Relax. Everything is going to be fine. It’s always darkest before the dawn. The sun will come up tomorrow. There’s nothing more you can do – you did your best – and things will look better in the morning, they always do. Things have a way of working out – you’ll see. Twenty years from now you’ll look back on this and laugh.
That’s all cold comfort, and a way to get you to just stop whining. It’s what exasperated parents say to the moping kid when they’ve had enough of the kid’s whining. And all those observations are presented as incontrovertible truths.
But only one is. The sun will come up tomorrow. The kid doesn’t know what is incontrovertible and what is not, but all the others are magical thinking – it’ll all work out, it always does. Who believes that? And it’s worse when you’re the one saying these things and you believe this nonsense. You’re telling yourself your own lies. Yeah, ignore those chest pains – you’re not going to have a heart attack – you’ll be fine in the morning. Or choose any other example. Stop taxing and regulating big business and the economy will heal itself and we’ll all be richer. Cut everyone’s taxes to the bone, or just stop taxing people, and the massive tax revenues will pour in, and we can afford to do most everything. Let people be – with no rules at all – and you’ll be amazed at how well we all treat each other. And you’ll win the lottery. Or you won’t get pregnant. Magical thinking is what we use when we’d rather not think about what is quite likely to happen. It’s classic avoidance behavior.
And it’s the basis of every situation comedy from I Love Lucy to the Simpsons. What’s the worst thing that could happen? That’s the setup – the situation. The rest of the show is what happens when the worst happens. Lucy Ricardo and Homer Simpson face the same thing, every week. The comedy is in seeing their magical thinking blow up in their faces. Sometimes you do have to do something else, and not just sit back and assume things will be fine.
And in January, RNC Chairman Michael Steele talked to Sean Hannity, who naturally asked the big-cheese Republican leader if his party is prepared to govern if it reclaimed a congressional majority, and he gave a curious answer – “I don’t know.” That was a concession that Steele was worried, or a way of saying that things have a way of working out – you’ll see.
Steve Benen flags that odd and seemingly unguarded statement here – and says that “eleven months later no one else can answer the same question with any confidence.”
And Benen notes it’s not just him, as the New York Times’ new young conservative columnist, Ross Douthat, doesn’t sound optimistic:
Today’s Republicans … tend to fall back on the reassuring story they’ve been spinning for the last two years, in which they lost to the Democrats only because they failed to hold the line on spending. It’s a narrative that flatters conservative self-regard, while absolving Republicans of the obligation to think too deeply about policy. All they need to do is say “no” to bigger government, and the rest will take care of itself.
The rest will take care of itself? Douthat doubts that:
This strategy has worked for them in opposition, thanks to the Democratic Party’s haste and hubris. But it isn’t a blueprint for governance, and it ducks the real reasons that the Republicans lost their majority. While the Bush administration overspent, it wasn’t spending and deficits that turned the country against conservative domestic policy between 2004 and 2008. It was the fact that the Republican majority seemed to have no answers to Middle America’s economic struggles, and no appetite for the structural reforms required to keep the United States competitive.
This is even more true today. The United States is facing three overlapping crises – the short-term challenge of a jobless recovery, the long-term crisis of entitlement spending and, in the medium term, an economy that wasn’t delivering for the middle class even before the financial crisis struck. The Democratic Party may have the wrong answers to these problems. But the Republican Party as an institution often seems to have no answers whatsoever.
And Benen adds this:
Republicans aren’t just failing to offer good answers – they’re hardly asking good questions.
Douthat’s vision isn’t even close to my own, but he’s nevertheless looking for the same thing I am from Republican leaders – a sense that there are Republican grown-ups prepared to “get serious about policy.”
They’re not – they’re not even pretending especially well – and the consequences very likely won’t be pretty.
Yes, magical thinking is not policy – that sort of stuff is for the politically out-of-power. You run on the if-only stuff. If you win you actually have to do something.
And that now seems to be the problem. Eric Cantor, the nice young man who is soon to be the House Majority Leader, second in command to the new Speaker of the House John Boehner, during a Fox News interview, insisted that Republicans would not accept any compromise on tax policy. They want it all – extending the massive tax cuts for the rich, regardless of cost, and will accept nothing less than absolutely everything they demand. And he offered what he thought was an incontrovertible point:
I really want to see that we can come together and agree upon the notion that Washington doesn’t need more revenues right now.
Steve Benen notes here that every time he brings up the point that Eric Cantor is surprisingly unintelligent he gets pushback. Republicans insist that Cantor is one of the sharpest Republican minds on Capitol Hill. And that puzzles Benen:
But the man has never demonstrated a working knowledge of any area of public policy. Take this quote, just as the latest example among many. Eric Cantor seriously believes that everyone should be able to agree that the federal government “doesn’t need more revenues right now.”
In what universe does that make sense? The federal government ran a $1.29 trillion deficit last year, and the national debt is well over $13 trillion. We’re in the midst of two wars, and have all kinds of costly obligations. No sane person could look at the country’s fiscal landscape and conclude that the federal government has plenty of money, and has no need for more.
And yet, Cantor not only argued this on national television, he suggested it’s an incontrovertible point.
Well, Cantor is into magical thinking, or something else is going on. See Norm Ornstein from the American Enterprise Institute:
John Boehner used to be a serious legislator. Eric Cantor is smart and a justifiably rising star in the GOP firmament. But they are becoming the Bart Simpsons of Congress, gleeful at smarmy and adolescent tactics and unable and unwilling to get serious. Instead of encouraging a constructive relationship with the serious and fair-minded legislators on the Democratic side, they are adding to the traction of their take-no-prisoners counterparts. What a shame.
And that’s from a fellow at the ultimate conservative think tank. But of course life imitates The Simpsons:
The Simpsons, 1995:
Kent Brockman: With our utter annihilation imminent, our federal government has snapped into action. We go live now via satellite to the floor of the United States congress.
Speaker: Then it is unanimous; we are going to approve the bill to evacuate the town of Springfield in the great state of —
Congressman: Wait a minute. I want to tack on a rider to that bill: $30 million of taxpayer money to support the perverted arts.
Speaker: All in favor of the amended Springfield-slash-pervert bill?
Speaker: Bill defeated. [Bangs gavel]
Kent Brockman: I’ve said it before and I’ll say it again: democracy simply doesn’t work.
Well, it doesn’t work when no one knows what the hell they’re talking about, and believes their own nonsense. For example, there’s Chris Edwards, director of tax policy at the Cato Institute and author of Downsizing Government. Writing at National Review Online in March 2007 he said everyone would be more like wonderful Ireland if only they listened to strict conservative economic policy:
Ireland has boomed in recent years, and it now boasts the fourth highest gross domestic product per capita in the world. In the mid-1980s, Ireland was a backwater with an average income level 30 percent below that of the European Union. Today, Irish incomes are 40 percent above the EU average.
Was this dramatic change the luck of the Irish? Not at all. It resulted from a series of hard-headed decisions that shifted Ireland from big government stagnation to free market growth. After years of high inflation, double-digit unemployment rates, and soaring government debt that topped 100 percent of GDP, Irish policymakers began to cut spending in the late 1980s in a desperate bid to recover financial stability.
Irish government spending fell from more than 50 percent of GDP in the 1980s to 34 percent by 2005. For Europe that is a triumph of restraint, given that the average size of government across 25 EU countries today is 47 percent of GDP. And Ireland has steadily reduced its tax rates. The top individual income tax rate was cut from 65 percent in 1985 to 42 percent today. The capital gains tax rate was cut from 40 to 20 percent in 1999.
However, the key to Ireland’s success has been its excellent tax climate for business. In 1980, Ireland established a corporate tax rate for manufacturing of just 10 percent. That low rate was subsequently extended to high-technology, financial services, and other industries. More recently, Ireland established a flat 12.5 percent tax rate on all corporations – one of the lowest rates in the world, and just one-third of the U.S. rate.
In Matthew Yglesias’ The Luck of the Irish we also see that James D. Gwartney and Robert Lawson writing for Cato back in 2005 said that Ireland should be seen along with Iceland. Each provides an important case study in the success of free market economics.
Of course Iceland crashed more than a year ago and now Ireland is a total disaster – no revenue, no growth, and all property values in a death spiral with foreclosure issues far beyond ours, and Yglesias says this:
I wouldn’t try to blame their property crash on low tax rates. But by the same token a frightening number of pundits went “all-in” on the idea that Ireland’s conserva-friendly tax policies were behind a boom that was in fact driven by a real estate bubble.
There needs to be some accountability for this, because it appears to quite genuinely be the case that relaxed financial regulation is a can’t-lose strategy for (temporarily) attracting financial inflows, sparking an asset price bubble, and boosting growth. But that doesn’t mean countries should do it. And we need a system of international praise and esteem that’s not so blind to these issues.
And Kevin Drum comments:
Good luck with this. … I mean, we’ve now got mainstream Republicans suggesting we should (kinda sorta) go back on the gold standard, we’ve got conservative economists who believe we should raise interest rates because inflation is our biggest worry right now, and we’ve got a victorious GOP that thinks spending cuts and deregulation are the key to prosperity – all aided and abetted by an economically illiterate pundit class seemingly convinced that accounting identities are just guidelines and the federal government should be run the same way you and I run our family budgets.
I mean, it’s almost as if the entire scientific community agreed about the fundamental chemical and thermodynamic reality of GHG-induced global warming but instead we listened to a bunch of cranks who — oh wait. We are listening to them, aren’t we?
Never mind. I’ll just retreat back into my cave now. Somebody send up a flare when it’s safe to come back out
Ah, things will look better in the morning, they always do. And sometimes they don’t. Drum has more here in Ireland’s Woes – And Ours? It’s complicated:
This is the basic problem with foreclosure relief. There are a whole bunch of good arguments about why it would be good for the economy, but the public would hate it. Bailing out bankers is bad enough, but at least it’s bad in a sort of abstract, far-off way. Bailing out your next door neighbor is a whole different story. That’s a fast way to political oblivion.
The whole thing is depressing. And Bart Simpson is telling us what to do. That would be what worked so well in Ireland and Iceland.
But the New York Times’ Bob Herbert puts it nicely:
One of the most frustrating tendencies of mainstream leaders in the United States is their willingness, year after debilitating year, to embrace policies that have no hope of succeeding.
From Lyndon Johnson’s mad pursuit of victory in Vietnam to George W. Bush’s disastrous invasion of Iraq to today’s delusionary deficit zealots, the tragic lure of the impossible dream seems never to subside.
And it happens over and over:
Ronald Reagan told us he could cut taxes, jack up defense spending and balance the budget – all at the same time. How’d he do? As his biographer Garry Wills tells us, the Gipper “nearly tripled the deficit in his eight years, and never made a realistic proposal for cutting it.”
President Obama is escalating the war in Afghanistan while promising to start bringing our troops home next summer, which is like a heavyweight boxer throwing roundhouse rights while assuring his opponent that he won’t fight quite as hard after the eighth or ninth round.
I don’t know if it’s the drinking water or the rarefied air at the highest reaches of government that makes so many of our leaders go loopy. Whatever it is, we need to put a stop to these self-defeating tendencies. The US is in sad shape, and most of the policy prescriptions being tossed around by the movers and shakers are bad ones.
Herbert says there is no time to waste on plans that can’t succeed, but he recognizes the political reality at hand:
The deficit hawks want to radically cut budgets and shrink the government, which they assure us will not only get the economy moving again but will eventually bring budgets into balance as neatly as some ideal middle-class family balances its checkbook.
This will somehow be achieved, we’re told, without raising taxes. And Senator Jim DeMint of South Carolina, a darling of the Tea Party, said on “Meet the Press” on Sunday that he was not in favor of cuts in benefits to senior citizens, meaning Social Security and Medicare, or any reductions in veterans’ benefits.
Herbert argues that you cannot have a coherent conversation about deficit reduction if tax increases are off the table and the country is still at war:
This is fantasyland economics, the equivalent of believing that John Boehner can fly.
People traveling in the real world understand that the federal budget deficits are sky high because of the Bush-era tax cuts, the costs of the wars in Iraq and Afghanistan, and the spending that was needed to keep the Great Recession from spiraling into another Great Depression.
Even if deficit reduction right now were a good idea – which it is not, given the sorry state of the economy and the vast legions of the unemployed – the deficit zealots have no viable plan for getting their misguided mission accomplished.
Herbert just wants us to get real:
What’s needed now is the same thing that has been needed for the past two years and more, a bold plan to put millions of Americans back to work and paying taxes, and a careful, thoughtful, strategic but unequivocal withdrawal of U.S. troops from Afghanistan and Iraq.
If we don’t engage these two issues effectively, there is little hope of getting to the other enormous challenges facing the country, including the metastasizing presence of poverty, the worsening problems facing already chronically underperforming public schools, and the deteriorating economic and social conditions that have drained the vitality of so many cities, rust-belt communities and rural areas.
But all we seem to get is “whatever other impossible dream is floated by the chronically dissembling political class to blind us to the real world.” Yeah. They used to tell us about wonderful Ireland, but they moved on. Now they say we need no new revenue. Relax. Everything is going to be fine. It’s always darkest before the dawn.
But twenty years from now we won’t look back on all this and laugh. We need to examine all those incontrovertible points being made these days. And there’s only one useful question to keep asking. Really?