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Government shutdowns are not a new thing. Gary Evans over at Global Macro Monitor recently provided an effective short summary with this graph.
It is interesting to observe that the government shut down 8 times under President’s Reagan’s watch. One reason for that was a strategy embraced by the Republicans at the time that came to be called Starve the Beast. Essentially the Republicans advocated large tax cuts, always popular, knowing they would lead to large government deficits. The hope was that the deficits would force the Democrats to cut programs they care about, social and environmental and so forth while keeping in place programs favored by the Republicans especially funding the military.
The strategy worked to an extent but it did lead to a number of government shutdowns. Mercifully they were short and our government leaders on both sides rallied to the best interests of America by engaging in serious and honest negotiations.
Fast forward to President Obama. The Starve the Beast had morphed by then into The Party of No born from the Tea Party obsession with everything Obama. The new Republican strategy, hostage to the Tea Party, became opposing anything Obama proposed. This has been well documented by Michael Grunwald among others.
TIME just published “The Party of No,” an article adapted from my new book, The New New Deal: The Hidden Story of Change in the Obama Era. It reveals some of my reporting on the Republican plot to obstruct President Obama before he even took office, including secret meetings led by House GOP whip Eric Cantor (in December 2008) and Senate minority leader Mitch McConnell (in early January 2009) in which they laid out their daring (though cynical and political) no-honeymoon strategy of all-out resistance to a popular President-elect during an economic emergency. “If he was for it,” former Ohio Senator George Voinovich explained, “we had to be against it.”
The Party of No led to the 2013 shutdown (the only government shutdown under President Obama). Former Federal Reserve Chairman, Alan Greenspan had this to say at the time.
“Our highest priority going forward is to fix our broken political system. Short of that, there is no viable long-term solution to our badly warped economy. In America we are being pulled apart politically in ways unrivaled since the aftermath of the 1929 crash. … My first realization of a striking shift in our politics was brought to my attention by the staunch conservative three-term senator from Utah, Robert Bennett. He feared that despite his strong approval ratings, his 2010 reelection bid was by no means secure. In his 2004 reelection, Bennett won 69 percent of the vote. His problem, as he stated it, was unexpected contenders for his Senate seat from his political RIGHT. [The 18-year veteran finished third at the Utah Republican convention and his seat is now held by Sen. Mike Lee, an instigator of the effort to shut down the government over Obamacare.] It was my first awareness of what later came to be known as the Tea Party, a political movement that emerged in 2009 and became a powerful force in the 2010 election. …
We are now in the midst of another government shutdown, a catfight among our elected politicians. The “blame game” has begun. It will lead nowhere. The extremists on both sides will not be convinced to change their opinions. We have deep divides in America that are difficult to bridge. We need real leaders who can find a way back to reason, moderation, principled negotiation and who can focus on those areas where a majority of Americans do agree. After all, America has always been described as a great country, a big tent, a city on a hill and Americans have mostly rallied to great causes when needed. Is this possible? I hope so. If not, we are doomed.
In the meantime the economy and the stock market with it has been steadily recovering since the 2008 crisis. The progress over the past year is nothing new but the stock rally is becoming worrisome to many including Think in the Morning who thinks a bubble is brewing. When the bubble pops everything will change. And not for the better. As George Santayana warned years ago, “those who cannot remember the past are doomed to repeat it.” It has been said that “eternal vigilance is the price of liberty.” It is also the price of personal solvency. Beware.
Dear Mr. Jones:
called him out and was taken, famously, to the “woodshed.”
Thus, Reagan engineered one the largest post-depression Keynesian recoveries (don’t tell that to your old TA Art Laffer(able)) before Obama’s, which saved us from living on Big River beach and eating bark.
During Reagan, the public debt-to-GDP ratio grew by 60 percent (31 to 60), albeit from a lower base. Under Obama the debt-to-GDP ratio grew by only 36 percent (73 to 106),
Fortunately, Reagan didn’t have the heart to cut those programs. David Stockman albeit from a higher base.
I suspect this is probably too much “TRUTH” to swallow for Paul Ryan and the Tea Party hacks. That their political god ran up the debt (normalized) more than any other post-War president. But, hey, they are like Ross Perot who never understood economics and inflation and would cite the country’s debt levels back 1900 as a comparison. Idjits, in other words.
History will look back to Reagan as the president who began our country’s public debt binge. Just look at the chart on the link below (first link).
Now that Trumpudo has reduced our standing in the world, which has dropped 25 points in the world, we are now viewed on par with China and Russia with Germany viewed as the major respected world power (see second link).
Let’s hope we are not losing our reserve currency status as the government will no longer be able to finance itself.
It worries me to see the dollar falling as interest rates rise. I have seen this many times in Latin America at the start of a crisis. A sign of capital flight and a coming crisis.
https://fred.stlouisfed.org/graph/?id=GFDEGDQ188S,
http://news.gallup.com/poll/225761/world-approval-leadership-drops-new-low.aspx?g_source=World&g_medium=lead&g_campaign=tiles
That brings us to Trumpudo. I have also seen a lot of his likes in Latin America, a corrupt Kleptomaniac only concerned about enriching himself. The people are on to him, however.
It’s in the bible, you know. Lucifer fell from heaven and took 1/3rd of the angels with him. Trump has a following of 1/3rd of the country supporting him… Hmmmmm..
When will Franklin Graham and Jerry Falwell Jr. realize they have been seduced by the one who often appears as “an angel of light.”
Keep up the good work. I may have to hire you at K. & Associates.
Sincerely,
Henry K.
Flattery will get you very far, Henry. But, if you want to get me you’re gonna have to fork over the big bucks. I am pleased to see that we have many grounds for agreement. My uncle directed RR in many of his movies. Uncle Lew told me RR’s first wife JW left him because he talked too much. The difference during his presidency is that he was fortunate to have a public that could be talked to, that would listen, and work with him to find common ground. He also had a Tip O’Neill. https://www.newyorker.com/news/john-cassidy/can-donald-trump-learn-from-ronald-reagan-and-tip-oneill
Ah, the good ole days!
Mr. Jones:
The NSC must have scrambled my comment:
First paragraph should read:
Fortunately, Reagan didn’t have the heart to cut those programs. David Stockman called him out and was taken, famously, to the “woodshed.”
Third paragraph should read:
During Reagan, the public debt-to-GDP ratio grew by 60 percent (31 to 60), albeit from a lower base. Under Obama the debt-to-GDP ratio grew by only 36 percent (73 to 106),
albeit from a higher base.
Sincerely,
Hank
Thanks very much for another excellent expository blog. You are an educator, David and I very much appreciate your educating us. Would it be OK to quote some of this in another blurb somewhere else, e.g. my Facebook feed? Or something similar? Just checkin’. Thanks for considering this.
Thank you Doug. I’m honored that you would use it anywhere.
Ronald Reagan to save money closed our state mental hospitals, other republican governors followed suit,, Street money for people who had no bank accounts, more liquor & drugs, What we got,, more homeless citizens. Trumpudo promised to help ‘America’s forgotten man’ He might start with the 50 million people living on the streets,, 20 million honorably discharged veterans. The San Culottes waiting in the wings,, Madam Defarge where are your knitting needles ?
Yes, I mentioned that here https://thinkinthemorning.com/we-cracked-pots-have-a-sense-of-humor/