The Republican Brain (36 page)

Take just the month of August 2011. A study by the Bipartisan Policy Center estimated that the Treasury would only take in about $172.4 billion during the month, but would owe $306.7 billion. So the Center constructed a scenario in which the department used the incoming money to pay its interest on bonds and to pay for social security benefits, Medicare and Medicaid benefits, unemployment insurance, and military contractors—totaling about $172 billion. This would then necessitate
not
paying for the Departments of Labor, Justice, Energy, and Education;
not
paying for the Environmental Protection Agency;
not
paying federal salaries or for veterans programs;
not
paying for housing assistance for the poor; and much, much else.

This would have been not only unfair, but likely financially catastrophic. From Geithner's perspective, it was just “default by another name.” Just because the debt ceiling deniers used a narrower definition of “default” does not mean that it was reasonable to subject the United States to such turmoil, or even to suggest doing so.

I wish we were finished. But we're not.

In late 2010, the Federal Reserve, chaired by Bush appointee Ben Bernanke, announced something called QE2: a second round of “quantitative easing,” in which the national bank bought up $600 billion of its own bonds. Hence the charge from conservatives, like Texas governor Rick Perry, that the Fed was “printing money,” although technically it was not. But new money was certainly being created, injected into the system in the hope of increasing bank lending and generating further economic stimulus.

From that point on, a rumbling conservative distrust of the Federal Reserve began to build, as conservatives (rather opportunistically, in light of the fact that any economic improvement might help President Obama) denounced the idea of creating more money on the grounds that it threatens the value of existing currency. Sarah Palin, for one, opined that we “shouldn't be playing around with inflation” and asserted that grocery store prices had gone up.

There's certainly a risk of inflation when you create new money. But the idea that inflation is something we should focus on right now, amidst much more momentous economic hardships—and at a time when inflation is, at this writing, not raising any alarm bells—is ostrich-like.

Nevertheless, the anti-Fed cry led to an extraordinary occurrence: In September 2011, Republican leaders in Congress actually sent Bernanke a letter urging him to cease attempts at monetary stimulus—as if this is a decision that politicians, rather than expert economists, ought to be making.

The Republicans' stated reason for pressuring the Fed was very peculiar. QE2, they said, had “likely led to more fluctuations and uncertainty in our already weak economy.” Further such actions, House Speaker Boehner and his colleagues intoned, “may erode the already weakened U.S. dollar or promote more borrowing by overleveraged consumers.”

“I'm not shocked by much anymore, but I am shocked by this: the leaders of one of the great parties in Congress calling on the Federal Reserve to tighten money in the throes of the most prolonged downturn since the Great Depression,” wrote David Frum when the GOP letter came out. Presumably Frum can still can remember the days when Milton Friedman, who would have supported monetary easing, was a GOP icon.

The claim of the GOP leadership is deeply disturbing, in that the core problem with the economy as of this writing (in early October 2011) is precisely the opposite of what Republicans say. It isn't inflation or people getting into too much debt. It's unemployment and lack of growth. It's a failure to come out of the recession with the speed that had been hoped for, which is precisely why it was appropriate for the Fed to take additional action.

In sum, Republican economic unreality now extends into monetary policy, and includes rejecting the views of Milton Friedman and pressuring the Federal Reserve, always insulated from politics (until now), to take precisely the opposite actions from those that are needed as we continue to reel from the Great Recession.

As my discussion with Bruce Bartlett about the right wing's economic follies continued—including conservatives taking positions that, just a few years earlier, conservatives denounced—something occurred to me. Bartlett was a nuanced and a situational economic thinker, rather than one who insists upon strict all-or-nothing rules or black and white approaches. And that (along with his mouth) was what got him in so much trouble with today's conservatives.

Bartlett was explaining to me his long study of Keynesianism—the view that when an economy freezes, the government has to step in and spend to get the gears turning again. The political right today, explains Bartlett, believes that “any sort of Keynesian fiscal stimulus is not only wrong, but counterproductive.” Instead, for conservatives, it's tax cuts, tax cuts, tax cuts, no matter the situation—a very un-nuanced application of the supply side economics of the Reagan years.

Bartlett himself was a chief proponent of supply side economics—
back then.
He authored the book
Reaganomics
in 1981. But he doesn't think the time for Reaganomics is now, because he doesn't think that one economic truth obtains in every economic situation. “Right at the moment when the economy collapsed, it was immediately apparent to me that the whole Keynesian idea was now exactly applicable to the circumstances of the time,” says Bartlett. “Rather than being dead, it was coming back like a Phoenix.”

“I still think the supply side model fits in other circumstances,” he adds, “but it's certainly not applicable today. We have an excess of supply—why do we need more supply?”

When circumstances change, a flexible thinker like Bartlett can find himself on the same side as a liberal economist like Paul Krugman. Meanwhile, the rigid right keeps pushing tax cuts, and now, “don't print money”—not so much thoughts any longer, but chants.

Notes

187
“people who literally walk across the street”
Interview with Bruce Bartlett, October 3, 2011. All quotations (unless otherwise noted) are from the same interview.

188
“Absolute faith like that overwhelms a need for analysis”
Ron Suskind, “Faith, Certainty, and the Presidency of George W. Bush,”
New York Times Magazine
, October 17, 2004. Available online at
http://www.nytimes.com/2004/10/17/magazine/17BUSH.html
.

188
“did not want to be associated with that kind of work”
Richard W. Stevenson, “In Sign of Conservative Split, a Commentator is Dismissed,”
The New York Times,
October 18, 2005.

189
economists today are liberal by nearly a 3:1 margin
Neil Gross and Solon Simmons, “The Social and Political Views of American Professors,” 2007 working paper.

189
“economic Enlightenment”
Daniel B. Klein and Zeljka Buturovik, “Economic Enlightenment Revisited: New Results Again Find Little Relationship Between Education and Economic Enlightenment but Vitiate Prior Evidence of the Left Being Worse,”
Econ Journal Watch
, Vol. 8, No. 2, May 2011, pp. 157–173. Available online at
http://econjwatch.org/articles/economic-enlightenment-revisited-new-results
. See also Daniel B. Klein, “I Was Wrong, and So Are You,”
The Atlantic,
December 2011, available online at
http://www.theatlantic.com/magazine/archive/2011/12/i-was-wrong-and-so-are-you/8713/#
.

190
the one institution above all that must remain above politics
Noam Scheiber, “Fighting the Fed,”
The New Republic
, November 17, 2010. Available online at
http://www.tnr.com/print/article/politics/79223/fed-sarah-palin-war-quantitative-easing
.

190
directly refuted right before their eyes
Nyhan, Brendan and Jason Reifler. 2010. “When Corrections Fail: The Persistence of Political Misperceptions.”
Political Behavior
32(2):303–330. Available online at http://www-personal.umich.edu/~bnyhan/nyhan-reifler.pdf.

190
straight from George W. Bush's mouth
For a rundown of all the times the Bush administration made this claim, see Brendan Nyhan, “Bush vs. his Economists, IV,” October 10, 2006. Available online at
http://www.brendan-nyhan.com/blog/2006/10/bush_vs_his_eco.html
. See also Dana Milbank, “For Bush Tax Plan, a Little Inner Dissent,”
The Washington Post
, February 16, 2003.

191
“That's been the majority Republican view for some time”
Quoted in Brian Beutler, “It's Unanimous! GOP Says No to Unemployment Benefits, Yes to Tax Cuts for the Rich,”
TPMDC
, July 13, 2010. Available online at
http://tpmdc.talkingpointsmemo.com/2010/07/its-unanimous-gop-says-pay-for-unemployment-benefits-not-tax-cuts-for-the-rich.php
.

191
some $ 1.5 trillion between 2001 and 2007
Center on Budget and Policy Priorities, “Tax Cuts: Myths and Realities,” May 9, 2008. Available online at
http://www.cbpp.org/cms/?fa=view&id=692
.

191
“some snake oil salesman”
N. Gregory Mankiw,
Principles of Microeconomics
, p. 29–30, “Charlatans and Cranks.” Dryden Press, Fort Worth, TX, 1998.

191
supremely Manichean stance
Bruce Bartlett, “Norquist Holds the Deficit Hostage to ‘Starve the Beast' Theory,”
Tax Notes
, March 21, 2011.

192
“not because citizens are taxed too little”
Orrin Hatch press release, April 14, 2011. Available at
http://hatch.senate.gov//files/04/24/50/f042450/public/index.cfm/releases?ID=cd997230–7bd5–45ec-a1df-18ea6fe1ee10
.

192
analysis of our budgetary plight
See Pew Charitable Trusts, “The Great Debt Shift,” April 2011, available online at
http://www.pewtrusts.org/uploadedFiles/wwwpewtrustsorg/Fact_Sheets/Economic_Policy/drivers_federal_debt_since_2001.pdf
.

193
“Simple common sense . . .”
Bruce Bartlett, “The Republican Myth on Tax Cuts and the Deficit,”
Tax Notes
, May 16, 2011.

193
early 2010 analysis
Congressional Budget Office, “Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output From October 2009 through December 2009,” February 2010. Available online at
http://www.cbo.gov/ftpdocs/110xx/doc11044/02–23-ARRA.pdf
.

194
“jobless stimulus”
“Did the Stimulus Create Jobs? Yes, the stimulus legislation increased employment, despite false Republican claims to the contrary.” FactCheck.org, September 27, 2010. Available online at
http://www.factcheck.org/2010/09/did-the-stimulus-create-jobs/
.

194
“zero jobs”
PolitiFact, “Rick Perry Says the 2009 stimulus ‘created zero jobs,'” September 12, 2011, available online at
http://www.PolitiFact.com/truth-o-meter/statements/2011/sep/12/rick-perry/rick-perry-says-2009-stimulus-created-zero-jobs/
.

194
a variety of tax cuts
Citizens for Tax Justice statement, “President Obama Cut Taxes for 98 % of Working Families in 2009,” April 13, 2010. Available online at
http://ctj.org/pdf/truthaboutobamataxcuts.pdf
.

194
64 percent of Tea Partiers
New York Times/CBS Poll of Tea Party Supporters, April 5–12, 2010. Available online at
http://documents.nytimes.com/new-york-timescbs-news-poll-national-survey-of-tea-party-supporters
.

195
“a majority of Americans have seen reduced taxes under President Obama”
PolitiFact, “Barack Obama says he lowered taxes over the past two years,” February 7, 2011. Available online at
http://www.PolitiFact.com/truth-o-meter/statements/2011/feb/07/barack-obama/barack-obama-said-he-lowered-taxes-over-past-two-y/
.