Conservative zealotry vs. economic reality
One thing about the current generation of conservatives: Getting mugged by reality hasn’t changed the way they look at the world. We’ve just come through a calamitous financial collapse — caused by reckless Wall Street gambling and toothless watchdogs — that triggered a Great Recession and doubled the U.S. national debt. The collapse is the greatest cause of large deficits, but conservatives act as if the deficits caused the collapse.
A recent stop in London revealed that this isn’t just a Tea Party phenomenon. There, the new Tory-dominated coalition led by David Cameron looks and sounds like a sprightlier offshoot of House Speaker John Boehner’s troops. Cameron has set out on a forced march for fiscal retrenchment, imposing deep and immediate spending cuts (and tax increases) to bring deficits down in Britain. This plan is sold with a jaunty recital of conservative gospel: The economy has begun to recover, and action on deficit reduction will boost the confidence of business and consumers. The resulting revival, it is argued, will generate more than enough private-sector jobs to make up for those lost in the public sector.
Yet the 2010 fourth-quarter economic numbers revealed that the British economy was declining, not growing. The government went from adding jobs to shedding them. And consumer confidence has collapsed since Cameron and his troops started chanting that the country “was broke.” Cameron dismissed the results, declared “war on the enemies of enterprise” and insisted that he would carry on. The magic of what Paul Krugman calls the “confidence fairy” and private-sector growth would overcome all.
In Washington, Boehner’s caucus exhibits the same zealotry. “The American people want us to cut spending,” the GOP speaker repeats, ignoring the vast majority of polls that show Americans care far more about jobs and the economy. We will “cut and grow,” is the new conservative message. Get government out of the way and the economy will blossom.
Yet Goldman Sachs projected this month that the deep cuts in domestic programs in the 2010 budget passed by the House could cut our growth rate in half. John McCain’s former economic adviser, Mark Zandi, projected a loss of 700,000 jobs. If the budget cuts cost federal jobs, said Boehner, sounding like a latter-day Marie Antoinette, “so be it.” He believes the private sector will more than make up for the loss of such jobs.
Remarkably, President Obama has once more been absent without leave. In his State of the Union address, he hailed the recovery and turned to deficit reduction. A few weeks later, he said it was time to “live within our means.” He hasn’t drawn a line against short-term cuts, choosing instead to argue for cutting less.
In the run-up to the 2010 elections, the administration assumed that job growth was picking up (remember “Recovery Summer”). The Election Day “shellacking” stemmed largely from the fact that voters didn’t see the jobs and didn’t think the White House had a clear view on how to create them.
The president and Republicans seem to believe that the “confidence” that comes from immediate spending cuts will offset the jobs lost from those cuts as well as offset declining household disposable income, plummeting housing prices and massive household indebtedness.
In Britain and the United States, it is bizarre to hear the same cruel conservative ideas and arguments defining policy while both countries are still struggling to recover from the human catastrophe they caused. And in both, economic reality doesn’t interfere with conservative faith.
In the United States, 25 million people are in need of full-time employment. Housing prices are headed back down; trade deficits are going back up. State and local governments have largely exhausted rainy-day funds and are laying off workers. Businesses are sitting on trillions in cash while waiting for consumer demand to pick up. At last Thursday’s “Summit on Jobs and America’s Future,” sponsored by the Campaign for America’s Future, economists showed that at current rates it would take eight years for the United States merely to return to pre-recession levels of employment.
For the unemployed, time isn’t measured in hours or months. It is measured by savings exhausted, homes lost, dreams crushed, children uneducated, marriages broken. Eight years is a calamity. But the White House and Republicans are arguing only about how much and what to cut, assuming that business needs only confidence, not consumers, to start hiring again.
You have to admire conservative gall. Financial collapse and global economic calamity changes not a word of their mantras. At the depth of the crisis, former Federal Reserve chairman Alan Greenspan, the Ayn Rand devotee and toothless watchdog whose willful lassitude did as much as anyone to allow Wall Street to blow up the economy, admitted to “a flaw” in his world view. But last week, Greenspan was newly unrepentant, charging that Obama’s governmental “activism” was standing in the way of recovery.
Greenspan didn’t mention that the pre-crisis decade featured declining wages and benefits for most American families, Gilded Age inequality, the hemorrhaging of manufacturing jobs, unsustainable trade deficits and ruinous financial speculation. But neither Greenspan nor conservatives, nor, tragically, Obama, are about to let reality get in the way of ideology.
Katrina vanden Heuvel is editor and publisher of The Nation. She writes a weekly online column for The Post.