.
Simon Johnson, “former chief economist of the IMF… Professor of Entrepreneurship at the M.I.T. Sloan School of Management”, in the NYTimes Economix blog, on “A Very Expensive Tea Party“:
The recent government shutdown and confrontation over the federal debt ceiling gained the Republicans nothing, at best – and may have cost them politically as a party. But it slowed the economy and undermined confidence in public finances in a way that will have a significant negative impact on future budgets of the United States. None of this should make for an appealing strategy, but Tea Party Republicans are giving every indication that they want to do the same thing again early next year. Their more moderate colleagues need to take a firmer hand…
The shutdown and debt ceiling brinkmanship did real damage to the economy. The immediate and direct costs are nicely summarized in a blog post by James H. Stock – an academic economist on the president’s Council of Economic Advisers. His assessment is that the effect is a
0.25 percentage point reduction in the annualized G.D.P. growth rate in the fourth quarter and a reduction of about 120,000 private sector jobs in the first two weeks of October (estimates use indicators available through Oct. 12th).
This is actually lower than the impact expected by some private-sector forecasters; after talking with people I trust, I would not be surprised if the overall impact ends up being closer to a 0.5 percentage point reduction in the fourth-quarter growth rate (annualized, as in the quotation from Mr. Stock.)…
Members of the Tea Party movement express concern about the longer-run federal budget – and the potential negative impact of future debt levels. But their tactics are directly worsening the budget over exactly the time horizon that they say they care about…
Of course, that’s working from the idea that the Tea Party actually cares about economics. Unfortunately, I think Harold Meyerson is closer to the truth:
The Republican Party has reached its Ninotchka period. Ninotchka, you may recall, was the eponymous Soviet commissar played by Greta Garbo in Ernst Lubitsch’s 1939 MGM comedy, released one year after Stalin’s show trials resulted in the execution of all of the tyrant’s more moderate predecessors in the Soviet leadership. “The last mass trials were a great success,” Ninotchka notes. “There are going to be fewer but better Russians.”
Like the Stalinists and the Jacobins, today’s tea party zealots have purified their movement — not by executing but by driving away those Republicans who don’t share their enthusiasm for wrecking their country if they can’t compel the majority to embrace their notions. Today, there are fewer but “better” Republicans — if “better” means adhering to the tea party view that a United States not adhering to tea party values deserves to be brought to a clangorous halt. NBC News-Wall Street Journal polling last week turned up a bare 24 percent of Americans who have a favorable impression of the Republican Party — a share almost as low as the 21 percent who have a favorable impression of the tea party…
Today’s tea party-ized Republicans speak less for Wall Street or Main Street than they do for the seething resentments of white Southern backwaters and their geographically widespread but ideologically uniform ilk. Their theory of government, to the extent that they have one, derives from John C. Calhoun’s doctrine of nullification — that states in general and white minorities in particular should have the right to overturn federal law and impede majority rule…
The remarkable resurgence of these ancient and despicable doctrines is rooted in the politics of demographic and cultural despair…
Baud
Vote for Democrats like your job depends on it.
Grung_e_Gene
@Baud: @Baud: Like your life depends on it@Baud: @Baud:
xenos
@Baud: It can depend on it. Business won’t hire during times of insecurity, right?
dmsilev
Somehow I can’t quite see the GOP ending up mellowing out the way Ninotchka did towards the end of the film.
gene108
Until it starts costing Republicans their seats in Congress, governorships and state legislature seats the strategy is sound. If the economic took off, President Obama’s popularity would soar through the roof.
The only thing that is keeping the GOP in striking distance of taking back the White House and Senate is voters getting so frustrated that they decide their votes do not matter and stay home, while the rabid conservative base keeps turning up at election time.
We will not know until the 2014 elections, if they have overreached this time, but the strategy of obstruction and economic sabotage worked in 2010 and they held onto the House in 2012.
Baud
@xenos:
Our economy would be booming right now if the Democrats had won the 2010 elections.
Davis X. Machina
@gene108: “Throw the bums out” elections are a problem when ‘the bums’ are are also the sane people….
Ben Cisco
@gene108:
The latter two are critical – as we see with the ACA rollout, it won’t matter much what happens in DC if the local loons insure that THEIR state remains steeped in the crazy.
Patricia Kayden
“Today’s tea party-ized Republicans speak less for Wall Street or Main Street than they do for the seething resentments of white Southern backwaters and their geographically widespread but ideologically uniform ilk.”
And Rep Grayson was right to compare T’Baggers to the KKK. What puzzles me is why the “moderate” Republicans are allowing the T’Baggers to drag the whole party down. Who benefits if the Democrats take over the House in 2014? If there is another GOP shutdown in February 2014, Repubs can kiss the House goodbye.
billgerat
“You don’t know what you’ve got ’till its gone…” Until they lose big time in an election, they will not change a whit.
Nutella
@gene108:
And there you have the explanation for the shutdown.
Damage to the government and/or the economy is what the TPers wanted.
gene108
@Nutella:
There you have the explanation of how Congressional Republicans dealt with the Obama and Clinton; they realized allowing the Presidents to succeed on their agenda would undermine Republican credibility.
Clinton or Obama would prove “government is the solution” and the whole post-Reagan Republican ideology would fall apart.
EconWatcher
Did anyone else catch the subtle Godwin violation in Simon Johnson’s excerpt? “The remarkable resurgence of these ancient and despicable doctrines is rooted in the politics of demographic and cultural despair.”
“The Politics of Cultural Despair” is a famous (in academic circles) book about the cultural origins of Nazism.
geg6
@EconWatcher:
Wow, didn’t catch that but you’re right. Hadn’t thought of that book until you mentioned it, but good catch!
Pincher
In the long run I don’t worry about the Tea Party. On the day after Barack Obama leaves office, all those white tea party rednecks will wake up, as if from a dream, and wonder what they were so angry about.
Suffern ACE
@Patricia Kayden: I’m not certain that the T party is dragging down any party moderates. The reason the tea party is around is that they are republicans. I do not see this ideological difference between moderate republicans and extreme republicans that others see. T party policies are what republicans have run on for decades.
mikej
@Pincher: Depends on who takes office. They aren’t going to be any happier with any Democrat.
agrippa
@gene108:
What matters to elected politicians and those political professionals/activists supporting them, are elections.
If they win the election, all is well. If they lose the election, they are out of a job.
If they are out of office and out of a job, they have an opportunity to learn a lesson.
Botsplainer
@mikej:
They aren’t happier with any Democrat, however, if you wind up with a D ticket that looks something like Tester-Beshear, then team R gets crushed like Goldwater or Mondale. And yes, it would be based solely on race.
agrippa
Moderate Republicans have three choices in how they vote:
stay loyal and vote GOP
stay home and do not vote.
vote Democratic.
The Democratic Party lived with the Dixiecrats for a long time. It was not until LBJ and Civil Rights that the Dixiecrats became GOP. The Dixiecrats comprise much of the ‘Tea Party’.
Ash Can
@Nutella:
@gene108:
Yep. Which is why they’re going to do it again, first chance they get. Simon Johnson of course is right when he says that the less insane elements have to step up and throw a net over their Teahadi counterparts. That, however, would take an act of courage that the less insane elements have already amply shown they’re incapable of. So, forget that.
RSR
@atrios says this regularly:
Ash Can
@Pincher: A lot of the anger will go away, to be sure, but if there’s another Dem in the White House the compulsion to uphold the “government is the problem” mantra will still be there, and the Teahadis — along with the rest of the GOP — will still see it as their mission to wreck anything and everything the Dems try to do. That part won’t stop with Obama’s departure. In fact, it won’t stop until even the Republicans realize that Ronald Reagan was a fraud. And that of course won’t be happening anytime soon.
Randy P
@Patricia Kayden:
I think up till now it’s been a deal with the devil. That’s the base, so say stuff that will satisfy the rubes and rake in the money and vote. It’s pretty clear that Republican politicians think none of their voters pay attention to what they actually do after election day, they can just control the rubes by the right ads at election time.
They didn’t count on some of the crazies actually getting into Congress I think. And those true believers are the focus for the votes and money, so they have the power.
Skippy-san
The beatings will continue until morale improves.
MattF
If you want to read about the crazy in Texas, from the WaPo:
http://www.washingtonpost.com/politics/ted-cruz-returns-to-texas-as-a-hero-who-is-reshaping-the-state-republican-party/2013/10/23/449c5a76-3b6a-11e3-a94f-b58017bfee6c_story.html?tid=auto_complete
Briefly, Cruz is the conquering hero, other politicians in Texas attempt to follow suit. I’ll note, fwiw, that this article was on the dead-tree front page, but nowhere to be seen in the website. I had to search on the reporter’s name to find it. Weird.
A Humble Lurker
@Randy P:
This is true. Also, everyone else is drifting away from the party. All they have left are the crazies, so they’re clinging to them.
I’d like to say, and this is something that I haven’t seen brought up as much, I think a part of their ‘let’s burn the whole thing down’ M.O. is because of Bush II. He was bad. Really, really bad. So in order for the public to not be able to look back and notice how bad he was even when measured amongst your average slimy incompetent politician, the next democrat (Obama) absolutely HAD to be as bad, hence the constant sabotage.
greennotGreen
I guess I just don’t get the cultural despair. Why are Tea Partiers and their enablers so threatened by change and by people who aren’t just like them? I love working and living in an environment of diversity. But now that I’m typing this, I remember that fearful children are the ones who grow up to be conservatives anyway. So it comes down to, how do we raise more confident and secure children?
C.V. Danes
The point we have to fear the most is the point when the Tea Party has no fear, which we are close to experiencing with a sizable chunk of them in safely gerrymandered seats.
Biscuits
@greennotGreen:
I too appreciate living/working in a diverse environment. When I was young, our high school was entirely white (connecticut), now living in a seattle suburb, my kids have friends and classmates who have Asian, African American, and Hispanic heritage. It’s not even an issue to the kids. Color is not what they see first, if at all. The kids support their gay and lesbian friends. It’s really quite touching and gives me hope.
Conversely, I have cousins in southern Ohio, who bewilder me with their racism and spite. I grew up with these people (visits). I don’t know how I got so lucky as to avoid such nastiness of the heart and mind. It’s exhausting trying to reason with them.
Barry
@Patricia Kayden: “What puzzles me is why the “moderate” Republicans are allowing the T’Baggers to drag the whole party down. ”
The ‘moderate’ Republicans have always found the extremists useful, and that’s even when the ‘moderate’ Republicans aren’t extremists themselves.
Citizen_X
I like Meyerson’s comment, except that the TPers aren’t from “backwaters.” They’re educated, they’re small businessmen, they’re middle management, they’re suburban. They’re the petit bourgeoisie. That’s what every survey of them says. Example here.
For Pete’s sake, know your enemy!
Xecky Gilchrist
@Botsplainer: They aren’t going to be any happier with any Democrat.
And if you like what they did to Obama, you’ll love what they’re going to do to President Hillary Clinton.
gene108
@Ash Can:
They don’t have to that much. They just have to acknowledge that Ronald Reagan was not setting down universal laws of governance that future generations must always follow for thousands and thousands of years, without question like he founded a religion.
They just need to admit Ronald Reagan was a politician, who set about tackling the problems of the 1970 ‘s – stagflation, rising crime rates, etc. – dealt with the problems of the 1980’s, as they arose, such as a rapid succession of change in the leadership of the USSR and what that meant for the Cold War.
That’s it.
I mean, in the 1980’s, no Republican was running around quoting Eisenhower like he was a prophet sent by God to establish the unalterable beliefs of what it meant to be a Republican.
In the 1960’s, Democratic politicians weren’t digging in and saying, “because FDR didn’t do nothing much about lynchings, we aren’t going to do much for Civil Rights because FDR set about unalterable rules of governance.”
J
What I don’t get is the ‘cultural despair’. I understand that tea party types see things that way, but why? There is a familiar kind of explanation for the growth of right wing extremism: a world in turmoil, desperate hard times, mass unemployment. But thought things are hardly going well, it would be absurd to compare the present to the interwar years. In any case, tea party supporters do not come from the ranks of those affected by today’s hard times. I jut don’t get the protracted cultivation of baseless resentment by the comparatively privileged.
ruemara
@Pincher: You’re charmingly hopeful. They most certainly aren’t going to wake up, much less wake up not angry.
johnny aquitard
@Patricia Kayden: The so-called moderate republicans are playing Good Cop to the teabaggers’ Bad Cop.
Losing the house is a risk in their strategy of economic sabotage to damage Obama but, as Meyerson noted, they are increasingly desperate. They will lose, eventually, if they don’t pursue that strategy.
It says something about the virulence of their base’s bigotry that the obvious solution of changing their policies is not an option. The gop base becoming more inclusive and accepting of other people is like pigs with wings or camels through eyes of needles. The base will give up their bigotry only after they give up the ghost.
Chris
@Patricia Kayden:
Because most of the so-called “moderates” are still more worried about liberals picking their bank accounts than they are about whatever the teabaggers can do to the country. A few of them are waking up, but their natural inclination is still to support the teabaggers and hope that they can be restrained from going too far when they pull a stunt like the government shutdown.
They want to believe, in essence.
Chris
@J:
Let’s also not forget that this kind of craziness was in full bloom in the 1990s as well, despite the best economy we’d had in decades. Whatever’s guiding them, economics ain’t it.
Matt McIrvin
@J: The United States is getting dramatically less white than it used to be, especially if you look at the younger generations. This freaks old white people out to a degree that is hard to understand if you’re young.
They don’t want to think of themselves as racist, because they’ve been taught racism is a character defect of bad people, but this mainly creates an extra layer of defensiveness about their feelings. They may well be fine with non-white people, even in leadership roles, if their numbers are relatively small, they don’t upset the applecart too much, and they’re careful to flatter whites about how non-racist they are. But this? Young mixed-race couples holding hands in the street everywhere; people with babies of a different color; a black President who is a Democrat and on occasion even says uncomfortable things about racism? To a lot of white people who grew up in the pre-civil-rights era, or even of my generation really, it’s the whole world they know going away.
johnny aquitard
@J:
One, they’ve had decades of the right wing noisemachine telling them how awful conditions are. They really believe crime is soaring, inflation is running amok ( and if’s not it surely will be), an ecomonic meltdown is underway. So Fox News and the WSJ and the Limbaugh media keep telling them this is so. And helping to make that bubble a reality, we have republicans busy trying to fulfill their prophecies of collapse, governmental dysfunction, and economic ruination.
So no conditions aren’t interwar bad. But these people believe they are. And no these people aren’t very good at discerning reailty, or rather they are very easily duped.
Two, they got their bigotry to take up the slack when conditions aren’t Hooverville bad. They’re unified in their bigotry for the Other, and the Other has been gaining socially and economically on them. They feel they have lost something of great value, this loss of white privilige, that it was stolen from them. And that percieved impoverishment for them is Hooverville bad.
Their belief that living in a modern democratic society is a violation — the fulfilling of the promise of equality — might explain why they are constantly talking about having something rammed down their throats, or being bent over and pounded, or some other metaphor of being violated.
A fully enfranchised populace fairly represented is unsurprisingly like a dry assfuck to these people. Modern democracy is just a huge black cock rammed down their throats.
Lurking Canadian
Think about that for a second. That means 6% of the population think the tea party isn’t crazy enough!
Raenelle
I didn’t read this. I got stopped short at “former chief economist of the IMF.” If you’ve read The Shock Doctrine, any association with the IMF is just bone-chilling. I am uninterested in anything any of those fucks have to say. Morally, this guy’s somewhere behind Jeffrey Dahmer, who at least seemed to show some guilt for what he’d done. Seriously, WTF!? Why would anyone on a progressive blog pay any attention to someone with his past?
mclaren
@Baud:
Sorry, but that’s a fantasy. Not gonna happen.
In the aftermath of the biggest economic crash in 80 years, coming off one of the largest economic bubbles in recorded history, you’re going to get 20 to 30 years of subpar GDP growth. That’s just the way it is.
There’s no mystery about this. We’re going to get a generation of far below normal economic growth because businesses got shafted with trillions of dollars in bad loans, so businesses are loathe to invest. Individuals got burned with trillions of dollars of subprime mortgage scams, sold overpriced houses they couldn’t afford and then when the economy tanked, they lost their life savings along with their houses, and now they’re broke and bankrupt and looking at a lifetime of paying off bad debts, so individuals aren’t spending or investing. And the state and federal government are looking at red ink and deficits as far as the eye can see, so they’re not investing either.
In the aftermath of gigantic orgies of economic fraud, people stop investing because they rationally realize that anything they invest in is likely to be fraudulent. Without investment, without loans, with capital, the entire economy grinds to a halt. That’s why banks aren’t lending — they’re hoarding capital to pay off all those liar loans they foolishly made. That’s why consumers aren’t spending — they’re hoarding every dollar that comes in to pay down their sky-high debt. That’s why state and federal government isn’t lending or investing or spending — they’re drowning in red ink because aggregate demand has collapsed and tax revenues are far far far far far below what they were pre-2009.
It takes generations to deleverage all this debt, to clean out the Augean financial stables of fraud. The economy will never boom again in our lifetimes. We’re looking at a growth rate of 1.8% (annualized) for 2013. That’s down from the previous estimate of 2.4%. Take a look at a chart of the annualized U.S. GDP estimates since 2009 and they keep falling. Why?
Because in the aftermath of a gigantic orgy of fraud no one wants to invest, money doesn’t circulate, every dime goes into paying down debts, so the economy doesn’t grow.
Economists who expected a V-shaped recover after 2009 were deluded and ignorant. You get V-shaped recoveries after the Fed steps on the brake and jacks interest rates up to tamp down aggregate demand — then when the Fed lowers interest rates, aggregate demand skyrockets again.
We’re now at the zero lower bound of interest rates. The Fed can’t reduce interest rates any more, they’re effectively at zero. And people still aren’t buying and banks still aren’t lending, because no matter how cheap loans are, consumers are pouring all their cash into paying off their debts and businesses are hoarding every dollar to pay off all those bad loans.
This is a balance-sheet recession. It’s fundamentally different from a normal recession. Wicksell and Keynes explained all this back in 1936. Have you people been living in a bathyscaphe?
drkrick
@agrippa:
The Dixiecrats and the Birchers.
drkrick
The “cultural despair” is no mystery. Any American born before 1970 was raised to expect to live out their lives in a country controlled by white Christian (preferably Protestant) straight males, whether they liked it or not. Others were to be allowed something like a decent life to the extent they were useful and cooperative to the dominant group. The 27%’ers are people who were comfortable with that model and understand it’s going the way of buggy whips – not quickly enough mind you, but it’s going.
The fact of economic hard times, at least by late 20th century US standards, has raised the level of agitation a bit, but even in good times the cultural panic was going to happen.
mclaren
@greennotGreen:
They’re looking at the middle class disappearing and the future they see (correctly) looks like Brazil — giant cities with a few skyscrapers housing the super-rich, surrounded by vast masses of tin-shack favelas with no electricity and no running water and raw sewage running in rivers through the dirt streets.
The Teahadits have correctly foreseen the future…they’ve just misattributed the causes of the collapse. The Teahdists think the middle class is being destroyed by gay marriage and non-white immigrants and the growth of government. Whereas the middle class in America is being destroyed by vast impersonal forces that neither political party is addressing at all: robotics, databases + data mining, the internet, the democratization of knowledge worldwide, automation of everything up to and including formerly white-collar jobs.
Source: “Europe: The Big Squeeze,” Newsweek International Edition, 30 May 2010.
America is now starting to outsource or automate all its high-skill high-wage work, from chip design to reading hospital x-rays to programming to robotics to basic research in genetics and computer science and materials science. If you thought the late 2007-early-2008 collapse was bad, you ain’t seen nothin’ yet. Wait till this next round of outsourcing kicks in and your high-skill high-wage job disappears…along with millions like it. You’ll see America’s tax base go off a cliff.
And what will be the result?
The Teahadists have correctly foreseen it: the destruction of the middle class and the end of the American way of life as we know it:
Source: “Can the Middle Class Be Saved?” The Atlantic Magazine, September 2011.
Right now
76% of Americans live paycheck to paycheck
27% of American have no savings at all
46% of Americans have less than $800 in savings
America has mutated into a part-time working society and the country’s second largest employer – a temp agency.
The college trap and the student loan bubble suck vast amounts of middle-class wealth into a rathole, while failing to create jobs
And of course, foodstamps, and the nearly 50 million poverty-level Americans who need them to survive
The Teahadists’ worries are real. The American way of life is being destroyed — America is turning into a combination of East Germany (a stasi state where everyone is either working for the secret police or a suspected subversive) and Brazil, where a tiny sliver of the super-rich lord it over a vast ocean of impoverished people squatting in shanties with dirt floors and no running water. The U.S. way of life just isn’t being destroyed by the culprits they think: a black president, big government, black helicopters from the U.N., and so on. The U.S. way of life is being destroyed by technology and automation and the internet and giant predatory corporations that ruthlessly offshore or automate every last job left in America.
To put it bluntly, America has become a lifeboat full of 311 million people, and the only way to stay in the lifeboat is to throw someone else out. The only trouble is that everyone else is trying to throw you out.
In America in 2013, the only way to make real money is to destroy jobs on a massive scale. Otherwise, you’re gonna make minimum wage at some part-time temp job…until your job is eliminate by automation or offshoring.
Source: “The Grim Math of the Working Class Housing Crisis,” The Atlantic Magazine, October 2013.
The Tea Party has correctly foreseen a crisis in America. They’re completely wrong about the diagnosis of the problem, though (it has nothing to do with large government deficits or big government) and they’re totally off-base about the solution (get rid of the blackity-black-black-black president, reduce deficits, slash medicare and social security spending, invade more foreign countries and start more endless unwinnable wars with a more bloated U.S. military).
But dismissing the Tea Party’s concerns is foolish. They’ve identified a real problem. The American way of life is disapearing, and without a middle class, we can’t have a democracy. At best, we’ll wind up like Mexico, with 35 super-rich families running the country. At worst, we’ll wind up like Brazil or Russia, with a handful of oligarchs running a sadistic police state and police who shoot homeless kids in the streets for sport.
Fred
The verdict is not in on the future credit rating for Uncle Sam. How much more interest will the US have to pay in the near and distant future? Add that to $24 billion.
The Democratic negotiating position should start with the wealthy picking up that tab. Give the 1% something to think about when the Rightwing pols come calling for $upport.
Yeah, a guy can dream, huh?
JoyfulA
@Raenelle: He was with the IMF in a later era and has written two anti-Wall Street books.