The Budget Deficit and the Tea Party Frankenstein

April 17, 2011

Last week, in response to Paul Ryan’s Republican plan, President Obama presented his own budget blueprint.  From a Machiavellian perspective, the dynamics of the opposing power blocks are more enlightening than the two plans.   Most interesting of all, the associated Republican propaganda has created a political Frankenstein.

There is an important underlying issue that comes in two parts.  First, between 1972 and 2001, real wages for the top 1% of Americans (a key constituency of the Republican Party) jump by 100 percent.  However, gains for Americans at the 50th percentile were meager, roughly 7%.  (I am relying on numbers from Janet L. Yellen, President and CEO, Federal Reserve Bank of San Francisco November 6, 2006 ). 

Second, since the 1990s, productivity has increased at 3% per year.  If you put these two facts together, it is fair to conclude that the benefits of the productivity increase ended up in the pockets of the top 1%. 

There are several ramifications.

  • To protect its gains, the 1% pressured the Bush administration for tax cuts.  Granting those cuts created a revenue shortfall that resulted in a budget deficit. 
  • Most Americans, including the base constituencies of both political parties (neither of whom are part of the 1%), have suffered a loss of status.  In our materialistic, consumer society, this loss of status has translated into widespread envious dissatisfaction.
  • The 1% has been able to translate its economic resources into political power and become an emerging oligarchy.   The oligarchy has been increasingly able to operate America’s corporations and its government in their own short term best interests. This has escalated the feeling of discontent in to pervasive political dissatisfaction.  Most Americans feel that the country is headed in the wrong direction.

The Republican Party’s elite constituency is made up primarily of oligarchs; whereas, the party’s base is made up of traditional conservatives and the religious right, essentially old white people. 

The Democratic Party’s elite constituency is made up primarily of upper middle class professionals and liberal idealists; whereas, the party’s base is made up of Blacks and Hispanics.

Unsurprisingly the two parties’ budget proposals reflect the interests of the party elites.

  • Republicans propose to cut government services but keep the tax cuts for their elite.  Unfortunately this obliges them to cut some services for their base.  They mitigate this side effect by rhetoric and by making the most severe cuts fall on the young and people of color (i.e. the Democratic base).
  • Democrats have proposed to tax those who have a level of income that falls above that of their elite.  The added revenue allows the Democrats to propose less severe cuts in entitlement programs, which are political payoffs to their base constituents.

Democratic rhetoric has been muted, because they too rely on campaign contributions from the oligarchy.  To be sure, oligarchs prefer to fund the Republicans, but they do their best to co-opt influential Democrats, particularly those that cannot be defeated because they occupy safe seats.  Democrats have not been confrontational, but have relied on their standard liberal rhetoric, which is largely harmless, but sets a Machiavellian’s political realist teeth on edge.  According to the Democratic dream world vision all children want to learn, discipline is unnecessary, education is optional, criminals are easily reformed, everyone is entitled to entitlements, and in foreign affairs, all we need is to give peace a chance.  

However, since continuing tax cuts for the 1% is not in the interests of the base of its own party (much less that of the Democrats), Republican rhetoric has had to leap well beyond simple persuasion. 

The deficit presents an awkward fact. In reality the deficit is due to (A) the revenue shortfall created by the Bush tax cuts, and (B) one-time factors including the wars in Iraq and Afghanistan, and by the recession, which necessitated a bailout and a stimulus package.  The onetime factors are, of course, a direct result of mismanagement by the Bush administration.  To explain away this problem the Republican propaganda machine has floated the idea that the deficit is due to a pattern of over spending. 

Even with mismanagement America’s budget deficit is not out of line with that of our European allies.  However, to continue to push its agenda Republicans have portrayed it as a crisis and have whipped its media allies into frenzy about the “Deficit of Mass Destruction.” 

The Republican propaganda machine has constructed an alternative vision that is so divorced from reality as to be delusional.  The main tenants of this alternative reality include: the god-like wisdom of the free market, the virtue of personal responsibility, and the evils of government.  Unfortunately the recent mortgage crisis demonstrated a massive failure of the free market, and a corresponding failure of personal responsibility at all levels.  Worse still, corporate America had to be bailed out by emergency funding from the hated Federal Government.   In the face of this stubborn reality, the right wing vision is a sort of paranoid delusion in search of a host. 

The delusion has found many hosts among those who are victims of income inequality and the ensuing crisis of envy and political dissatisfaction.  The readymade paranoid fantasy has attracted to the Republican banner a entire cult of people who seem to have Schizotypal disorder.  This is an official personality warp that is characterized by odd beliefs (magical thinking), suspiciousness, obsessive elaborate and stereotyped thoughts, odd speech, and delusional ideas.  Think for example of talk show hosts such as Glen Beck. These people have organized themselves into a cult, the Tea Party, which has taken on a life of its own.  Unfortunately for the Republican hierarchy, as in the Frankenstein story, the thing has got a bit out of control.

For example, in the budget compromise passed in the House last Friday, 59 Tea Party members voted against the party elite. The crisis nature of the budget debate, the threatened government shutdown, and the Republican defections are unsettling for the world financial system.  The political mess raises the specter that America may not be able to reach pragmatic policy decisions that are in its own interests.  Clearly, if we have a genuine debt crisis, we should be doing everything possible to down play it. 

The next political showdown will come near the May 16th deadline for raising the Federal debt-ceiling.  The Frankenstein faction again threatens to push the Republican Party into creating yet another crisis, but this time it may have dire consequences.  According to the Wall Street Journal, Rep. Michael Grimm is warning his Republican colleagues that “Wall Street understands that if we default on our obligations, our markets are going to crash,” By its inflexible stance the Tea Party cult has set up a dynamic of catastrophe.  The party’s Schizotypal rhetoric will repel independent voters.  As the Tea Party cult takes control, the Republican Party will expel its political realists. The repulsions and expulsions will make the Republican Party increasingly desperate and confrontational.  In the end, demographics are against a party of crazy old white people.  The Republican Party will implode and America will then have to rely on the Democratic Party for political realism and that too is a Machiavellian horror story.

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