least willingly.
Monty
Monty
I can’t disagree with you more. If you say the Republicans are to blame just as the Democrats, you present yourself as a person unable of making intelligent distinctions. You mentioned PJ O’Rourke. I believe that he, Christopher Buckley, Peggy Noonan, other conservatives who made similar arguments in 2008 were a big part of what made Obama, a completely unqualified candidate, our President. With your analytical skills, I am pretty sure you can find information that when Republicans have been in charge of Congress, deficits have been substantially less. Republicans have not done lawless things like were done to the Chrysler bondholders. Republicans have not nationalized companies. Republicans have not allowed a natural disaster to expand and destroy massive environment treasures for political motives. To equate the two parties is pure ignorance. And to do so while delivering daily doses of apocalyptic information, and doing nothing to suggest ideas to stop it, is almost pathetic. Do you think we will return to Constitutional principles via some atmospheric change, like the weather? No – it will happen in our system via the political party that values the Founding principles and fights effectively to save them. And the only chance now is with the Republican Party.
Kent,
I do not want to argue for either political party. They both have demonstrated themselves to be pretty much useless. Government, as practiced today, is little more than a criminal enterprise. One party happens to be a bigger criminal than the other, yet both are criminals. Neither has the inclination or the courage to do what needs to be done.
The Ponzi schemes are nearing an end. They will result in a collapse of the economy. Whether we can rejuvenate the Constitution at that point is uncertain. There is no chance it will happen via the normal political process.
As an aside, I do not believe that P.J. O’Rourke ever supported Obama. That seems almost inconceivable to me.
I guess we just have to disagree on what can and will be done via the ballot box under less than crisis situations.
Monty
You offer a shortsighted argument that is long on media brainwashing.
A high school graduate could have taken the reins a year and a half ago and taken steps to get off the path of destruction we are on. And Obama didn’t do that. It’s Obama’s debt, Obama’s destruction, and his alone.
I ain’t buying it. In fact, your arguments are shocking.
Mary,
Thanks for your commentary.
Perhaps I didn’t explain myself very well. I am not arguing that Obama or the Democrats are not to blame. But so are the Republicans. The entitlement programs expanded over many years and through different administrations and different parties in control of Congress. The given is that neither party stepped up to stop the nonsense.
If your argument is that these programs tend to be more favored by Democrats, I agree. If your argument is that Obama made things much worse, I also agree. See my President Clarabelle and numerous other posts on the insane economic policy of the current administration.
The point is that the “tipping point” for turning the mess around likely passed before Obama assumed office. As I have written elsewhere, defaults are inevitable with respect to programs subsumed under the rubric of the Welfare State. They were before Obama. Yes, he has substantially worsened the problem and accelerated the time to default.
I responded to Kent earlier who had a similar reaction to yours. Apparently I did not communicate very well.
Monty
Monty
I love your site but I despise the idea of this post, that the two parties are the same. The fact is we are in the crucial stages of a war and there is now only one party that is fighting for America. It is not perfect, far from it, but nothing on this earth is. The Republican party is the only thing that has stopped Obama from a complete takeover. The Tea Party is an excellent political phenomenon and its best strategy is to influence the Republican Party back to its roots. Which it is doing. Articles like this one only serve to confuse and weaken resolve. Your economics is great – your politics could use some work. Please take some courses from Mark Levin.
Kent,
Thanks for your commentary.
I am not a political type other than in the sense that H. L. Mencken, P. J. O’Rourke and Albert J. Nock are (were). As I stated in the article: “While one party may be worse than the other, they are both bad. Voting for the lesser evil is still voting for evil.”
In my opinion, you cannot “reform” either party. Somehow or another we must return to the Constitutional constraints that guided us for our early existence. Most of our politicians should be in jail for violating their Constitutional oaths. Unfortunately, this oath is nothing more than a charade for the masses.
I am in favor of the Tea Party movement to the extent that their motivations are limited government as imposed by The Constitution. Some way or another, I hope we can get there. I just don’t believe it will be via either existing major political party.
To the extent you say a vote for Republicans is better than a vote for Democrats, I agree. But my agreement is analogous to answering the question: “Do you want to die now or die in a few years?”
Monty