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“Republicans Are Plotting Economic Disaster For 2016: The American People Will Be The Collateral Damage

Since George W. Bush’s presidency, Republican economic ideas have become drastically more conservative. Instead of massive tax cuts for the rich coupled with a general tolerance of the rest of government (or even new welfare programs), the party is now committed to much larger tax cuts coupled with eye-watering cuts to government.

Every Republican presidential candidate proposes staggering tax cuts heavily weighted toward the rich. Donald Trump would give the top one-thousandth of taxpayers $1.3 million apiece per year, while Ted Cruz would give them an even $2 million. Trump does favor preserving the welfare state, but he is a marked outsider in this respect. The entire rest of the party is committed to gigantic cuts to welfare, as shown by the budget formulated by House Republicans. Their most recent plan would slash $5.3 trillion in spending over a decade, 69 percent of which would come from programs for the needy.

The party’s intellectual apparatus (distinct from the Trumpist insurgency) has more-or-less fully regressed to an economic libertarianism straight out of the 1920s. They view basically all government programs outside of the military and the courts as illegitimate, to be slashed or eliminated wherever possible. The only problem with this is that when you try it, the results are immediate disaster.

Republicans haven’t been able to fully implement their plan of tax and service cuts on the federal level, but they have tried it in a few places on the state level. Louisiana under Gov. Bobby Jindal has had it the worst. Jindal’s massive cuts to education and services were not nearly enough to cover his gigantic tax cuts, and draining every rainy day fund in the state only delayed the day of reckoning. Eventually the results were so disastrous that the unthinkable happened — a Democrat replaced Jindal. Now Gov. John Bel Edwards is scrambling to deal with the most extreme budgetary emergency of any state government in decades, working feverishly just to keep the state from literal financial collapse.

Kansas is also suffering from Republican quack economics. Gov. Sam Brownback (who barely scraped through re-election in 2014 and now sits at a 21-percent approval rating) tried the same tricks as Jindal, though to a somewhat lesser degree, and the results were similar: a huge budget deficit with none of the promised explosive growth or job gains. Now Kansas conservatives are running into problems with the state’s Supreme Court, which found legal problems with the distribution of education cuts. Their solution: Attack the justices politically, by drawing up a new impeachment law and trying to get them thrown out in an upcoming confirmation election.

It’s the same story in Wisconsin with both deficits and lousy economic performance. Gov. Scott Walker’s major innovation has been an effort to basically destroy the Wisconsin state university system with drastic cuts and the abolishment of tenure, which is already leading to serious problems at the flagship school in Madison.

However, it could have been worse for all these states. The federal government, with its grants, its spending on social programs, and its employment of in-state government workers and contractors, provides a buffer of spending state governments cannot cut. For example, Louisiana gets over 40 percent of its state budget from the feds, as well as $5,917 per person in social spending, $3.5 billion in federal contracts, and $5.3 billion in compensation paid to almost 68,000 federal workers (as of the most recent data). That’s $48 billion in income against $39 billion paid in federal taxes (other states don’t make out so well).

This means that the results would be far more disastrous should Republicans get to implement their ideas on a federal level. Great chunks of the federal programs — food stamps, federal health programs, the Earned Income Tax Credit, and so on — that have provided inadequate but vital economic stabilization would be cut or eliminated altogether.

The results would be just as what happened on the state level, only worse.

It took many years for Republicans to talk themselves out of the fact that Herbert Hoover’s presidency was a disastrous failure, but with the exception of Trump, Hooverism is where they stand. It’s an ideology that can gain wide popularity only insofar as it is not actually tried on a wide scale. It turns out that a vision of government that was already outdated a century ago (when farmers were over a quarter of the workforce) is not very well-suited to a modern economy. It’s just too bad the American people might have to be the collateral damage in re-learning that lesson.

 

By: Ryan Cooper, The Week, April 4, 2016

April 6, 2016 Posted by | Economic Policy, Republicans, Spending Cuts, Tax Cuts | , , , , , , , | 1 Comment

“Wishful Thinking”: Does Business Success Make A Good President?

Mitt Romney’s chief qualification for the presidency, according to Mitt Romney, is his experience in the private sector. “[S]omeone who spent their career in the economy is more suited to help fix the economy than someone who spent his life in politics and as a community organizer,” he said in a recent interview.

But is that really true? Romney would hardly be the first man in the White House with extensive private sector experience, so we can test his claim by looking at the records of other 20th century presidents who came from business backgrounds. And those records suggest that private sector experience is by no means a guarantee of of a good president. In fact, it’s anything but.

Let’s begin at the bottom. That is where Warren Harding, president from 1921 to 1923, routinely ranks in historians’ presidential rankings. There’s little doubt Harding was a skilled businessman. After he bought an Ohio newspaper, the Marion Daily Star, and launched a weekly edition, the paper became one of the most popular in the country. Harding then profitably bumped off its rival to become the official organ for Marion’s governmental notices.

But none of that success made Harding a good president. The administration is most notable for its foreign-policy isolationism and a plethora of scandals culminating in the Teapot Dome Affair, called by one historian “the greatest and most sensational scandal in the history of American politics” before Watergate.

Next up is Herbert Hoover, who founded the Zinc Corporation in 1905 and was a wildly successful investor, making $4 million by 1914—$92 million in today’s dollars. “If a man has not made a million dollars by the time he is forty, he is not worth much,” Hoover once said.

But like Harding, Hoover turned out to be pretty much worthless as president. His policies helped grease the skids for the 1929 stock market crash, and most historians agree that his hands-off response helped trigger the Great Depression. Indeed, the day after the crash, Hoover said, “The fundamental business of the country, that is the production and distribution of commodities, is on a sound and prosperous basis.” His foreign policy wasn’t much better: He did little to stop the nascent Japanese aggression that would ultimately lead to Pearl Harbor. A 2010 survey ranked him as 36th of 43 presidents.

Aside from Hoover, Jimmy Carter was perhaps the most successful businessman to become president. He took over his father’s failed peanut-farming business and turned it around, making himself a wealthy man by the time he ran for Georgia’s governorship.

Again though, Carter wasn’t able to translate his peanut prowess into presidential success. Between stagflation, an energy crisis, the Iran Hostage Crisis and rise of the Ayatollah Khomeini, Carter was arguably the worst Democratic president of the 20th century. Indeed, despite being the sitting president, he nearly lost a primary challenge to Ted Kennedy in 1980, before being ousted from office by Ronald Reagan that fall. Carter averages 27th in the rankings.

George H. W. Bush, too, was an extremely successful businessman, working his way up from sales clerk in an oil corporation to founding his own two profitable oil companies. By the time he ran for Congress in 1966, he was a millionaire.

Bush 41 wasn’t a bad president—but neither was he a good one. His strength was foreign policy, where he skillfully wound down the Cold War and won the first Gulf War. But the economy spiraled into recession on his watch. Unable to convince Americans he knew how to fix it, Bush lost his 1992 re-election bid to Bill Clinton.

Bush’s son, George W., was less successful in the oil business. The company he founded, the aptly named Arbusto, nearly went belly-up before being sold. But he did do OK as the co-owner of the Texas Rangers baseball team, improving their performance and making a ton of cash. As for his presidency? Well, you know that disaster.

One other businessman-turned-president bears mention here. Harry Truman co-owned a haberdashery which went bankrupt in 1921. And yet, most historians agree Truman was a better president than any of those mentioned above. He implemented the strategy that would eventually lead to victory in the Cold War, recognized Israel, bravely avoided intervening in China, stared down Joe McCarthy, and helped usher in a period of robust and broad-based economic growth. Though unpopular when he left office, he is routinely ranked among the top 10 presidents, and has ranked as high as fifth in one scholarly survey.

None of this is to say that being a good businessman makes you a bad president, or vice versa. Whether there’s any correlation at all is hard to say, given the small size of the sample. But that’s just it. Romney’s central argument, boiled down to its essence, is that his private-sector success will necessarily translate into success in the Oval Office. And modern history tells a very different story.

 

By: Jordan Michael Smith, MSNBC Lean Forward, July 12, 2012

July 14, 2012 Posted by | Election 2012 | , , , , , , , , | Leave a comment

“The Wrong Résumé”: The Myth Of The Businessman President – A Prelude To Disaster

Lost in the exhaust of mendacity left in Las Vegas this week, after Donald Trump brought his birther fantasies to town on behalf of Mitt Romney, was a curious statement by the man who has now cinched the Republican nomination for president.

On Tuesday, the same day Trump proved yet again that money and truth, like money and taste, are seldom twined, Romney talked about amending the Constitution to require the president to have business experience. He spoke approvingly of a notion from a store owner who wanted to make anyone who does not have at least three years of business background ineligible to lead the country.

“He said, ‘I’d like to have a provision in the Constitution that in addition to the age of the president and the citizenship of the president and the birth place of the president being set by the Constitution, I’d like it also to say that the president has to spend at least three years working in business before he could become president of the United States,’” said Romney, cheerfully summarizing this rewrite of the founders’ governing blueprint.

Well, there goes Teddy Roosevelt, the writer, rancher and police commissioner, not to mention his distant cousin Franklin Roosevelt, the assistant naval secretary and politician, or Dwight Eisenhower, the career soldier. Ike’s résumé, which includes defeating the world’s most concentrated form of evil in Nazi Germany, would not be enough to qualify him for the presidency.

Romney has made business experience the main reason to elect him. Without his business past or his projections of business future, there is no there there. But history shows that time in the money trade is more often than not a prelude to a disastrous presidency. The less experience in business, the better the president.

In a scholarly ranking of great presidents, a 2009 survey conducted by C-Span,6 of the 10 best leaders lacked sufficient business experience to be president by Romney’s rumination. This list includes Ronald Reagan, the actor, union activist and corporate spokesman, and John F. Kennedy, the naval officer, writer and politician. There is one failed businessman on the list of great presidents, the haberdasher Harry S. Truman.

By contrast, two 20th century businessmen — George W. Bush, whose sweetheart deal with the Texas Rangers made him a multimillionaire, and Herbert Hoover, who came by his mining fortune honestly — were ranked among the worst presidents ever by the same historians. Bush left the country in a sea of debt and an economic crisis rivaled only by the one that engulfed Hoover.

Both George W. Bush and Romney are Harvard Business School graduates, further padding their business cred. Once they started governing, both men failed to improve the economic lives of those under them.

At Bain Capital, Romney as C.E.O. practiced a very Darwinian form of capitalism for 14 years; he points to his time there as a model for how he would turn around the American economy. But it’s clear that enriching a handful of shareholders often has very little to do with job creation. The point of private equity, after all, is to make deals that turn investments into profits — nothing more. In that realm, Romney has succeeded.

Once he moved from running Bain to running the Bay State, Romney was a failure at job creation. His state ranked 47th. Job growth nationwide, even under the sluggish economy of George W. Bush, was five times higher than it was in the Massachusetts run by Romney from 2003 to 2007. This was reflected in his approval ratings — 34 percent in the last full year of his term, making him one of the most unpopular governors in the country, ranked 48 out of 50.

The biggest job creator of modern times, Bill Clinton, wouldn’t know a spreadsheet from a cooked derivative. His business experience was nil, but he had governing smarts, and his instincts were usually right. Under Clinton’s watch, the United States added 23 million new jobs — this after he raised “job-killing” taxes on the rich.

Romney never mentions Clinton’s formula for prosperity, or that of Franklin Roosevelt, the other business-challenged president who took the American economy to new highs. Roosevelt had been through a traumatic life experience, the diagnosis of polio, that made him a man of resolve, with empathy for the average person.

“If you spent two years in bed trying to wiggle your toes, after that anything would seem easy,” said Roosevelt. When he ran for president in 1932, his theme was “the forgotten man.”

Romney has shown a strange tendency to fetishize wealth, from his belief that “corporations are people” to his boasting of how many Cadillacs his wife drives. His European role model would have to be Silvio Berlusconi, Italy’s richest man. A media tycoon, the Rupert Murdoch of his country, Berlusconi was laughably bad as a three-time prime minister.

The verdict is still out on Barack Obama, the community organizer, lawyer and writer. Because he got hit with the Bush hangover, his overall job numbers show a net loss of about 850,000, from January 2009 to the present. But if you start a year into his presidency, Obama has added almost four million jobs.

We aren’t electing a C.E.O. to occupy the White House. We’re looking for good judgment, broad life experience, flashes of wisdom. Still, for those who insist on making business the bottom line in who they pick, the past is indeed predictive.

 

By: Timothy Egan, The New York Times, May 31, 2012

June 3, 2012 Posted by | Election 2012 | , , , , , , , , | Leave a comment

   

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