I’m puzzled as to why this is, but for as long as I have been alive, the Republican Party has been viewed as the party that knows economics. I think it’s because they are the party of the wealthy, so a much higher percentage of their members are economics-minded. Those who have a lot of money tend to think about money the most. Those who lack money tend to think about happier things than the fact that they have no money. Those who love and obsess over money are the ones most drawn to the Republican Party, so the party, in kind, tells them what they want to hear. This reality creates the illusion that Republicans understand economics; while Democrats are merely bleeding-heart liberals who are naïve about the harsh economic realities of the world.
So I can understand how many people initially see the Republicans as the economics party, but I’m puzzled as to how these people continue to think this, as Republican ideology is repeatedly disproven over time. The Republicans have been dead wrong about nearly every economic prediction they’ve made over the last few decades.
It started with the Clean Air Act of 1991 (passed by a Democratic Congress, but signed by George H.W. Bush), which was to burden businesses with overwhelming regulations and ruin the economy. There’s a reason Republicans are always wrong about this sort of thing. When a power plant is required to make changes to their facilities in order to accommodate environmental regulations, they must pay someone to design, implement, and maintain such technology. This creates business to business transactions within the economy, which creates jobs and is good for the economy. Republicans act as if money spent on regulations is simply taken out of the economy, that there is a cost to the economy, but no benefit. And that is simply untrue.
Next, Republicans promised that Clinton’s tax increases on the rich would bring about economic Armageddon. Again, they treated it as if taxes took money from the economy, when the truth is that taxation of the wealthy in a high-disparity economic system simply redistributes wealth from those who hoard it to those who spend it in the economy, which then creates jobs. The 1990s went on to be the most economically-successful decade in U.S. history – the only decade in which the nation spent less than a years in recession, and that recession happened under Bush in 1991.
Of course, economic doomsday did finally arrive, but it did so after 7-8 years of Republican policy under the George W. Bush administration. Banking deregulation from the 1980s and 90s allowed banks to take chances with their depositors’ money, become too big to fail, and bring down the economy when their risk-taking blew up in their faces. But as we got back on the road to recovery, Republicans prophesied that economic doom was just around the bend. First, it was the Fed’s expansion of the money supply, known as quantitative easing, that was to ignite hyper-inflation, in which the dollar would become worthless, and only those who were smart enough to sock away all of their money in gold would survive. Yet, 5 years later, inflation is still around 2%. At the end of 2012, Obama allowed the Bush tax cuts for the rich to expire. This, too, was to destroy the economy. And, of course, the onset of Obamacare in 2014, was sure to ruin us all. Yet here we are, heading into 2015 having just had our best job growth year since the 90s. Republican doomsday predictions have been wrong every single time.
Yet, Republican voters seem to forget these predictions as soon as they are disproven. It really makes me wonder if there’s a large percentage of our population that simply doesn’t have functioning memories. One of the reasons humans have memories is to warn us of danger. If we have a bad experience with something, we remember next time not to trust that thing. Yet, Republican voters keep trusting those who have misled them. Rather than use their memories, they eagerly believe the next cry of doom, because it’s what they want to hear.
It seems the only economically-related thing that Republicans can (or care to) remember is that Reagan supposedly saved the terrible economy he inherited in 1981. Republicans like to think that Reagan’s tax cuts fixed the whole thing. Of course, Reagan’s tax cuts didn’t hurt the economy, because they were not matched by cuts in spending, so that added money to the economy, and that never hurts in the short term. But in the long run it hurts, because Reagan’s fiscal policies increased the national debt by 189% during Reagan’s 8 budget years, the worst of all time. But what most people fail to realize is that the high inflation of the late 1970s was fixed by Carter-appointed Fed Chairman Paul Volcker when he raised interest rates sky high, which took all of the excess money out of the economy, thanks to people saving more and spending less due to the high rates. Once inflation was defeated, then the interest rates were lowered. Their job had been finished. The high oil and gas prices fell, not because of anything Reagan did, but because more countries began to produce oil after the OPEC fiasco of the 1970s. So there was nothing that Reagan did that fixed the three biggest economic problems of the time. But since few people know of such details, they give Reagan the credit. They then proceed to forget that the Reagan-Bush era ended with a sharp 1991 recession that resulted in unemployment rates as high as 8% in 1992.
For the sake of brevity, I’ll go no further with economic arguments here in this blog post. I could get into how high tax capitalist countries fare better than low tax nations, but that would require charts, etc. and a much longer article. If you want to see all of that, you’ll have to read the taxation chapter in my book, “Rescuing Religion from Republican Reason”, for which you can find a link to buy on the “My Books” page of this site.