Those Who Forget History Are Condemned To Be Establishment House Republicans

Let’s take a look at history.

1985 – Ronald Reagan, who (let’s remember this) governed his entire eight years with Congressional minorities, had to finally cut a deal with the Dems.  The deal with Tip O’Neill involved two dollars in spending cuts for every dollar in tax hikes.  It led to the “Reagan Tax Hikes” that liberals blather about (they were much, much smaller than his tax cuts, and occurred after the economy had recovered, which isn’t nearly as stupid as raising taxes during a recession).   Naturally, O’Neill reneged on the deal; we got the tax hikes and the spending, putting a black mark on Reagan’s legacy and giving a generation of giggly lefty chanting-point-bots a cheap tu quoque tittering point.

1990 - George H.W. Bush cuts a deal with Congressional Democrats, who are still in the majority – just one more round of taxes, in exchange for spending cuts, leading to his famous declaration, “Read my lips!  No new taxes!”.  The Dems welched, naturally, leaving Bush looking like the fool that, for believing the Democrats, he truly was.

2012Some House Republicans are making noises that sound suspiciously similar to “we’ll be happy to agree to tax hikes today, in exchange for spending cuts someday when you get around to it”.  In other words, they are planning to extend electoral credit to a party that has “our ends justify our means” as an unwritten platform plank.

Dear House Republicans:  you thought the 2010 primary season was brutal for RINOs?  Remember Trent Lott, and don’t be stupid. Compromising with Democrats before you’ve gotten your pound of flesh is the mark of the sucker.  The moron.  The soon-to-be unemployed politician, God and your smarter voters willing.  

27 thoughts on “Those Who Forget History Are Condemned To Be Establishment House Republicans

  1. Hakim X Ellison and his bag of leftist monkeywrenchers have promised to vote against any cuts to entitlements, which of course is where the money is spent.

    Does that make them:

    a. Bigots
    b. Homophobes
    c. Racists
    d. Obstructionists
    e. Sequentially, all of the above

  2. “a party that has “our ends justify our means” as an unwritten platform plank.”

    Maybe they mean to put that in there last September? No, that would have been too “transparent”.

  3. I say it’s time to go cliff diving, FOR THE CHILDREN! I don’t the idea of my kids having to pay for what we’re consuming today.

    Remember, our pain will be for the children! For the Children! For the Children! (Repeat as necessary.)

  4. What was worse about the Bush thing….after he compromised with the Democrats, they then stabbed him in the back and used his compromise against him in 1992. “Don’t vote for Bush, he lied” the Democrats said.

  5. I don’t know about the actual numbers….but I have a proposition: Prior to entitlement reform, how about we eliminate (to start with) the federal Depatrments of Education, Energy, Health and Human Service and Housing and Urban Development. Completely wasteful and useless federal government entities performing functions that even if needed would be better suited to state level government. I wonder how much capital these entities have sucked out of the American private sector economy since their inception…

  6. Adrian, you forgot the source of the most lame, ignorant and short sighted regulations in the world, the EPA!

  7. BH, not forgotton, trust me. My ultimate goal would also include elimination of the IRS.

    If I were running for President I would promise that upon my election unemployment would skyrocket….inititally.

  8. Chuck has it. Liberals can manage to attack conservatives for agreeing with them. Alida Buys Minnesota put a press release yesterday criticizing Rep Kline and Paulsen for possibly reneging on the no new taxes pledge.

  9. Terry Obama was asked if a tax increase on the rich would bring in less revenue would he still be in favor of it? His answer was yes and his reason? Fairness.

  10. The GOP is just pursuing their agenda in a way that I think is short sighted. The strategy of blanket opposition didn’t let them win in 2012 and guaranteed that their views wouldn’t be incorporated at all in the 2009-2010 legislation. Now we’ll see if they stick to an all-or-nothing strategy or try to compromise in a way that gets them some of what they want and some of what the Democrats want.

  11. The strategy of blanket opposition didn’t let them win in 2012

    It didn’t lose anything, either.

    and guaranteed that their views wouldn’t be incorporated at all in the 2009-2010 legislation

    Obama, Reid and Pelosi made it clear that the only way they’d get “incorporated” was by going along with the Dems.

    . Now we’ll see if they stick to an all-or-nothing strategy or try to compromise in a way that gets them some of what they want and some of what the Democrats want.

    Filed under “Dispatches from Fantasy World”. Obama is the one that’s never going to compromise. No reason we should – not without getting major concessions.

  12. Personally, I think capping deductions would be the right place for Obama to begin from. A $50,000 cap would raise some $750 billion over ten years. The cap would barely touch the bottom 60% of taxpayers while only slightly hurting the upper-middle class. Most of the money would come from the top 1%.

    According to Bloomberg, a $25,000 cap would generate $1.3 trillion in higher revenues, and still be highly progressive.

    I would also include the mortgage interest deduction and employer provided healthcare (subsidy) benefits.

    But on the other hand the ‘fiscal cliff’ is the best deal anyone who is going to be around 25 years from now is likely to get. We are going to have another recession some day. Why not now, when those who sold the future can see it up close?

  13. As bad as the media is about politics generally, its ignorance on economics is truly breath taking.
    The theory of economics Obama is using isn’t Keynesian Economics and it isn’t Classical Economics. It’s Obamanomics.
    In Classical economics you handle a recession by allowing wages and prices to drop until the market clears. “market clears” means that wages have dropped enough that full employment is restored, and prices drop until whatever inventory is glutted (housing, in this case) is sold. At that point markets become efficient and can start growing again (an inefficient market is a market where buyers and sellers can’t agree on price so things are stuck, c.f. the current housing market).
    Keynesian economics modifies Classical economics by positing that the ill effects of a standard business cycle recession can be moderated by the government pumping borrowed money into the economy. On paper it can work under certain circumstances, but it will not help in a ‘supply shock’ recession (as the U.S. experienced due to rising oil prices in the 70′s) and it will not help with structural (rather than cyclical) unemployment.
    There is no way to describe what Obama is doing by running endless trillion dollar deficits while he raises taxes, other than to say that he is handing out borrowed money to people based on their political usefulness rather than what makes sense economically. This is not pro-growth economics, it is pure political redistributionism.

  14. Emery-
    I know that you used 10 year figures throughout your comment, but you only mentioned ”ten years’ once. There are many people (liberals and idiots) who believe that the ten-year revenue estimates they hear on the news or read online are annual figures. I know, I’ve talked to them. I was subjected to horrible abuse once (not here) just for bringing this point up!
    I like to look at economics the way a scientist looks at an energy budget. You have to account for every milliwat.
    So if deductions are limited, and that brings in 1.2 trillion $ over a decade, what would that money have been spent on if the government didn’t take it? Investments in startups? Contributions to non-profits? Mega-yachts?
    I don’t think that it is good for the economy to reduce spending on any of those things.

  15. The Reagan history from the early 80s is interesting. The Reagan tax reforms (completed with a Democratic House of Rep.s) broadened the tax base by taking out a lot of deductions while reducing marginal income tax rates. Significantly, it was viewed at the time that it was important that almost everyone paid a little tax (the lowest rate was 5%, I believe) in the interests of fairness and democratic legitimacy. In a populist reversal of that notion, each tax rise and tax cut that followed increased the basic personal deduction to make the change palatable to the middle class. But as Reagan and others in the early 80s foresaw, as income tax becomes less universal it becomes more of a partisan political issue, with income tax payers complaining of “takers and makers” while non-payers see “tax the rich” as the solution to all fiscal problems. Neither approach solves any fiscal problems, but it helps to win elections.

    Europe has relatively flat taxes, due to their reliance on consumption taxes. Benefits, on the other hand, are highly skewed to the poor, particularly relative to income. It’s a much more efficient and politically sensible system than the American system of universal benefits and progressive taxation

  16. Emory in the not to distant past, Gordon Brown had a large tax increase passed upon Britain’s wealthy. The result was as predictable as the sun rising, less revenue and fewer wealthy people.

    Capping deductions or raising rates may bring in more revenue for a period of time. But, people will adjust to the new reality and if it gets bad enough they will leave.

  17. This is a state that disdains outsiders so guess what folks, Alida Messinger had nothing to do with the last electoral embarrasments. BTW Mitch, Why don’t u study our post-modern culture (I hate that its this way but accept that these are the cards we’ll be dealt from now on) The 80′s ain’t coming back folks— especially in this state!!

  18. This is a state that disdains outsiders so guess what folks, Alida Messinger had nothing to do with the last electoral embarrasments.

    Non-sequitur.

    The state may or may not “disdain outsiders”, but money is always inside. And the DFL’s low-info voter message wasn’t prefaced with “Hey, I’m New York native Alita Messinger telling you…”, now, was it?

    BTW Mitch, Why don’t u study our post-modern culture (I hate that its this way but accept that these are the cards we’ll be dealt from now on) The 80′s ain’t coming back folks— especially in this state!!

    I do study our culture. Would you care to be more specific?

    I will. The eighties – or full DFL control based on a demigogued electorate, which we last had in the eighties – just did come back.

  19. jpmn,
    Why is the debate only about the total amount of the deficit, and not about what the money is spent for? I believe there is a difference if the deficit goes into consumption, or is invested in a way which increases future growth. When the government can borrow money almost for free, it should be the time to make all the investments in infrastructure which are needed anyway – right now. A huge debt incurred for a profitable investment is perfectly allright – it’s the way all successful venture capitalists work.

    A huge debt for consumption is entirely different and more problematic – it’s what Greece has done, and Latin America did in the 1980′s.

    The underlying problem is that the state doesn’t produce a real balance sheet but only some cash accounting. Some better bookkeeping would go a long way to making the discussion more rational.

  20. Emery, I completely agree with setting priorities. But, borrowing more when our best thinking on what an investment is has gotten us 16.3 trillion in debt is close to insanity.

  21. Emery,

    And to think conservatives complain that liberals don’t get either economics or basic logic! The nerve of us!

    Why is the debate only about the total amount of the deficit,

    It’s not, although the sheer magnitude is cause for legitimate alarm.

    and not about what the money is spent for?

    It is.

    I believe there is a difference if the deficit goes into consumption, or is invested in a way which increases future growth.

    Well, in theory that’s true. But in practice, government “investing for growth” merely puts government in competition with private equity for “investing for growth”.

    It also falls under the category of “picking winners and losers”.

    Obama added billions to the deficit “investing for growth” in solar energy, saving GM protecting union pensions and inflating the used car market at taxpayer expense, and of course “saving” the “too big to fail” sector of the economy.

    When the government can borrow money almost for free, it should be the time to make all the investments in infrastructure which are needed anyway – right now.

    Again, sounds vaguely nice in theory.

    What that inevitably means is investing in the winners government has picked, and to hell with the unintended consequences of the market distortions the “investments” create.

    A huge debt incurred for a profitable investment is perfectly allright – it’s the way all successful venture capitalists work.

    Government is not a venture capitalist. They don’t “invest” according to the same criteria a “successful venture capitalist” does; the only return they care about is political

    The underlying problem is that the state doesn’t produce a real balance sheet but only some cash accounting. Some better bookkeeping would go a long way to making the discussion more rational.

    As would understanding that the money for these “investment” doesn’t come down from unicorns from on high. It’s taken from the productive parts of our economy – or from our grandchildren.

  22. It seems like the economic case for austerity rests primarily on analyses that ignore this certainty. Fiscal contraction is contractionary. Everyone knows this. In normal times, this can be offset with monetary policy, but right now it cannot (barring some still more extraordinary central bank actions, like higher inflation or NGDP targeting, which hypothetically might work but which central bankers are refusing to engage). Some used to argue that “confidence” effects would provide some other offset, but we’ve seen amply around the world where it’s been tried in earnest that this simply doesn’t happen.

    In a zero interest rate environment such as ours, any deficit reduction gains from fiscal contraction are, certainly, offset in some part by contraction. Weak output, weak growth, employment hysteresis, reduced potential output … all of these things makes the deficit worse, as tax revenues are reduced and transfers are increased.

    So in some part, austerity is self-defeating. The question isn’t whether it’s true, it’s how much, as in: is austerity predominately or entirely self-defeating. It’s such a horrendous tradeoff either way that it’s questionable whether we should be considering it.

    If we don’t repeat the mistakes of 1937, creating our own double dip through misguided fiscal contraction, it is likely the economy will eventually heal itself with time. When it does, monetary policy will be lifted off the zero mat and regain traction. At that time it will be perfectly appropriate to move to deficit reduction. Until then, we are eating our seed corn if we attempt to try.

  23. There has been some chatter recently about forming a government ‘infrastructure bank’. There are two ways such a bank could work, both of them bad.
    1) Spending by the ‘infrastructure bank’ is controlled by congress. The usual pork barrel politics ensues. Highways are built where unemployment is high, not where they are needed, etc.

    2) Spending by the ‘infrastructure bank’ is not controlled by congress. You then have the opposite problem, where the people’s tax money is spent on projects w/o their input. The worst thing you can do in a democracy is to give a group of politically unaccountable people — any people — access to the treasury. This country was formed, in part, to prevent this sort of despotism. We are a republic. The government has no interests of its own, we the people have interests.

  24. Emery wrote:
    “When it does, monetary policy will be lifted off the zero mat and regain traction. At that time it will be perfectly appropriate to move to deficit reduction.”
    At that point interest on the national debt will skyrocket. Deficit reduction will be difficult if we are spending $600 billion/yr on interest.
    Fiscal policy has a mixed record for fixing the economy — probably because the money is spent to achieve political goals, e.g., failing, inefficient industries with political connections get capital injections, while new industries with growth potential do not (c.f. the auto industry and ‘green energy’ vs. fracking).
    Monetary policy has a better track record, but we’re on the floor — unless the fed pursues an NDGP growth target that effectively gives T bills a negative interest rate as the dollar declines in buying power. Unfortunately we need to people to buy T bills . . .
    The only hope we have is for the gov’t to pursue high growth policies, and the cheapest way to do that is to encourage fossil fuel resource exploitation. ‘Global warming’ be damned, it is clear that the people who are pushing the idea of trillion dollar deficits forever care little about the health and prosperity of future generations.

  25. Terry,
    You’re correct, It is a republic. Furthermore, it is a federal republic designed in such a way that most of the functions of government are supposed to be carried out at the state level. The fact that politicians at the federal level have increased the power of the federal government, and the president in particular, doesn’t make this a good thing. The solution is to devolve more power and responsibility to the states, not strengthen the center.

    You also made another good point about energy.
    I’m not actually a member of the oil and gas industry, but I do work in the chemical industry, and I do manage risks to employees and the public every day, so I have no trouble seeing the perspective of the drillers. We tend not to use terms like “massive ecological disaster” as lightly or with as little precision as some have, but we do spend an enormous amount of time and care complying with regulations, and worrying about safety, health and the environment. If only the financial industry guarded against risks to the economy as carefully as the oil and gas or chemical industry guards against risks to the environment.

    Secondly, the fracked gas wells have in fact been producing more than had been predicted. The resulting glut has driven gas prices down, but as new users emerge and the predictions improve, the drillers will get it right. Many coal plants are converting to gas rather than retro-fitting with new pollution control devices mandated by the EPA.

    Natural gas, by the way, is essential in the short term to allow us to shut down coal plants, and in the long term to provide load balancing for intermittent renewable sources of power. We will not manage our climate change problems without cheap fracked natural gas, so embrace the technology and encourage its improvement.

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