Tuesday, October 12, 2010

More entries in the Herbert Hoover look-alike contest

We tend to forget that Herbert Hoover was once unremitting in his scorn for the "idle rich," thought inherited wealth was practically sinful, favored steeply graduated income taxes and estate taxes "for the deliberate purpose of disintegrating large fortunes," and frequently decried the unfair distribution of income between capital and labor.

What we remember him for is his unfeeling disregard for the suffering of those who lost jobs, homes, and farms in the Depression. So did the voters, who did not again elect a Republican to the White House for another 20 years, and who gave the GOP a majority in the House only twice in the following 60 years.

Today's Republicans have done a remarkable job of trying to sound like the heartless Herbert Hoover. It can't be because it's good politics; it must be because they can't help themselves. A whole line of GOP candidates have been insisting this year, for example, that unemployment is the product of lazy workers. Rep. Steve King of Iowa explained that he was against extending unemployment benefits because "we shouldn't turn the 'safety net' into a hammock." Sen. Jon Kyl of Arizona, the Republican whip, said that "continuing to pay people unemployment compensation is a disincentive for them to seek new work." And Rep. Michele Bachmann of Minnesota denounced aid to the states to prevent hundreds of thousands of teachers from being laid off as a "bailout," as did the House minority leader and Speaker apparent John Boehner.

All of those statements are remarkably close in substance to actual Herbert Hoover quotes from 1931 and 1932. But where the Republicans manage to quote Hoover almost (and in several cases literally) word for word is in the line "we can't squander ourselves into prosperity." Last week Boehner again reprised this bit of Hooveresque wisdom, declaring “the greatest threat to job creation in our country is the flawed idea that we can tax, spend and borrow our way to prosperity.’’

The alternative, as the Senate minority leader Mitch McConnell explained, is to cut taxes on the rich — "the people who’ve been hit hardest by this recession and who we need to create the jobs that will get us out of it." This, of course, is a reprise of the Reagan-era "supply-side" fantasy that economic growth is determined by how much stuff we can make, and not by the trivial question of whether anyone is willing and able to buy it. An interesting measure of the validity of this concept was just provided by a report that with interest rates hovering near zero percent, companies have been borrowing huge amounts — some $1.6 trillion — and sitting on the money (after all, it might come in handy . . .). What the private sector is not doing with its ready access to cash and credit is to build plants, buy goods and services, and hire workers.

The concept of the government stepping in to borrow and actually spend money in such a situation of economic stagnation is not complicated. As Abraham Lincoln remarked (okay, perhaps apocryphally) of his do-nothing general of the Army of the Potomac, George McClellan, during the Civil War, "If General McClellan is not using his army, I should like to borrow it for some time."