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

[cmhmd]

This reminded me of the quote of Cheney that left Paul O'Neill so stunned in "The Price of Loyalty'" - "Reagan proved that deficits don't matter!"

Mr. Frank have you read this and what do you think of it?
http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html?_r=1&em&oref=slogin

Cheers,

[HWBII]

Also known as "starving the beast." Be afraid. Be very afraid. We are living in a parallel universe which even Lewis Carroll wouldn't recognize.

[jmwtex]

Thank you, thank you, thank you!!!! I have been telling people this for years. The Republicans want to spend our government into a corner preventing us from building a better America for all us all. They want an America that can only afford to pay for defense and nothing else. They do not want Obama to be elected because he, as a Democratic follow up to Bill Clinton, will prove that there is plenty. We can balance the budget, tax the wealthy appropriately, rebuild our infrastructure, have national healthcare and still have a growing economy. Sort of like, let us see, Europe!!!!!.

The conservatives have brain washed a large part of America into believing that we have to pay off the rich with super low taxes and cheap Chinese labor or else all the rest of us will be out of work, etc., etc., etc., Hopefully the American people are waking up and hopefully there will more people speaking out like you are. If we could only get the Democrats to have enough courage to tell the truth that is expressed in this article.

[Paul]

Exactly.

The Republicans are selling Capitalist snake oil but they are on the wrong side of history.

The most successful societies - the ones that actually provide decent healthcare for everyone, a mass transportation system, a better educational system, 35 hour work week, a better environment and six weeks vacation - these societies all have higher tax rates and a bigger government.

Time to send unrestricted free market capitalism to the economic dustbin of history.

Socialism - the way forward.

[GOVSUX]

The Europeans can afford all of their Socialism because we pay for their defense.

[TOOO]

Then we should stop paying for their defense. Oh, that's right: we want to influence everything that goes on in the World, instead of minding our own business.

[lulamaebroadway]

Can all democrats start using the phrase "Borrow and Spend" Republicans for, like, the next 30 years the way they've been saying "Tax and Spend" Democrats?

Pleeeeeeeease!

[dubstyleenation]

Duly noted.

[ProFromOre]

Why not just the effing Failure Party?

[cmhmd]

Why not just "Deficit Spending" Republicans.

Or "Tax our kids and spend"

Somebody needs to do a video of when that little girl asked McCain if he'd raise taxes when he was President and him responding "No." Then follow with all of the deficit spending packages and budgets and corporate welfare and this bailout and on and on and then finish with, "Well, maybe not your mom's taxes but you and your generation are going to be in a massive, possibly tragic hole of deficit spending and indebtedness to China and Oil rich countries around the world. Elections matter."

Cheers,

[LeftCoaster64]

Excellent idea, I will start today. Enough of this transfer of wealth from the non-rich (and future generations) for the benefit of the Republican fat-cat few. They are disgusting and should all be jailed starting with King George the Lesser

[darcy]

Great idea, lula.

[jmwtex]

Good one, I wil if you will. Borrow and Spend, Borrow and Spend, Borrown and ........... over and over and over.

[jamula]

I think there should be absolutely no bailout and that those who go under should have to pay the piper under the same rules called out for in the consumer bankruptcy law that was recently signed into law by these money grubbing corporate w_h_o_r_e_s!

[RadCenter]

I pity whichever candidate wins the race to the White House. He's going to have an awful mess to clean up. I'm not expecting miracles.

[rubinoff]

I concur and it will take longer than 8 years....Daggone shame.

[dubstyleenation]

Yea, whoever wins, their job is going to suck inheriting all the suckness from bushies presidency. I guess its an early christmas gift, 2 wars, huge deficit, crappy economy, terrorists, energy issues, high oil prices. The list goes on.

[LouisvilleLiberal]

This time will be different. Unlike Clinton, Obama is going to have a Democratic Congress. If they get serious, they can pass a balanced budget act and enact a payment plan to pay down the deficit before social security will need the funds.

Then, they can give us universal healthcare, increase the quality of public education and create some jobs by making long term investments in infrastructure and alternative energy.

With a majority in Congress and the White House, the dems can make these programs permanent and sabatog proof.

I suspect that's why the dems have been so quiet about the bail out. They are just holding their breath hoping that they are going to be in complete control in 2009 and they can really start undoing the damage the Bush administration caused. This bail out is just a patch.

[Progress08]

In 40 years the Republicans have never once had a balanced budget, Oh wait George W had one for about an hour then he pi$$ed it away.

[torrrep]

Maybe you need to check your history books. Democrats controlled all of congress for 50 years prior to 1992. So if you want to talk about balanced budgets you go right ahead. Oh and by the way. W. had no surplus. Clinton decimated the military and the intelligence agencies. Yes, the same agencies you complained gave faulty intelligence to Bush prior to the invasion of Iraq.

[ProFromOre]

Bush wasn't given faulty intelligence. He ignored the accurate intelligence and Cheney made up the rest.

[frappe]

Excellent piece, Mr. Frank. I have long believed that the Republicans have used deficits (and now, bailouts) as a type of public policy strategy or as a means to radically curtail government spending on what they regard to be "discretionary entitlement programs". Apparently, they fail to see defense spending as "discretionary" even though our defense spending is now calculated to be five times that of what the rest of the world collectively spends on defense. They also fail to see the paradox in their support for corporate welfare while opposing affordable, taxpayer funded universal health care for American citizens. Why can't our citizens' taxes be applied for purposes that benefit the taxpayers more directly, like health care, rather than having that money go into various types of corporate welfare? Can't there be a balance? The point is that the average American citizen seems to get shafted much more so during periods of Republican control than when Democrats control the levers of power.

[torrrep]

The answer to your question is simple. It's not my job to pay taxes so you can afford health care. It is my job to pay taxes to make sure our financial institutions don't fail. You are correct that there does need to be more balanced. But universal health care is not the answer. Many people can afford health care but choose to spend their money on other things and then complain they can't afford health care. Businesses need to be accountable for their investments but so also do the American people need to be held accountable for how they spend (or waste) their money.

[Querent]

We all know that Republicans see it as their function to hold their fellow citizens responsible for whatever nutcase nonsense they see fit to fulminate about. Why they see this as their role remains a mystery, since they never hold themselves responsible for anything.

[AmericanScream]

Excuse me? II earn $50k per year and pay $5,000 per year on healthcare. That's 10% of my income I pay on a policy that they will no doubt cancel if I get sick!

People like you make me sick. You'd rather pay taxes to build bombs to kill people in other countries while you deny your fellow citizens a decent living and decent healthcare.

MOVE TO FREAKING CHINA, YOU ARE NO AMERICAN.

[frappe]

Your perspective is not a surprise. You, in fact, mirror the attitude and approach taken by Republicans in Congress. And it is exactly people like you that I reference in my comments and, if I may extrapolate, Mr. Frank references in his. And it is exactly for that reason that the vast majority of American citizens need to wake from their collective coma and vote people who think like you -- Republicans -- out of office.

[Gidster]

It is your job to pay taxes to fund the workings of the USA. You cannot cherry pick the things you want to spend it on.

Financial institutions are for the most part PRIVATELY held companies, run for profit, your tax dollars should not be used to buy bad diversities.

[dctackett]

yeah... run up the credit card, so nothing beneficial can be afforded and that money taken out on credit is used to line your pockets and your patrons... so then they have even more money to spend defeating the enemy (liberals and other sane people)

[Republicrats]

Thats exactly why if we have a democrat congress we should get a something else executive. Balance is good, reduce the size of the fed govt for a few years until the economy catches up, i love it!

[DrPaulProteus]

YES. It's great to see Mr. Frank posting here on these pages, hopefully he will post often. His new book, "The Wrecking Crew" is indispensible reading, especially right now. Also check out his column at the Wall Street Journal (?!). Here's the latest one: http://online.wsj.com/article/SB122221440058969313.html

[rubinoff]

What I fail to understand is the fact that for soooo long, the powers that be, denied that the country was in a recession....and now, in the last few days, we're hearing the word, 'depression.'....What's up with that...This whole mess is not passing the 'smell test.'

[torrrep]

Simple. Just because a few companies made stupid investments and mismanaged their portfolios doesn't mean the rest of the country is in a recession.

[Paul]

So about now isn't some prminent Republican supposed to say: "No one could have foreseen the magnitude of the sub-prime mortgage crisis..."

It's a financial Katrina and 9/11 all rolled into one.

[AuntSally]

Clinton ruled like a 'nice, responsible Republican?' Now there's an oxymoron.

No, Clinton ruled, at least budget-wise, like a responsible President. And Obama will too. And the roughly half of the country's population that understands this can only work with an informed citizenry will have to shoulder the thinking burden for the other, ignorant and clueless half.

[Republicrats]

Beware the zealot, the true believer, there are many sides to every issue and no slimy political party has all the answers, wake up!

[dbeden]

Beware the useless hyperbole, the non-answer answer.

[lvdragonlady]

They have principles?
Could have fooled me!