Politics from the Port Side

I really have to hand it to the Republican-Tea Party. After decades of opposing the social safety net known as the New Deal and the Great Society and after decades of opposing Keynesian Economic Policy, the right wing is on the verge of realizing it's long held dream. After more than 70 years of pursuing one failed strategy after another, the tactics settled on by the Republican-Tea Party that proved to be so successful in overturning post Great Depression Democratic Party social policy was really brilliant in terms of its simplicity. The Republican-Tea Party is using Keynesian Economics to destroy Social Security, Medicare, and Keynesian Economics! 

During the Great Depression beginning in 1929 the capitalist economy appeared to be on the verge of collapse. Karl Marx had predicted that capitalism was a self-destructive economic system. By 1932 Marx's predictions were coming true. Economic growth was going in reverse, poverty was growing exponentially, every major industry was experiencing labor unrest, and the Communist Party USA had more members then the Communist Party USSR! The old economic theory known as laissez-faire capitalism was incapable of providing a road map leading capitalism out of the crisis capitalism had created for itself.  

When all seemed lost a little known British economist named John Maynard Keynes published "The General Theory of Employment, Interest, and Money." Keynes argued that to get capitalism out of its on-going crisis the government must "...stimulate the economy through some combination of two approaches: a reduction in interest rates and government investment in infrastructure. Investment by government injects income, which results in more spending in the general economy, which in turn stimulates more production and investment involving still more income and spending and so forth. The initial stimulation starts a cascade of events, whose total increase in economic activity is a multiple of the original investment." Keynes also wrote that government spending on such things as basic research, public health, education, and infrastructure could help long-term growth. But Keynes argued, once the crisis was over the debt incurred to stimulate the economy out of the crisis must be paid down in preparation for the next crisis.

In contrast, the traditional Republican Party advocated a policy of fiscal conservatism. The policy goals of fiscal conservatism involved balanced budgets, reduced government spending, free trade, deregulation, lower taxes, and paying down the national debt. Traditional Republicans believed that if they pursued fiscal conservatism it would be possible to unleash a sustainable economic boom that would make the social safety net unnecessary and Keynesian Economics pointless. The fiscal conservatives constantly accused the Keynesians of being tax and spenders.

Because of the success of Keynesian economics, fiscal conservatism never caught on even when traditional Republicans were in power. By the 1980s radical Republicans who could not or would not let go of their fiscal conservative dreams stumbled on a  tactic to finally bring Keynes down. 

In 1981 the national debt on the day the Republican Ronald Reagan became president was 900 billion dollars. When Reagan left office the national debt rose to 2.4 trillion dollars. By 1988, the country owed more to foreigners than it was owed, and the United States moved from being the world's largest international creditor to the world's largest debtor nation. Four years later George H.W. Bush got the national debt up to 4.5 trillion dollars. Eight years later at the end of Bill Clinton's presidency, the national debt stood at 5 trillion dollars but Clinton left a 1.2 trillion dollar surplus to his successor, George W. Bush. 

During the eight years of George W. Bush's administration, Bush started two wars and paid for them by selling United States Treasury Bonds to the rest of the world. Meanwhile Bush passed the largest tax cut in United States history. Then the Bush administration passed legislation that created Medicare part D and paid for it by again selling U.S. Treasury Bonds. When the economy again returned to crisis mode and stagnation in September 2008, the Bush Administration created the Troubled Asset Relief Program which used treasury bonds to buy up the debt of private banks. When Bush left office his failed economic and war policies saddled the nation with a debt that balloon to 13 trillion dollars! 

By 2011 the radical Republicans had morphed into the Republican-Tea Party.  In violation of the key Keynesian economic principle of paying down debt, the radical Republicans had stumbled on the tactic of borrowing and spending never paying back that which was borrowed. And to add economic insult to economic injury the monies borrowed had to be paid back with high interest in the 1980s and 90s quietly increasing the sum total of the borrowed monies to foreign governments and foreign banks and private U.S. banks. Today China owns 22% of the federal debt. Because they threw the United States into massive debt the Republican-Tea Party now has the tools to destroy Social Security and Medicare, bring down Keynesians Economics, and lord over the largest transfer of wealth upward in world history.