Why do we think Republicans are good for the economy? Republican talking points were hammered into our heads for just about the entire eight years of the Obama administration. One such talking point said that we need to shrink government (code for we need to do away with social programs: Medicaid, Social Security, Welfare, Food Stamps, CHIP, WIC, Medicare, and now the ACA). These things are not the business of the federal government GOPers would declare.
Then they would argue that programs like these perpetuate poverty by institutionalizing dependence. They would argue that these programs have done nothing to end poverty. Look at the data. How many people have actually been lifted out of poverty they pontificate? Perhaps these people who claim to be devoutly religious forgot that Jesus said there will always be poor people.
There is also data to suggest that if you were able to leave a poor neighborhood, or get a good education or both, it is possible that your fortunes did improve. And we know that this is not quite as true for black and brown people who were often not welcome in white neighborhoods or suburban schools with larger budgets that provided better educational experiences.
Recent studies tell us that housing discrimination played a greater role in placing limitations on minorities even when other inequalities were legislated away. Realtors found ways to keep minorities out of more upscale white neighborhoods. Look for an article with the title The Architecture of Poverty. Read Eviction by Matt Desmond. Subscribe to the Daily Beast which is doing a series of articles about this.
We have seen the underlying racism and white nationalism lurking in the Republican Party since the parties switched platforms during the Civil Rights movement of the late 50’s and early 60’s. We thought that this was a line of prejudice that did not run through everyone in the party. We can no longer say that here in 2018 with Donald Trump at the head of the GOP.
But aside from this abiding hate and bigotry and long-nursed resentment, aside from a firm belief, against all scientific evidence that people with darker skin are inferior to people with white skin; the key policies of the Republican Party all center around money, economics, business, Capitalism (and military power). Prominent Republicans have even said that they know God favors them because he has blessed them with great wealth. So now the wealthy are more beloved by God than the poor. But if my Sunday school religious education is correct, I believe Jesus said that it is easier for a rich man to pass through the eye of a needle than to enter the Kingdom of Heaven.
The litany of the Republican talking points included all the things they would do if/when they took over in Washington; all the things they are doing right now. Deregulation was near the top of the GOP wish list. If businesses were allowed free rein the economy would fly, they promised, all the factories would return, and the American economy would be fixed forever and ever. Climate change considerations were declared bad science and the GOP has been overturning safety rules left and right. Mercury no longer a controlled substance; asbestos perfectly fine. Now the Republicans were able to allow drilling everywhere and fossil fuels would flow like water and reset the health of wealth around the planet, melting ice caps be damned. Keystone, yes; drilling in the Arctic, AOK, fracking, the more the merrier. The GOP said they would trade coal mining jobs for votes and they have.
Free trade was an ask that big business did not get. Trump got his tariffs by decree. Those tariffs are still a bone contention, but the GOP has taken a wait and see attitude. All can be forgiven because of that glorious corporate tax cut. Trickle down, supply side, voodoo economics in action. The Republicans are in GOP economic nirvana and many Americans still believe that Republicans are great at boosting the American economy, even if the whole ship of state may prove to be less seaworthy than they have been led to expect.
An enormous deficit is looming. If the economy doesn’t meet standards of progress that are considered totally unrealistic by almost every numbers-man-and-woman in America, drastic cuts will have to be made. Those social program cuts were part of the GOP talking points all along. The whole apparatus may have been designed to make Americans so frightened about the American economy that they will make little fuss when they lose their benefits, which Mitch McConnell is salivating to cut as I write. Then the GOP will have achieved every one of the points on their “small government” list and Social Security will be gone, the government will not be involved in health care and there will be no safety net for people who cannot work. How does this hold any appeal for Americans who are not wealthy?
The really big question is why are we pursuing a Republican economic agenda which has never worked and how on earth did Republicans get a reputation for being good with economics. The data does not support this assertion nor does it back up the faith Americans have in the Conservative Way. Wealthy people do get richer but, in a Republican administration we actually get further and further from a balanced budget (which is also on the GOP wish list, hypothetically) and the middle class loses ground it cannot afford to lose. The Republican Party is not a champion of workers.
Republicans have been no pikers when it comes to making debts. https://ritholtz.com/2011/10/us-debt-accumulation-by-president/
The deficit numbers are even bigger and were often dependent on historical events during any given Presidential term/s. For example, there are bigger deficits in times of war.
“Republicans point to the Reagan Administration as an example of how their policies worked. Reaganomics ended the 1980 recession. It suffered from stagflation, which is both double-digit unemployment and inflation.
Reagan cut income taxes from 70 percent to 28 percent for those earning $108,000 or more. He cut tax rates on middle-class incomes to 15 percent. He cut the corporate tax rate from 46 percent to 40 percent.
But Reagan also used non-Republican policies to end the recession. He increased government spending by 2.5 percent a year. He almost tripled the Federal debt. It grew from $997 billion in 1981 to $2.85 trillion in 1989. Most of the new spending went to defense. But trickle-down economics, in its pure form, was never tested. It’s more likely that massive government spending ended the recession. (Source: William A. Niskanen, “Reaganomics,” Library of Economics and Liberty.)”
“The Bush Administration also used Republican policies to end the 2001 recession. It cut income taxes with EGTRRA. That ended the recession in November, despite the attacks on 9/11. But unemployment continued rising to 6 percent. In 2003, Bush cut business taxes with JGTRRA. It appeared that the tax cuts worked. But the Federal Reserve lowered the Fed funds rate from 6 percent to 1 percent during this same period. It’s unclear whether tax cuts or another stimulus were what worked.
Another problem with the Reagan and Bush tax cuts is that they worsened income inequality. Between 1979 and 2005, after-tax income rose 6 percent for the bottom fifth of households. It rose 80 percent for the top fifth. Incomes tripled for the top 1 percent. It appears that prosperity didn’t trickle down, it trickled up. (Source: Steven Greenhouse, The Big Squeeze, pp.6-9.)
Both trickle-down and supply-side economists use the Laffer Curve to prove their theories. Arthur Laffer showed how tax cuts provide a powerful multiplication effect. Over time, they create enough growth to replace any lost government revenue. That’s because the expanded, prosperous economy provides a larger tax base. But Laffer warned that this effect works best when taxes are in the “Prohibitive Range.” Otherwise, tax cuts will only lower government revenue without stimulating economic growth.
Republicans who say tax cuts always create growth ignore this aspect of supply-side economics.”
Obama also added a fair amount to the debt, although not as much as George Bush, and he had to clean up a mess with mortgage foreclosures, bad banking practices, and a Great Recession all inherited from George Bush and the Republicans. Obama did get to pass a number of regulations to protect consumers from bad business practices but they have pretty much all been overturned by the Trump administration. After the first two Obama years a red wave swept away his majority in Congress and he was constrained on economic policy (and every other policy also). Because of some nasty obstructionism I find Republicans responsible for the debts of the Obama administration.
And I give you the Voodoo graphic.
And now we have Donald Trump – a newly-minted Republican who never ran a government or a national economy even with help from colleagues in Congress, who has declared bankruptcy 6 times, and who does things just because he concluded perhaps in the 1980’s (based on strictly his own opinion) that he could fix the American economy and MAGA. He had his father’s wealth to back him up when he failed. America doesn’t. I have no faith at all in Republican economics and the historical facts do not favor those who do. But all the political ads make it sound like Trump and the Republicans are a bunch of economic geniuses.
Bret Stephens was on MSNBC this morning (he writes on the opinion page of the NYT). Stephens is a Republican who has joined the resistance against his own party because he is not a Trump fan. Stephens credits the current rise in job numbers and even a small jump in wages to momentum built up in the Obama years. Many economists are nervous about what will happen when the huge deficits begin to pile up from Trump’s tax plan and his tariffs and his belligerence with friendly nations on trade.
It is probably too late for a reality check on Republicans economics to have any effect on this midterm election, especially since half of the nation has already voted early (in New York we can’t). I think even the Democratic Party sometimes (sort of) accepts the myth that Republicans are good with money. Perhaps that is because they are really good at lining their own pockets. But they are not really good with the economics of our nation and more needs to be made of this point. Actually our economy probably benefits most when Democrats spend and Republicans admonish them about their spending. In other words, partisan economics is really not so likely to produce a consistently booming America.
The last time Republicans had a majority this huge was in 1928. Just before the Great Depression.
Photo Credits: From Google Image Searches, The Economist, The New Republic, Politico
This is a view from the cheap seats.
Michael Tomasky also wrote about this subject in the NYT today.