Bobo has decided to tell us “What Republicans Think.” He gurgles that this election is about whether we try to work within the existing governing model or render it obsolete to build something fresh. Prof. Krugman says “We Don’t Need No Education,” and that a look at Mitt Romney’s accidental truth-telling reveals a lot about what conservatives really mean when they talk about shrinking government. Here’s Bobo:
Democrats frequently ask me why the Republicans have become so extreme. As they describe the situation, they usually fall back on some sort of illness metaphor. Republicans have a mania. President Obama has said that Republicans have a “fever” that he hopes will break if he is re-elected.
I guess I’d say Republicans don’t have an illness; they have a viewpoint. Let me describe it this way: In the 1950s, Dwight Eisenhower reconciled Republicans to the 20th-century welfare state. Between Ike and George W. Bush, Republican leaders basically accepted that model. Sure, they wanted to cut taxes and devolve power, but, in practice, they sustained the system, often funding it more lavishly than the Democrats.
But many Republicans have now come to the conclusion that the welfare-state model is in its death throes. Yuval Levin expressed the sentiment perfectly in a definitive essay for The Weekly Standard called “Our Age of Anxiety”:
“We have a sense that the economic order we knew in the second half of the 20th century may not be coming back at all — that we have entered a new era for which we have not been well prepared. … We are, rather, on the cusp of the fiscal and institutional collapse of our welfare state, which threatens not only the future of government finances but also the future of American capitalism.”
To Republican eyes, the first phase of that collapse is playing out right now in Greece, Spain and Italy — cosseted economies, unmanageable debt, rising unemployment, falling living standards.
America’s economic stagnation is just more gradual. In the decades after World War II, the U.S. economy grew by well over 3 percent a year, on average. But, since then, it has failed to keep pace with changing realities. The average growth was a paltry 1.7 percent annually between 2000 and 2009. It averaged 0.6 percent growth between 2009 and 2011. Wages have failed to keep up with productivity. Family net worth is back at the same level it was at 20 years ago.
In America as in Europe, Republicans argue, the welfare state is failing to provide either security or dynamism. The safety net is so expensive it won’t be there for future generations. Meanwhile, the current model shifts resources away from the innovative sectors of the economy and into the bloated state-supported ones, like health care and education. Successive presidents have layered on regulations and loopholes, creating a form of state capitalism in which big businesses thrive because they have political connections and small businesses struggle.
The welfare model favors security over risk, comfort over effort, stability over innovation. Money that could go to schools and innovation must now go to pensions and health care. This model, which once offered insurance from the disasters inherent in capitalism, has now become a giant machine for redistributing money from the future to the elderly.
This is the source of Republican extremism: the conviction that the governing model is obsolete. It needs replacing.
Mitt Romney hasn’t put it this way. He wants to keep the focus on President Obama. But this worldview is implied in his (extremely vague) proposals. He would structurally reform the health care system, moving toward a more market-based system. He would simplify the tax code. He would reverse 30 years of education policy, decentralizing power and increasing parental choice. The intention is the same, to create a model that will spark an efficiency explosion, laying the groundwork for an economic revival.
Democrats have had trouble grasping the Republican diagnosis because they don’t have the same sense that the current model is collapsing around them. In his speech in Cleveland on Thursday, President Obama offered an entirely different account of where we are. In the Obama version, the welfare-state model was serving America well until it was distorted a decade ago by a Republican Party intent on serving the rich and shortchanging the middle class.
In his speech, Obama didn’t vow to reform the current governing model but to rebalance it. The rich would pay a little more and everyone else would get a little more. He’d “double down” on clean energy, revive the Grand Bargain from last summer’s budget talks, invest in infrastructure, job training and basic research.
Obama championed targeted subsidies and tax credits. Republicans, meanwhile, envision comprehensive systemic change. The G.O.P. vision is of an entirely different magnitude: replace the tax code, replace the health care system and transform entitlements.
This is what this election is about: Is the 20th-century model obsolete, or does it just need rebalancing? Is Obama oblivious to this historical moment or are Republicans overly radical, risky and impractical?
Republicans and Democrats have different perceptions about how much change is needed. I suspect the likely collapse of the European project will profoundly influence which perception the country buys this November.
It’s cute when Bobo uses the word “think.” Here’s Prof. Krugman:
Hope springs eternal. For a few hours I was ready to applaud Mitt Romney for speaking honestly about what his calls for smaller government actually mean.
Never mind. Soon the candidate was being his normal self, denying having said what he said and serving up a bunch of self-contradictory excuses. But let’s talk about his accidental truth-telling, and what it reveals.
In the remarks Mr. Romney later tried to deny, he derided President Obama: “He says we need more firemen, more policemen, more teachers.” Then he declared, “It’s time for us to cut back on government and help the American people.”
You can see why I was ready to give points for honesty. For once, he actually admitted what he and his allies mean when they talk about shrinking government. Conservatives love to pretend that there are vast armies of government bureaucrats doing who knows what; in reality, a majority of government workers are employed providing either education (teachers) or public protection (police officers and firefighters).
So would getting rid of teachers, police officers, and firefighters help the American people? Well, some Republicans would prefer to see Americans get less education; remember Rick Santorum’s description of colleges as “indoctrination mills”? Still, neither less education nor worse protection are issues the G.O.P. wants to run on.
But the more relevant question for the moment is whether the public job cuts Mr. Romney applauds are good or bad for the economy. And we now have a lot of evidence bearing on that question.
First of all, there’s our own experience. Conservatives would have you believe that our disappointing economic performance has somehow been caused by excessive government spending, which crowds out private job creation. But the reality is that private-sector job growth has more or less matched the recoveries from the last two recessions; the big difference this time is an unprecedented fall in public employment, which is now about 1.4 million jobs less than it would be if it had grown as fast as it did under President George W. Bush.
And, if we had those extra jobs, the unemployment rate would be much lower than it is — something like 7.3 percent instead of 8.2 percent. It sure looks as if cutting government when the economy is deeply depressed hurts rather than helps the American people.
The really decisive evidence on government cuts, however, comes from Europe. Consider the case of Ireland, which has reduced public employment by 28,000 since 2008 — the equivalent, as a share of population, of laying off 1.9 million workers here. These cuts were hailed by conservatives, who predicted great results. “The Irish economy is showing encouraging signs of recovery,” declared Alan Reynolds of the Cato Institute in June 2010.
But recovery never came; Irish unemployment is currently more than 14 percent. Ireland’s experience shows that austerity in the face of a depressed economy is a terrible mistake to be avoided if possible.
And the point is that in America it is possible. You can argue that countries like Ireland had and have very limited policy choices. But America — which unlike Europe has a federal government — has an easy way to reverse the job cuts that are killing the recovery: have the feds, who can borrow at historically low rates, provide aid that helps state and local governments weather the hard times. That, in essence, is what the president was proposing and Mr. Romney was deriding.
So the former governor of Massachusetts was telling the truth the first time: by opposing aid to beleaguered state and local governments, he is, in effect, calling for more layoffs of teachers, policemen and firemen.
Actually, it’s kind of ironic. While Republicans love to engage in Europe-bashing, they’re actually the ones who want us to emulate European-style austerity and experience a European-style depression.
And that’s not just an inference. Last week R. Glenn Hubbard of Columbia University, a top Romney adviser, published an article in a German newspaper urging the Germans to ignore advice from Mr. Obama and continue pushing their hard-line policies. In so doing, Mr. Hubbard was deliberately undercutting a sitting president’s foreign policy. More important, however, he was throwing his support behind a policy that is collapsing as you read this.
In fact, almost everyone following the situation now realizes that Germany’s austerity obsession has brought Europe to the edge of catastrophe — almost everyone, that is, except the Germans themselves and, it turns out, the Romney economic team.
Needless to say, this bodes ill if Mr. Romney wins in November. For all indications are that his idea of smart policy is to double down on the very spending cuts that have hobbled recovery here and sent Europe into an economic and political tailspin.