The Republicans Really Did Destroy the Country

I’m not an expert on economics, but I think I know enough about it to be able to come to reasonably-informed opinions on the issues.

I’ve been warning about the national debt to anybody who would listen since the late ’70s. You can’t run on deficit spending forever, yet that’s what we we’ve been doing.

That course was heading us to eventual disaster, but then GW Bush was installed as president by the Supreme Court and pretty much sealed our fate. Bush massively ratcheted up the already obscenely high national debt. His cronies (e.g., Haliburton, Blackwater, Goldman Sachs) looted the public treasury. He got us into two protracted, unfunded wars. His policies destroyed our manufacturing base, shipped many of our jobs overseas, and damaged the economy in numerous other ways.

Given our massive debt, enormous budget deficits, gargantuan military, and runaway spending that neither party is willing to curtail, it looks to me that a crash is inevitable. I hope I’m wrong. I tend to be a fatalist about life in general, so that might be coloring my assessment of things.

David Stockman, Ronald Reagan’s former budget director, is making the rounds these days warning of the bleak days ahead. He wrote an op-ed at the New York Times titled “Four Deformations of the Apocalypse”. Here are some excerpts of what he says:

[T]he new policy doctrines have caused four great deformations of the national economy, and modern Republicans have turned a blind eye to each one. The first of these started when the Nixon administration defaulted on American obligations under the 1944 Bretton Woods agreement to balance our accounts with the world. Now, since we have lived beyond our means as a nation for nearly 40 years, our cumulative current-account deficit — the combined shortfall on our trade in goods, services and income — has reached nearly $8 trillion. That’s borrowed prosperity on an epic scale.

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When the dollar was tied to fixed exchange rates, politicians were willing to administer the needed castor oil, because the alternative was to make up for the trade shortfall by paying out reserves, and this would cause immediate economic pain — from high interest rates, for example. But now there is no discipline, only global monetary chaos as foreign central banks run their own printing presses at ever faster speeds to sop up the tidal wave of dollars coming from the Federal Reserve. The second unhappy change in the American economy has been the extraordinary growth of our public debt.… This debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party’s embrace, about three decades ago, of the insidious doctrine that deficits don’t matter if they result from tax cuts.

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The third ominous change in the American economy has been the vast, unproductive expansion of our financial sector. Here, Republicans have been oblivious to the grave danger of flooding financial markets with freely printed money and, at the same time, removing traditional restrictions on leverage and speculation.

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The fourth destructive change has been the hollowing out of the larger American economy. Having lived beyond our means for decades by borrowing heavily from abroad, we have steadily sent jobs and production offshore.

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The day of national reckoning has arrived.… [I]t’s a pity that the modern Republican Party offers the American people an irrelevant platform of recycled Keynesianism when the old approach — balanced budgets, sound money and financial discipline — is needed more than ever.

Stockman was also interviewed on All Things Considered recently. I’ll try to embed the interview below.

Bottom line: We’re undertaxed and overspent and have been so for decades.