Wednesday, November 03, 2010

Last night's biggest loser

It wasn’t the Democrats. It was the belief that government spending must shrink. Peter Beinart on the GOP’s lunatic notion of America’s exceptionalism—and how it could help get Obama re-elected.

Last night’s biggest loser was not the Democratic Party. Democrats will rebound. In fact, the GOP’s victories probably improve Barack Obama’s chances of reelection since he can now position himself as a check on Republican radicalism, as Bill Clinton did in 1996.

The real loser is Keynesianism: The idea that when businesses and individuals stop spending, government must. That idea will not rebound; it’s over for this period in economic history. First Britain, and now the United States, are responding to the worst economic contraction in 75 years by contracting government, despite the fact that the world’s best economists are screaming that it’s exactly the wrong thing to do. As Virginia Thomas might say, “Have a good day!”

The worst-case scenario is that in trying to balance the budget, Republicans force the White House into substantial cuts, which means America goes from stimulus to anti-stimulus. (Amy Sancetta / AP Photo)
Howard Kurtz: A Democratic BloodbathYou can already see the shift in the media commentary. On MSNBC, Keith Olbermann and company gleefully skewered the newly elected Republicans for not being more specific about what they’ll cut and gleefully predicted a civil war between Tea Party zealots who want massive cuts and Republican establishmentarians who don’t. But in so doing, they implicitly conceded that the question of the next two years will not be whether government contracts, but by how much. The best case scenario is gridlock: Obama blocks large-scale cuts as his 2009 stimulus money peters out, which means America goes from stimulus to no stimulus. The worst-case scenario is that in trying to balance the budget, Republicans force the White House into substantial cuts, which means America goes from stimulus to anti-stimulus. That’s the same move Franklin Roosevelt made in 1937, which according to many economists prolonged the depression for several years.

In retrospect, maybe the greatest blame lies with America’s pre-recession policies. For years, green-eyeshade types had been warning that America needed an economic surplus to prepare for the huge entitlement costs imposed by the baby boom retirement. Instead, George W. Bush—with a boost from Alan Greenspan—spent the surplus on war, tax cuts and expanding entitlements, leaving Americans anxious about debt even before the economic meltdown. Had America’s government done something about its long-term fiscal problems while times were good, perhaps America’s people would be more tolerant of the short-term spike in debt required by Keynesian stimulus. Instead, debt—even necessary debt--has become a metaphor for governmental irresponsibility and national decline. Fiscal restraint is to the anti-Obama Republicans what sexual restraint was to the anti-Clinton Republicans: the ultimate character test.

The Republicans have taken refuge in an anti-government ideology premised on the lunatic notion that America is the only truly free and successful country in the world.

Historians may also look back at 2010 as the first post-9/11 election in which fears of China loomed larger than fears of Al Qaeda. Given that China has stimulated its way out of recession and is set to pour even more government money into infrastructure, leaving America further behind, I doubt it will be the last. In his Senate victory speech, Republican megastar Marco Rubio announced that “America is the single greatest nation in all of human history. A place without equal in the history of all mankind” because “almost every other place in the world…what you were going to be when you grow up was determined for you.” Almost every other place in the world? From China to India to Brazil, hundreds of millions of people are rising economically in ways their parents could scarcely have imagined, in part because their governments are investing in infrastructure in the way the United States did in the late nineteenth century. The American dream of upward mobility is alive and well, just not in America. And rather than looking at what those other countries are doing right, the Republicans have taken refuge in an anti-government ideology premised on the lunatic notion that America is the only truly free and successful country in the world. That ideology won last night, and Keynesianism lost. Have a good day!
Peter Beinart, senior political writer for The Daily Beast, is associate professor of journalism and political science at City University of New York and a senior fellow at the New America Foundation. His new book is The Icarus Syndrome: A History of American Hubris. Follow him on Twitter and Facebook.


Anonymous said...

Sorry but Robert Reich's approach of big goverment and defecit spending does not appear to be what the American voter wants.

Anonymous said...

Yes, they want Billy Long and his "Fed Up" rhetoric.


Horse-farmer said...

you had better keep close tabs on what the bumbling auctioneer does while in DC...

I venture cigar smoke filled back rooms with a poker table and who's in who's back pocket.


Anonymous said...

I always wondered in great amusement what would our country be if we gave Americans EXACTLY what they vote for.

Imagine, under protest, the President signing a bill eliminating the unemployment check. The veteran's check and medical benefits. All causalities of the "cut spending" rhetoric. Of course the Prez should hold a brew-ha-ha BIG conference and be under duress and totally against the idea personally but alas, "the people have spoken and I have heard you....bla bla bla."

Social security? Cut it.
Medicare. Cut it. In fact let's give them old geezers the same deal they're offering the rest of the country with regards to healthcare which would be...fend for yourself suckers.

Democrats keep scraping and fighting so the American people never truly realize there are consequences for voting to cut off your own foot because of some snappy campaign slogan and radio jack offs telling them what to think.

The President should make sure he gives them everything they want. Even if it stops the checks.

Hey, they voted for it. Right?

Anonymous said...

Followed you over from the Turner Report, where it was posted:

"Well 11:04, isn't President Obama; his cabinet; his closest advisors; and, the direction he has given the Speaker Pelosi Congress and Senator Reid led Senate EXACTLY what this country voted for two years ago?

NOW it appears that the past 2-year experiment in stupidity is not EXACTLY what Americans want. At least the majority of voters who cast ballots in the Tuesday election.

Hey, I voted for less government. The President will not give it to me. I expect him to bitch, moan, travel, and play golf and tell his loving media he can't get things done because of the Republicans, and, find some way to continue to blame President Bush.

If you were in charge, what would you do and how would you pay for it?

You and your attitude are the experiment in stupidy the voters have rejected."

I agree with this poster, not you.