Monday, June 04, 2012

This Republican Economy

No, this is not becoming the all-Krugman, all-the-time blog. But sometimes the Nobel Prize winning economist is on a roll, like right now. From the New York Times:

What should be done about the economy? Republicans claim to have the answer: slash spending and cut taxes. What they hope voters won’t notice is that that’s precisely the policy we’ve been following the past couple of years. Never mind the Democrat in the White House; for all practical purposes, this is already the economic policy of Republican dreams.

So the Republican electoral strategy is, in effect, a gigantic con game: it depends on convincing voters that the bad economy is the result of big-spending policies that President Obama hasn’t followed (in large part because the G.O.P. wouldn’t let him), and that our woes can be cured by pursuing more of the same policies that have already failed.

For some reason, however, neither the press nor Mr. Obama’s political team has done a very good job of exposing the con.

More here.

Krugman is a big Democrat, so I'll allow this lapse on facts, but the reality is that it hasn't been simply during the last couple of years that we've been following Republican economic dogma. Rather, it's been for the last twenty years or so. Cut spending/cut taxes/cut spending/cut taxes and on and on and on. This all began during the Reagan era, but it didn't really start to speed up until Clinton was in office, when the White House had to start dealing with GOP dominated Congresses. Sure, there was a lapse when W was in office, but even though his mad spending was sort of the exception proving the rule, this was Republican spending on Republican wish list items, and, therefore, still a Republican economy.

That is, the old GOP concept that all we need are massive tax and spending cuts to fix the economy is, and has been for many years, the conventional wisdom in Washington, regardless of your party affiliation. Indeed, Democrats have long been falling all over themselves to prove that they're serious about economics, and the way they've done that is by embracing Republican attitudes. We really are in a Republican economy, just as it has been since the early 90s.

So here's the punchline.

One would imagine that because we've been doing exactly what the Republicans say we need to do with the economy for two decades, that we would start to see some payoff, if they know what they're talking about. We've been cutting spending--remember, welfare is, for the most part, not much more than a memory now. We've been cutting taxes--they're now lower than they have been since the 40s. If the GOP is right, the economy ought to be positively booming these days. But it's not. And I'm not just talking the financial meltdown and the accompanying recession, either: wages have been literally stagnating or falling for the vast vast majority of Americans for those couple of Republican decades; the middle class is just a hollow name now, and that's been the case for a long time.

In short, we've essentially seen, in real life, what tax and spending cuts actually do. Turns out that the Republicans were and are totally wrong. Strangely, nobody in power seems to understand this.