Wily Senator DeMint (R-SC) Leads GOP Senate to the Cliff!

Road Runner, Wily Coyote, or Blue Dog? Yesterday, economist Paul Krugman put it well, “A not-so-funny thing happened on the way to economic recovery. Over the last two weeks, what should have been a deadly serious debate about how to save an economy in desperate straits turned, instead, into hackneyed political theater, with Republicans spouting all the old clichés about wasteful government spending and the wonders of tax cuts.”

“Not so funny” is an understatement, of course. For more than a year now, we’ve been mired in a national recession that I’ve been calling the Lesser Depression, and the signs are that it is continually worsening. Recent reports on retail sales, inventories, credit availability, and yesterday’s unemployment report underscore the need for quick economic stimulus. Federal Reserve ammunition – interest rates – has been depleted; the fed funds rate hovers near zero, so monetary policy is of little use now. We may already be in a liquidity trap, and the signs of wholesale deflation are rising with every day. Fiscal policy is one weapon that has some “legs” – and the Obama administration and Democrats have offered both tax cuts and fiscal measures. The bill being debated this evening is, apparently, 40% tax measures and 60% fiscal (spending) measures. But, Yogi Berra style, let’s throw in an additional 60% for luck that it all actually “works” given my belief that once the fiscal stimulus bucks reach consumers we’ll find ourselves enmeshed in the “paradox of thrift.” That’s a story for another blog, another day . . .

Once again, the Democratic party, at least in the Senate, appears to be split asunder by the Blue Dogs like Evan Bayh (D-IN) and Ben Nelson (D-NB). The majority-party-that-never-was is now fighting for the middle ground against tax cutting insanity rampant among Senate Republicans, and now, the Blue Dogs. Surely, the fiscal package ought to combine spending and tax measures, and President Obama initially obliged GOP requests for tax measures. Yet, as is always the case with the GOP as now constituted, once you give them that proverbial inch . . . watch out. And, also, as soon as the door is opened in that direction expect the Blue Dogs to push back against the party discipline that is so important in a Senate where 60 votes now seems essential for anything other than bills naming post offices or commemorating the famous. Both House and Senate Blue Dogs have now thrown down the gauntlet to President Obama, and the fiscal stimulus package is in jeopardy. Not jeopardy of passage, but jeopardy of weakness to the task. When we need a Superboy a-bornin’ we’re likely to get a Barney Fife. Krugman explains:

The Blue Dogs are not simply a mild distraction in a huge Democratic majority either. The House counts 47 Blue dogs, and a handful of them already voted against H.R. 1, the stimulus package, joining the entire GOP caucus last week. Watching the mosh pit called the Senate this week, they now hint that they may become even more difficult. All this internecine Democratic warfare emboldens the GOP lunatic fringe, and they are a group that needs little emboldening. Already, this week they have introduced numerous amendments to H.R. 1, most of them designed to discard spending (i.e. fiscal stimulus) and add in their usual bromide: tax cuts and breaks that would continue to erode our tax base and further balloon the deficit, and do so permanently, systemically.

Of course, it’s always been my contention that the ultimate goal of today’s government hating GOP – the subconscious categorical imperative of their logic – is to ultimately starve the federal government so that it eventually withers away completely, except, perhaps, for a foreign policy arm, border guards, and a military (although they seem content to privatize even those functions). They must know, however, somewhere in their heads,

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that tax cuts alone will not revive this economy. That’s been tried by Dubya. What happened there? Our deficit grew nearly exponentially, we acquired debt that obliterated the Clinton surplus, and we had an eight year period of stagnation, or worse, for middle class wages. So that approach has been tried, and found lacking. But the GOP returns to just that no-regulation-whatever methodology. It’s so divorced from reality that it almost seems like a plan, like they may actually know what they’re doing. It almost seems sorta . . . wily.

For example, the other day, the irrepressible right wing tax hating Senator Jim DeMint (R-SC) had the cahones to introduce an amendment to the Senate’s wholesale amendment of H.R. 1, Senate Amendment 98. DeMint’s amendment (S. AMDT. 168) sought to replace the entire fiscal stimulus bill with tax cuts alone, a fiscal-stimulumdectomy in medical terms. Mr. DeMint disguises it not a whit:

This is a complete substitute for the spending plan. We call it the American Option because it helps to develop a free market American economy by leaving money in the hands of people and businesses rather than taking it and then having the Government direct where the money goes. So it basically puts our faith in the American people, in our free market economic system, instead of political decisions here in Washington.

And DeMint’s just getting warmed up. The Democratic bill, as he calls it, is a one-way ticket to – Heaven forfend! – Brussels, Belgium!

This bill is not a stimulus; it is a mugging. It is a fraud. Conservatives who fear proponents of this bill want to inch our economy closer to a European style of socialism are kidding themselves. The proponents of this bill want to strap a big rocket on the back of our economy and launch it all the way to Brussels. This massive spending bill is fatally flawed. It will not rescue our economy; it will strangle it.

Eventually, Democratoc Senator Max Baucus (D-MT) rose to speak against the DeMint amendment:

What is the effect of [removing all the fiscal stimulus from the bill]? There are several effects.

First, we are trying to begin to address our health care system, and the DeMint amendment strikes all the health information technology provisions in the bill. We are trying to get health information technology up and running. I think it is a bad idea to strike health information technology. We have to get that started if we are going to begin to lower health care costs in this country.

It strikes the Medicaid provisions through aid to the States. It does not take a rocket scientist to know what effect that would have on the States. The States are in a recession. I think it was the Government Accountability Office that estimated about $230 billion is being cut by States because they are in recession, and that basically comes out of Medicaid and other low-income programs. The DeMint amendment says, oh, sorry, States, you do not get any assistance, which means all of those people getting cut are not going to have health care.

It strikes the changes to TANF. That is the program we put in place years ago to reform the welfare program. It is a great program. It works very well. It gets people off of welfare in a very solid way.

It also strikes provisions that extend unemployment insurance to people who have lost their jobs. I cannot believe it would do something like that, but that is what the DeMint amendment does.

[Snip].

I also say, these are permanent tax cuts in the DeMint amendment. The 1-year deficit effects of this amendment are staggering. They are ugly, because basically this is a huge, big tax cut amendment is what it is.

Later on during the floor debate, Senator Baucus sums it up quite well:

I understand the next amendment is DeMint amendment No. 168, the tax cut substitute. This amendment is very simple. It strikes the entire bill. Then it replaces the entire bill with a $2.5 trillion increase in the national debt, according to the Joint Committee on Tax. With debt service and added tax provisions, it increases the national debt over 10 years by $3 trillion because it is a massive tax cut. Again, it replaces the underlying bill, which means no aid to States, no energy provisions, no infrastructure provisions, nothing that is in the bill, replaced by a tax cut which takes effect in 2011. Joint Tax scores this, adding interest on the debt, about a $3 trillion increase in the national debt over 3 years.

That pretty much nails it, and highlights the solution the GOP offers for every problem. As the saying goes, “if you only own a hammer, everything looks like a nail.” Senator Baucus, is few words, provided the clear economic argument against DeMint, and implied the moral arguments as well, which always escape the mainstream GOP.

A Widening Gap. The DeMint amendment was defeated 36 (all GOP) to 62. But, think about it, and think about the divide between the parties this vote implies. Thirty-six Republicans thought this a spiffy idea! Thirty-six, and there’s only 41 Republican Senators! So, despite the GOP yammering and whining about “bipartisanship,” as Krugman wrote, “There isn’t much room for bipartisanship when 87.8% of the other party is totally irresponsible.” And at least the Senate Democrats proved that this was too heady stuff for even the Blue Dogs. WOOF!

The GOP As The Third Rail. Naomi Klein hit upon the mainstream GOP strategy in her discovery of shock doctrine capitalism. In a nutshell, when a catastrophe occurs (as in Hurricane Katrina or the present economic hurricane), shock doctrine capitalists seize upon the moment when most everyone is in a state of shock to push forward their most radical laissez faire corporate-centric, tax averse, selfish, privatizing ideas. And that’s what’s happening here. The GOP is, I think, actively pushing this stimulus package toward the cliff. They are actively and, I believe, almost consciously courting disaster so as to cause the failure not merely of the Obama administration, but of the national economy as well. Why? So they can then, in a sense, ride to the rescue, Reagan style, and say “See, government spending doesn’t work. Government doesn’t work. Only unfettered capitalism works. Let’s give it a try again!”

Far from being humbled by the last election, they are bolder than ever. They are natural fighters, I’ll certainly cede them that. The attainment of wealth in an unregulated manner is their highest principle, and it’s obviously worth every ounce of their effort to achieve. This Lesser Depression is their moment. Don’t believe for a second that they mourn it. They will use it to, as tax hater Grover Norquist famously said cut government “down to the size where we can drown it in the bathtub.” They seek the Greater Depression – they think, in their wily ways – to literally set them free.