The Treasonous Politics of the GOP

As you may have heard, Congressional Republicans have sent a letter to Fed Chairman Ben Bernanke arguing that “further intervention by the Federal Reserve could exacerbate current problems or further harm the U.S. economy,” that is, urging him to do nothing about the economy at this perilous time. As Matthew Yglesias puts it, they are basically urging him to keep unemployment high.

Here’s how David Frum, a conservative (if also a renegade Republican) explains the letter:

I’m not shocked by much any more, but I am shocked by this: the leaders of one of the great parties in Congress calling on the Federal Reserve to tighten money in the throes of the most prolonged downturn since the Great Depression…

As is, we’re looking at a continued economic slump, more unemployment, and more deleveraging via continuing catastrophic consumer default on mortgages, car loans, credit cards, and student aid. And now the GOP leadership is urging that the Federal Reserve make the catastrophe worse? To what end?

We know that Republicans these days usually put ideology (their extremist right-wing ideology) ahead of what’s best for the American people. (Just think back to their hostage-taking of the country during the debt ceiling crisis, as well as their persistent threats to shut down the government whenever they don’t get what they want.)

But this isn’t so much about ideology, it seems, as it is about brute partisanship, about doing whatever it takes to get Republicans elected. If the economy continues its apparent downward trajectory, or at the very least if confidence remains low and uncertainty remains high, voters, they hope, will blame Obama and vote Republican next year.

Indeed, as Andrew Sullivan observes, looking at some deeply troubling poll numbers for the president (with independents in overwhelming numbers saying they’ll vote against Obama), “the GOP’s total intransigence seems to be paying off politically.” What they’re hoping is that even more intransigence, and getting the Fed to play along (as if the country’s central bank should be a partisan extension of the Republican Party), will pay off even more at the polls.

As Steve Benen writes:

Frum doesn’t come right out and say it explicitly, but reading this, it appears Frum believes Republican leaders are — or at least may be — trying to hurt the economy on purpose, as part of a political strategy to undermine President Obama during a crisis.

In other words, Frum seems to be suggesting that the top GOP officials in Congress, including the entire party leadership, may be involved in some kind of sabotage campaign. That’s no small charge.

No, but it appears to be an accurate one:

A few months ago, Kevin Drum wondered whether this will ever be “a serious talking point,” adding, “No serious person in a position of real influence really wants to accuse an entire party of cynically trying to tank the economy, after all.”

Given recent events — the debt-ceiling scandal, the GOP-driven downgrade, the Republican rejection of any efforts to boost the economy, the letter to Bernanke, the repeated threats of government shutdowns — it appears all kinds of serious people are at least entertaining the possibility.

We should do more than just entertain it. The evidence points to a concerted effort on the part of Republicans — and not just any Republicans, the top Republicans on Capitol Hill, and perhaps also most of the Republicans seeking their party’s presidential nomination — to benefit politically from a weakened and (if they have their way) weakening economy, cruelly and callously to score political points at the expense not just of President Obama but of the American people, millions upon millions of whom are struggling to make it through this difficult time, if they are even in a position to struggle at all.

Personally, I call that treason. Do you have a better word for it?

(Cross-posted from The Reaction.)

         

25 Comments

  1. “Do you have a better word for it?”
    No, but I have a phrase: “Conspiracy theory”.

    There are Republican Keynesians as well as Democrat ones, but the end result is the same. The fact is, the Fed has been feeding money to the banks, and that money sat there like so many tar balls. They then stuck into the markets with QE1 and QE2, in an attempt to drive down interest rates and get mortgages refinanced. The interest rates are down, but the wave refinancing never happened, because the banks upped the standards for refinancing. The banks, in both cases, are working against the Fed.

    Now, instead of trying to have an honest and serious discussion about the underlying problems, the current meme is push a Republican conspiracy to undermine the economy in order to hurt the Democrats.

    I ain’t buying it.

  2. Oh the weight is just too heavy. I cannot understand this hatred.

    Why are these people so determined to get at President Obama at the expense of our citizens?

    Why, in their political desperation, do these Republicans want more damage done to America just to destroy, or otherwise shut up, those that only want to HELP the American people?

    If only the Republican party would ADMIT the obvious, that their tax cuts and borrowing has CAUSED the terrible situation our country is in, then progress could be made!

    I mean really, the Republicans are “big on defense”. Ok, but how weak are we now that they have broken the bank and put so many out of work? How weak are we in the face of our enemies because Republicans openly defy our president during his speeches screaming “liar” and refusing to even attend of late? How weak are the Republicans making America when they tell the world that we will not even pay back the debt that the Republicans themselves MADE?!

    It’s stunning…and these same Republicans offer us “Bachmann and Perry” as serious leadership candidates?

    The weight of trying to placate ignorance out of respect for the GOP is just getting WAY to heavy.

  3. Although I wouldn’t put it past the GOP to try to do anything to get back in power, even worsening the economy, I am with them on this particular issue.

    I think creating money out of whole cloth is wrong-headed. The hopes it will improve the economy are just that: hopes. It is not monetary policy that is keeping the economy down this time. And when you apply the wrong fix to a problem, you don’t fix the problem, and you risk making it worse.

    As I said in an earlier topic, it’s like using a hammer to fix the plumbing. You’ll likely get more leaks.

    And to those who say “well, the Fed is full of brilliant folks who know more than you do”, I say “well, sure they do.” But brilliant people can often get tunnel vision just like anyone else, and have a hard time saying “you know what? I’m actually the wrong guy to fix this problem.”

  4. “We know that Republicans these days usually put ideology (their extremist right-wing ideology) ahead of what’s best for the American people.”

    Well, that certainly has become their calling card. Their America seems to be an elite and exclusive group. Apparently the majority of citizens here are just getting easier and easier for them to forget about.

  5. I think creating money out of whole cloth is wrong-headed.

    What do you think happens when you deposit 10k at your local bank of which 8k is loaned out the very next day? Other than the creation of money whole cloth?

  6. “What do you think happens when you deposit 10k at your local bank of which 8k is loaned out the very next day? Other than the creation of money whole cloth?”
    You have $10,000 that isn’t in circulation, the bank put $8,000 into circulation. That’s a net loss of $2,000 in circulation. Fractional banking doesn’t really create money until the bank can lend out more than it has in deposits.

  7. I’ve felt for a long while that it’s not treasonous, so much as part of the overall strategy to prove to people that Washington is incapable of functioning, and that “Government = bad.”

    As dysfunctional as it may run under Democrats, since Reagan onward it seems to be the mantra for the Republican party to slay “the beast,” and if it cannot be slain, to incapacitate it beyond meaningful functioning.

    So dysfunctional government is, in the long run for Republicans, a victory.

  8. prof-

    Do you know what the “discount rate” is and how it relates to banks and the money supply, (M1)…?

  9. That’s a net loss of $2,000 in circulation. Fractional banking doesn’t really create money until the bank can lend out more than it has in deposits.

    No, you just created 8k out of thin air.

    If you go to the bank the day after the 8k was loaned out and take out your 10k, there is now 8k more in circulation.

  10. It would be easier to dismiss the whole “Republicans want the government/economy to fail” thing as a conspiracy theory if they hadn’t been pushing the idea for so long.

    From Reagan’s “government is the problem” speech, to Grover Norquist’s stated desire to make the government small enough to drown in a bathtub, to Mitch McConnell’s now infamous goal to make Obama a one-term President at all costs, to Presidential hopeful Perry’s pledge to make Washington irrelevant, to the expressed opinion of some tea-party types that a government shut down and/or default might be a good thing, we’ve got more than enough evidence to suggest that it is not a wacky conspiracy theory at all.

  11. If you go to the bank the day after the 8k was loaned out and take out your 10k, there is now 8k more in circulation.

    The $8K that was loaned out is now backed by “something”, whether it was a home asset, car asset, or a person’s income potential.

    Here’s what you’ve missed in your whole example:

    ME DEPOSITING $10K: –> I had to have $10K
    FED QUANTITATIVE EASING: –> Fed printed money

    All else is the same, sure, but that $10K I put in was real. It will create money, sure, that’s what banking is, but at least it existed.

    The Fed created it out of thin air. Or maybe the Underpants Gnomes brought it …

  12. When all else fails, blame those with whom you disagree as treasonous, unAmerican, America-hater, communist, fascist, racist, or evil.

  13. “Do you know what the “discount rate” is and how it relates to banks and the money supply, (M1)…?”
    Yes, and that relates to my point about lending out more than your deposits, but not to QF’s example.

    @QF
    The bank has to maintain a certain percentage of cash (and liquid assets) on hand. If I take the 10K back out, the bank will pull that from its reserve, and will then have to make up the difference.

  14. Prof-

    Yes QF is a bit off the mark. Maybe if you explained to QF an Expansion vs. Retraction business cycles, why it is important to have both. Also bonds, banks, federal charter, the Fed, and why the money supply must be manipulated by government to prevent economic catastrophe. It is quit dangerous to play politics with Fed responsibilities. I’m not sure the GOP understands this.

  15. barky-

    Where the heck did you learn economics? The Treasury prints money, not the Fed. The Fed sells bonds.

  16. Nobody creates money, “out of thin air”.

    Good Grief.

  17. I would agree I do not get the blind hate of the right for Obama any more than I got it for Clinton.

    I also did not get the blind hate of the left for Reagan, Bush 41, Bush 43 or anyone who disagrees with them.

    I just don’t get it.

  18. When ordinary people (who are not in positions of power and influence) are angry at injustice, corruption, negligence, and/or the stupidity of their leaders (who are expected to know better and who are in positions of power), then all they have left is the ability to vent. Not so hard to understand why they get angry about wrongs being left unrighted in my book. I wouldn’t call it “hate” though, it’s more like intense frustration.

  19. barky-

    Where the heck did you learn economics? The Treasury prints money, not the Fed. The Fed sells bonds.

    It’s a euphemism. Folks here can’t understand detail, so you talk simply and in soundbites. Then folks get mad because simple talk is not completely accurate. Maddening.

    Here’s a simple article describing how money creation through quantitative easing works. It’s from last year so some of the “newsy” elements are out-of-date, but it describes the principles — including how money is created — and states the reasons it bothers me so much:

    http://www.npr.org/blogs/money.....asing-week

  20. Then there’s this from former Fed chairman Paul Volcker:

    http://www.bloomberg.com/news/.....-says.html

    So now I have to ask YOU: why do YOU (Allen, QF, Steve) believe in it so much you’re willing to defend it with such vitriol? Maybe you should put YOUR facts on the table…

  21. “I also did not get the blind hate of the left for Reagan, Bush 41, Bush 43 or anyone who disagrees with them.”

    This is because your education failed you, and you do not know that stupidity is exactly the same as evil. In fact, “stupidity” is the only acceptable definition of evil.

  22. I’m sure I’m misreading what you’re saying, as it almost sounds like the point was it is ok for the left to hate everyone who disagrees with them.

    I know I’m wrong, probably just tired.

  23. @Allen: “Also bonds, banks, federal charter, the Fed, and why the money supply must be manipulated by government to prevent economic catastrophe. It is quit dangerous to play politics with Fed responsibilities. I’m not sure the GOP understands this.”

    There’s a lot so say about how fiat currencies arose and why people wanted them. But it’s safe to say that the Fed has gone far beyond the textbook descriptions of simple central bank. I wonder if liberals (or anyone else for that matter, but liberals in particular seem to avoid the point) understand how lucrative it is to be able to loan out money that isn’t yours, for more interest than you pay.

  24. The better word is incompetence. Calling the other guys “Treasonous” is going too far, its ignorant, cheap, and undermines an otherwise valid post. Posters here at TMV should really know better.

  25. slamfu, they do, they just don’t CARE, and that, you ought to know, is a portion of the root of our national problem-on both sides. The intent of an adversarial system, is to get the two sides arguments going so that the rest of us, in the middle, get the plums from both sides-basically the idea is “Gridlock means they only pass IMPORTANT laws”.

    Only the vitriol level, and the rationality level, have both dropped off the map-neither side is saying much of anything of actual use, just thundering on with their own absolute vision of utopia, with little regard for the consequences, and less acceptance of the responsibility FOR those consequences.

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