Republicans and demon debt

Are they completely incompetent, or are they merely Democrats in disguise? That is the question one is forced to ask of Republican politicians on a depressingly regular basis. I tend to incline toward the latter position, since I see the two "parties" as being rival factions of the same bipartisan ruling party, but every now and then, there is evidence that points to the distinct possibility that Republicans are simply stupid. Consider this excerpt that the Fraters Libertas quoted from "Decision Points," George W. Bush's book about his presidency.

I adjourned the meeting and walked across the hallway to the Oval Office. Josh Bolten, Counselor Ed Gillespie, and Dana Perion, my talented and effective press secretary, followed me in. Ben's historical comparison was still echoing in my mind.

"If we're really looking at another Great Depression," I said, "you can be damn sure I'm going to be Roosevelt, not Hoover."

One would have thought – one would have hoped – that both the president of the United States and the chairman of the Federal Reserve would know that Herbert Hoover was not the laissez-faire "liquidationist" that the historically illiterate (or at least those who have heard of him) usually believe the 31st president to have been. As I have demonstrated in a response to one of Paul Krugman's many historical falsehoods, as president, Herbert Hoover was not only committed to aggressive government intervention in the economy, but actually doubled the amount of federal spending as a percentage of the economy during his term in office.

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It was not Herbert Hoover, but his secretary of the Treasury, Andrew Mellon, who was the "liquidationist" of the Hoover's administration. And unfortunately, Hoover did not heed Mellon's astute advice, but instead reacted precisely as Roosevelt, Bush and Obama subsequently did by engaging in futile attempts to use government spending to stimulate the economy out of contraction.

These repeated attempts at stimulus packages, particularly the Bush stimulus of 2008 and the Obama stimulus of 2009, are the primary reason that the United States recently reached its debt ceiling again. Between them, Bush and Obama have done almost exactly what Hoover did as they doubled the amount of federal debt from $4.8 trillion in Q3-2006 to $9.6 trillion in Q1-2011. And as was the case with Hoover, they laid the foundation for a long-term economic contraction that will last for a decade or more.

The reason that the politicians of both parties are desperate to raise the debt limit is because the moment that the rampant federal orgy of borrowing and spending even begins to significantly slow down, the three-year game of extend-and-pretend is over. While there has been no genuine economic growth for years, the inability to continue using government-funded demand to make up for the lack of real private demand will bring an end to the illusion of economic growth that has allowed Washington D.C. and Wall Street to avoid confronting the financial and economic crises for so long. Time, in this case, has not healed any wounds, but has only allowed infection to set in. The longer the corrective treatment is delayed, the more likely it is that the patient will die a painful death.

This is why Republicans cannot, in good conscience, permit the raising of the debt ceiling, even if the suggested promises of severe spending cuts and balanced budgets were genuine. The promises of future fiscal responsibility are worth no more than a fraudulent mortgage-backed security, and only the most politically naïve will believe that even the most binding guarantees on future congressional actions are anything more than transparent cover for elected Republicans to betray the tea party and their fiscally conservative base.

Furthermore, it should be noted that a refusal to raise the debt ceiling absolute does not mean that the U.S. will default on its debt any more than not signing up for an additional credit card is the same thing as declaring bankruptcy. The truth is the exact opposite, because not raising the debt ceiling increases the chances that the U.S. will not eventually need to default. Any politician, of either party, who talks about U.S. default in the context of the debt ceiling, has done nothing more than prove himself to be a complete ignoramus or a liar. Federal interest payments are presently $207 billion versus $2,016 billion in federal tax revenues. There is absolutely zero risk of default if the debt ceiling is not lifted. What will happen instead is that federal spending will be forced to decline, which of course is why the politicians are desperately casting about for an excuse to justify taking on more debt.

But regardless of whether they are economic morons or evil political Machiavellians, Republicans have absolutely no excuse whatsoever for voting to raise the debt ceiling. There is no amount of spending cuts, balanced budget amendments or cross-my-heart promises that could justify such a complete betrayal of small government principles and fiscal responsibility. Every single Republican in the House, in the Senate and on the campaign trail must be informed, in a very clear and unmistakable manner, that a vote to raise the debt ceiling will mark the end of his political career.