Washblog

A) Stop Believing The Myth That Republicans Want To Cut Spending.

When it comes to deficit spending and "smaller government", Republicans have a clear record:  They are nothing but empty, lying, hypocrites.

To understand Republican Keynesianism, you just have to understand three simple things:

1) Creating a deficit by subtracting taxes needed to finance spending is the same as adding spending beyond the taxes you have to finance it. .

As Ben Bernanke noted in his famous "Helicopter Speech", right-wing ideologue Milton Friedman first noted that using deficits to finance tax cuts might provide even more stimulation to an economy than using deficits to finance spending. I won't get into the technicalities of a "money-financed" deficit tax cut verus a "bond-financed" deficit tax cut because they basically amount to the same thing. Keynesianism is Keynesianism. Republicans just favor Keynesianism through deficit tax cut giveaways, mainly for the rich.

2) The Republican Party uses its loud, bullying, anti-tax ideologues the way any Ponzi schemer uses salesmen to hustle a scam and cover up afterwards.

This is very important.
 Everybody knows how the scam works, but just to review:

• Republicans keep government spending in place or increase it.
• Republicans pander with deficit tax cut giveaways, mainly to the rich, talk a lot of hypocritical nonsense about "liberty".
• Tax cuts stimulates the economy, everything looks great.
• The rich spend differently so consumer prices don't go up but asset prices do.
• Nobody understands financial markets anyway, so the financial press, like Rupert Murdoch's Wall Street Journal, easily cover up the cause of the bubbles and crashes, blame it on the government.
• The blizzard of Keynesian subsidy for the rich eventually causes a crippling, private debt bubble, which bursts.
• Republicans bail out the corporations, blame it all on the Democrats.
• When a Democrat is in the White House, Republicans pretend they agree with their crazy ideologues, threaten cut Democrat programs, gain credibility among the cynical and easily-led.

3) There is clear economic evidence Keynesianism for the rich is happening.

Since the Republicans began their Keynesianism for the rich from Reagan to Bush, every Republican President has increased the debt and only Bill Clinton reduced it.  Since the Republicans started stimulating the economy with deficit tax cuts, the asset inflation they cause has created financial bubbles and crashes with great regularity: Crash of '87, S+L Crisis, Asian Financial Crisis, Russian Financial Crisis, LTCM Scare, DotCom Bust of 2000, WorldCom-Enron bust of 2002 (lost some cash in that one myself), SubPrime Crash of 2007, leading to the OTC Debt Markets Crash of 2007, leading Financial Crisis of 2008 with the little-noted Commodities Bubble of 2008 thrown in there.

Because of the Bush-Bernanke bailouts and Obama's stimulus tax cuts in the name of "bipartisanship" we're still looking at huge bubbles forming/readying to bust in the Gold Price, China, the Eurozone and probably Brazil. To be fair to Brazil, South America has been the proving ground for Keynesianism for the rich, with the result that in many South American countries people have simply abandoned the idea of using their own currency as a reserve currency.

It's simple: Republicans are not for cutting government, they are for Keynesianism for the rich. Their record on deficits, debt and creating financial disaster is absolutely clear.

B) Call The Republicans' Bluff

I and everyone who criticized Governor Gregoire for disapproving publicly of her own budget owe her an apology. It was simple, brilliant, honest politics. We here in Washington know that insane ideologues and self-promoting, anti-tax demagogues like Tim Eyman always crash and burn. At the right time, you have to be willing to give them what they claim to want   and show them up for the frauds they are.

Eyman has lost all credibility in this state. Meanwhile,  Governor Gregoire has recovered enormous credibility through her simple statement that massive cuts in needed programs do not reflect our values as a community.

If President Obama were to offer to sign any balanced budget the Republicans could come up with, he would show them up for the frauds they are.

Look, there are two ways out of a debt crisis

A) You borrow more in the near term and grow your way out of the debt.

B) You crush the economy by radically reducing debt and hope you can build it back up.

No politician in his right mind is going to choose B, yet the Republicans pretend they would. So, I say that if they continue to ask for the political disaster of huge spending cuts, we not only give it to them, we jam it down their throats.  

C) Fight Real Power With Real Alternatives

If Republicans constantly cause financial bubbles and crashes, why do we allow conservatives to claim credibility when it comes to economics? Is it because of the Soviet Union? Look, among all the people here, I'm the biggest Marxist of the bunch and I HATED the Soviet Union. I hate Communist China. It's the Wall Street Journal and Jim Cramer who lavish disgusting, fawning praise on the Chinese Communist Party, not Progressives.

Conservatives don't care about rights and freedom, they care about money. Conservatives don't care about morals, they care about money. Conservatives live in a weird, perverted world where money equals merit and moral worth. Conservatives are nothing but degenerate sycophants to the rich.  

Here's what they don't understand: Money is an information technology.

The IT community is overwhelmingly Progressive. Even now, IT nerds are quietly taking over the financial world and that trend will only increase. Take my word for it, in finance there is a growing rift between the technocrats and the kleptocrats. This is because old way of thinking about finance ultimately pictures the world as a random array of people, each competing to build up his little pile of gold coins. Of course kleptocrats see it that way. That reflects kleptocratic values.

We Progressives don't need to turn the clock back, we just need -metaphorically, perhaps actually - to get Goldman Sachs out of and Google into the world of money. We Progressives have the power to re-think the structure of world finance as a community of people who owe each other good faith, fair value and honest effort.

Here are some practical steps we can take:

If Wall Street wants to rip off the people of Washington when our state does its financing, let's stop using Wall Street to do our financing. To the extent possible, let's make the finances of the state of Washington local and sustainable.

If we want to go to the world market for some of our financing, let's go directly. The state of Washington offers some of the safest investments in the world, denominated in what is now and will remain for the foreseeable future the world's most-favored currency. The state of Washington has some of the world's best IT companies. We have the product and the technology to deliver that product. We don't need Wall Street.

If the Federal Government won't regulate banks properly, let's change the laws in our state to favor our excellent credit unions so Washington's savings move to prudent managers.

If mortgage brokers, banks and insurance companies who operate in the state of Washington still want to cheat and lie, let's let their shareholders know our regulators will seize their assets and re-open the businesses for the benefit of new shareholders who will demand honest management.  

If President Obama and the rest of Washington D.C. won't listen to reason, let's start talking to Oregon and possibly even British Columbia about building the beginnings of a sustainable, regional public option for healthcare. Let's look into creating a regional healthcare payments system that bypasses the insurance companies that are out of control. Let's develop best practices in medical information technology. We may only be able to make a modest beginning, but it's better than waiting around for people who just don't get it.