Tuesday, November 13, 2012

A Tale of Two Reagans

Michael Tomasky's latest piece at the Daily Beast argues that Mitt Romney's loss is a Big Deal, in a way most people fail to realize. In essence, Tomasky believes it represents the death of Reaganomics:
But economics played a strong and even pivotal role in this election too, and Reaganomics came out a huge loser, while the Democrats have started to wrap their arms around a simple, winning alternative: the idea that government must invest in the middle class and not the rich. It’s middle-out economics instead of trickle-down, and it won last week and will keep on winning... 
Supply side was rejected. And in its place, voters went for an economic vision that says: don’t invest in the wealthy in the hope that they’ll decide to spread the wealth around; invest in the middle class, because it’s demand from a prosperous middle class that ultimately creates more jobs, and because doing that makes for a healthier society all the way around.
It's a fantastical re-imagining of the election, to say the least, supposing that the votes pivoted on this narrow comparison of economic policy. In Tomasky's world, voters in places like Ohio and Wisconsin supported the President not because of his pro-union stance, not because of government largess in these States, not because of the GOP's war on women, and not because of the Obama campaign's attacks on Bain Capital. No, Obama won because voters believe in his economic vision. Which of course begs the question: why is the House still under GOP control?

Obama's victory is easy to explain and it has little to do with competing economic visions. It has everything to do with a still-popular President, his deeply flawed opponent, and a successful localized campaign in swing States by team Obama.

That said, what of Tomasky's caricature of Reaganomics? Could his assessment still be right? The problem for Tomasky is that he doesn't actually know how to identify economic consequences of specific policies. His economic analysis is like that of a first year undergraduate...who is majoring in art history. Policy consistent with Reaganomics--according to Tomasky--existed only under Reagan and George W. Bush, following the creation of the Laffer Curve in 1974:
Up sprang the nonprofits devoted to getting the little people to buy in to the idea that taxes on the wealthy should be lowered, and soon enough supply-side economics was born. Along came Ronald Reagan to assure everyone that the rising tide would lift all boats. It’s never happened quite the way conservatives said it would. Even during the general prosperity of the second Reagan term, income inequality began to expand dramatically, wage stagnation became a permanent feature of American life, and the immiseration of the poor worsened. So supply side’s first shot at governance was at best half a success.  
Then came the second go-round under George W. Bush, and this of course was an unmitigated disaster. You know the details on that.
There's no depth to Tomasky, no recognition that Bush the second was no Reagan Conservative, no acknowledgement that the capital freed by Reagan's policies is what led to the economic growth under Clinton. And certainly no clue that the economic policies of Clinton were far closer to those of Reagan than to those of Carter. Or Obama. Worse still, Tomasky seems tragically unaware that the biggest jump in income inequality occurred during the Clinton years and that Obama's policies have not led to wage stagnation, but to actual wage reduction.

In his zeal to proclaim the death of Reaganomics, Tomasky reveals his own economic ignorance. And oddly enough, Ralph Benko at Forbes offered a piece just yesterday arguing exactly the opposite of Tomasky. A frontliner from the actual administration of Reagan, Benko notes what is consistently obvious to Reagan Conservatives:
Liberals do not grasp the distinction between Ronald Reagan and (either) George Bush. This blind spot creates a massive confusion and hazard to their ambitions. Obama defeated neither the Reagan Narrative nor Team Reagan. Team Bush appropriated, and then marginalized, both. Obama beat Team Bush, not Team Reagan. The implications are huge.
Bush the second was--domestically--a horrible conservative. He was more than happy to increase entitlement spending, to put his name to all manner of new domestic policies. Sure, he wanted to cut taxes, but such a stance does not, in and of itself, a Reagan Conservative make. And Republicans in Congress--many of whom pretended to be Reagan Conservatives during the Clinton years--happily joined with Bush on the latter's domestic spending sprees.

Benko goes on to detail a cadre of new Reagan Conservatives in various positions of power, all of whom understand the real economic basis for Reagan's oft-quoted "rising tide." He singles out people like Mike Pence, Paul Ryan (whose Romney adventure has actually cost him little; he's actually gained political capital),  Sam Brownback, Rand Paul, Ted Cruz, and Marco Rubio. It's worth quoting from Rubio's July speech--also referenced by Benko--to demonstrate how the spectre of Reaganomics still informs their views (my boldface):
So, here's the bottom line: These tax increases [Obama's proposal to raise taxes on "the wealthy"] they're talking about. These so-called revenue enhancers, they don't solve the problem. So what do we do then? Because clearly we have to do two things.
One, we have to hold the line on spending, if you keep digging yourself in the hole, the hole is going to bury you. But the other thing is, how do you start generating revenue for government so we can start paying down this debt? And that’s what the debate should be about. 
We already know these taxes they're talking about don't work. So, here's what works. Here is what I would suggest works in a balanced approach, using the president's terminology. Let's stop talking about new taxes and start talking about creating new taxpayers, which basically means jobs. Now, here in Washington, this debt is the number one issue on everyone's mind, and rightfully so. It is a major issue. But everywhere else in the real world, the number one issue on people's minds are jobs. And I'll tell you every other problem facing America -- a mortgage crisis, home foreclosure crisis, this debt problem -- all of these issues get easier to deal with if people are gainfully employed across America... 
We don't need new taxes. We need new taxpayers, people that are gainfully employed, making money and paying into the tax system. And then we need a government that has the discipline to take that additional revenue and use it to pay down the debt and never grow it again. And that's what we should be focused on, and that's what we're not focused on.
Stop creating new revenue drains via entitlement growth (spending money we don't have year after year) and do those things that will lead to a growing economy, because real economic growth is the best thing for all. Elegant in its simplicity, the basis of Reaganomics, yet never wholly realized under Reagan. But it's the ideal, of course. The point is to approach it whenever possible. And again, neither of the Bushes even attempted the approach. But Clinton--and a Republican controlled Congress--actually did, to some extent. Obama? He's in another world. Like Tomasky.

The realities of Romney's own past and the political calculations made based on that past insured that Romney could never fully escape the Bush years, no matter how he truly felt or how he would actually govern. This is not earth-shattering news; it was recognized from the early days of the Republican primaries. It's not that Romney was some sort of phony, it's just that he came with his own unique baggage that--again--made him a flawed candidate in a race with Obama. The Republicans he bested in the primaries would not have fared any better, though. In fact, I believe they would have all done worse than Romney. Significantly worse.

Romney's loss, while unfortunate for the nation, clears the way for a return to Reagan Conservatism. Finally.

Cheers, all.

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