Subject: [big campaign] New Huff Post from Creamer- Is GOP Trying to Hurt the Economy for Political Reasons?
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Date: Fri, 25 Feb 2011 11:05:57 -0500 (EST)
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Are Republicans Trying to HurtEconomy for Political Reasons – Or Have The Inmates Taken Over the Asylum?
 
     Yesterday, ABCNews leaked a confidential report from investment bank Goldman Sachs warningthat the spending cuts proposed by the Republicans to take effect this yearwould slow the economy by 2% of Gross Domestic Product.  It also found that even compromise cuts of$25 billion would cut growth by 1 percent. 
 
     This report wouldnot be surprising if it came from the progressive Economic Policy Institute(EPI) – or even someone at the Brookings Institution.  Instead it comes from Wall Street – which is,after all – the principal base of the GOP.
 
     Of course, theirconclusions are not surprising. Virtually everyone with an ounce of economic literacy understands thatcutting Federal spending right now – just as the economy is clawing its way outof the worst recession in 60 years – will cost hundreds of thousands of jobs.
 
     Right now, theGovernment projects about a 2.7% rate of growth in the economy this year.  So according to Goldman Sachs, if theRepublicans have their way, most of that growth would be wiped out and we wouldbe perilously close to a double dip recession. 
 
     It’s time to stoptreating proposals for immediate cuts in spending as “reasonable” policyalternatives.  These proposals aredangerous to the economy and the welfare of everyday Americans.
 
      You have to ask yourself, why would theRepublicans propose a policy that even Wall Street thinks would be suicidal forthe economy?  Here are two options:
 
Reason 1: To Damagethe Economy for Political Purposes
 
     Mitch McConnell –the Republican Senate Leader – made it very clear at the end of last year thattheir major goal for this session of Congress is to defeat Barack Obama in 2012and take over both Houses of Congress. And there is no question that the most important key to PresidentObama’s re-election is an improving economy. 
 
      The Republicanshave absolutely no political interest in the creation of jobs in the Americaneconomy.  The more unemployed Americansthere are next November, the better for them. The more incomes have stagnated,the better for them. 
 
     As much as theyblather on about how they will create jobs in the private sector by cuttinggovernment spending, even most Republicans understand that as you recover froma recession, that is simply not true.  
 
     As much as theywish it were not so, recessions are never caused by too much governmentspending, they are caused by an deficit of demand in the economy for goods andservices that could be produced if the economy were operating at fullcapacity.  The virtuous cycle that isbehind economic growth requires that demand be jumpstarted by government – thatenough people be put back to work with incomes to buy new products, that theprivate sector is enticed to invest and hire.
 
      Right nowprivate corporations are sitting on almost two trillion dollars in cash.  The fact that they are not hiring orinvesting heavily in new plant and equipment has nothing to do with a need formore tax breaks or a shortage of capital. It has everything to do (as they will tell you) with the fact that theyaren’t confident there will be enough demand in the economy – enough peoplewith money to buy their products and services.
 
     The time to cutdeficits is not as you are recovering from a recession, but in periods oflong-term economic growth – in the same way that President Clinton did duringthe 1990’s.  Some people act like thedeficit is an intractable problem of many generations.  It was just over ten years ago that we had nodeficit.  The way to deal with thedeficit in the future is essentially the way it was eliminated in the 1990’s –tax increases on the wealthiest taxpayers and robust economic growth.
 
     If you cut $61billion of spending out of the economy over the next six month, you make the“demand deficit” larger, not smaller.  Inthe process you destroy jobs.  It’s thatsimple.  Or as Republican Leader JohnBoehner might say, “So be it.”
 
     Most thoughtfulRepublicans actually understand that. But one reason they continue to support these cuts is that by hurtingthe economy, it will benefit them politically.
 
Reason 2: Because theInmates Have Taken Over the Asylum
 
     A second reason that the Republicansare supporting these damaging policies is that the crazy relatives they used totry to keep out of sight have burst into the living room.
 
     For many years,the interests of Wall Street and the biggest corporations have completelydominated the economic policy-making of the Republican Party.  While this wing of the Party pays appropriatetribute to “restraining spending” and “smaller government” their ideology isnot really about principle.  They adhereto only one core ideological premise: they favor whatever is in their owneconomic interest.  
 
     Wall Street andbig corporations are generally advocates of “smaller government” because theywant to cut their taxes and reduce government regulations that prevent themfrom injuring consumers, fouling the air or engaging in the kind of recklessspeculation that sunk the economy in 2008 and cost 8 million Americans theirjobs. 
 
     But the WallStreet crowd is perfectly capable of abandoning any talk of  “small government” when it comes to hugegovernment contracts.  And you don’t hearmuch about the deficit when it comes time to ask for tax breaks for the rich oroil company subsidies.   Remember it wasformer Vice-President Dick Cheney who famously said: “deficits don’t matter” –a view that he used to justify the fact that he and President Bush rolled upmore deficits in their eight years than all of the previous presidents inAmerican history combined. 
 
      However, thereis another wing of the Republican Party that has traditionally talked a lot,but didn’t have a lot of power.  They arethe libertarian ideologues who actually believe that the economy would bebetter off with a tiny government.  Thisgang mainly has appeal to the “non-Wall Street” base of the Republican Party –the Republican “foot soldiers.”  
 
      The“foot-soldier” wing has traditionally been concerned more with social issuesand has been heavily populated with rightwing religious activists. But the WallStreet-induced economic disaster  -- and overalldecline of the American middle class -- has made this group a prime target forlibertarian economic narratives that include a conviction that governmentspending is the root of all economic evil. 
 
      Libertarianeconomic nostrums infused the Tea Party Movement, and that helped propel manynew Republicans into Congress last fall. Suddenly this wing of the Party is no longer relegated to the role ofcampaign season political fodder.  Theyactually have some power in the Republican Caucus. 
 
     The conflictbetween the Wall Street/corporate wing of the Republican Party and thelibertarian wing of the Party may play out even more starkly when Congressneeds to raise the debt limit to avoid defaulting on the Country’s obligations.  That would be the absolute last thing WallStreet is interested in, since it would cause a world-wide economic catastropheand almost certainly send the country back into a major recession.   But the libertarian wing sees it as abargaining chip to achieve their ideological goal of “smaller government.” 
 
     The battle overthe fiscal 2012 budget – and the current level of spending for the balance ofthis year – will have major economic consequences for the well-being of averageAmericans.  
 
     Whether youbelieve that the Republicans’ plan is intended to hurt the economy forpolitical reasons, or because they must satisfy ideological extremists thathave taken seats of power – or both – it would be a disaster for middle classAmericans who expect our government to focus on one thing: creating new jobs.
 
     For Democrats,good politics and good government go hand in hand.  We must do everything in our power to preventthe Republicans from passing these job-killing policies.  The better we can do at that, the better theeconomy will be in 2012 – and the more likely we are toachieve political success.
 
   Robert Creamer is a long-time political organizer andstrategist, and author of the book: Stand Up Straight: How Progressives Can Win, available on Amazon.com.

 

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