Making Sense of the New American Right

Keeping track of the Jacksonians, Reformicons, Paleos, and Post-liberals.

I like to start my classes on conservative intellectual history by distinguishing between three groups. There is the Republican party, with its millions of adherents and spectrum of opinion from very conservative, somewhat conservative, moderate, and yes, liberal. There is the conservative movement, the constellation of single-issue nonprofits that sprung up in the 1970s

  • gun rights,
  • pro-life,
  • taxpayer,
  • right to work

— and continue to influence elected officials. Finally, there is the conservative intellectual movement: writers, scholars, and wonks whose journalistic and political work deals mainly with ideas and, if we’re lucky, their translation into public policy.

The Trump coverup no one is talking about: The emperor has no money

But Trump’s theatrics were also very convenient because they disguised the fact that he cannot now, or ever, deliver on his signature promise to create a “great” infrastructure program. This is why Trump “infrastructure weeks” have become a standing joke in Washington. LaTourette was right: The Republican Party is no longer interested in spending public money to solve big problems if doing so gets in the way of cutting taxes.

LaTourette explained this in his rough-and-ready way back in 2011 when he called the 2010 tea party class of Republicans “knuckledraggers that came in in the last election that hate taxes.”

One of those newcomers was Mick Mulvaney, now Trump’s acting chief of staff and budget director. From the moment Trump, Pelosi and Schumer announced their convergence on a $2 trillion infrastructure plan last month, Mulvaney began sabotaging it. “Is it difficult to pass any infrastructure bill in this environment, let alone a $2 trillion one, in this environment? Absolutely,” Mulvaney said.

He was far from alone because the entire Republican leadership in Congress is now part of the Knuckledraggers Caucus. Senate Majority Leader Mitch McConnell quickly signaled that he had absolutely no interest in a big infrastructure plan if it required rolling back any part of the GOP’s 2017 corporate tax cut.

Democrats argue that because business is clamoring for infrastructure, it would make sense to ask business to foot part of the bill. They have suggested raising the corporate tax rate to 25 percent from the 21 percent enshrined in the 2017 law and pulling back on some of its other provisions.

No way, say the Republicans. A “nonstarter,” declared McConnell. Faced with the choice of bridges collapsing in a heap or reining in the tax giveaways, the bridges don’t have much of a chance.

Note that the meeting Trump sabotaged was about how to finance the plan. He had no way of coming up with anything constructive because, for all of his bravado, he is totally under the thumb of Congress’s conservative ideologues. His tantrum was part of the coverup no one is talking about: The emperor has no money.

This fact underscores a widespread misunderstanding about our politics. “Normal” Republicans are regularly described as privately horrified with Trump. Trump is said to have engaged in “a hostile takeover” of the GOP.

In fact, it’s Trump who has been taken over. He campaigned as a different kind of Republican, and his infrastructure promise was a major component of his antiideological image. But on all the things the ideologues and right-wing business interests care about

  1.  tax cuts,
  2. corporatist judges,
  3. deregulation —

Trump caves in.

We know the president’s boast that he “could stand in the middle of Fifth Avenue and shoot somebody and I wouldn’t lose any votes.” Perhaps Republicans in Congress wouldn’t go that far. Otherwise, they’ll keep standing with him as long as he prostrates himself before their tax-cutting god, even if this means showing he is too weak and powerless to fix the roads.

Ignorance Abounds About Supply-Side Economics

The movement’s main founder, Robert A. Mundell, wrote prolifically on the subject avant la lettre in top economics journals in the 1960s and 1970s. Mundell’s protégé at the University of Chicago, Arthur B. Laffer, did the same, then branched out to a consulting business where he put out some 50 papers per year that dilated on supply-side economics.

Archives? The Hoover Institution in California has hundreds of boxes of papers of the first journalistic supply-siders, Wall Street Journal editor Robert L. Bartley and his assistant Jude Wanniski. As for supply-side economics’ Congressional lodestar, Jack Kemp, there are more boxes on end at the Library of Congress.

I looked and looked at all this stuff, and a definition emerged clear as the sky. This was that supply-side economics favored a particular way of solving the kind of recessions we have been prone to since the founding of the Federal Reserve and the income tax, both in the year 1913. This is to stabilize the dollar and cut taxes.

This definition—stabilize money and cut taxes—was repeated so often, so uniformly, and over so much time by the original supply-siders that it became possible to identify a canonical statement, the Ur-document, the quintessential rendering of the supply-siders as to their philosophy.

This is it, from a paper Mundell wrote in 1971: “The correct policy mix is based on fiscal ease to get more production out of the economy, in combination with monetary restraint….The increased momentum of the economy provided by…a tax cut will cause a sufficient demand for credit to permit real monetary expansion at higher interest rates.

As for details, to a one the supply-siders favored tax cuts of the marginal and capital-gains variety, and monetary stability in the form of a gold-anchored dollar.

Readers of this column can be forgiven for asking if I haven’t been repeating myself. Haven’t I availed of the above Mundell quotation in recent columns, keen to point out that supply-side economics is a policy mix of two things, stable money and marginal tax cuts?

Indeed I am repeating myself—for an all too appropriate reason.

Last week, for the umpteenth time, a major, credentialed economist wrote an article, one read far and wide, contending that supply-side economics has to do exclusively with tax cuts. There is probably no bigger economics blogger than Mark Thoma, and marginal-tax-cuts-equal-supply-side-economics is what he made his supposition in “Why the GOP Won’t Admit Supply-Side Econ Has Failed.”

You can click on the link to see Thoma go about all this, but the essential thing is as follows. There is no credible historical evidence ever produced by a scholar that has served to delink monetary issues from the core doctrine of supply-side economics. In fact, all primary evidence ever produced as to the central claims of supply-side economics has confirmed that supply-siders insisted that monetary restraint and progress toward a gold standard is as crucial as any kind of tax policy. To say otherwise is to speak in the absence of evidence.

But in current circumstances, you see how it can be so…tempting…to say that supply-side economics was only ever a policy of tax cuts. This is because the George W. Bush tax cuts—those things on the chopping block in this fiscal cliff drama—supervised a mere boomlet in the mid-2000s, and then the Great Recession after 2008. If you trash W.’s policy by calling it supply-side, then by association you can discredit the Reagan success too. Conservative economic policy: a comprehensive failure in its decades-long response to Keynes!

Go back to the record ten years ago and see if the supply-siders were unconcerned about monetary issues, as the Bush-era Fed made money as loose as it was in the 1970s. See if Robert Mundell quit on the idea of a unitary dollar-euro exchange rate and an anchor akin to gold. See if the second generation of supply-siders, the next round of journalists and Congressmen (such as Kemp trainee Rep. Paul Ryan) didn’t call out the money-printing 2000s as making the W. tax cuts nothing but a “small, ambiguous reprise” of the great tradition, as I would put it in the book, Econoclasts, which came out in 2009.

But “everyone knows” that supply-side economics’ main, if not exclusive concern was with tax cuts, and that’s good enough for Mark Thoma. Cui bono from burying the true history of the objectives of supply-side economics? Fiscal-cliff corner-cutters and their enablers, but certainly not sincere political economists trying to master our recent history for the purpose of getting our once-great economy back in good repair.