Every poker player knows the rules of the game. Your hand gets called you either raise or fold. If you raise you’re either a very good bluffer or you’ve got one helluva hand. There’s no in between.
So far over the last fifteen months, Republicans – and more importantly the far Right – have been playing their usual game of revisionist history when it comes to the deficit and the poor economy. They have had a field day ripping this president and this Democratic majority congress by saying that if they had been in control none of this would’ve happened. Yes they would’ve lowered taxes (again), reduced the deficit, grown the economy and reduced the size of government intrusion into our daily lives.
To paraphrase Clarence in It’s a Wonderful Life, “OK, you got your wish. You’re in charge. Obama didn’t win a landslide victory. McCain is the President and the GOP holds a majority in both houses of Congress. Now go on and fix the mess.”
Hear that Republicans? Your hand just got called. What’ll ya do? Raise or fold? It’s your call. Raise? You must be bluffin’. What’s that I see? A smile? Must be holding a straight or a flush or perhaps a full house. And here all I got is a pair of deuces, or so it seems. Maybe I got a four of a kind; maybe he’s got nothin’. But you know what, I’m going to fold anyhow. Take it, take the damn pot. It’s yours. If it doesn’t work out, I can always blame Clarence.
Now let’s see, let’s start with those pesky taxes. What’s that you say? Lower them even further than they were under Bush? But how are we going to pay for it? What’s that? Something about a Laffer curve? The more you reduce taxes on the wealthy the more they invest and the more revenue the government takes in. I don’t know, that sounds risky, but after all you’re in charge so we’ll go with your plan.
OK now, on to reducing the deficit. Now things can get a little dicey here so if you don’t mind a little advice… Well there’s no need to yell! Yes, I know what Clarence said so I’ll just shut the **** up and let you have at it. What’s that I see coming out of your ears? Smoke? You seem to be grumbling under your breath. Can you speak up a bit? Now there’s no need to get surly. I was only trying to help. Yes I am aware that almost 80% of the federal budget consists of non-discretionary and military spending. Yes, I’m aware that even if you cut all discretionary spending you still have a deficit. Perhaps you can trim the Defense budget a bit? Now sir, violence is not an option! All I suggested was…yes I’ll shut the **** up. Pardon me for thinking you could be reasonable. OK, you’ll table this for later and get back to it. Fair enough. After all, it isn’t going anywhere is it?
Next up growing the economy. Titillate me with how you are going to grow the economy and produce jobs. Step one: no bank bailouts or stimulus at all. Let the bad banks fail and let the market adjust and rebound just like it has always done. Step two: create the proper environment in which business small, medium and large can grow and hire the workers necessary to get the economy moving. Step three: remove all those annoying regulations so that businesses won’t be hampered by government agencies and bureaucracy; hence they become more profitable, hence they hire more workers, hence prices are lowered, hence everybody wins. It all makes perfect sense and Clarence likes it so here goes. OK, it’s done. No TARP, no stimulus, all regulations removed. Now before we complete our journey, sure you don’t want one more stab at that deficit thing? OK, I see, if we do the other things the deficit will take care of itself because revenues will naturally increase. Silly me, I’m sorry I doubted you.
OK, here goes. Ready Clarence? Now, let’s see what happened.
Uh-oh. Something’s wrong with this picture.
Unemployment is over twenty-five percent; half the banks in the country folded, the world is in a deep depression and the deficit is over two trillion and climbing. On the bright side the wealthy DO have more money in their pockets, and consumer prices are cheaper, so I guess it wasn’t a complete loss.
So what happened Einstein? Well for one thing, that TARP bailout, as controversial as it was, helped stabilize a precarious industry that was on the verge of a total collapse that would’ve devastated the world. Without it, like dominos, one after another, each of the huge banks began to fail. AIG, JP Morgan, Citigroup. They all fell and there wasn’t enough money in the treasury to stop the hemorrhaging once the collapse started. The Euro followed shortly and, after that, China, then everyone else.
With no stimulus in place, all that money that helped states that were in dire straits was not available. Hence those states were forced to layoff millions of workers who were now no longer able to pay their taxes. But it wouldn’t have made much difference. With the banks failing there was no one to loan them or their businesses money to keep them employed anyhow. That’s what I call a two-fer. Well done!
And now for that most detestable of words: regulations. Thanks to your persistence, all of them have been removed. Yes, no more senseless regulation of industries that operate airlines, or poison our food, or pollute our drinking water, or drill in our oceans for oil. They’re all gone. And a good thing too. Now they are better able to grow their companies free from the burden of government interventionism. The by-product? Airplanes are crashing more often, food poisoning is up tenfold, our drinking water is hopelessly contaminated, and, well, you know what happened in the Gulf of Mexico? Well now it happens on a fairly regular basis in the Atlantic and Pacific. But what’s a few hundred thousand square miles of beaches anyway? They can always go hiking in the woods. What’s that? Deforestation has pretty much done away with that? Oh, well.
As for that deficit bugaboo, guess all that money in the hands of the wealthy didn’t do much to increase revenues. Well after all, with all those banks failing and the states laying off all those workers you could hardly expect the deficit to be reduced now could you.
You see what happens when you meddle in things that you don’t know much about and play Monday-morning quarterback? Each thing that happens has a profound impact on other things. They’re all interrelated somehow and changing one or two things around is akin to pulling out one card in a house of cards and hoping the whole house doesn’t cave in on itself.
The bailout mitigated the banking crisis, the stimulus helped reduce the burden on the states, regulations help keep us safe, and raising taxes on the wealthy actually means that overall revenues increase, laffer curve notwithstanding. As for reducing the deficit, your unwillingness to at least consider cutting military spending meant you were left with little else left to cut, which meant you cut nothing.
Guess you didn’t have a full house after all. Not even a pair of deuces. You see, it’s a lot easier to pick at a scab than to try and heal a wound. Everyone’s an expert so long as they don’t have to do anything. It’s easy to say let the banks fail, so long as you don’t actually have to let that happen on your watch; it’s easy to say tough shit to the states when the other party is the one holding the gavel; it’s easy to cut spending so long as it doesn’t affect any of your pet projects or your constituents wallets; and it’s always easy to say you’re going to lower taxes, especially when you don’t have to say where you’re going to get the money from.
Face it, this was going to be a cluster**** no matter who was in charge and you know it. There was never going to be any easy, quick fix that was going to magically transport us out of this mess. It took a long time to dig the hole we’re in. Republicans own as much of this mess as they say Democrats own. The Bush Administration set the stage for the meltdown, but Clinton helped start it by repealing Glass-Steagall. At heart what we are faced with is a classic case of falling for the ultimate fairytale: that all markets are rational and that if the government just leaves well enough alone and stays out of the way, all will be well. It didn’t work in1932 and it wouldn’t have worked any better had Republicans gotten their way in 2009.
Like it or not, it is going to take a while before a full recovery is possible. While government cannot provide all the answers, it is foolhardy to believe it has no role to play in providing some of them. There will be a time for fiscal prudence and austerity. Just not now. Clinton got that much and in his second term he used that recipe to balance the budget.
So, for now, let’s leave the cards right where they are on the table. No body raises or folds. Let’s go out and grab a bite and chew the fat a bit. As the song goes, “There will be time enough for countin’ when the dealing’s done.”
Don’t worry about the tab; Clarence will pick it up.