We are on the cusp of discovering whether Michele Bachmann’s party can achieve what Dick Cheney’s could not, which is to induce a depression.
Cheney got us only as far as the 2008 financial collapse and what has become known as the Great Recession. It’s starting to look like Bachmann and her consorts on the far right can now take us all the way, to 1936 if not to 1929.
My nomenclature needs some explanation. Was it Cheney’s Republican party in the last decade or George W. Bush’s? I choose Cheney because, at least in the first five years of the Bush presidency, Cheney drove the economic and foreign-policy agenda. When Bush said he thought they had taken care of the nation’s richest in the first round of tax cuts in 2001, Cheney corrected him. More had to be done, the vice president said, and Bush acceded, as he always did until the veep fell out of favor over the Valerie Plame affair in late 2005.
When alarms were raised about the mushrooming budget deficits at a meeting of Bush’s economic team (his tax cuts and war spending had turned a $236 billion surplus in 2000 into a $158 billion deficit in only two years) it was Cheney who explained that President Reagan had proved that “deficits don’t matter” and that Bush shouldn’t worry about them either. After all, Reagan had inherited an accumulated national debt of only $998 billion and his and the George H. W. Bush administrations hiked it to $4.4 trillion, but the sky didn’t fall. W. didn’t worry about it either, and in two more years they had swelled the annual deficit to $459 billion. Bush and Cheney handed off a debt of $11.5 trillion to their successor in 2009.
Cheney’s doctrine metamorphosed across the economic spectrum. Financial controls were shredded and everyone in America learned not to worry about debt — not the poorest homeowners, not the credit-rating agencies like Standard & Poor’s, and certainly not the banks or any of the other mortgage debt holders. When the inevitable collapse came in the winter of 2007-08, the United States was so heavily mortgaged and the political reaction so revolutionary that the country was left with no swift and sure way to address the crisis. The traditional remedy of middle-class tax relief and jobs spending ended the free fall in eight months of the Obama presidency, but the economy had no reserve energy. It limped along with anemic growth until the long hot summer of 2011, when the Republican Party, rejuvenated by the Tea Party victories in the 2010 congressional elections, took over. Although it controlled only a third of the policy-making apparatus, it was enough to hold the country hostage.
But that recent history is stale news, or stale commentary.
To continue the analogy, Bachmann’s party could as easily be Paul Ryan’s party, Eric Cantor’s, Joe Barton’s, Jim DeMint’s or any of the other hard-eyed reactionaries who together have held the Republican Party, and the whole country, in thrall since spring. But it is Bachmann’s meteoric rise that has made her zany pronouncements the fixed doctrine of the party across Congress and the entire field of presidential aspirants.
They were ready to force national default and calamity in order to bring about the dismantling of environmental and banking regulation, Medicare, Social Security, Medicaid and the rest of the safety net for the elderly, disabled, sick, mentally ill, unemployed and everyone else but the squalidly rich.
Though Bachmann eventually voted against it — it didn’t go far enough toward making the U.S. an oligarchy — the debt agreement that her movement produced virtually assures that the country’s economic engine will be stymied until at least 2013, when the elections may have produced prospects for relief. The recession remedies available to every president since 1933 won’t be there for Obama this time. The Republicans hold the cards.
Dick Cheney’s old allies were there last week to do their part for the second collapse, as they did for the first one in ’07-’08. Standard & Poor’s, which had given the highest grade to hundreds of billions in mortgage securities in the Bush era that were virtually certain to fail, downgraded the United States’ credit even after admitting that it had made a $2 trillion error in its calculations of discretionary spending growth. It helped trigger a historic selloff on Wall Street Monday as investors feared that ruthless government spending cuts next year would plunge the country back into recession, this one perhaps cataclysmic.
Even at that, the Tea Party economists were condemning a bit of uncharacteristic honesty by the credit-rating company. Down in its analysis, S. & P. explained that it downgraded government debt once it realized that Republicans in Congress would never allow the Bush tax cuts on the rich to lapse, as they are scheduled to do in 2013. Without additional revenues — they are down close to $800 billion a year from tax cuts and the recession — there is no hope of closing the budget gap. The scholars at Cato Institute accused S. & P. of taking sides against the Bachmann party in the great economic war by subtly lobbying for the restoration of a modest tax rate on the super-wealthy.
If it did, no one else seems to have got the point.