November 22, 2011

The Rise of the DestructoCons (Part II of Reagan’s Big Lie)

By Glenn

There is a traditional German saying that warns the foolish not to throw the baby out with the bathwater. A wise person realizes the value of preservation and change. Since the French Revolutionaries first took their seats in the National Assembly, politicians have divided themselves along this axis. One party favored preservation, while the other advocated change. Conservatives sat on the right, while liberals sat on the left. A healthy political system balances the two, keeping they baby and throwing out the dirty bathwater.

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Since the Presidency of Ronald Reagan, however, a new breed of American conservative has been gaining strength—the DestructoCons. The DestructoCons took to heart Reagan’s Big Lie: “government is not a solution to our problem, government is the problem.” Instead of removing the baby from the bathwater, DetructoCons foolishly throw it away. Every social problem has the same solution, cutting government and cutting taxes. In this Ayn Rand dystopia the best social solution is always to do nothing. Individuals should struggle to survive with the strong rising to the top and the weak falling to the bottom.

At the end of the Reagan Presidency, however, most DestructoCons were far from the corridors of power. The traditional conservatives, who controlled the Republican Party, had left intact the great pillars of liberal America: Social Security, Medicare, the 1964 Civil Rights Act, the Voting Rights Act, unemployment benefits, food safety, work place safety and environmental protections. Worse still, from a traditional conservative perspective, the financial health of the country was weaker than eight short years before. Tax cuts and extravagant military spending meant the federal debt was rising at a faster pace than any time since the Great Depression. It was painfully obvious that the country could not keep taxes low on the affluent and maintain vibrant social services that improved the lives of millions of Americans.

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The DestructoCons saw this moment as an opportunity. During the 1988 Republican primary, Grover Norquist used his newly organized Americans for Tax Reform to extract a “No New Taxes Pledge” from candidates. He abandoned the traditional conservative goal of a balanced budget in favor of cutting taxes. The goal became known as Starve the Beast. “The idea is that if revenues are unilaterally reduced, this reduction will lead to a higher budget deficit, which will force legislators to enact spending cuts.” It was the logical consequence of Reagan’s Big Lie. If government is the problem, or a beast, then it was immoral to feed it and make it stronger. It had to die.

Grassroot conservatives loved the idea and forced the 1988 Republican nominee to get on board. Vice President George H. Bush had been a traditional northeastern Republican. Before joining Reagan’s campaign in 1980, Bush had fought for the soul of the Grand Old Party, warning against the adoption of voodoo economics. He knew that cutting taxes and increasing spending was a recipe for disaster. He knew that government could play a positive role in society if leaders made rational decisions. Just eight short years later and billions of dollars of new debt, Bush was ready to say the voodoo economic prayers.

Vice President Bush fought hard to win the Republican nomination. Picking up his party’s standard, he told the Republican National Convention:

And I’m the one who will not raise taxes. My opponent now says he’ll raise them as a last resort, or a third resort. But when a politician talks like that, you know that’s one resort he’ll be checking into. My opponent, my opponent won’t rule out raising taxes. But I will. And the Congress will push me to raise taxes and I’ll say no. And they’ll push, and I’ll say no, and they’ll push again, and I’ll say, to them, ‘Read my lips: no new taxes.’

He said the voodoo economic prayers, but, if elected, would the DestructoCons have a friend in the White House? Did George H. Bush just say the words to please his base as so many politicians do in primaries? Would this traditional conservative really throw the baby out with the bathwater as the DestructoCons demanded?

Almost immediately the answer was clear. President Bush the Elder believed the government could be a solution, not simply a problem. During the 1980s, the Saving & Loans industry had successfully lobbied to deregulate its business, arguing that government regulation hurt opportunities to grow and serve customers. Private businessmen, not public bureaucrats, should make economic decisions. Free of New Deal era restrictions, they recklessly invested in commercial real estate, contributing to a bubble market. When the predictable collapse occurred, the Federal government once again had to intervene to mitigate the damage to average Americans. President Bush and Congress created the Resolution Trust Corporation, which had the authority to seize failed S&L, liquidate their assists and pay off depositors.

Rescuing the savings of average Americans was a relatively painless decision. Bush, however, had won his election by promising, “Read my lips, no new taxes.” While this made good politics, it was bad policy. For the first time in American history, the deficit was growing without a major war or a severe economic crisis. Congressional Democrats were not going to cut popular government programs without at least token tax increases.

After negotiating throughout the summer and fall of 1990, President Bush reached a compromise with Congressional Democrats. In exchange for cuts in Medicare, Bush abandoned his no new taxes pledge. The deal cut federal spending by $366 billion over five years while raising $134 billion in taxes on gasoline, tobacco and alcohol. This represented a $500 billion step in the direction of a balanced budget. Traditional conservatives had scored a victory. They had cut spending and the deficit while only raising taxes on consumption, protecting income and investments.

For the DestructoCons it was a defeat. In 1992 many Republican primary voters did not forgive Bush for compromising with Democrats and cast him as a Rhino (Republican in Name Only). They preferred tax cuts over actual deficit reduction and voted for Pat Buchanan to express their sense of betrayal. The Democratic nominee, Bill Clinton, was able to capitalize on the divide within the Republican Party when Ross Perot made an independent bid for the presidency. At the center of the race was the budget deficit. While Clinton won the election with less than 50% of the vote, Democrats controlled both Houses of Congress and promised to reduce the deficits.

Democrats set about solving the countries problems with constructive action, but Republicans in the House rallied around the DestructoCons. During the 1980s, as a backbench Congressman from Georgia, Newt Gingrich had made a name for himself running against “Washington.” Gingrich was the master of contrast. The traditional tools of statesmen, negotiation and compromise, were thrown out the window. Out went the baby with the bathwater. In their place was language adopted from religious fundamentalism: a battle between good and evil.

From 1990 to 1996, Gingrich distributed a memo to his Republicans colleagues, teaching then to “speak like Newt.” He promised them a road map to electoral success.

Often we search hard for words to define our opponents. Sometimes we are hesitant to use contrast. Remember that creating a difference helps you. These are powerful words that can create a clear and easily understood contrast. Apply these to the opponent, their record, proposals and their party.

Democrats weren’t simply wrong according to Gingrich; they were “shallow,” “self-serving,” “wasteful” and “traitors.” He encouraged them to throw out baby and bathwater, compromise and big government.

The decision by Congressional Republicans to follow Gingrich’s lead meant Democrats had to craft a budget on their own. The Clinton deficit reduction plans in 1993 required higher taxes on the wealthiest 1% of Americans, but cut taxes for the small businesses and 15 million low income families. Not a single Republican voted in favor, claiming the Clinton budget would kill jobs. Those predictions were simply wrong. Not only did Clinton set America on the path to fiscal responsibility for the first time since the Reagan Revolution, but the economy grew at annual 3.2 rate (adjusted for inflation) and 11.6 million new jobs. The empirical lesson was clear. Modest reductions in the rate of government growth and slight tax increase did more fiscal good than eight years of voodoo economics.

Clinton and his Vice President, Al Gore, also looked towards a new economy. They had touted a new program during their election campaign called the “information superhighway.” It was meant to remind Americans that government spending on infrastructure (Erie Canal, TVA, and the interstate highways) spurred economic development. Clinton and Gore were right. Like previous projects, public investments in the internet opened up new business opportunities for the private sector. Unlike Reagan, Clinton knew that good government could be a solution and help America prosper.

Also, in 1993 the Clinton administration decided to tackle a perennial problem for working Americans, affordable, universal, comprehensive health insurance. Working within the country’s tradition of employer provided health insurance, Clinton’s plan had six goals: security, simplicity, savings, choice, quality and responsibility. The legislation relied on private insurance markets and required all employers to cover their employees, offering them a choice from at least three plans. Each plan had to meet basic coverage requirements such as no denial for preexisting conditions, prenatal care and preventive care. Clinton explained to the nation why everyone had to accept responsibility for healthcare.

And I want to tell you that I believe that all of us should have insurance. Why should the rest of us pick up the tab when a guy who doesn’t think he needs insurance or says he can’t afford it gets in an accident, winds up in an emergency room, gets good care, and everybody else pays? Why should the small business people who are struggling to keep afloat and take care of their employees have to pay to maintain this wonderful health care infrastructure for those who refuse to do anything? If we’re going to produce a better health care system for every one of us, every one of us is going to have to do our part. There cannot be any such thing as a free ride. We have to pay for it. We have to pay for it.

Moderate Republicans responded with an alternative. Instead of relying on an employer mandate, Senator Lincoln Chafee proposed an individual mandate. To overcome the fact that individuals lack the purchasing power of large corporations, Chafee would have required each state to create insurance exchanges to hold down costs. Any individual who could not afford to pay their premiums would receive a federal voucher to buy insurance on the stat exchange. Like Clinton’s plan, the Chafee plan would have also prohibit insurance companies from denying medical coverage for pre-existing conditions.

Any reasonable assessment of the competing plans would have found common ground for a compromise. The DestructoCons were not happy; their faith in Reagan’s Big Lie was stronger than ever. They knew “government is not a solution to our problem, government is the problem.” Clinton, the Democrats and RHINOs were not wrong, they COULD NOT be right. Together with the insurance industry, the DestructoCons rallied the public against “Big Government.” Newt Gingrich falsely said any Clinton proposal would be “washed-over old-time bureaucratic liberalism, or centralized bureaucratic socialism.” The health insurance industry reinforced Gingrich’s message and inflamed public opinion with two “Harry and Louise” ads.

The DestructoCons strategy worked. Not only did they defeat all health insurance reform in 1994, but they capitalized on the anti-government fever and voters turned control of the House over to Speaker Newt Gingrich. The initial results of the “Gingrich Revolution” were disastrous. Unwilling to compromise as the Constitution required, DestructoCons tried to bully Bill Clinton. When he stood firm, Gingrich refused to pass a budget and shut down the government. This experience taught him a lesson; Americans hate government in theory but like it in practice. With egg on his face the Speaker backed down.

Unfortunately, Bill Clinton had already surrendered the rhetorical high ground, famously saying that the era of big government was over. Clinton worked with Republicans on welfare reform, lower capital gains taxes, and banking reform. Welfare reform and capital gains were relatively modest changes. Banking reform did real long term damage. Banking reform opened the door for mega banks to consolidate finance and insurance markets.

Wisely, President Clinton refused to compromise on Medicare. The health care fight and the 1994 midterm elections motivated Gingrich and the DestructoCons to set their sights on this popular Great Society program. In October 1995 he explained his goals.

So what we’re trying to do, first of all, is say, O.K., here is a government monopoly plan. We’re designing a free-market plan. Now, they’re very different models. You know, we tell Boris Yeltsin, “Get rid of centralized command bureaucracies. Go to the marketplace.” O.K., what do you think the Health Care Financing Administration is? It’s a centralized command bureaucracy. It’s everything we’re telling Boris Yeltsin to get rid of. Now, we don’t get rid of it in round one because we don’t think that that’s politically smart, and we don’t think that’s the right way to go through a transition. But we believe it’s going to wither on the vine because we think people are voluntarily going to leave it — voluntarily.

The only way to save Medicare was to kill it. Gingrich wanted to replace Medicare with a voucher program. Seniors would receive a set amount and then compete on the open market for coverage. Neither Clinton nor the public accepted Gingrich’s argument and it was his privatization scheme that “withered on the vine,” not Medicare

At the end of the Clinton Presidency the country looked fiscally sound. The budget deal George Bush had made in 1990 helped slow the rate of spending growth. As new revenue came into the treasury from Clinton’s increased taxes and economic growth, the budget deficit began to shrink. All federal revenue, including Social Security taxes, had actually produced a surplus.

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In 2000 voters faced a clear choice when it came to fiscal responsibility. Al Gore wanted to put the Social Security surplus in a lock box, effectively paying down the Reagan era debt. George W. Bush wanted to emulate the mythical Reagan and redeem his family name after the treachery of his father. Bush promised once again that tax cuts at the top would trickle down, producing even further deficit reduction.

When Americans went to the polls, the majority of voters rejected this newest incarnation of voodoo economics. Most Americans weren’t willing to throw the baby out with the bathwater. George Bush the Younger, however, was able to gather enough electoral votes to move into the White House. More importantly, Republicans controlled the House and the Senate. DestructoCons had a blank check to reprioritize the nation’s agenda.

Step one was to cut taxes, not once but twice without any reductions in spending. In 2001 they called the plan the “Economic Growth and Tax Relief Reconciliation Act,” and in 2003 it was dubbed the “Jobs and Growth Tax Relief Reconciliation Act.” DestructoCons were simply wrong. Not only did the budget deficit begin to balloon immediately but job prospects began to decline. From 2000 to 2008 the employment-population ratio dropped from 64% to 59%. This fact was masked by unemployment calculations which ignored people who gave up on the job market. When asked about the rising deficit, Vice President Dick Cheney said, “deficits don’t matter.”

With the Social Security Trust Fund safely out of the “lock box” and in the hands of the top 2%, President Bush warned the nation about the impending Social Security crisis. After winning reelection in 2004, he offered younger Americans an option. They could divert part of their Social Security Taxes into a private investment account in exchange for a lower guaranteed benefit plan. Voters knew better. Privatization would not “save” Social Security; privatization would kill Social Security. With the public behind them, a reenergized liberal coalition rallied opposition to the plan and save this popular social program from the DestructoCons.

Today, in 2011, we are back at square one, debating issues that were settled in the 1930s, because the DestructoCons promised a better solution. Rejecting 100 years of economic and political experiences, which showed us what works and what doesn’t, the DestructoCons told us to throw the baby out with the bathwater. Cut taxes. Destroy unions. Eliminate environmental laws. Let the market place decide Civil Rights issues. Why? Because Reagan declared that “government is not a solution to our problem, government is the problem.”

Insanity is doing things over and over, expecting different results. Failed conservative policies are destroying the middle class. Doubling down on them will not make things better. They will make things worse, much worse. American needs proven fiscal responsibility, not fairy dust. Instead, the national narrative is dominated by DestructoCons. They have proven time and time again that “deficits don’t matter” to them. Common sense should tell us that a “destructive conservative” is an oxymoron, yet that is exactly the dominate ideology of the 2012 Republican presidential field.

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