No Future for You.

A seven-hundred-billion-dollar bailout plan? Weren't Republicans supposed to be opposed to deficit spending? Weren't they the party that was all about balanced budgets and fiscal responsibility?

That's what Republicans say, of course. And now they tell us they wish they didn't have to take this course; that the bailout violates their own first principles; that they're so, so sorry. But none of this is true. At some point in the first Reagan administration, Washington conservatives (as opposed to your average conservative pundit or grassroots activist) learned to stop worrying and love public debt. Maybe that first, gigantic deficit the Reaganites piled up was an accident, just a combination of deluded "supply side" tax cuts and a huge bag of good stuff for the Pentagon. But pretty quickly conservatives discovered that deficits, when done correctly, did something really cool: deficits defunded the left.

For one thing, deficits gave the Reaganites an enormous weapon to wield against their enemies in Congress and the executive branch. Having to pay down the debt was the excuse for "reductions in force" in agencies detested by conservatives; it was the rationale for attacks on this liberal program and that; and it was--believe it or not--the original justification for the trademark conservative innovation of outsourcing and privatizing public operations, an innovation that has, as we now know, turned out to be one of the most fantastic money-burning frauds ever conceived by the mind of man.

And then, of course, the whole thing was dumped in the lap of the incoming president Bill Clinton in 1993. The story is so famous it borders on legend: One fine day, after being briefed by his economic team, Clinton realized that, thanks to the deficit, he would not be able to enact most of the economic program he had been promising voters throughout the campaign. He cursed. He screamed. He referred to it as "Stockman's revenge," after President Reagan's budget director (whose memoirs are an invaluable account of conservative thinking about deficits). And, of course, he did as the situation bade him: he balanced the budget and ruled like a nice, responsible Republican.

When done right--or wrong, depending on how you look at it--deficits remove liberal options from the table. Suddenly there's no money for building bridges or inspecting meat. Not surprisingly, running up a deficit is a strategy favored by the wrecking crew for its liberal-killing properties.

But seven hundred billion dollars, all of it to make Wall Street whole again after it cheated and deceived itself into its worst crisis in seventy-five years? Add this to the already enormous deficit Bush piled up by sluicing waves of public money down the pipe to whatever contractor has the best lobbyists, and you're talking deficit Armageddon.

And with a deficit that size, what a lot of defunding we'll have! Perhaps your individual share of the bailout will be manageable, but its larger effects will take much more from you than you think: public schools, workplace safety, health care reform all might well be sacrificed.

These gratifying effects are already being acknowledged. On Tuesday Barack Obama recognized that the bailout may crowd out some of the programs he's been promising on the campaign trail. Yes, I know that something has to be done to avoid Great Depression II; I know we have no choice in the matter; and I don't even have a problem with deficit spending in the abstract. But it seems to me that the combined result of all this might be to compel even Obama into acting like a Republican.

 

Comments

[egal]

....Except for the fact that the Republicans haven't been acting like the fiscally conservative ones they claim to be, and it is the Democrats who have always and consistently repaired the money issues by acting responsible and being judicious with spending, so really Obama would be acting like a Democrat.

[vivian eponymous]

But Cheney said that Reagan taught us that "deficits don't matter"...

[terraprieto]

Reid, Pelosi, Frank and the rest have rolled over for Bush, agreeing to the Paulson outrage with minimal oversight provisions added. It's now the Bush+Democrats bailout plan that is infuriating taxpayers nationwide, and the House Republicans saying HELL NO!.

Pelosi says she will bring the bill to the floor if 80-100 Repubs will vote for it. She should be demanding that all of them must vote Yes!

No need for an October surprise. Democrats have been suckered in September.

[karebarron]

Nancy Polosi has enough problems--She's already unpopular for saying she would take the impeachment of Bush/Cheney off the table.

This is an unpopular bill--nobody likes it, but let's not forget, it is George-conservative-W-Bush's bill. It is he who is begging for a handout from the taxpayers, like the biggest socialist of the land. Give credit where credit is due--this is not a Democrat problem. It's a Republican problem. So please, all you ,so-called fiscally conservative, small government, lower taxes, pundits, Republicans, blah, blah, blah, step aside, let a democrat show you how it's done. It wasn't a Republican who balanced the national budget, who reversed deficit spending and who indeed, left George W with a trade surplus. It was a Democrat--Bill Clinton!

So Republicans, you Phil Gramm "whiners," get over yourselves, and quit claiming credit for things you are unworthy of, such as "smaller government," "lower taxes," "social conservatism," (Sorry Sarah, your family circumstances don't comport with this), "national security" (tell that to Katrina survivors, victims of 9/11, and soldiers fighting in Iraq when the enemy is in Afghanistan).

Republicans would like nothing more than to tie Democrats equally to the culpability of this stinking bailout bill. But the true culprits are the party of serial deregulators. The less governement-turned-governement -handout-party, the Republicans!!!!!
ENOUGH! It's time for CHANGE.

[krocklin]

I don't quite get how you arrive at your final conclusion in the last sentence.
Do the math. If we get out of the Middle East, slash the bloated military budget, which is inflated by lobbyists, private contractors, corruption and waste, create national healthcare, recover the progress tax structure Bush destroyed, then there will be a surplus again.
With wise policies and investments in the future there will be o need any more deficite spending.
Clinton almost achieved it with a Republican congress. With a Democratic congress Obama should be able to accelerate the process.
The losers: war and Wall Street profiteers and their lobbyists. The winners: everyone else.

[krocklin]

How is all this outsourcing to "private contractors" allowed? How is it even legal?
It ends up costing far more in tax dollars and they aren't even accountable or auditable.

[AndSoItGoes]

Can someone explain the benefit of the "insurance" option the Republicans are suggesting? Not an Economics Wonk so the immediate benefit to avert this pattern of business collapse eludes me.
Also, if insured, is this like an FDIC and when the insurance payouts exceed the monies paid into it by the businesses, then who pays ... the taxpayer? At least with the options Paulson with ammendments by the Dems and some GOP will provide for profit sharing & the ability for the recovery of the funds. Please advise what you think. I'm pretty confused by it all.

[schatsie]

SPOT ON...Loved the article, gives me a better perspective on these deficits...

So hysterical that 4 weeks ago, Gramm was telling us we were whiners and then this comes up all of a sudden,,,,, right...

[wordvarc]

These "small government" "no new tax" "trickle down" deregulation GOP presidencies are sure expensive!

[darker]

You said it!
We can't afford Republicans any more. Their NANNY STATE FOR THE RICH and corporate welfare queens is too darn expensive!

Millionaire McCain refuses to acknowledge the MIDDLE CLASS that's been paying the bills for the misguided IRAQ WAR and WALL ST. CORRUPTION-CRASH created by years of Republican DEREGULATION and greedy profiteering.

I CANNOT AFFORD REPUBLICANS ANY MORE with their wrecking-ball style government.
They're too damn expensive!
Republicans PROVED that they CAN'T GOVERN. NO MORE YEARS for corrupt Republican liars and crooks.

After too many years of REPUBLICAN HYPOCRITES and nuts,
Obama and Biden are a breath of fresh air.

[biased2]

God save the Queen...We mean it man" - Sex Pistols
(Or how we say in the states: Lord help us)
Let's all just plan on our "landLords" not helping us, don't you think?

[JohnnyCostic]

Republicans loathe entitlements. It seems they never met a social program that they did not want to defund. They love free enterpise. In fact, when former House majority leader Tom Delay visited the Northern Marianas' labor camps...er...excuse me, garment factories, he gushed that it was "a perfect petri dish of capitalism." We love getting rich on the backs of sweat shop workers. Remind me later that we must revisit those child labor laws. Such a nuisance.

I never understood why Democrats haven't tarred the Republicans with being unpatriotic by valuing the dollar over the needs of the country at war (two wars, to be exact). Or sharing the sacrifice after the market meltown. But sadly when this country needs bailing out, it's the middle class who'll make up the bucket brigade.

Good insight, Mr. Frank. I have your "Kansas" book and look forward to reading "Wrecking Crew."

[infinity]

Also little noticed this week was the INCREASE in the Pentagon budget approved by an allegedly Denocractic controlled Congress. So the gravy train will continue for the mil-ind complex, the contractors and lobbyist while schools, the national infrastructure, health and social welfare programs, and science and research are drowned in the deficit bathtub. Way to go, Grover.

[Hoelder]

One of the more interesting aspects of the crises is that I so it coming for about two years. Today I drove by a store in the southern part of town. A man covered in a white shroud was surrounded by police and neighbors. It lend a perspective to the "crises." Maybe not quite fitting as a comparison, but the demise of large banks is certainly a crises to those who found their job in those gone overnight. I don't know what the administration learned in school about management, but this is not a crises, it is a catastrophe. As a German commentator said: this is the end of American Financial Hegemony; He stopped short of the end of a superpower, that reared it's ugly arrogant head in everybody's face. The German Foreign Minister rather somberly added that "we warned the President [at the G8 meetings], but received just a patronizing smile." McCain suggested recently to throw Russia out of the G8. I think the Russians think the same about us right now. There might be some other members that sympathize with Russia, but for now it is damage control for us and the "socialist" countries of Europe that still have their banks, will maybe mention that control is not such a bad move, considering that the Giant is about to fall and some countries will now seriously reconsider free trade and capitalism.

[AngryOhioan]

In case you haven't been paying attention, the House Republicans are the only ones trying to stop this $700 billion ripoff. Bush is not a conservative and never was a conservative, he is a crony capitalist who hijacked the party to gain power. I thought the Democratic party was supposed to be the party of working people. Why are the Democrats first in line to help Bush steal $700 billion from working people and give it to thieves on Wall Street? Why are Frank, Pelosi and Reid cheerleading for the ripoff? The working people of this country do not have a party that represents them.

[boophus]

First off the Dems plan was for 150 billion which is just slightly more than Bush was willing to spend to keep us in Iraq for an additional year to help the republicans. not for our countries good. They had oversight and ... Oh heck read the Dems proposal. It is responsible and will help hold things together past the 1st of October when the hedge funds are likely to take down the market. SO STOP THE STAMPEDE that was Bushies and neocons intent from beginning to shift the blame to Dems and minorities. The Dem plan will give us breathing space to work out a better solution. The repugs are playing a bluff game to look like they are the more responsible. If Dems say ' OK, no deal, they will back down so quick they are in danger of Whiplash'

[wordvarc]

Maybe; but these "small government" "no new tax" "trickle down" deregulation GOP presidencies are sure expensive!

[AndSoItGoes]

I don't the Dems like it any more than the Republicans. Let's not forget who put this proposal forward & part of it required no oversite or access by the courts, it was the Republican Administration. The proposal also did not have a provision for the recovery of the funds. All of which the Dems & some GOP amended Paulson's proposal to include. Where I think the Dems make the mistake is not looking beyond the crisis to the GOP who have created it with over a decade of legislation when they were in control of Congress 1995-2006, that deregulated the financial institutions, provided for the oil speculation, and led to mismanagement of the morgage institutions. The GOP should be held accountable for that. This false huff & puff by them regarding this bailout is all theatre for the election's benefit. The GOP has never had the taxpayer's,, aka. THE MIDDLECLASS interests in consideration unless it helps them at election time. THE GOP CAUSED THE CRISIS!. From a former registered Republican.

[ReallyNowPgh]

A most excellent commentary. Yet another Republican Hypocrisy. Republicans have driven this country to the worse levels of debt EVER. There is NO fiscal responsibility among them.

The best part is watching the "real beliver NEOCONS" waking up to see the truth in their party. I have a lot of Republican relatives who feel really stupid and conned right now.

They claim the "Moral Majority" on Sunday, but demeanor the less advantaged and most in need.

REPUBLICAN = HYPOCRIT.

[frank1569]

The 2008 budget deficit is gonna be about $500 billion. Imagine if y'all went to your bank and said, yea, I know - I'm 500 billion down this year, but if ya can just spare me another 700 big ones - really big ones - I can make things right. Just, you know, don't ask me about how I'm gonna right things...

Here's my "rescue" plan for dummies. Close all 700+ mil bases (and golf courses) worldwide (incl. Iraq, Afghanistan,) all troops home - there's about $200 billion. Sell/lease the bases/golf courses to the natives - another $100 billion. Collect all hidden corporate taxes - off-shore, etc. Another $100 billion easy. Audit the top 1% with a fine tooth calculator - half-a-billion back, for sure. Seize all assets of all the top thieves - gotta be $200 billion there, at least.

There's $600 billion. Okay? Now, which of you kindly bank robbers would like a loan again?