GOP big picture?

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    OK, so I know how the right talking heads resort to character assassination whenever they can’t argue facts and they certainly try to do it with Paul Krugman – (good luck with that, BTW). But I think today’s article is the most succinct description of our current state of socio/political/economic affairs as it pertains to our friends in the GOP.

    OK Smitty, Rich, Kootch, et al, let’s see what you got by way of response to this.

    Article begins here:

    We are not having a debt crisis.

    It’s important to make this point, because I keep seeing articles about the “fiscal cliff” that do, in fact, describe it — often in the headline — as a debt crisis. But it isn’t. The U.S. government is having no trouble borrowing to cover its deficit. In fact, its borrowing costs are near historic lows. And even the confrontation over the debt ceiling that looms a few months from now if we do somehow manage to avoid going over the fiscal cliff isn’t really about debt.

    No, what we’re having is a political crisis, born of the fact that one of our two great political parties has reached the end of a 30-year road. The modern Republican Party’s grand, radical agenda lies in ruins — but the party doesn’t know how to deal with that failure, and it retains enough power to do immense damage as it strikes out in frustration.

    Before I talk about that reality, a word about the current state of budget “negotiations.”

    Why the scare quotes? Because these aren’t normal negotiations in which each side presents specific proposals, and horse-trading proceeds until the two sides converge. By all accounts, Republicans have, so far, offered almost no specifics. They claim that they’re willing to raise $800 billion in revenue by closing loopholes, but they refuse to specify which loopholes they would close; they are demanding large cuts in spending, but the specific cuts they have been willing to lay out wouldn’t come close to delivering the savings they demand.

    It’s a very peculiar situation. In effect, Republicans are saying to President Obama, “Come up with something that will make us happy.” He is, understandably, not willing to play that game. And so the talks are stuck.

    Why won’t the Republicans get specific? Because they don’t know how. The truth is that, when it comes to spending, they’ve been faking it all along — not just in this election, but for decades. Which brings me to the nature of the current G.O.P. crisis.

    Since the 1970s, the Republican Party has fallen increasingly under the influence of radical ideologues, whose goal is nothing less than the elimination of the welfare state — that is, the whole legacy of the New Deal and the Great Society. From the beginning, however, these ideologues have had a big problem: The programs they want to kill are very popular. Americans may nod their heads when you attack big government in the abstract, but they strongly support Social Security, Medicare, and even Medicaid. So what’s a radical to do?

    The answer, for a long time, has involved two strategies. One is “starve the beast,” the idea of using tax cuts to reduce government revenue, then using the resulting lack of funds to force cuts in popular social programs. Whenever you see some Republican politician piously denouncing federal red ink, always remember that, for decades, the G.O.P. has seen budget deficits as a feature, not a bug.

    Arguably more important in conservative thinking, however, was the notion that the G.O.P. could exploit other sources of strength — white resentment, working-class dislike of social change, tough talk on national security — to build overwhelming political dominance, at which point the dismantling of the welfare state could proceed freely. Just eight years ago, Grover Norquist, the antitax activist, looked forward cheerfully to the days when Democrats would be politically neutered: “Any farmer will tell you that certain animals run around and are unpleasant, but when they’ve been fixed, then they are happy and sedate.”

    O.K., you see the problem: Democrats didn’t go along with the program, and refused to give up. Worse, from the Republican point of view, all of their party’s sources of strength have turned into weaknesses. Democratic dominance among Hispanics has overshadowed Republican dominance among southern whites; women’s rights have trumped the politics of abortion and antigay sentiment; and guess who finally did get Osama bin Laden.

    And look at where we are now in terms of the welfare state: far from killing it, Republicans now have to watch as Mr. Obama implements the biggest expansion of social insurance since the creation of Medicare.

    So Republicans have suffered more than an election defeat, they’ve seen the collapse of a decades-long project. And with their grandiose goals now out of reach, they literally have no idea what they want — hence their inability to make specific demands.

    It’s a dangerous situation. The G.O.P. is lost and rudderless, bitter and angry, but it still controls the House and, therefore, retains the ability to do a lot of harm, as it lashes out in the death throes of the conservative dream.

    Our best hope is that business interests will use their influence to limit the damage. But the odds are that the next few years will be very, very ugly.



    btw.. before you shoot..

    this article was written by a conservative

    who was i think a financial adviser to both Reagan and Bush Sr….

    maybe not the same article and i have no time to go look…

    but an article on the same subject was recently written by a conservative who was a financial adviser to GOP presidents….

    i apologize for being sloppy this morning but life it getting in the way of my posting time ;->



    Actually, JoB, this article is from Krugman. But you ARE correct in the statement that several other conservatives have voiced similar sentiments – maybe not as succinctly and pointed directly at the death throes of their master plan – but certainly in vocal disagreement with their fiscal policy.

    You don’t have to Google hard to find plenty of articles/videos of David Stockman and Bruce Bartlett – two of Reagan’s top economic advisers – who have no qualms hammering the GOP’s break with sanity.



    >>The U.S. government is having no trouble borrowing to cover its deficit. In fact, its borrowing costs are near historic lows.

    –Thank you for enlivening this otherwise somber morning, wake-f. You know, if I could print money, I, too, would have no trouble “borrowing” from myself to cover my deficits. Similarly, if I could arbitrarily set the interest rates I had to pay others for borrowing their money, my borrowing costs, too, would be at “historic lows.”

    Our monetary system is run by scammers and sleight-of-hand artists and the people at the top know it. The only difference between the magicians on the right and the ones on the left is that the righties were first to admit that the game was up. The lefties, magical thinkers that they are, seem to think they still have a few tricks left.

    Krugman’s a boob.

    Stiglitz is a boob.

    Stockman’s a disgraced boob.

    I’m smarter than these guys put together, and I never took anything higher than Econ 101.



    May I riff on this too?…”The U.S. government is having no trouble borrowing to cover its deficit. In fact, its borrowing costs are near historic lows.”

    Yes, the federal govt. has a unique feature, unlike the private sector or state & local govts. The federal govt prints the State Currency. When you own the currency printing press it’s no problem to spin out crisp bundles whenever an invoice is due. And, yeah, it’s all legal for the feds, but illegal for anyone else.

    Problem is: fiat currency (a currency without a backing standard like gold or silver). Fiat currency use ultimately depends upon Confidence and Trust. All day long, I can print pretty figures on tiny sheets of papers. And I can try to use the tiny papers to purchase stuff. But, if you won’t take my pretty papers in exchange for your goods or services…then, all I have is paper.

    Say you decide to trust my pretty papers, but then you glance at my accounts and you see that my income falls 300x lower than my current spending and I don’t have a budget that’s balanced. I spend pretty papers, left & right and I don’t have a plan to contain my spending. You might fear I would make my pretty-papers less scarce – I’d devalue them by printing even more. I come to you, asking for another loan. You could ask for a higher interest rate than you used to give me. Or, I try to purchase something from you & you refuse to sell me goods or demand some other country’s currency, or even gold, in exchange for your goods.

    As long as the US doesn’t deal in foreign imports or doesn’t have to pay globally for services or goods, then our printing press business (and how it affects our sovereign rating) isn’t a problem.



    Wow, DBP, um, I’m not even sure how to start to respond to that. What, exactly are you advocating here? Abolish the FED? I’m not against the concept if you care to describe what replaces it and how it would be superior?

    I’m not a particular fan of the monetarist school of finance, which has held sway for the last few decades. But you’ve thrown Friedman Monetarists (Stockman, Bartlett) in with pragmatic Keynesians (Krugman, others) in with semi-agnostics (Bernanke). And the first two don’t agree upon much…so if all those approaches are useless, then you propose what flavor of economic theory should we be using to address our ills?

    I’m all ears. And at the ready to vocally support DBPism in it’s unabashed societal equity!! :-)

    OK…and GO!…



    Let’s talk theories, not politics.

    Krugman thinks debt doesn’t matter. I think that may be his premise. He’s wrong, debt matters greatly. Krugman thinks debt should be easily balanced against assets. Nope. Debt is derivative (derivational?) in its nature. It creates other intricate debt & financial webs. Check out what happens when one card (for example, Greece) starts falling.

    Global economies have been and are using rising debt levels to finance economic growth. This ‘financialization of our lives’ is paralyzing and has given big banks a huge parasitic hold on global economies and on governments.

    Here’s something else. Right now government allows too much incentive for debt. We need to remove that. Forgive most debt for ‘main street’ and remove all debt incentives for the future. Get the debt beast off peoples’ backs, out of their lives – unwind it over a decade or two. Right now lending is primarly a form of credit creation, when in fact lending should be done from held savings.

    And the Federal Reserve should be kept AWAY from a role of trying to stimulate the economy. They should not be allowed to keep interest rates artifically low, targeting some mythical inflation rate range and unemployment rate. They should be doing their Original limited scope — purchasing Treasury bonds, purchasing high-quality and protecting the State’s currency. Instead, they have helped big banks and financial institutions fuel a debt-based economy that sucks real wealth away from the many into the pockets of the few.



    Well, you should start with a different or modified premise. Krugman doesn’t think debt matters, isn’t accurate. He’s suggesting that in the context of the current economic doldrums, debt isn’t the PRIMARY issue. It’s manageable because LT interest rates are low and stable, which allows current leadership the opportunity to address economic growth OVER debt reduction.

    I don’t disagree with some of your thinking on how the Fed uses/abuses it’s power but that’s a long game fix when we have some short term opportunities to help people who could use someone getting their backs instead of the already wealthy.



    And it should be noted, that growth is the most efficient mechanism – short of debt abandonment by the credit holders (China, et al) – to pay down debt.

    Now, I might be naive, but I suspect China and every other holder of our bonds would possibly object to us just tearing up the IOU’s.

    But there is always the third world option of having the World Bank restructure our debt and sell off whatever’s left of our assets for pennies on the dollar.

    Or maybe you’re suggesting revolution and overthrow of the system? Let’s see your plan for the aftermath. :-)




    it doesn’t matter what China thinks, truly, as long as we produce our own goods in our own borders. we can default – countries do it, all the time. the WB is the global financial system hand-maiden, helping keep credit/debt alive to fuel the uber-wealthy. we wouldn’t need to restructure our debt if we didn’t need a credit line. it’s theoretical thinking, of course, the US is deeply in need of a credit line as we import most of our necessary & basic goods.

    besides ultimate default tho, we have the other option – balancing our budget and living within our means. for this to work, debt has to be deincentivized. savings has to be valued, again.

    check history for the aftermath plans of revolutions. systems need cleansing from time to time. revolutions happen in all manner of ways. sometimes, people who have had enough find that their continually asking, “pretty please” no longer works.


    HMC Rich

    Short answer for now.

    The Republican party is going through changes. And some Republicans are dumb enough to try and let people like Krugman lead the changes.

    Essentially, what is happening is that the Progressive arm of the Republican party is in its death throes. The party has absorbed a tough loss and now will need to strategically define what it wants to do in the future. Actually the future holds many good candidates politically, and also will make its message heard as America changes.

    Two years ago, the Democrats received the worst election losses nationally and locally. Or have you forgotten that. No you are ignoring it.

    Besides Ronald Reagan and parts of Bush II, there has not been a conservative in power. The federal government has grown progressively and has never really gotten smaller.

    So to say the Cuts won’t work is insane because it has not been tried. Over and over revenues have risen when tax rates are cut.

    Sorry Wakeflood but the Krugman narrative is wrong. Regular old common sense shows us that at some point if you overspend you cannot recover.

    I need to research this more. But the bottom line is Krugman is covering the hind end of Reid and Obama by changing the negative into a positive. He is saying debts don’t matter so the future is peachy.

    That is like me looking at a house on fire and saying, the smoke must be good because I can’t see the flames.



    Yes, a little revolution now and again CAN be a good thing. It’s also not pretty and doesn’t guarantee you end up in a better/more functional place, regardless of the intent.*

    * See, Russia 1917; Germany 1923; China 1958; Cambodia 1975; etc…

    I’m not comparing all those to an economic overthrow, which would be more akin to France’s revolution and Russia’s but even France’s was quite bloody and was shortly superseded by a guy who crowned himself emperor. ;-)

    Just saying, it’s a double-edged sword.



    Krugman does say debt doesn’t matter, as essentially he feels debt can be managed by balancing against assets. he wrote a piece about a year ago I remember, titled something like “nobody understands this”. can’t find now.

    Here’s the thing. Debt DOES have consequences, and we don’t have to look further than Europe to see some bad ones.

    The 2001-2008 economic period had huge economic ‘growth’…great, eye-popping, economic growth. Then it popped and started rapidly deflating. Why? One big reason, it was growth fueled by debt. Now Krug’s saying, more spending, more debt, by govt. This should be able to grow us another healthy economy?? huh? for one thing how does a govt. ever pull out of funding that new ‘growing economy’ once they start? How does THAT bubble not pop? Prop it up or it will pop. A new slogan.



    Didn’t forget anything, Rich. The elections in ’10 were the result of two things.

    1. Progressives got lazy and demoralized by a President who didn’t/couldn’t create as much change as they’d hoped. They didn’t turn out AND…

    2. The GOP has been busily gerrymandering as many districts as they could whenever they could for the last decade. There’s now a structural advantage in many districts for the GOP.

    If not for that, the GOP would be in the minority in all three branches today. Powerless, save for the silent filibuster and the Supreme Mafia. Can’t wait to get that majority back and overturn all those ridiculous 5to4 decisions since the Rehnquist court. And the silent filibuster is going away too, thank god. A little karma payback for Mitchy McWingnut will be a good thing.



    Goodness, can’t understand what’s so hard to grasp here.

    Krugman isn’t about building bubbles. And he’s not in favor of growing debt un-needlessly.

    What is obvious is that in a downturn, you CAN’T CUT YOUR WAY TO PROSPERITY.

    Somebody’s spending is another person’s wages. And that includes the Gov’t. THE PRIVATE SECTOR ISN’T HIRING and the banksters aren’t lending so this is a period when Gov’t spending can prime the pump. Things like infrastructure spending is an excellent example. You end up with an asset as a result.

    To suggest Krugman thinks building a gov’t funded bubble, LIKE THE ONE THAT BUSH II CREATED WHEN HE TOOK THE REIGNS OFF THE MORTGAGE BANKERS, is silly at best and also just plain wrong.




    And it’s easy to build the stimulus to NOT pop like a bubble. You tie it to unemployment rates. The more people that have private sector jobs, the less stimulus the gov’t puts into the system.

    And yes, that’s what’s been proposed by people like Krugman and Reich, ad nauseum.




    Sorry, you mean Baby Bush’s predecessor. He took off the reins on banks to allow them the ease of creating uber-financialization and speculation instruments.

    Anyway, please explain again, the “easy” part of building the stimulus to not pop like a bubble? Show me an example where that’s already been done…i.e. what country, what govt, that has done exactly that: stimulated its private sector into a happily humming economy without distorting the market (at the very least distorting with the government put), and then been able to withdraw that govt stimulus successfully and not have it deflate as a bubble.

    It’s not possible to show an example, except maybe China, where they build lots of empty buildings, roads to nowhere, etc. Or maybe N. Korea where the govt. interferes in absolutely everything.

    IMO Krugman is a fraud. At best.




    look south




    Yes, the federal govt. has a unique feature, unlike the private sector or state & local govts. The federal govt prints the State Currency. When you own the currency printing press it’s no problem to spin out crisp bundles whenever an invoice is due. And, yeah, it’s all legal for the feds, but illegal for anyone else.

    you need to differentiate the federal reserve and the treasury.

    one is run by banks, the other is run by the government.

    and the one that’s run by the banks tells the one that’s run by government when money is to be printed.

    and you asked about successful government stimulus. look up the works projects administration and its effects on the american economy.

    don’t forget that when you finance infrastructure, you provide jobs that get those things built – and a myriad of other industries that supply materials, and the capital required by the contractors to supply those materials, and the jobs that producing and delivering those materials requires. stimulus money has a huge multiplier effect in the private sector.

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