Zombie Politics

The Republican Party was in a shambles after the election of Barak Obama in 2008. The American voters had roundly rejected the Bush administration and indicated that they trusted Obama and the Democrats to lead us out of the financial crisis caused by Bush policies.

It was in this crucible that leaders of the Republican Party hatched their strategy to regain control. They will throw sand in the gears of government and attempt to grind everything to a halt and then blame it on the President. Render government ineffective, and by inference, those running the government will appear weak. Oppose at every turn and some will start to question the ability of Obama and Democrats to govern rather than criticize the nature of the opposition. Energize the lunatic fringe with a seemingly endless stream of conspiracy theories surrounding the President and eventually you may be able to affect the level of trust that the larger population has in an inexperienced African American to lead.

What’s more, when asked what they would propose as an alternative to the ideas coming from the Obama administration, the best the Republicans can come up with are the same policies that Bush used to drive us into the ditch.

What’s worse – it’s working.

Here’s a quick summary for those who have forgotten the first part of this decade.

Ten years ago the Republicans set their plan in motion to transform society. Under the guise of trickledown economics they enriched the wealthy at the expense of the middle class through tax cuts. They slashed regulations and eviscerated the agencies charged with oversight of Wall Street, Big Oil, and Big Insurance in the name of the free market. Lobbyists ruled the halls of Congress.

The result – reckless Wall Street banks purposefully grew to a size that they could not be allowed to fail, collapsed the economy, and cost eight million Americans their jobs. Health care costs exploded, drug company profits soared, and average American incomes declined $2,000 per family. The Bush administration became bin Laden’s best recruiter by invading Iraq on trumped up WMD claims while allowing Afghanistan to fester.

The last Republican administration created exactly zero net private sector jobs. They spent a surplus like drunken sailors and rolled up more debt than all previous administrations in the 200 years of American history combined. They were chased from office by the most serious financial crisis since the Great Depression.

Even though the Democrats have made dramatic strides by preventing economic collapse, passing healthcare reform to start to bring us on par with the rest of the industrialized world, and financial reform to prevent a repeat of the last crisis – the American people are upset at the slow pace of the recovery and the special interests that profited from their pain.

Republicans are trying to take advantage of this anger by claiming not only that the Democrats are responsible for the mess, but aren’t cleaning it up fast enough.

They will do everything they can to prevent the American people from focusing in this upcoming election on the failed policies that drove us into the ditch to in the first place. The drama of filibusters, the doomsday prophecies about the deficit, the whole tea party movement – they are all just smoke screen and theatre intended to distract from the real question. Is the American public ready to give the keys back to the party that caused the most serious financial pileup in 60 years?

Let’s just look at what might happen if the Republicans gain control of house.

Paul Ryan will become Chairman of the House Budget committee. He wants to repeal Medicare and replace it with a private voucher system. That would turn one of the most popular and successful government programs into one administered by the very industry that caused the program to exist in the first place. These are the same guys who in the past decade have driven premium prices up at three times the rate of wages and racked up record profits.

Joe Barton will become Chairman of Energy and Commerce. Joe was the guy who most recently apologized to BP because the Obama administration was being too tough on them.

The whole Republican crew has revived the Bush plan to privatize Social Security. Apparently they figure that American public has forgotten that their 401k’s have yet to recover. They have also said that they want to repeal healthcare reform, reduce the minimum wage, and reduce unemployment benefits to encourage the jobless to find work faster.

The Republican Party has been successful in rendering government ineffective while simultaneously undermining the public’s trust in the institution. They have kept Democrats on the defensive by unleashing the loony Tea Party and its stream of fear and doubt. But at the end of the day, they are still going to have to dust off their corpse of an economic policy, put a suit on him, and parade him in front of the American people as the preferred choice. The sooner the Democrats can force that discussion, the sooner the American people will have a chance to realize that the future that Republicans have planned for them is not pretty.

16 Responses to “Zombie Politics”

  1. Keith says:

    Jeff,
    I struggle to respond…………

    all this spending, yet you want more. How much debt do you want

    you control the house and senate and pres, do what you want, no excuses.

    unemployement use to be 26 weeks and now its 99 and you want more.
    how much is long enough?

    you continue to bash bush. you should focus on the 48 year old in office who i am now convinced has no clue what to do or how to ask. did you hear bill clinton talk about what to do with the leak a week and a half ago. thats what a president sounds like. (i’d rather the 63 year old clinton to the 44 year old. when will we elect someone “office ready?” we’ve got to stop electing the young guys who are not ready. obama had no experiance that prerpared him to lead….NONE)

    again you champion medicare as a great program..we both agreed in march/april ITS GOING BANKRUPT!!!!

    Jeff…..47% of all of us dont pay fed taxes…..again, how many of us do you think should actually be paid by the public treasury in the form of credits, how many should pay nothing and how many should be left to pay the burden?

  2. Jeff Beamsley says:

    Keith,

    Good to hear from you again.

    As I posted earlier, the issue is that the economy is still underperforming. There are five unemployed folks for every job that the economy is creating right now. This IS the time time that the government should be spending to help create jobs and get our unused industrial capacity back into production.

    When people have jobs and the economy is growing, the number of taxpayers will go up and government revenues will go up. The government can raise interest rates and cut short term spending and begin to pay down the deficit.

    At the same time, we have to fix medicare and social security. I don’t want to revisit the whole silly semantic debate on “bankrupt”. We both agree that something has to be done to slow the rate of growth in healthcare spending. Privatizing the program is not it. That’s just a shell game which ignores the fundamental issue that the business model of our healthcare system has to change. The current system pays for transactions and so has a built-in incentive to encourage more transactions with little regard to how those transactions affect the long-term health of the patient.

    If we had a system that paid for outcomes there would be incentives for healthy lifestyle choices and disincentives for unhealthy choices. Those that choose to smoke, for example, would pay more for their care than those who don’t. Those who take an active role in managing their chronic conditions will be rewarded while those who ignore their physician’s advice will fall into high risk pools and have to pay more.

    The bottom line is that if we don’t fix these structural problems, it doesn’t matter what we do now regarding short term budget balancing. In the same way, if we are able to fix these structural problems, our short-term stimulus spending will not endanger our long term financial future.

    The real risk is that we cut back on stimulus spending which slows economic recovery INSTEAD of making the hard decisions about Medicare and Social Security. Then we run the risk of turning this recession into a depression and entering a truely frightening era of deflation.

    As is often the case in this situations, there is active debate among economists on which direction will prove the most productive.

    Here’s a link that seems fairly balanced in it’s description of both sides.

    http://caivn.org/article/2010/06/29/paul-krugman-fears-america-has-entered-its-third-depression

    The bottom line is that we have to choose. I happen to like Paul Krugman, but as you’ve said, there is no middle road here. Obama has to step up to the plate, chose the policy he feels is best for the country, and win the political support to implement that plan.

  3. Keith says:

    Jeff,
    to spending, the gov’t HAS been spending and for years. S.S. is not funded because we SPENT it! Medicad/medicare are undrfunded because WE SPEND TOO MUCH!!!! the stimulas…etc..we are spending money and WAY TOO MUCH. wwe’re in recession and business are profitiable because they have tighten spending. gov’t has grown…you tell me.

    Jeff…..47% of all of us dont pay fed taxes…..again, how many of us do you think should actually be paid by the public treasury in the form of credits, how many should pay nothing and how many should be left to pay the burden?

  4. Jeff Beamsley says:

    Keith,

    Do your homework. The way that SS and Medicare work is through payroll deduction plans and employer contributions. Any surplus in funds over expenditures is invested in Treasury bonds.

    Bonds are one of the tools that the government uses to finance deficit spending. Interest rate on those bonds is an indication of the trust that the rest of the world has in our ability to repay our bonds when they come due. As long as interest rates remain low, the government can borrow money with some confidence that the cost to repay them will also be low. That is the current situation.

    The structural issue is that baby boomer retirement is going to put a sufficient strain on Medicare and Social Security that those programs will have to sell their bonds in order to meet their obligations.

    This would be an issue regardless of what the size of the current deficit is.

    If we didn’t have this population blip, both programs would be fine since income would more or less equal expense.

    Also if we had 5% unemployment, it would be less of an issue too, but still something we would have to deal with.

    The reason we had so few tax payers is because we had so many people out of work.

    It’s pretty simple. More people working = more taxes = more income = lower deficit.

    The government has to continue to stimulate the economy until we see robust job growth.

    I will post something in more detail on this, but it growth is happening. Just not fast enough. So it is not time yet to take our foot off the accellerator.

    Republicans continue to try to make the case that deficits are somehow affecting the recovery, but they don’t have the facts. They only have the fear, which clearly has affected your thinking too. Interest rates remain low. The government is not sucking up all of the available capital. Much the opposite. The government is pumping money into the market in every way that it can (extensions of unemployment benefits being just the most recent example).

    The Republican nightmare scenario is that the stimulus DOES work and that the economy DOES recover because that is their only issue for November.

    Riddle me that one.

  5. Keith says:

    http://www.realclearpolitics.com/video/2010/07/22/geithner_economic_crisis_caused_by_people_living_beyond_their_means.html

    Not a republican saying this….This is what I believe happened. Just because the bank will let you refinance your home and use it as a piggy bank don’t mean you should. Untimately its YOUR FAULT when your home is foreclosed. YOU took the 125% of value loan that bolooned after 5 years. Its YOUR fault the value of your home crashed and you couldn’t sell it for 125% of the value it was purchased for and now you’re bankrupt because your upside down $150,000….The banks were stupid for making those loans but the individual was even dumber for putting themselves in harms way. PERIOD!!!!

    Jeff, I have no debt, I’ve lived like this ever since I paid off my home 10 years ago. Its the only debt I’ve have in the last 15 years. It is not silly for me to think fiscal discipline is the way to go at ALL TIMES!!!

    You comment above;

    “Republicans continue to try to make the case that deficits are somehow affecting the recovery, but they don’t have the facts. They only have the fear, which clearly has affected your thinking too.”

    How condesending of you to think I am effected by what republicans say…..this is absolutely a major flaw of the “progressive left.” You think anyone who thinks as a conservitive is influenced by “right wing leadership.” blah!!!!!! No one listens to Rush to learn what to think, They listen because he’s the only one, or was, saying what they already believe!!!

    The dems are falling apart on the tax issue with regards to the rates that expire 12-31-10…..Many of them know this is a bad idea

    SS was created when life expectancy was only six months longer then the date one would start receiving it. It was intended to help in the last few months of life. Look where its at today!!! Its view as a full fledged retirement program. Any idea why we think health care will be a financial train wreck?

    Your view of these programs is that they don’t have to stand on their own. Simply cut the benefit, raise the amount of the tax or prolong the payment. You view everyones money as the Govt’s….Margert Thacher said “socialisum is great, until you run out of everyone elses money.” That’s where we are my friend. I was appalled with Bush’s spending. At worst he was $450 billion, $265 billion when he left office. Obama is at 1.4 trillion for this year with much more to come this year and next…..don’t you get it????? This is reason for concern……

    Please answer this….47% of all of us dont pay fed taxes…..again, how many of us do you think should actually be paid by the public treasury in the form of credits, how many should pay nothing and how many should be left to pay the burden? This is important to our conversation.

  6. Jeff Beamsley says:

    Keith,

    You confuse cause with remedy.

    I agree with Secretary Gietner that, as is the case in many financial bubbles, there were many individuals taking too much risk and doing financially irresponsible things. The market punished some and rewarded others. It also punished a lot of innocent bystanders who were behaving responsibly, but through no fault of their own lost their jobs and houses. You can spend a lot of time trying to figure out who to blame and whether or not they were adequately punished. While that may result in better regulations to prevent a future crash, it won’t do anything substantial to aid the current recovery.

    This is a macro economic problem, not a micro economic problem.

    From a macro economic perspective, recessions are a chicken and egg problem where the near-term future is sufficiently unclear that private industry including banks are unwilling to take much risk. Robust government spending gives companies an opportunity to expand to fill government orders for goods and services. More folks get hired. They pay their bills and are able to make some of the big capital purchases they have been putting off like new cars. The car companies hire to build the cars and things get going again. I can testify that this is happening. Car sales are up. The factories aren’t hiring yet, but they are runnning a lot of overtime, which is the precursor to more hiring.

    The point at which the government needs to back off is when government spending threatens to kick off a round of inflation because the demand the government is creating is making particular resources (capital, labor, raw materials, etc.) scarce and prices go up. We are not even close to that point. Backing off too early, as you and other conservatives advocate, will realize the very fear that you express. The business confidence will evaporate, job growth will stall, and the recovery will stop.

    You have yet to tell me how SHORT TERM debt is bad. The TARP money is getting paid back. The money spent in infrastructure comes back to us in commerce which increases taxes. Your concern is that it won’t get paid back, but please tell me what YOUR plan is for a recovery and how REDUCING government spending is going to make that happen faster.

    The reality is that you don’t have a plan. All you have is the boggie man of debt. Reduce the debt and the boggie man goes away. The reality is that the boggie man is a figment of your imagination and will remain under the bed as long as you let him exist.

    Your last question, which you have asked several times is also a red herring because it also has nothing to do with recovery.

    This discussion is not about taxation. It is also not a soak the rich discussion. The reason so many people didn’t pay taxes last year is because so many people were out of work. Even with the current system, if we had 5% unemployment you would not have 47% of federal income tax filers paying no net taxes.

    My sense regarding taxation is that everyone should pay their fair share and that during times of economic expansion that tax system should not favor any particular economic class.

    During times of economic contraction, there is some logic to pumping money through tax cuts and other benefits into the hands of the poor/unemployed because it keeps them spending. Virtually the whole spectrum of economists agree that this is one of the best ways to get money into the system and prevent the sort of dislocations (forclosure, relocation, school drop out, family break-up) that accellerate economic contraction rather than expansion.

    Once we’re into another growth cycle, which is inevitable, the tax code, to the degree that it is able, should make sure that everyone has an equal opportunity to benefit and that all share the burden of paying down the debt accumulated during the downturn. What we have also accepted as a society is the concept that it is fair to ask a poor person to pay a dollar while a rich person pays a thousand dollars.

    That probably won’t satisfy you, but it is a place to start.

  7. keith says:

    try this for our conversation on s.s.

    http://spectator.org/archives/2010/07/20/democrats-renew-their-war-on-a/

    the econimy if left to its own will always rebound…it just does. govt can do far more to hurt this process then help. really doesnt matter who is in charge…the unemployement rate does have anything to do with obama…we simply bought and built too much stuff and we got sloppy with our personal finances and lending pratices….it would have happened on anyones watch. clinton was president when the tech bubble grew and burst…1999 the nasdq was up 84% poof…bushes was houses…poof…obamas might be the growth in gov’t….

    i was for tarp and the treasury action…not so much the recovery act. tarp is being paid back which i always knew much of it would. those that dont pay it back are the ones im not so sure should have been helped, gm, aig, fannie and freddie…tough call though.

  8. Jeff Beamsley says:

    Keith,

    It is true that the ecnomy, if left to its own will eventually rebound.

    The depth and duration of these corrections, however, can be affected by government.

    We are also operating in a globally connected market. So there are also political costs to the conservative “let it burn” philosophy of fiscal management.

    If we let the global financial system collapse, which was certainly a clear possibility, we would have taken virtually all of the world’s economies with us into a deep and prolonged depression. That would have destabilized countries like China which depend on exports to keep their economy growing. China could have chosen to invade Taiwan in an effort to keep focus off of internal domestic hardships. In a weakened state, it is unclear how the US would respond, and if we didn’t respond, how would that affect North Korea and Iran?

    Our position as a global superpower is built in large part on our economic strength. You willing to put that at risk just because you don’t like Keynesian economics?

    As far as the American Spectator link is concerned, once you get past the first page of conservative political posturing, he is saying the same thing I’ve been saying for quite a while. Both SS and Medicare need to be fixed. Medicare is the larger short-term problem and it is connected directly to rising healthcare costs. Control healthcare costs and you have solved the problem of Medicare.

    He also said that SS is OK until 2017 or so, but the longer we wait to act, the more difficult the adjustments will be. Tweaks are possible in the next couple of years which will modify the plan in ways that will insure that it survives more or less intact.

    Rep Ryan’s proposals, by the way, ARE radical. They are interesting because they are at least ideologically consistent and based on what appears to be defensible economics. Bascially it is the libertarian vision of a government with no social programs and virtually no regulations. We’ll see if the voting public are ready for a return to the age of robber barons and poor houses.

    I suspect, though, that recent details regarding safety violations at the Deep Horizon rig and the Massey coal mine will serve as sufficient reminder that big corporations can’t be trusted. They have proven time and time again that they are willing to take huge risks with regard to safety and environmental impact in order to maximize short-term profits. This is what a beaten and contrite Greenspan used in his defense of the latest collapse. He was convinced that CEO’s would not bet their companies on what was clearly a bubble. He was wrong. Greed overwhelmed reason. That’s why we must have another entity with the power to enforce rules which compel responsible behavior. That is one of the important roles that only the federal government can play.

  9. keith says:

    i have never questioned what will eventually happen to s.s. and med care/cade, we’ll fix it, we have too…the only reason i’ve continued to bring it up is you want to add more and bigger programs which will ultimatley end up in the same state….HEALTHCARE will arrive at the same state…my question is this; with the history of these programs growing far bigger then originally planned, and not recognizible to its original purpose, why would you favor creating programs even bigger? surely you dont think this one will be different….. get it?

  10. Jeff Beamsley says:

    The OMB projections had Healthcare reform reducing the deficit over ten years.

    It is also the first step in the larger program of changing the healthcare re-imbursement model from transactions to outcomes. You can’t hold the healthcare system accountable for the health of all americans until you can provide some baseline level of care for all americans.

    If we fail at that, the rest really doesn’t matter.

    The bottom line anyway isn’t the size of the program, but whether the money spent is having the intended results.

    In the case of Social Security and Medicare, the results are spectacular. They have reduced the level of elderly poverty from 35% in 1959 to 10.2 in 2003. That was a little UNDER the poverty rate for the whole population. In other words, Social Security and Medicare have made it possible for retired people to avoid slipping into poverty just because they can no longer work or may be in declining health.

    I think that this was the intended purpose of these programs and they appear to be suceeding.

  11. Jeff says:

    so heres the fix….raise the go forward age to 73 on a progressing scale starting now. im open to any suggestion on what that scale looks like….cut the benefit on a sliding scale up to 20%, based on a means test…problem solved…its that simple, agree?

  12. Jeff Beamsley says:

    Sure.

    In fact there is even a simpler change which is to remove the current salary cap. That will generate sufficient revenue that no other changes, other than those already in the law, would be required.

    Whatever is decided should be enacted sooner rather than later in order to have the desired effect.

  13. Jeff says:

    so it is simple……now maybe you can understand why I want them ALL thrown out. Because most things are simple. They are all part of a great system which unfortunately has become corrupt. Get them all out. If you and I can agree that the answer is simple then why after years and years cant they? Its crazy…

    the tax cap being lifted is not good for me as it adds to the total burden of that group of people and their benefit will not be increased. all the more so if we are means testing a reduction of 20%. thats a double whammy

    Jeff you and I could go into a room and solve most of our most pressing issues in no time, our elected officals can not. They have ALL become too partisian to get anything done. S.S. i an easy one.

  14. Jeff Beamsley says:

    Compromise the the lubrication that makes democracies work.

    The challenge is that the political system has become dysfunctional because it currently punishes those who even suggest that a compromise is possible, much less actually create and implement one.

    I personally feel that throwing all of them out is the wrong thing to do. We’ve seen how term limits have destroyed state government. It reduces the incentive to compromise rather than increase it.

    My “silver bullet” is to get private money out of elections. Make them all publically funded and I think you will see compromise return to the process. Elected representative will finally be free to vote their conscience and represent the people rather than special interests who fund their campaigns.

  15. keith says:

    to wandering thoughts – dont hold me to these

    only landowners should be allowed to vote.

    money is free speech

    my “silver bullet”

  16. Jeff Beamsley says:

    Keith,

    Tried that when the country was first founded.

    Didn’t work.

    You can thank Andrew Jackson.

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