Are Republicans Turning Keynesian?

With the election over, all attention is now being directed at the fiscal cliff. Basically, at the beginning of 2013 a series of tax cuts are set to expire like the payroll tax break and the Bush tax cuts. Along with the expiring tax cuts is a slew of mandatory spending cuts.  Both parties agree this could throw the country back into a recession. Both parties agree this contraction in spending will hurt the economy. And both parties agree this is something we need to avoid.

Before I continue, I’d like to rewind the clock a couple of years back to when Republicans took control of the House. In 2010 a Republican wave swept into Congress and changed the national dialogue from economic recovery to deficit reduction. They made the national debt and deficit the central issue. They claimed that addressing the nation’s spending problem would put us on a ‘path to prosperity.’  The story went something like this: We have to stop the reckless spending in order to restore confidence in the markets, this will in turn lead to an increase in investment, and we will then see a robust recovery. In economics this is known as expansionary austerity i.e. Europe’s recovery plan.

Now, fast-forward to today where the Republicans could get everything they wanted back in 2010 by simply doing nothing. If Republicans truly bought their argument that government was spending too much money, and the best way to improve the economy was to cut spending then Republicans should be more than willing to drive right off the fiscal cliff. The expiring tax breaks combined with the mandatory cuts would reduce government spending by over $700 billion just in 2013 (5.1% of GDP). The deficit hawks of 2010 should be drooling over this, but instead of embracing the fiscal cliff, Republicans agree with Democrats that this is an issue that needs to be addressed.

So, back in 2010 Republicans believed government spending was the problem and needed to be reined in, but now Republicans are arguing that cutting government spending will throw the economy back into a recession. Essentially saying that not only can government spending be helpful, but cutting it would be hurtful. The Republicans have officially becomes Keynesians!

So what happened?

Is the Republican Party really changing? No. Although Republicans talk about being fiscally conservative, and talk even louder about solving the ‘debt crisis’ – they really don’t care about the debt. The poster child of fiscal conservatism, Paul Ryan, devised a plan that would take over two decades to balance the budget.

What’s going on in the Republican Party is much more cynical. They are using the guise of fiscal responsibility in order to advance their agenda of changing the role of government. They believe in a minimalist government. Not one that actually tackles the debt problem, but one that cuts taxes for the wealthiest Americans and sets up a system for the rich to get richer, the poor to get poorer, and the middle-class to disappear. They envision an Ayn Rand world where government has no responsibility to take care of the less advantaged. Hence the reason why the Ryan Plan cuts Medicare, and makes even deeper cuts to Medicaid. And why the vast majority of the savings in the plan comes not from bloated defense spending, or slight tax increases on the top two percent of earners, but rather to programs that benefit the poor and the needy.

You may agree with this. You may think government should let everyone fend for themselves – but don’t be fooled into thinking this is fiscal responsibility. Don’t be fooled into thinking the only way we can balance our budget is on the backs of poor by cutting the programs on which they rely. And don’t be fooled into thinking that giving the ‘job creators’ more money will somehow lead to prosperity.

Republicans are not the party of deficit hawks or fiscal conservatives (which is why they don’t want us to go off the fiscal cliff). They are the Party that wants to fundamentally change the role of government in the economy. A role that no longer helps the most disadvantaged in society, but one that caters to the most advantaged


15 thoughts on “Are Republicans Turning Keynesian?

  1. Great post, and well said! I’m thinking that the voters are slowing beginning realize this, and that the RepubliCANTS have no one’s interest at heart but their wealthy friends and big corporations.

  2. Unbelievable – Obama controls both house and has a 60 40 majority in the senate in 2008. He and the Dems passes a huge stimulas that doesn’t work and gets a shellacking in 2010 when the GOP regains the house. The Dems still have all the power with the white house and the Senate and you are going to lay this deficit on the GOP. The Senate has not passed a budget in 3 years and you are going to blame the GOP.
    The GOP would like to protect tax breaks for all so people can move from the poor to middle class and middle class to rich. Just like Obama can’t balance the budget by only taxing the rich, the GOP need more then just the rich to win future elections. So it benefits the GOP if people move up the financial ladder so they are no longer reliant on the government for assistance which is the strategy of the Dems.
    Also I get a real kick out of all the chest pumping that Obama won a huge landslide. He won by a total of 333,239 votes in the 4 swing states that Romney needed to win to take the White House (Florida, Virginia, Ohio and New Hampshire). So I guess the Obama bus service to the polls in those states means we all can pay more in taxes and watch more jobs move overseas as our tax rates make us less competitive in the global economy.

    • I am not placing blame on either party for the debt; however, it is Republicans who have been prioritizing deficit reduction over reducing unemployment since they took the House in 2010. Now, when faced with the fiscal cliff, which every study says would reduce the debt, Republicans are agreeing with Democrats that we must avoid it.

      So you can talk about “failed” stimulus and who had control of what, but I don’t see how that is relevant to the issue at hand. Republicans want deficit reduction; the fiscal cliff would reduce the deficit; but they don’t want it. Hence my point: Republicans don’t care about tackling the debt; they care about changing the role of government.

  3. GOP prioritized deficit reduction over reducing unemployment? Now that is funny.

    GOP wants to get the economy moving again and when unemployment gets back to 3% or 4% the deficit will be reduced. Then less people reliant on the Government is a good thing unless you are a Dem and it won’t get you the votes you need to stay in power.

    So if changing the role of Government to create a less reliant population is the GOP plan – then sign me up!

    Also, still waiting for a budget from Harry Reid. What is he afraid of? Real leadership void in Washington. Where are the problem solvers?

    • I think it’s funny you’ve mentioned twice that Dems want people to be reliant on government because that’s their base. How do you explain the fact that on average red states receive far more government support than blue states? Although Republicans are so sure Democrats want everyone to be dependent on government the fact of the matter is it is the red states that are more reliant on government.

  4. So the Dems didn’t just spend the entire campaign attacking the GOP for wanting to gut benefits?

    Why didn’t the Dems bring up your fact about Red States have more reliance?

    That is because they want the Dem Brand to target reliant people. If they emphasize your fact the GOP won’t be the big, bad, ugly party trying to take away their benefits. The Dems want to be the party to save the reliant people – that is their Brand. So the more people they can make reliant the more votes they get. So high unemployment helps the Dems by creating more reliant people.

    Interesting how Obama has not taken a leadership role in the Fiscal Cliff negotiations. The GOP has already agreed to more tax revenue. Where is Obama’s plan for spending cuts. He doesn’t have one. It is easier for him to sit back and let the GOP bring plans forward for him to reject as not enough. Obama plans to take us over the fiscal cliff. He is just trying to make sure the GOP gets blamed. Nice leadership by Obama. Where is his and Harry Reid’s plan to resolve the Fiscal Cliff. They don’t have one and it benefits them for us to go over the cliff. They can blame the GOP and then get higher taxes from everyone and heavy cuts in the military. The Cliff has everything the Dems want. They are not interested in economic growth – it doesn’t benefit them or their brand as long as they can blame the GOP for all the problems without offering any leadership to fix them..

    • “That is because they want the Dem Brand to target reliant people. If they emphasize your fact the GOP won’t be the big, bad, ugly party trying to take away their benefits.”

      I think you’re confusing the point. A lot of red states benefit from programs which Democrats supports, but Republicans are against. It’s amazing Republicans have gotten so many people to vote against their own interest. A lot of red states have Republican voters that curse government but welcome welfare checks.

  5. So you agree. If the GOP got people to vote against their best interest (i.e. welware checks), you feel those votes should have gone Dem because that way the checks can keep coming. The Dems want the reliance and Market their Brand that way.
    I guess you can’t see that these people don’t want to be on welfare and view the GOP as having the best path off welfare and toward upward mobility because the GOP want economic growth for all.

    • Dan, I agree with you. But I fear that the Republicans have done a poor job in 2008 and 2012 of explaining why their vision (which involves harder work, and deferred gratification) is better in the long run. Not only has America reached a fiscal tipping point, we’ve also reached an ideological tipping point: The liberals have perfected their Santa Claus act so well that most lower income people now believe there’s no way to climb up the mobility ladder without government carrying them up every rung. Sad that “The American Dream” for them means a perpetually entitlement-funded lifestyle….a welfare way of life…never cutting the cord and achieving self-suffiency. The conservative movement has a major problem to overcome, and can no longer assume that American voters are, on average, center-right. They’re now slightly center-left, with the aroma of Santa Claus’s koolaid wafting under their noses every election season.

    • So GOPers who are on welfare don’t want to be on it, but Dems who are on welfare do want to be on it? I think it’s pretty obvious those on the Right who are on government assistance but vote Republican vote on non-economic issues like gun rights, religion, and abortion.

  6. Republicans don’t want to increase spending, they want to decrease spending, overall. However, they don’t want such a disproportionate amount of spending cuts to come out of the defense budget, which is not bloated as you say. The view that defense spending is bloated comes from a liberal “flower child” ideology of utopian appeasement and love. Peace is only maintained through strength.

    Your entire article, and all your replies to the comments, are strawmen. You’ve constructed a hypothesis of the conservative viewpoint that you’re ripping apart, but you don’t have the first clue about understanding conservatism. For example, you said “So, back in 2010 Republicans believed government spending was the problem and needed to be reined in, but now Republicans are arguing that cutting government spending will throw the economy back into a recession.” No, dude! Now, as always, Republicans are arguing that increasing tax rates will throw the economy back into a recession. You and your liberal/progressive spin-sters have concocted this narrative that conservatives are mean, don’t care about the needy, and just want to feather the nests of rich people. It isn’t true, but to understand conservatism takes logical thinking about multi-stage causes & effects…but you’re only into superficial hyperbole and emotional hyperventilating. You’ll have an automatic pat answer to this comment, no doubt, because you’re hopelessly stuck in the deep end of the koolaid pool, literally drunk on your economic ignorance and your utopian view of human nature. Societies don’t grow and prosper under your principles, they collapse because productivity tumbles when more people jump in the entitlement wagon than are pulling the wagon. If you could invent a type of society where compassionate support of the truly needy didn’t snowball into rampant scamming by the chronically lazy, then perhaps socialistic societies would stop going bankrupt consistently.

    You say “They [Republicans] are using the guise of fiscal responsibility in order to advance their agenda of changing the role of government. They believe in a minimalist government.” You’re exaggerating. Republicans believe in “limited” government, not “minimalist” government. It’s Libertarians that believe in minimalist government. And why do ignore that for the first half of American Constitutional history, we DID have limited government. It was Woodrow Wilson, FDR, LBJ, and now BHO that changed the role of government away from that intended by the founders. Conservatives simply want to roll all that back before America goes the way of the PIGS (Portugal, Italy, Greece, Spain).

    You don’t own the only facts. You, like me, Dan Brinkman, fairtaxtoday, and anybody, own (y)our view which is slanted by (y)our beliefs. Show some maturity…get off your high horse and hold an equal-footing discussion among adults.

    • I don’t know what high horse you’re talking about, I’m simply saying I don’t agree with the conservative movement. At the heart of conservatism is lower taxes. That is their answer to almost every problem. The problem is lowering taxes has not shown to be an economic starter. We had greater growth in the 90’s than in the 2000’s and taxes were higher in the 90’s. Oh, and as much as conservatives are just so sure that tax cuts pay for themselves, they don’t. A large driver of our current debt is due to tax cuts. So how do you say you want to tackle the debt, but then at the heart of your plan is to lower taxes. You’re putting your ideology before facts.

      • OK, I’ll climb up on my high horse to look you level in the eye….

        At the heart of conservativism is lowering tax RATES, not directly lowering TAXES. Economics in the real world outside your Keynesian textbooks involves real human beings reacting to incentives and disincentives. You’re cherry-picking your examples. In the 80s, Reagan lowered tax RATES, and collected more tax revenues because the economy grew. A smaller tax percentage of a larger GDP pie resulted in more tax revenues in the government coffers. The Reagan era is distorted by liberals by pointing only at the increasing budget deficits. Here I’m talking about the revenue side of that story, not the spending side from the Democrat-controlled House of Representatives throughout the 80s, who always declared Reagan’s budgets “Dead On Arrival.”

        Same thing happened under JFK in the early 60s — he lowered tax RATES, and collected more tax revenues. It happened under Calvin Coolidge too. Didn’t you learn this?

        Let me state something, so you don’t keep mis-stating it in your strawman arguments: The reason lower tax rates are NEAR the heart of conservatism is because the ACTUAL heart of conservatism is the principle of limited government. An appropriately limited government doesn’t need to take an excessive percentage of a private citizen’s earnings. If the government does have high tax rates, it can only be for the purpose of growing the scope of government power and intrusion into people’s everyday life. It’s the principle of individual freedom and liberty that conservatives believe in. High taxes are the slippery slope that leads away from individual freedom and liberty.

        Again I say that understanding conservatism calls for multi-stage logical thinking about the WHOLE series of dominos in a cause & effect chain. Human nature isn’t a one-step superficial emotional reaction to everything. If you don’t care about the 2nd…4th…8th domino, then you’re just a pop-economist and you’re ignoring true human nature as Adam Smith recognized it.

        You can’t squeeze more than about 18% (19-20% in a good year) of GDP out of the economy in taxes. If you try, taxpayers change their behavior and sidestep your attempt. The problem is that right now government is SPENDING at something like 24% of GDP. You can’t balance the budget at that level. Overall, we don’t have a tax problem, we have a spending problem. When the economy recovers (if the government would stop disincentivizing it with more and more onerous regulations and higher tax rates), the tax revenues will go back up. Meanwhile, if America could get its federal spending DOWN to around 19%, then we could balance the budget in most years.

        If you’re truly going to use your Keynesian economics degree for a political-oriented career, you’ll do great because you’ll be armed with lots of factual-sounding deceptions (e.g. Paul Krugman) to shower upon the sheeple. But if you’re going to use your degree for business purposes, you’ll find it leads you astray because it’s counter to actual human nature. Try seriously reading Thomas Sowell, Walter Williams, Milton Friedman, Friedrich Hayek, etc. Especially Sowell’s A Conflict of Visions and Friedman’s Free to Choose.

        I could go on and on forever, trying to tell you all the things Ashland’s indoctrinators (or what YOU call professors) “sheltered” you from. I’m sorry you wasted your money on Ashland’s degree in Fantasy and Mythology, at least on the economics courses. You do write well, so you got your money’s worth there.

        Winston Churchill said “If you’re not a liberal at twenty you have no heart; if you’re not a conservative at forty you have no brain.”

        You’ll learn, one way or the other.

      • First, Ashland is an incredibly conservative school. Need to put that out there.
        Second, and more importantly, conservatives are so sure tax rates lead to growth, but there is no evidence of that. In fact plenty of studies like this one ( say there is no correlation between the two. You might not have seen this because Senate Republicans pulled it from the CRS website – they didn’t like what the report said. And herein lies the problem, conservatives think lowering tax rates is the answer to everything. When in reality an economy is much more complicated. The right doesn’t see that though. Conservatives have consumed themselves with the idea that everything that goes in the country is directly connected to a person’s tax rate. You even connected freedom with tax rates. Do you really believe people in the 90’s were less free than us now?

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