The Republican’s Debt and Deficit Blackmail

Tuesday, December 18th, 2012
GOP blackmail

(By The Pragmatic Pundit)

Republicans have been using debt and deficit blackmail as a bargaining strategy since the days of Ronald Reagan.Reagan’s brand of politics was successful at promoting the notion that federal government spending on social programs is mostly wasted on pointless handouts to lazy recipients. He carefully cultivated the impression that “government spending” meant “free money” for people who were nothing more than moochers.  Sound familiar?

Ronald Reagan was swept into office on the same Republican fearmongering-propaganda that grips the country today…”spending is out of control, the country is going bankrupt and government is too big.”

There is no denying Reagan inherited an economy that was in a deep recession, but his response to the debt crisis was far different than Republicans would have us believe.

Despite his “small government” rhetoric, Reagan expanded the federal government by 7%, employing a larger federal workforce (those greedy public employees) than any President in history other than Johnson who presided over the Vietnam War.

He did enact a huge tax cut, but then raised taxes eleven times; increased defense spending; ballooned the federal deficit to the largest peacetime deficit in history; raised the debt ceiling 17 times and accumulated a debt burden that equaled the previous 200 years of American history, turning the United States from a creditor nation into a debtor nation.  For the first time in the history of the nation, the United States borrowed in order to cover federal budget deficits.

David Stockman, Reagan’s economic wizard and the architect of the trickle-down budgets wrote:

“The Reagan deficits were intentional, designed to cut revenue as a way of pressuring Congress to cut programs Republicans wanted to destroy….The plan… was to have a strategic deficit that would give you an argument for cutting back the programs that weren’t desired….”

The “small government” mantra and “debt and deficit” narrative continued after Reagan left office and another Republican, Bush (41)  took the helm.

Daily News 1990:  Legislators Say There’s No Money.

During the tenure of these two Republicans, deregulation and imprudent real estate lending contributed to a Savings and Loan crisis and quite possibly the stock market crash.  Between 1980 and 1994, more than 1600 banks were closed or received financial assistance from the FDIC.  Over 1,000 banks with total assets of over $500 billion failed.  The number of savings and loans declined from 3,234 to 1,645.Taxpayers assumed the bill for a $124 billion bailout, while corporate scandals and bankruptcies made matters worse. Enron represented the biggest corporate scandal in history, while Worldcom MCI filed the largest bankruptcy in history.

That was the economy Republicans left for Bill Clinton and they were singing the same song: “spending is out of control and the country is going bankrupt.”  
CNN – 1995
Americans blame GOP for budget mess

Buffalo News 1995

Then as now, Republicans focused solely on cutting the social safety net and entitlement programs.  Remember welfare reform?  Republicans take credit for Clinton’s 1993 deficit-cutting package, but the truth is the balanced budget passed without a single GOP vote in either house of Congress.   By the time Clinton left office, there was a surplus.Bush/Cheney inherited the Clinton budget surplus and immediately began turning it into a deficit.

Despite their opposition to entitlements, Republicans passed the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 expanding the program (can’t privatize it, figure other ways for private corporations to extract money from the program).  After being debated and negotiated for several months, the bill finally came to a vote  on a November morning at 3 am while America slept.  Among other things, the bill prohibits the federal government from negotiating discounts with drug companies.  Read the curious legislative history.

Bush launched wars with Iraq and Afghanistan and introduced tax-cuts that primarily benefited the rich.  None of these expenditures were offset and they all were kept off the books, giving the illusion that the country was in a much stronger fiscal position than it was.  Republicans admit under Bush they  “spent like drunken sailors”,   but when the spending was taking place, not a single Republican rebelled.  Remember, running up debt and deficits is a strategy.  
Six weeks before President Obama was sworn in, the economy collapsed and the Republicans began their familiar chant…“spending is out of control and the country is going bankrupt.” 
Newly installed Governors cut the federal workforce; remember, Reagan ( the man Republicans credit with economic problem-solving) increased the federal workforce to one of the largest in history.  They cut employee pay and pensions, while they delivered more tax cuts to the wealthy.  They busted unions, destroying employees last firewall between workers and employers.  All of these acts redistribute the treasury from the middle class and working poor to the wealthy.

It isn’t ideology that drives the Republican insistence on spending cuts, it’s a strategy.  Think about it…the Republicans controlled the House, the Senate and the White House for four consecutive years.  They could have fixed Medicare and Social Security, but for some reason, there’s never a problem unless a Democrat is in the White House.Listen to how fervently they defend cuts to defense.  Why?  Afterall, defense workers are unionized public employees.  Because there isn’t a department that shifts more taxpayer money to the private sector than the Defense Department.  There is no other federal vehicle that allows the wealthy to extract more money from the treasury, convert more taxpayer revenue to the private sector than the Defense Department.

Throughout history, since 1783, tax cuts for the wealthy and increased defense spending and union busting have increased the gap between the revenues and the expenditures. Shareholders and those on Wall Street have enjoyed inflated returns, while the wages for workers have taken a beating.   It’s a 21st century Gilded Age.

In the final analysis, the real targets are Social Security, Medicare, Medicaid; any program that supports the less fortunate.   Republicans have a long-standing, deeply-held  antipathy for both Social Security and Medicare. Not only did Reagan advocate that Social Security should be privatized, he was at the forefront of a coalition against Medicare with the same arguments we hear today.

How did the public ever buy the idea that Republicans are good stewards of the economy?   Studies have been done comparing every phase of economic growth, during Democratic and Republican presidencies and congresses, and they all show stunningly better performance when Democrats are in power.

The trickle down miracle never worked because lower taxes don’t generate more revenue, they generate deficits.  It is a fact that is so mathematically  basic, it borders on common sense.

Weekend Reading List

Sunday, February 26th, 2012

For this weekend’s reading list we have articles on experts agreeing that we should not attack Iran, the Obama Administration’s corporate tax reform proposal, debunking myths about poverty and the safety net, and climate scientists fighting back against climate deniers.

If you have any feedback on any of these articles, or would like to recommend an article for next weekend’s reading list, please let us know in the comments section below, or at the Winning Progressive Facebook page.


Experts Say Iran Attack is Irrational, Yet Hawks Are Winning the Debate – Why is the media promoting the war hawks’ efforts to start a war with Iran, even as the chairman of the Joint Chiefs of Staff and the head of Mossad warn it would be a horrible idea.

Administration’s Corporate Tax Reform Framework a Promising Start but Falls Short on Raising Revenue - a good overview of the highlights of President Obama’s corporate tax reform proposal, along with its major downside of being revenue neutral. See also this list of Six Tests for Corporate Tax Reform.

Debunking Poverty Myths and Racial Stereotypes – a good debunking of 10 conservative myths about safety net programs and their recipients.

The Inside Story of Climate Scientists Under Siege – Climate scientist Michael Mann, the climate denying Heartland Institute, and the conservative attack on the science of climate change.



Weekend Reading List

Saturday, February 18th, 2012

For this weekend’s reading list we have articles on contraception and gender equality, how the safety net helps those in need, the lessons we can learn from the success of schools in Finland, the dangers of fracking, and what needs to occur in Afghanistan as our troops start coming home next year.

If you have comments on any of these articles, or would like to recommend an article for next weekend’s reading list, please let us know below or at the Winning Progressive Facebook page.


10 Facts About Contraception (and How It Changed the World) – a good overview of how contraception has helped increase gender equality throughout the world

Contrary to ‘Entitlement Society’ Rhetoric, Over Nine-Tenths of Entitlement Benefits Go to Elderly, Disabled, or Working Households – deconstructing the conservative myth that social safety net programs are somehow destroying the work ethic in the US

Schools We Can Envy – an overview of education success in Finland, and how it contradicts the testing and anti-teacher union agenda of education “reform” advocates here in the US

Why Not Frack? – a review of two books and a movie about the dangers of fracking and the impacts that the natural gas industry is having on local communities

Beginning of the End – a good overview of things that need to occur in Afghanistan as we prepare to begin bringing our troops home.


Weekend Reading List

Saturday, January 21st, 2012

For this weekend’s reading list we have articles on the benefits of energy efficiency, the efficiency of federal safety net programs, President Obama’s focus on long term strategy, how austerity is killing European economies, and how Occupy Wall Street has gotten economic inequality onto the political agenda.

If you have any feedback on these articles, or would like to recommend an article for next weekend’s reading list, please let us know at Winning Progressive’s Facebook page.

Energy Efficiency: Still Awesome, Still Ignored - How energy efficiency is overlooked even though it can save money, create jobs, protect the environment, and reduce energy use.

Romney’s Charge That Most Federal Low-Income Spending Goes For “Overhead” and “Bureaucrats” is False – a report detailing that, contrary to Multiple Choice Mitt Romney’s false claims, less than 10% of social safety net spending is for administrative and overhead costs, with more than 90% of such spending providing actual aid to beneficiaries

How Obama’s Long Game Will Outsmart His Critics – independent conservative Andrew Sullivan explains how President Obama’s focus on long term strategy is outsmarting his critics on all sides of the political debate

How Austerity is Killing Europe – a detailing of how the European Union’s obsession with cutting spending has caused a vicious circle of increasing economic problems leading to further austerity leading to further economic problems in every European nation where austerity has been tried

The Return of Inequality - an essay about how the Occupy Wall Street movement shifted political discourse in the US to put reducing economic inequality on the agenda

Saving Capitalism From Itself

Tuesday, November 1st, 2011


It has often been said that President Franklin Delano Roosevelt saved capitalism from itself.  What that means is that FDR took office at the lowest depths of the Great Depression, when it was clear that rampant uncontrolled capitalism had not only failed to benefit the more than one-third of Americans were ill-housed, ill-clothed, and ill-fed, but had also collapsed on itself due to the uncontrolled excesses that unregulated free markets had created.  But rather than scrapping the system, FDR went about fixing it by establishing the regulations that capitalism needs to function effectively, the policies needed to give people confidence in the system, and the programs needed to ensure that a larger and larger proportion of Americans would benefit from the system. As a result, the free market system, combined with effective New Deal governance, led to a thriving economy and the largest and most secure middle class in history.

I was recently reminded how far we have strayed from this simple approach of saving capitalism from itself when reading Thomas Friedman’s Sunday New York Times column titled Did You Hear the One About the Banker?.  In the column, Mr. Friedman discussed the fact that Citigroup recently received the equivalent of a slap on the wrist for engaging in the type of outrageous Wall Street behavior that drove our economy into the ditch in 2008.

The news was that Citigroup had to pay a $285 million fine to settle a case in which, with one hand, Citibank sold a package of toxic mortgage-backed securities to unsuspecting customers — securities that it knew were likely to go bust — and, with the other hand, shorted the same securities — that is, bet millions of dollars that they would go bust.

In discussing how we avoid a repeat of the economic disaster that has resulted from the 2008 financial meltdown, Mr. Friedman makes an interesting yet incomplete point that gets to the heart of progressivism’s relationship to capitalism.  As Mr. Friedman notes, “Capitalism and free markets are the best engines for generating growth and relieving poverty — provided they are balanced with meaningful transparency, regulation and oversight.” 

This statement is absolutely correct for as far as it goes.  History has proven time after time that free markets are the best generators of wealth and have pulled billions of people out of poverty.  At the same time, as we learned from the disaster that was the Great Depression and the stability that was brought about by the New Deal, transparency, regulation, and oversight are necessary for capitalism and free markets to be effective.  Otherwise the system devolves into a chaotic free-for-all marked by economic bubbles followed by catastrophic collapses.

But Mr. Friedman’s statement is incomplete in that it leaves out three other things that are needed for the free market to thrive and to relieve poverty:

1. Government investment in the public sphere – in order for capitalism to work, we need an active and well-funded public sector that educates our people, builds an efficient infrastructure system, and protect and promotes a healthy populace.

2. A well-funded social safety net that smooths out the rough edges of capitalism and helps ensure that everyone has a chance. Without such a safety net, far too many people will get caught in the type of abject poverty that is unjust and that undermines social cohesion and growth.

3. A strong labor movement – while capitalism is seen as an individualistic system, the reality is that business interests work in concert all the time to protect and promote their shared interests. Workers must have the ability to do the same thing by collectively bargaining over wages, benefits, and working conditions.

The simple fact is that a thriving capitalist system can be maintained only with progressive policies that set the groundrules, invest in the public sphere, provide a safety net, and support the rights of workers to organize for their interests. We learned that lesson in the 1930s when such progressive New Deal policies saved capitalism from the Great Depression. Unfortunately we forgot that lesson over the past thirty years of conservative economic policy.  Let’s hope we relearn the lesson again soon.

Weekend Reading List

Sunday, August 21st, 2011

For this weekend’s reading list, we have an essay on the political value to Democrats of fighting for the safety net, a critical review of the latest pro-charter school/anti-teachers union book, a guide to GOP Presidential candidate Rick Perry, an essay on how to revive the middle class, and a letter regarding the appeal and misguided nature of the tea party.

If you have any feedback on these articles, or would like to recommend an article for next weekend’s reading list, please let us know at Winning Progressive’s Facebook page

How Democrats Win: Defending the Social Safety Net -Rick Perlstein, author of Nixonland, which is the book that President Obama is reading on vacation, explains how time and again Democrats have won elections by strongly fighting for Social Security, Medicare, and the safety net

Steve Brill’s Report Card on School Reform -a critical review of Steve Brill’s latest pro-charter school, anti-teachers union book about education reform

ProPublica’s Handy Guide to the Best Coverage on Gov. Rick Perry and His Record – a good compilation of sources to learn more about the latest crazed GOP Presidential candidate – our own take on what a Perry Presidency would be like can be found here

Can the Middle Class Be Saved? – an in-depth look at why the middle class is struggling in America, and what we can do to revive it

As Ohio Goes: A Letter From Tea-Party Country – a writer who grew up in southwestern Ohio discusses how the tea party has gained traction there, and also how the tea party is failing to address the real problems facing people there.