Are Republicans Trying to Hurt the Economy for Political Reasons?

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    Feb 25, 2011 8:43 PM GMT
    Yesterday, ABC News leaked a confidential report from investment bank Goldman Sachs warning that the spending cuts proposed by the Republicans to take effect this year would slow the economy by 2 percent of Gross Domestic Product. It also found that even compromise cuts of $25 billion would cut growth by 1 percent. This report would not 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, their conclusions are not surprising. Virtually everyone with an ounce of economic literacy understands that cutting federal spending right now -- just as the economy is clawing its way out of the worst recession in 60 years -- will cost hundreds of thousands of jobs.

    Right now, the government projects about a 2.7 percent rate of growth in the economy this year. So according to Goldman Sachs, if the Republicans have their way, most of that growth would be wiped out and we would be perilously close to a double-dip recession. It's time to stop treating proposals for immediate cuts in spending as "reasonable" policy alternatives. These proposals are dangerous to the economy and the welfare of everyday Americans. You have to ask yourself, why would the Republicans propose a policy that even Wall Street thinks would be suicidal for the economy? Here are two options:

    Reason 1: To Damage the Economy for Political Purposes

    Mitch McConnell -- the Republican Senate Leader -- made it very clear at the end of last year that their major goal for this session of Congress is to defeat Barack Obama in 2012 and take over both Houses of Congress. And there is no question that the most important key to President Obama's reelection is an improving economy.

    The Republicans have absolutely no political interest in the creation of jobs in the American economy. The more unemployed Americans there are next November, the better for them. The more incomes have stagnated, the better for them. As much as they blather on about how they will create jobs in the private sector by cutting government spending, even most Republicans understand that as you recover from a recession, that is simply not true.

    As much as they wish it were not so, recessions are never caused by too much government spending, they are caused by an deficit of demand in the economy for goods and services that could be produced if the economy were operating at full capacity. The virtuous cycle that is behind economic growth requires that demand be jumpstarted by government -- that enough people be put back to work with incomes to buy new products, that the private sector is enticed to invest and hire.

    Right now private corporations are sitting on almost two trillion dollars in cash. The fact that they are not hiring or investing heavily in new plant and equipment has nothing to do with a need for more tax breaks or a shortage of capital. It has everything to do (as they will tell you) with the fact that they aren't confident there will be enough demand in the economy -- enough people with money to buy their products and services.

    The time to cut deficits is not as you are recovering from a recession, but in periods of long-term economic growth -- in the same way that President Clinton did during the 1990's. Some people act like the deficit is an intractable problem of many generations. It was just over 10 years ago that we had no deficit. The way to deal with the deficit 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 $61 billion of spending out of the economy over the next six months, you make the "demand deficit" larger, not smaller. In the process you destroy jobs. It's that simple. Or as Republican Leader John Boehner might say, "So be it." Most thoughtful Republicans actually understand that. But one reason they continue to support these cuts is that by hurting the economy, it will benefit them politically.

    Reason 2: Because the Inmates Have Taken Over the Asylum

    A second reason that the Republicans are supporting these damaging policies is that the crazy relatives they used to try to keep out of sight have burst into the living room. For many years, the interests of Wall Street and the biggest corporations have completely dominated the economic policymaking of the Republican Party. While this wing of the party pays appropriate tribute to "restraining spending" and "smaller government," their ideology is not really about principle. They adhere to only one core ideological premise: They favor whatever is in their own economic interest.

    Wall Street and big corporations are generally advocates of "smaller government" because they want to cut their taxes and reduce government regulations that prevent them from injuring consumers, fouling the air or engaging in the kind of reckless speculation that sunk the economy in 2008 and cost 8 million Americans their jobs.

    But the Wall Street crowd is perfectly capable of abandoning any talk of "small government" when it comes to huge government contracts. And you don't hear much about the deficit when it comes time to ask for tax breaks for the rich or oil company subsidies. Remember it was former 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 up more deficits in their eight years than all of the previous presidents in American history combined.

    However, there is another wing of the Republican Party that has traditionally talked a lot, but didn't have a lot of power. They are the libertarian ideologues who actually believe that the economy would be better off with a tiny government. This gang 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 issues and has been heavily populated with right-wing religious activists. But the Wall Street-induced economic disaster -- and overall decline of the American middle class -- has made this group a prime target for libertarian economic narratives that include a conviction that government spending is the root of all economic evil.

    Libertarian economic nostrums infused the Tea Party Movement, and that helped propel many new Republicans into Congress last fall. Suddenly this wing of the party is no longer relegated to the role of campaign season political fodder. They actually have some power in the Republican Caucus.

    The conflict between the Wall Street/corporate wing of the Republican Party and the libertarian wing of the party may play out even more starkly when Congress needs to raise the debt limit to avoid defaulting on the country's obligations. That would be the absolute last thing Wall Street is interested in, since it would cause a worldwide economic catastrophe and almost certainly send the country back into a major recession. But the Libertarian wing sees it as a bargaining chip to achieve their ideological goal of "smaller government."

    The battle over the fiscal 2012 budget -- and the current level of spending for the balance of this year -- will have major economic consequences for the well-being of average Americans.

    By: Robert Creamer
  • Posted by a hidden member.
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    Feb 25, 2011 8:45 PM GMT
    Are Republicans Trying to Hurt the Economy for Political Reasons?


    Yes.
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    Feb 25, 2011 8:52 PM GMT
    Well argued and convincing to me. I've suspected as much for some time.
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    Feb 25, 2011 8:56 PM GMT
    Yes. It couldn't be more obvious.
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    Feb 25, 2011 9:01 PM GMT
    It's obvious that they are.
    And they don't care if it causes the American people more pain and suffering.

    You'd think that the Repubs would feel guilty about causing the 2007-2009 Bush recession -and causing the American people so much economic distress and pain - but NOPE.
    They don't.

    Remember "Country First"?
    What a LIE.
    One of the all-time biggest BIG LIES.
    It's PARTY FIRST 24-7 365 days a year with the Repubs.
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    Feb 26, 2011 3:17 AM GMT

    It definitely seems like they are here in WI, perhaps for more amunition in the 2012 presidential election. By making public workers reduce their spending by making them use some of their income for health insurance and their pension, the state 's economy will go down even further, resulting in a loss of more jobs and even less money going to the governement, which will cause people to want a change in the presidency. I believe they are looking ahead to 2012 and they actually want the economy to be bad during the presidential campain, so that people will be more lilkely to vote for a republican president.

    This is really quite a scheme, but I think the Democrats do the same thing during a republican presdiency, in order to sway voters.

    That's what is wrong with government and why government reform should be job number one. Because the way it is now, each party is looking at how they can keep control, rather than doing what is best for the country as a whole. And until we stop this, nothing is going to change because each party just wants what will be best for them personally, rather than Americans and we are left holding the empty bag.
  • GQjock

    Posts: 11649

    Feb 26, 2011 3:33 AM GMT
    For them the ends ........

    ........ justifies the means

    Bad economy means it's better for them electorally
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    Feb 26, 2011 3:45 AM GMT
    What bad economy?
    http://www.google.com//finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1298691594978&chddm=98923&chls=IntervalBasedLine&q=INDEXDJX:.DJI&ntsp=0

    http://www.silive.com/news/index.ssf/2011/01/what_recession_wealthy_treated.htmlThe Dow Jones Industrial Average has risen 19 percent since the beginning of July. That and the return of bonuses on Wall Street and elsewhere have helped the wealthy feel better about more conspicuous consumption, said John Lonski, chief economist of Moody's Capital Markets Research Group.

    "Financially speaking, wealthy Americans much better withstood the latest downturn than have lower-income Americans," he said. "There was a drop-off there for a while, but it seems as though they've rebounded quite nicely."

    That doesn't offer much solace to lower-income Americans, who are still facing a housing slump and high unemployment. But it is good news for the economy, because the richest 5 percent of Americans, those making at least $207,000 annually, account for about 14 percent of all spending. And spending accounts for about 70 percent of the economy.

    "What you would like to see is consumer spending improvement distributed more broadly," Lonski said. "The lower- to middle-income segment of the population, after bearing brunt of the slump, is lagging behind rest of economy."
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    Feb 26, 2011 3:47 AM GMT
    jockgymboy said
    It definitely seems like they are here in WI, perhaps for more amunition in the 2012 presidential election. By making public workers reduce their spending by making them use some of their income for health insurance and their pension, the state 's economy will go down even further, resulting in a loss of more jobs and even less money going to the governement, which will cause people to want a change in the presidency. I believe they are looking ahead to 2012 and they actually want the economy to be bad during the presidential campain, so that people will be more lilkely to vote for a republican president.

    This is really quite a scheme, but I think the Democrats do the same thing during a republican presdiency, in order to sway voters.

    That's what is wrong with government and why government reform should be job number one. Because the way it is now, each party is looking at how they can keep control, rather than doing what is best for the country as a whole. And until we stop this, nothing is going to change because each party just wants what will be best for them personally, rather than Americans and we are left holding the empty bag.


    Both major parties are deeply corrupt - and barring something that causes both parties to collapse at the same time, we cannot hope to bring about a viable multi-party system that would help break the stranglehold on American politics.
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    Feb 26, 2011 4:01 AM GMT
    alphatrigger said
    jockgymboy said
    It definitely seems like they are here in WI, perhaps for more amunition in the 2012 presidential election. By making public workers reduce their spending by making them use some of their income for health insurance and their pension, the state 's economy will go down even further, resulting in a loss of more jobs and even less money going to the governement, which will cause people to want a change in the presidency. I believe they are looking ahead to 2012 and they actually want the economy to be bad during the presidential campain, so that people will be more lilkely to vote for a republican president.

    This is really quite a scheme, but I think the Democrats do the same thing during a republican presdiency, in order to sway voters.

    That's what is wrong with government and why government reform should be job number one. Because the way it is now, each party is looking at how they can keep control, rather than doing what is best for the country as a whole. And until we stop this, nothing is going to change because each party just wants what will be best for them personally, rather than Americans and we are left holding the empty bag.


    Both major parties are deeply corrupt - and barring something that causes both parties to collapse at the same time, we cannot hope to bring about a viable multi-party system that would help break the stranglehold on American politics.


    Until politicians start looking out for what is best for americans rather than just themselves and their party, we are going down a rough road. There are still some politicians from both parties who sincerely want to help americans, but greed and power is driving most of them.
  • Webster666

    Posts: 9217

    Feb 26, 2011 4:17 AM GMT
    They don't give a damn about the economy or the people or the country or the Constitution.

    They're just power mad.