If the last few years have taught us anything, it is that it is impossible to be too cynical about what Republicans say when it comes to the economy.
During the Obama years, after all, Republicans alternated between hysterically and semi-hysterically warning that we had to cut the deficit or go bankrupt like Greece, and raise interest rates or have our currency collapse like Zimbabwe’s. They, of course, tried to use their most sober and serious voices to tell us this story, but that didn’t change the overall message: Be afraid, be very afraid.
Never mind that textbook economics told us that running big deficits and printing money were exactly what we should have been doing when things were so bad that even zero interest rates weren’t enough to turn them around. Or that, contrary to Republican predictions, there were no signs that investors were losing confidence in the government’s creditworthiness or that inflation was creeping up. If anything, the opposite was true. The government’s borrowing costs actually hit an all-time low in 2012, while inflation stubbornly stayed below the Federal Reserve’s 2 percent target pretty much this whole time. Nonetheless, Republicans persisted in portraying these policies as the height of irresponsibility even as that most orthodox of institutions, the International Monetary Fund, was telling us that the policies were, in fact, appropriate.
This Republican fearmongering probably peaked in 2010 and 2011. That, you see, is when the Fed embarked on its first post-crisis attempt to revive growth. Which, since short-term interest rates were already at zero, meant that it couldn’t really cut them anymore, but had to try buying longer-term bonds with newly printed money instead. In response, an all-star list of Republican investors and economists took the rather unusual step of writing an open letter to then-Fed Chair Ben Bernanke calling on him to reverse course, since, they said, he was only going to “risk currency debasement and inflation.”
Republican politicians went even further. They not only ended up writing their own letter criticizing the Fed’s stimulus efforts, breaking what had been a recent taboo against politicians meddling in monetary policy, but they also called into question the entire way the Fed does business. Former congressman Paul D. Ryan (Wis.), for one, thought that the Fed’s actions demonstrated that it might not be truly independent anymore but was rather trying to “bail out” all of Obama’s spending. And then-Rep. Mike Pence (Ind.) said that these supposedly dangerous monetary experiments showed why the Fed needed to be told to stop taking unemployment into consideration in making its policy decisions. They might have disagreed on the particulars — some Republicans wanted the Fed to return to the gold standard, while others would have been satisfied if it were forced to follow a mathematical rule for setting interest rates — but they were unanimous that the Fed needed to be reined because it had gone too far to try to help the economy.
It should be no surprise, then, that Republicans have proceeded to do ... exactly the opposite of all this, now that the president being judged on the economy is a member of the GOP?
Actually, yes. As Paul Krugman points out, Trump has increased the deficit so much that he’s now pushing as much stimulus into the economy when unemployment is under 4 percent as Obama was back when unemployment was over 8 percent. Not to mention that Trump and Pence have both been publicly pressing the Fed in the past few months to cut interest rates. Hypocrisy doesn’t get any more naked than this. Not when Pence, who, remember, has told us that he wants the Fed to base its decisions entirely on how fast prices are rising, says that it should be doing more now because inflation is still a little bit below its 2 percent target, but thought it should have been doing less nine years ago when inflation was even lower, at just 1 percent. Which is even more egregious when you consider that unemployment isn’t even 4 percent now but was almost 10 percent then.
What a coincidence that they figured out everything they’d been saying was wrong at precisely the same moment that they took office!
Now, all kidding aside, it really is true that this shouldn’t be much of a surprise. None of it is new. Republicans , going all the way back to Reagan, have attacked deficits, only to turn around and increase them by cutting taxes for the rich and spending more on the military. And while it might have been a bit more subtle than Trump’s attempts to bend the Fed to his tweets, the Nixon, Reagan, and George H.W. Bush administrations all did try, with varying degrees of success, to browbeat the central bank into keeping interest rates low ahead of their own reelection campaigns.
Bu that doesn’t make it right. This kind of political opportunism has real economic costs. Indeed, the recovery has been a lot slower than it needed to be simply because of all the budget cuts Republicans forced on the Obama administration — cuts that they haven’t been willing to make themselves. Which brings us to maybe the most important point of all: This isn’t how politics works, but rather how Republican politics does. We just don’t see Democratic politicians holding the country’s credit rating hostage unless Trump agrees to the spending cuts they want. Or Democratic economists lending their gravitas to an effort to pressure the Fed into raising rates right now. It’s another example of what political scientists call asymmetric polarization: the idea that the two parties are not, in fact, equally extreme, but that Republicans have become much more so.
The problem is that there’s no reason for them to stop. Not as long as crippling the economy when their opponents are in charge remains a good way to win power back for themselves, and running up the deficit is a good way for them to keep it. Keep that in mind, then, whenever it is that a future tea party declares it is going to balance the budget ... just as soon as it cuts taxes one more time.
It’s bad faith all the way down.