February 1, 2009

Swimming Clear of the GOP's Sinking Ship

On Wednesday, the House of Representatives passed an $819 billion economic stimulus bill. Despite the efforts of President Barack Obama to gain bipartisan support for the legislation, in the end, precisely zero Republicans voted in support of it. While the Democratic majority in the House is significant, it is narrow enough in the Senate that Republicans there have a chance to stop their version of the bill through a filibuster, and there are early indications that the GOP may do just that. Certainly, Senate Majority Leader Harry Reid believes it's likely.

Despite the dire straits in which the country finds itself after 8 years of Republican rule, and despite the fact that a majority of economists believe that a spending-based stimulus package is vital to America's economic recovery, GOP threats to derail the bill should come as no surprise. Republicans in the Senate have made obstructionism the norm in recent years, and in 2008, utterly shattered the record for filibusters. As Norman Ornstein, a congressional expert with the conservative American Enterprise Institute, notes:
The use of a filibuster as a routine measure on virtually every bill and the use of the filibuster on bills were there is a consensus on a tactic to slow things down, to make the place look bad, that is new... It is sending Congress' approval down into the sewer but it is also sending Republicans even further into the sewer.
Between the expressed hope of leading conservative infotainment personality Rush Limbaugh that he hopes President Obama fails, and their continued value of ideology over country, it is little wonder that, as Nate Silver puts it, the Republican Party is in death spiral:
... The more conservative, partisan, and strident their message becomes, the more they alienate non-base Republicans. But the more they alienate non-base Republicans, the fewer of them are left to worry about appeasing. Thus, their message becomes continually more appealing to the base - but more conservative, partisan, and strident to the rest of us. And the process loops back upon itself.
As I described in Time to Side-Step the Obstructionists and the Mis-Informed, the record of the Republican Party on economic matters over the past 100 years or so is inferior to that of Democrats with regard to any of number of metrics, including gross domestic product (GDP), treasury debt, inflation, S&P 500 performance and employment. The modern GOP's mantra of tax cuts, tax cuts and more tax cuts as the key to economic growth, simply isn't supported by historical data. As Larry Beinhart explains in an excellent article, the problem with the ideology of tax cuts is that it conflates profit-taking with wealth creation, and those two things are very definitely not the same:
High taxes create an incentive to reinvest profits into long-term growth.

With high taxes, the only way to retain the bulk of the wealth created by a business is by reinvesting it in the business - in plants, equipment, staff, research and development, new products and all the rest.

The higher taxes are (and from 1940 to 1964 the top rates were around 90 percent), the more this is true.

This creates a bias toward long-term planning.

If a business is planning for the long term, it wants a happy, stable work force. It becomes worthwhile to pay good wages and offer decent benefits.

Low taxes create an incentive for profit taking.

It is easy to confuse profitability with wealth creation.

They are not the same.

President Eisenhower built the interstate highway system. There is no doubt that this gave the country an asset of great value, one that was very productive. It created great "wealth." But, aside from the construction companies that contracted the work, it was not profitable.

Selling subprime mortgages, trading in derivatives, packaging mortgage-backed securities and "flipping" condos were all very profitable but did not create wealth.

The theory is that if the rich can keep their money, they will invest in businesses that create jobs, more businesses, more tax revenue and greater "wealth" for the nation.

That sounds like logic and common sense. But is it, in practice, what happened?

Once tax cutting began, the culture of business changed.

It was no longer enough for a business to be a reasonably good business, making steady, reliable profits.

Clearly, the idea that taxes are the cure-all for what ails us is no more valid than the belief eliminating taxes altogether provides the answer. A balance - a point of equilibrium - needs to be established, but the all-tax-relief substitute stimulus bill submitted by House Minority Leader John Boehner last week makes it clear that Republicans have no concept of such a balance - or at least no interest in it - and no understanding of economic necessity:
Let’s lay out the basics here. Other things equal, public investment is a much better way to provide economic stimulus than tax cuts, for two reasons. First, if the government spends money, that money is spent, helping support demand, whereas tax cuts may be largely saved. So public investment offers more bang for the buck. Second, public investment leaves something of value behind when the stimulus is over.
As the GOP ravages itself into irrelevance, we must ensure that it doesn't take the nation down with it like a sinking ship pulling sailors to a watery grave. Single party rule is not something to which I believe the United States should aspire, but the fact is that the modern Republican Party has fully demonstrated that it is neither trustworthy nor competent. That either needs to change or the GOP needs to be replaced by another party, but in the meantime, America can ill afford Republican obstructionism.

Here are two videos for your consideration.

The first is a flashback to 1993 and the Clinton tax increase. As can be seen in the video, conservative smear merchant Robert Novak was against a tax increase then, and despite the record of history staring them in the face, he and the moronic Kate O'Beirne remain against tax increases today.

The second is from The Colbert Report, and in it, Stephen Colbert offers the ultimate litmus test for principled stands against the stimulus package. Given recent actions and statements by Republican governors like Bobby Jindal and Sarah Palin, however, it's unlikely that we'll see too many people take him up on it.

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