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The other evening, shortly before the Federal Reserve was to meet to consider its next policy move (or lack thereof), Speaker Boehner, Senate Minority Leader McConnell, Eric Cantor, and John Kyl sent a letter to Fed Chair Ben Bernanke urging the Fed not to take any further policy action.  The letter was striking in a couple of ways.  First,  the Fed is supposed to be an independent central bank, and the notion that Congress should oversee it more carefully is an old Tea Party favorite.  More important, it reveals the true Keynesian agenda of the Republicans.

In 1971, Richard Nixon suspended the convertibility of the US dollar to gold, and is famously (although maybe erroneously) quoted as having said, "We're all Keynesians now."  Whatever Tricky Dick actually said, it's notable that this statement is one of the ones we remember him as having made.  After all, if the Republicans are the party of small government and enablers of the kleptocracy, the idea that a GOP President might have once embraced government spending to stimulate the general economy is a surprise.

I'd argue, though, that today's Republicans are still Keynesians.  They still believe (correctly, in my view) that both fiscal stimulus (government spending) and monetary stimulus (lower interest rates and such) would have beneficial effects in terms of economic growth and employment.  Not only that, but the effects of a strong stimulus package could be evident in less than a year -- in time for the 2012 election.  And that's why the Republicans are against any kind of stimulus, and prefer crushing austerity.  It isn't because they think theirs is a good economic policy.  It's because they know it isn't.  By opposing stimulus and imposing austerity, they hope to drive the economy further into the ground.  Naturally, they'll then try to blame the resulting weakness on President Obama.  

Once again, our friends on that side of the aisle are showing that only one thing matters to them -- their own chances of election.  They're willing to sacrifice millions of jobs to promote their agenda.

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Comment Preferences

  •  And a corollary of your argument: (4+ / 0-)

    If the republicans controlled the white house, they would be stimulating the economy like crazy, because their reelection hopes would depend on it. There would be a few differences with what is going on now: They'd be more successful at getting a stimulus passed because a good number of democrats would go along with them for the sake of their constituents. And, unlike Obama, they wouldn't try to pay for the new spending.

  •  I remember that remark (3+ / 0-)

    But it wasn't Nixon. It was Milton Friedman.

    One should never confuse Friedman with a vulgar Keynesian, who would think deficits don't matter, though. There's a lot more to Keynes than just deficit spending and countercyclical stimulus. Clinton may have understood Keynes better than any president of my lifetime. That's why he was running a surplus.

    As for what Republicans today believe, some of them honestly think the budget needs to be carefully balanced every year. Ron Paul seems to think gold is money in some kind of real sense, not just conventionally in some societies. Others seem to think that if they cause the economy to tank again they can defeat Obama's re-election and take over.

    Know about "starve the beast"?

    •  Countercyclicality (2+ / 0-)
      Recommended by:
      Danjuma, Justanothernyer

      Yes, Keynes thought fiscal policy should be countercyclical, so that government would also reduce spending in flush times.  

      Keynes's big contribution, of course, was his critique of Say's Law, which remains a principal tenet of Austrians, Birchers, the Koch Brothers, and others that dictate to Tea Partiers what they believe.  

      During the debt ceiling circus, I wondered out loud how many of the Republican obstructionists are true believers (we may get Gotterdammerung, but at least we stuck to our principles), how may are nihilists who really do want to destroy the Hamiltonian underpinnings of our banking system, and how many just don't have an effing clue.

  •  D-Kos is all screwed up (0+ / 0-)

    No rec links, no republish links, couldnt load a page from 11pm to 3am, WTF

    FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

    by Roger Fox on Fri Sep 23, 2011 at 12:49:56 AM PDT

  •  Well, at least (1+ / 0-)
    Recommended by:
    Liberal Protestant

    I can figure out why the 'pubs don't want to help the economy. What's the dems' excuse? That's what is worrying. Neither party cares about helping the economy, nor the average American.

    At least the 'pubs in this case are helping, even if for bad motives. The Fed cannot stimulate the economy, that was shown in QE2. It only helps market speculation. It we care about the economy, at least we can get behind the idea.

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