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Sunday, March 01, 2009

CPAC's Cleansing Moment?

The Conservative Political Action PAC (CPAC) wrapped up its annual meeting here in Washington, DC at the Omni Shoreham. The fortunes of the conservative movement, according to today’s Washington Post, have done a 180 degree about face from just a few years ago when their ideas were in the ascendancy and they controlled both the legislative process and the policy debate. But that did not dampen the ardor of these most rightward looking of movement conservatives. Despite their declining numbers and the fact, noted by friend and foe alike, that they have shrunk to a mostly regional party of the Deep South and Plains states, their enthusiasm for their conservative principles has not waned at all. Neither has their determination not to compromise on either principle or policy. To most of those present, the explanation for why they lost the last election so resoundingly is that the Republicans abandoned their core conservative principles and turned their back on the base. That’s the explanation of Mitch McConnell, Mitt Romney, and Newt Gingrich, among other rightwing luminaries who spoke to the crowd. They all urged their fellow conservatives to be the party of new ideas that advance their core values. They were, however, long on enthusiasm and inspiration but short on actual ideas.

The most realistic assessment of the right’s chances of regaining power from the Democrats in the next few years came from Bay Buchanan:
"As long as they're pursuing legislation that appears to be working, we won't be able to come back," she said. "If the economy comes back, the group in power stays in power. It's that simple."
Bay is right, of course, but this leaves two problems for the conservatives. The first is that the Republicans pursued legislation for nearly eight years that, in fact, didn’t appear to work. Indeed, most of the current economic turmoil has been laid at their feet, which is why the public repudiated them in the last election. This is also not the first time their solutions and policies have led to similar results. The run up to the Great Depression was in many ways eerily similar to today’s recession. It too began with the collapse of the banking industry and the stock market crash. Likewise, the recession of 1987 was brought about by the savings and loan collapse. During those periods the Republican administration passed tax cuts for the wealthiest one percent of the economy, preached free market values, and ended up with government bailouts to shore up the economy. Three of the most recent Republican administrations also left the nation with record deficits.

Under most modern Democratic administrations (the exception being Jimmy Carter’s abysmal administration and Carter was a Blue Dog fiscal conservative), the nation enjoyed solid growth of the GDP, low unemployment, low inflation, and even a slight rise in wages for ordinary people. Even under Bill Clinton’s administration, which was largely pro-free trade but did raise taxes on the very wealthy, most working people saw an increase in their wages and a real rise in their buying power. Unlike with the Republicans, a larger group of Americans benefitted from the good economy, not just CEOs and top executives. And none of that hurt the real economic growth of the nation.

So, one problem is that the Democratic legislative agenda appears to work better than the Republican one does.

This also begs the question – and this is the second problem for conservatives – if, in fact, the Democratic economic policies actually do work once again, why should the conservatives make a comeback? If their ideas actually don’t work in the real world – as opposed to in ivory tower think tank papers – as well as Democratic ideas, why would these people deserve to come back? Even more important, why wouldn’t they simply change their mind if facts and history prove them wrong?

This exchange at Tucker Carlson’s speech provides an answer and may be the most telling moment at this conservative event.
Carlson got in a bit of a dust-up with the audience when he spoke Thursday. Arguing that conservatives need to put more effort into digging up facts and rely less on opinion and punditry, he noted that the New York Times, a favorite target of conservative wrath, at least cares about spelling people's names right.

"NOOOOOOO," arose a moan from some in the crowd.
"I'm merely saying that at the core of their news-gathering operation is gathering news."

"NOOOOO . . ."
If the conservatives are so resistant to taking newsgathering and respecting the facts of current events seriously, even when those facts contradict their favorite ideas, is there any hope for a serious and substantive opposition party that actually puts forth a real debate?


aznew said...

Welcome back, Karen.

Ok, now that the niceties are out of the way, I don't believe there was a recession in 1987. The U.S. experienced a recession in 1980-82, and another in 1990-91, I believe. There certainly was a market crash in 1987, and there was an S&L crisis, but we actually weathered it quite well.

Also, I'm no economist, but I do find the comparisons between the Great Depression of the 1930s to today somewhat facile. My understanding is that there are certain constants to business cycles only insofar as there will be periods of boom and bust in capitalistic systems -- I would guess these derive from human nature, itself -- but in terms of policy, each recession has its own causes.

I understand the reasons for it, but our current economic mess is unique. It is really hard to see us falling into a depression as severe or as long as the one in the 30s.

P.S. I read that thread below where you had to cut that jerk off. Shhesh, what a putz.

AnonymousIsAWoman said...

Aznew, glad to have you commenting. Never mind the niceties, you make some good points (I only cut off people for rudeness, not for challenging me)

You're right and I misspoke. On Black Monday, in early October 1987, the stock market crashed and the Dow Jones sunk by 22.6 percent. That plunge in the market was larger than the one of 1929, yet, surprisingly, our economy absorbed it and recovered quickly.

But the savings and loans also collapsed, which led to a bank panic.

That panic led to recession in countries closely tied to the U.S., including Canada and the UK. Even Japan slowed down because of it. Yet, the U.S. economy recovered and continued to grow.

In fact, consumer confidence rebounded rapidly and led to an increase in spending, which single handedly lifted the U.S. out of the threat of recession.

That bears a small similarity to the way consumer confidence and increased spending lifted us out of the actual recession in 2001-2003.

But, according to this explanation, the recovery was deceptive.

"It soon turned out that the quick recovery was illusory, and by 1990, economic malaise had returned with the beginning of the Gulf War and the resulting 1990 spike in the price of oil, which increased inflation but to less of a degree as the oil crisis ten years earlier. Nevertheless, for the next several years high unemployment, massive government budgetary deficits, and slow Gross Domestic Product (GDP) growth affected the United States until late 1992 and Canada until 1995."

I would agree with your point that comparisons between today's recession and the Great Depression are somewhat exaggerated. In terms of severity, of course, we are nowhere near the double-digit unemployment rates, homelessness, and business collapse of that era. Some safety nets have survived to prevent that. But severity of the crisis was not what I was comparing.

But each recession is not unique in terms of what causes it. My point that the Great Depression and today's recession share some underlying causes is, I think, valid. Indeed, Janet Yellen, San Francisco Federal Reserve bank president thinks so too.

Some of those common causes include years of deregulation (such as the 1990 repeal of the Glass Steagall Act of 1933), a housing bubble, stock market speculation, stagnant wages, a large gap between the wealthy and the working class, etc.

Where I think that Republican policies have gotten us into recessions most times is because they are more anti-regulatory and are more apt to repeal laws that could prevent some of the more egregious speculation that leads to these bubbles.

Also, because Republicans have an almost religious faith in the markets to self-correct, they are too slow to use the government to step in and mitigate the effects of a truly collapsing major economic sector, like the current bank meltdown.

You can't prevent the upturns and downturns of the business cycle, but sound fiscal and monetary policies can indeed prevent those downturns from spreading throughout the entire economy and causing it to crash down around our ears.

That was my main point.

aznew said...

I agree with you about the tendency of Republican policies to cause recessions, but if I had to find a precipitating cause of the current one, I'd lay it at the feet of Alan Greenspan and his determination to use monetary policy to keep inflating bubbles as a means of financing Bush Administration policies with which he agreed.

The jig was up in 2008, but the writing was on the wall well before that -- an extended inverted yield curve beginning in 2006 signaled that there were no more bubbles to inflate, and after that, it was just a matter of time.

Certainly, the repeal of the GSA exacerbated the problems once the cracks appeared, but I would not call that a cause, per se. In fact, in the absence of poor monetary policy, I would argue that the repeal of GSA was sound, but I admittedly take a Wall street perspective on this stuff.

Similarly, deriviatives get a bad name. Ued responsibly, derivatives do spread risk in such a way as to allow for greater propserity for larger numbers of people. I realize I'm not in fashion saying that right now, but it is simply math.

Again, however, I would argue that the irresponsible use of them resulted not so much from a lack of regulation as form an insane monetary and fiscal policy that skewed the idea of risk.

But, look, outside of causing a recession, Bushonomics had so many other problems, most seriously an unsustainable income inequality that was morally shameful, IMHO.

pariahdog said...

Hi Karen,

Thanks for this good write up on fact-resistant conservatives.

I asked how it is that Congressman Frank Wolf is classified as a moderate on another thread. If attacking the New York Times is a mechanism for demonstrating conservative credentials, Congressman Wolf uses that mechanism.

'Rep. Frank Wolf of suburban Virginia led the attack on the Gray Lady. During a hearing on science education, he asked: "Is there a New York Times reporter here?" Nobody answered.

Good thing, because Wolf was wound up. "The New York Times has a front-page story today on the fact that Barack Obama's hair is turning gray, and the chairman is having a great hearing with great witnesses and they have never even covered this," Republican Wolf barked. "Do we wonder why our factories are empty and we're in a period of decay on this issue? I think the media, quite frankly, whoever is with the New York Times, you just aren't doing your job."'