Back in the last heyday of liberal dominance during the heady days of the New Frontier, our previous charismatic progressive president, John F. Kennedy, had his burdens lightened by the presence of two perfect political foils. Senate Minority Leader Everett Dirksen (R-Ill.) and House Minority Leader Charles Halleck (R-Ind.), living personifications of the mossback Republicanism of the time, would appear regularly before television cameras and rail to the press about the doom poised to descend upon the country as a result of JFK’s misguided policies.
Mostly, “The Ev and Charlie Show,” as it became known, obsessed on the evils of tax-and-spend liberalism, which was about to sink the nation in a sea of red ink and cripple individual initiative. Ev and Charlie were always good for a laugh—Dirksen’s deep, stentorian tones weekly predicted impending disaster in a Bullwinkle-like voice that echoes down the years—but their prognosis was invariably wrong; the 1960s still reverberate as the last economic golden age for ordinary Americans, with employment high, wages good, and inflation a distant threat.
Today, Barack Obama is blessed with his own version of Ev and Charlie. Rep. John Boehner (R-Ohio) and Sen. Mitch McConnell (R-Ky.), the public faces of the Republican minority in Congress, are duly carrying out their assigned roles of opposition and roadblock, but with a grim mean-spiritedness that generates nostalgia for the civility and comic relief of Dirksen and Halleck. The Boehner-McConnell crusade against resurgent progressivism is focused for the moment on the new administration’s economic-stimulus package, which contains too few tax cuts and too much public spending to satisfy the GOP.
Put aside the fact that for the better part of the Bush presidency, fiscally obtuse Republicans in charge of Congress rubber-stamped every debt-enhancing budget submitted by the White House to pay for its ill-conceived adventure in Iraq, which has cost $850 billion to date, all of it borrowed. Now that deficit financing is really necessary to rescue the economy, and not a policy of choice, GOP members have gotten religion and become born-again deficit hawks. It doesn’t hurt their conversion that the president is now a Democrat.
The truth is the Obama stimulus proposal, tailored from the start to attract recalcitrant Republicans, contained not too few but too many tax cuts—$275 billion worth, or a third of the entire package, compared to less than a fifth for infrastructure renewal. The Boehner-McConnell team wanted (and got) still more. The latter-day Ev and Charlie would, if allowed, have passed a stimulus plan composed solely of tax cuts with no public spending whatever. In actuality, there is no solid evidence that tax cuts in and of themselves boost or revive an economy at all, especially those geared to higher incomes, as invariably demanded by Republicans.
Moody’s Investment Service calculates that $1 in tax reductions produces $1.02 in economic activity versus $1.59 were the same dollar applied to infrastructure spending. The biggest tax-cut programs enacted in recent times, Reagan’s in 1981 and Bush’s in 2001 and 2003, created immediate windfalls for the highest earners, followed by deep recessions. The deepest, the one we’re experiencing now, began barely five years after Bush cuts in capital-gains, dividend, income, and estate taxes so large that, if continued beyond their 2010 expiration date, would cost the Treasury $2.4 trillion in revenue over the next decade. Yet, these rollbacks have done nothing to forestall the worst downturn since the 1930s.
Obama supposedly slanted his tax cuts to favor the middle class, defined as those earning under $200,000 a year, about $150,000 more than the median family income in the US. Once more, Democrats fell into the GOP trap of setting the measure of who is “middle class” far too high, but regardless of where the line is drawn, their middle-class bailout will do too little to spur the economy. People are just plain scared; they’re fearful of losing their job, if they have one, and frightened they won’t meet the monthly mortgage, assuming their house is not already under foreclosure. A tax cut clearly won’t inspire a stimulative spending spree. Whatever “free” money turns up will go to pay off bills, and anything left over will go into rainy-day savings. Why, after all, should ordinary Americans behave any differently than cash-hoarding bankers?
So, what’s the answer moving forward? The only thing we know for sure is that the Great Depression was ameliorated in the 1930s by the New Deal’s public spending and finally cured in the 1940s by the massive public outlays of the Second World War. Obama needs to learn from history, put aside silly notions of bipartisanship or post-partisanship, and use his majorities to pass a second, spending-centered stimulus much larger than the one enacted. As the Ev and Charlie Republicans of 2009 demonstrated in their unanimously negative House vote on the initial stimulus package, they will cling forever to their tax-cut ideology and can’t be bribed into cooperation by concessions. FDR passed his New Deal spending programs without GOP support; Obama can do the same.
Experience teaches what the public spending should look like; it must be geared, first and foremost, to job creation and secondly to needed public-sector investments—projects that will lay the groundwork for a revitalized economy. The money can either be allocated to existing government agencies to spend or contract out, or used to create entirely new public-jobs programs similar to the Depression-era WPA. Once working, the presently unemployed will, of necessity, spend their wages, not squirrel them away, and they will pay taxes, so that a substantial part of the outlay will return to government coffers. In addition, it’s possible some of the initial funding can be offset by using the presidential bully pulpit to demand—on pain of future sanctions—a return of that portion of the TARP money recipient financial firms on Wall Street used to pay those outlandish 2008 executive bonuses.
As for dealing with the hard-line Republican successors to Ev and Charlie, the new president should know by now who his friends are in Congress. Bipartisanship is and always was a mythical concept. Let Boehner, McConnell, and company rant, fume, and obstruct. An angry public will deliver its own pro-stimulus vote in 2010.
Wayne O’Leary lives in Orono, Maine.
From The Progressive Populist, March 15, 2009
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