Potential Republican presidential candidates are neck-deep in the “money primary,” schlepping from one wealthy watering hole to another, kissing the proper palms, stroking the insatiable egos, and if successful, pocketing commitments and cash.
The “ideas primary” apparently is still a distant destination. Republican pundits have decided that they must compete on a populist message. With the economy growing, they’ve turned to bemoaning the “people in the shadows” (Ohio Gov. John Kasich), demanding a revival of “the right to rise” (Jeb Bush), or pledging a quality education, “regardless of background or birthright,” even while trying to slash hundreds of millions from public universities (Wisconsin Gov. Scott Walker).
Echoing President Obama, Bush described the opportunity gap as “the defining issue of our time.” In what was billed as a major economic speech in Detroit, Bush was content to trot out old conservative bromides on small government and competition as the answer to that challenge; his promised “new vision” and a “plan of action” would come . . . later. His basic “principle” was “growth above all.” A growing economy — at 4 percent, twice the current rate of growth — is Bush’s fix for what ails us.
But what is the Republican growth agenda? Here the reality doesn’t match the rhetoric.
Republicans are now unified in assailing the Federal Reserve, demanding that interest rates go up faster and sooner than the Fed suggests. But growth slows as interest rates rise, making borrowing more costly and lenders more wary. Traditionally, under Republican presidents or Democratic ones, the Fed raises interests to curb inflation, with a byproduct of slower growth and higher unemployment. But this economy is closer to deflation — falling prices — and there is not a whiff of inflation in sight.
Republicans are also committed to balancing the budget over the next 10 years, if not sooner. They scorned Obama’s budget that brings deficits down to 2.5 percent of GDP and debt down to 73 percent of GDP over the next 10 years. Republicans oppose raising taxes to lower deficits. In the short term, all of the deficit reduction has to come from spending cuts. (In the long term, the promised growth will provide new revenue.) But Republicans want to increase military spending even more than the president’s proposed hikes. That means truly crippling cuts in all domestic programs — funding on schools, student loans, Pell grants, renewable energy, research and development, infrastructure, food stamps, homeland security and more programs that would help growth.
And Republicans — even Sens. Rand Paul (Ky.) and Ted Cruz (Tex.) — are largely united in support of our current trade policies. GOP congressional leaders are joining with Obama to support fast-track trade authority, designed to railroad the Trans-Pacific Partnership agreement through without amendment or extended debate.
But our trade deficits totaled more than $500 billion in 2014, with the deficit with China at historically high levels. Large trade deficits cost jobs as companies ship good jobs abroad. And worse, companies use the threat of departure to put pressure on wages across the board.
Republicans are also intent on deregulating the big banks again and dismantling the Dodd-Frank reforms piece by piece. They managed, even before assuming the majority, to stick into a must-pass funding bill a measure drafted by Citibank that repealed part of bank regulation, enabling banks to gamble on derivatives with deposits guaranteed by the federal government. And Republicans are on the warpath against the Consumer Financial Protection Bureau, which is cracking down on payday lenders and abusive credit-card companies.
But given how banks blew up the economy, reopening the financial casino isn’t exactly a recipe for growth. Indeed, more and more studies suggest that as Wall Street captures more and more of the nation’s profits, it constricts rather than aids growth, with speculation supplanting venture capital and patient investment vital to job-creating innovation.
Say it ain’t so, Jeb. Growth is everything, and the Republican recipe for growth apparently is higher interest rates, lower spending, continued trade deficits and more financial speculation. And somehow that is going to help revive the American dream?
Meanwhile, Europe provides a graphic testimony to just how destructive tight money and fiscal austerity is in wake of a financial collapse. The dollar is strong now; travel to Europe is cheap. Maybe if Republicans just held some of their fundraisers in Greece and Spain, they’d absorb a little common sense.