Titanic Economics

07/09/2011 01:22 pm ET | Updated Sep 08, 2011

When the Titanic was sinking, first class passengers got the lifeboats and the rest were left to fend for themselves. Listening to the economic plans of leading Republicans, the Titanic approach still appears to reign over conservative rhetoric a century later.

Of course, some might argue it was only fair for first class passengers to get the best treatment. After all, their $4,000 tickets (costing roughly $100,000 in today's dollars) paid for the lion's share of the voyage. And as the job creators for the crew, didn't they deserve to be protected first?

To carry the analogy to today's economic debate a bit further: Consider that Titanic was designed and piloted to fit the desires of the strata of society accumulating vast amounts of wealth.

No expense was spared at creating a ship of luxury, but it was one equipped to be short on safety in case of disaster. And everyone was told this ship was unsinkable, so only doomsayers would argue for more lifeboats or better rescue options.

But icebergs -- like bursting financial bubbles -- happen. And when disaster strikes, how those at the top react often impacts those at the bottom far more, and far longer. Some see it as fair that limited lifeboats go to the privileged, and also that limited money for bailouts and economic recovery seems to flow most to those who already started out with vast resources.

The actual Titanic never recovered from its disaster. But imagine if instead, some of the passengers who could not board the lifeboats had gotten together, chosen Captain Obama to take command, and had managed to patch up the ship enough to stop it from slipping all the way under.

Saving the ship from sinking required charting a different course than the one preferred by the first class passengers, whose preferences prevailed before disaster struck. It even required some extreme measures -- including borrowing materials from other passing ships to patch the holes.

Then, imagine further that after the ship was stabilized and no longer likely to sink, first class passengers came rowing back in their lifeboats. And instead of acknowledging that total disaster was averted, the first class passengers started criticizing the new captain for taking on debt to other ships, claiming that because the ship was listing half underwater, Obama's actions had made the situation worse.

The Titanic did not collide with an iceberg because the average deckhand or second class passenger was being reckless. The hubris of those who built her without knowing her limits, and piloted her into treacherous waters, brought everyone into danger.

And the U.S. economy did not come near collapse because the average homeowner borrowed to stay afloat. The hubris of those who built a systemically risky subprime mortgage financing machine, and steered the economy without adequate safeguards, brought us all into economic danger.

The choices being made today by leaders in Washington will determine if the titanic U.S. economy stays afloat or sinks further underwater. More importantly, choices that tilt in favor of the wealthy, who can weather troubled economic waters so far, would come at the expense of those who are most vulnerable.

So it is vital that those leaders should not repeat a failed approach. Decades of rhetoric and policy that at bottom are based on class-based ideology -- putting the priorities of the most privileged Americans first, while telling everyone else they are adrift on their own -- has not produced a healthy economic climate.

Nor will cutting deeply only programs like unemployment, housing, education, health care, transportation and other so-called discretionary budget items, without raising more revenue through closing tax loopholes or letting the Bush tax cuts expire, magically produce a stronger economy in the coming decades.

Unfortunately, the approach Republicans are still bringing to the table at bottom takes the financial lifeboats away from struggling American families and hands those lifeboats over to the already-well-off. Conservatives can assert over and over that the already-well-off will then invite the less-well-off into the lifeboats, but a decade of experience with the lowest tax burden on the rich in generations proves those assertions false.

It is time to change course, and to abandon Titanic economics. There are no "job creators" without job doers, and no wealth is created without buyers capable of buying whatever is produced. Instead, in a crisis like the one facing America today, more survive if everyone is asked to contribute to the solution to the fullest of their ability.

David M. Abromowitz is a Senior Fellow at the Center for American Progress,