George H.W. Bush was the accidental catalyst that built the new Republican Party

It was a statement designed to jump-start budget talks that had been stalled for months. It did that and more, providing the catalyst that changed the Republican Party into an aggressive and hard-edge brand of conservatism that would hold sway for two decades.

The statement was a renunciation of one of the most famous campaign promises in modern American politics: Bush’s declaration of “no new taxes,” which he made as he accepted the Republican nomination in 1988. The pledge was a bow to conservatives, who always regarded him with suspicion, if not outright hostility. When he reneged on the promise, they exacted revenge.

.. As president, Bush proved that experience matters, that knowledge of the world is an asset, that careful and methodical can be more effective than big and bold, that responsibility to country takes precedence over loyalty to party, even if sometimes it comes at great cost, that compromise is not a dirty word.

..  If Reagan’s presidency hastened the end of the Cold War, it was left to Bush to manage the decline and fall of the Soviet empire and to do so safely and without bloodshed. He accomplished that with skill and strategy, aided by Secretary of State James A. Baker III, a longtime friend, and trusted national security adviser Brent Scowcroft.
.. After the war ended, with U.S. forces ordered to stop short of Baghdad, Bush’s approval rating soared close to 90 percent, scaring away veteran Democrats who were thinking of challenging him. Twenty-one months later, he was driven from office by the voters. A transition inside the Republican Party that was already underway accelerated.
.. Two years after that, the House was in Republican hands for the first time in 40 years, and the dominant figure in the party was House Speaker Newt Gingrich, who was the antithesis of the defeated president in so many ways. The party began to shift from a philosophy of smaller government to one of anti-government, particularly anti-Washington.
The statement that appeared on the bulletin board in the White House pressroom on that morning in June 1990 showed Bush to be a president who was prepared both to compromise with the Democrats, even if it meant breaking a campaign promise, for what he believed were the best interests of the country and to take personal responsibility for his actions.

.. The statement that appeared on the bulletin board in the White House pressroom on that morning in June 1990 showed Bush to be a president who was prepared both to compromise with the Democrats, even if it meant breaking a campaign promise, for what he believed were the best interests of the country and to take personal responsibility for his actions.

.. The conflicting interests of Bush and the Gingrich forces continued for the duration of Bush’s presidency. Gingrich’s wing saw conflict with the Democrats as essential to creating sharp differences between the parties; Bush saw cooperation with congressional Democrats in the name of effective governing as essential for the country and, he hoped, for winning reelection as president. On that, he proved mistaken.

.. As other Republicans lamented the fall of a president whom they much admired, those in the forefront of creating the new Republican Party were relieved that Bush had been defeated.
.. Tom DeLay, who would become House majority whip, later told me of his feelings on the night Bush lost in 1992. “Oh, man, yeah, it was fabulous,” DeLay said in a 1995 interview. DeLay admitted then that he had feared that, if Bush were reelected, it would mean “another four years of misery” for House GOP conservatives. He acknowledged mixed feelings about seeing the White House fall into Democratic hands but added, “If we had another four years of this [Bush], we’d never take over the Congress.”
.. Bush’s eldest son, George W. Bush, sought to restore something of his father’s sensibility to the GOP when he ran for president in 2000 and won the White House as a “compassionate conservative.” But he could neither remake nor retrofit the party. Though he was more conservative than his father, he nonetheless drew the ire of those on the right on issues such as immigration and spending.
.. The end of George W. Bush’s presidency further accelerated the changes within the Republican coalition, including the rise of a tea party movement that brought an even more unyielding form of anti-government conservatism. Today President Trump is redefining the party in his own image, moving it ever further from the GOP over which George H.W. Bush presided.

From Economic Crisis to World War III

The response to the 2008 economic crisis has relied far too much on monetary stimulus, in the form of quantitative easing and near-zero (or even negative) interest rates, and included far too little structural reform. This means that the next crisis could come soon – and pave the way for a large-scale military conflict.

BEIJING – The next economic crisis is closer than you think. But what you should really worry about is what comes after: in the current social, political, and technological landscape, a prolonged economic crisis, combined with rising income inequality, could well escalate into a major global military conflict.

The 2008-09 global financial crisis almost bankrupted governments and caused systemic collapse. Policymakers managed to pull the global economy back from the brink, using massive monetary stimulus, including quantitative easing and near-zero (or even negative) interest rates.

But monetary stimulus is like an adrenaline shot to jump-start an arrested heart; it can revive the patient, but it does nothing to cure the disease. Treating a sick economy requires structural reforms, which can cover everything from financial and labor markets to tax systems, fertility patterns, and education policies.

Policymakers have utterly failed to pursue such reforms, despite promising to do so. Instead, they have remained preoccupied with politics. From Italy to Germany, forming and sustaining governments now seems to take more time than actual governing. And Greece, for example, has relied on money from international creditors to keep its head (barely) above water, rather than genuinely reforming its pension system or improving its business environment.

The lack of structural reform has meant that the unprecedented excess liquidity that central banks injected into their economies was not allocated to its most efficient uses. Instead, it raised global asset prices to levels even higher than those prevailing before 2008.

In the United States, housing prices are now 8% higher than they were at the peak of the property bubble in 2006, according to the property website Zillow. The price-to-earnings (CAPE) ratio, which measures whether stock-market prices are within a reasonable range, is now higher than it was both in 2008 and at the start of the Great Depression in 1929.

As monetary tightening reveals the vulnerabilities in the real economy, the collapse of asset-price bubbles will trigger another economic crisis – one that could be even more severe than the last, because we have built up a tolerance to our strongest macroeconomic medications. A decade of regular adrenaline shots, in the form of ultra-low interest rates and unconventional monetary policies, has severely depleted their power to stabilize and stimulate the economy.

If history is any guide, the consequences of this mistake could extend far beyond the economy. According to Harvard’s Benjamin Friedman, prolonged periods of economic distress have been characterized also by public antipathy toward minority groups or foreign countries – attitudes that can help to fuel unrest, terrorism, or even war.

For example, during the Great Depression, US President Herbert Hoover signed the 1930 Smoot-Hawley Tariff Act, intended to protect American workers and farmers from foreign competition. In the subsequent five years, global trade shrank by two-thirds. Within a decade, World War II had begun.

To be sure, WWII, like World War I, was caused by a multitude of factors; there is no standard path to war. But there is reason to believe that high levels of inequality can play a significant role in stoking conflict.

According to research by the economist Thomas Piketty, a spike in income inequality is often followed by a great crisis. Income inequality then declines for a while, before rising again, until a new peak – and a new disaster.

This is all the more worrying in view of the numerous other factors stoking social unrest and diplomatic tension, including

  • technological disruption, a
  • record-breaking migration crisis,
  • anxiety over globalization,
  • political polarization, and
  • rising nationalism.

All are symptoms of failed policies that could turn out to be trigger points for a future crisis.

.. Voters have good reason to be frustrated, but the emotionally appealing populists to whom they are increasingly giving their support are offering ill-advised solutions that will only make matters worse. For example, despite the world’s unprecedented interconnectedness, multilateralism is increasingly being eschewed, as countries – most notably, Donald Trump’s US – pursue unilateral, isolationist policies. Meanwhile, proxy wars are raging in Syria and Yemen.

Against this background, we must take seriously the possibility that the next economic crisis could lead to a large-scale military confrontation. By the logicof the political scientist Samuel Huntington , considering such a scenario could help us avoid it, because it would force us to take action. In this case, the key will be for policymakers to pursue the structural reforms that they have long promised, while replacing finger-pointing and antagonism with a sensible and respectful global dialogue. The alternative may well be global conflagration.

Trump’s Diminishing Power and Rising Rage

None of Trump’s extremist policy ideas has received public support. The public opposed last year’s

  1. Republican-backed corporate tax cut, Trump’s
  2. effort to repeal the Affordable Care Act (Obamacare), his
  3. proposed border wall with Mexico, the decision to
  4. withdraw from the Iran nuclear agreement, and the
  5. imposition of tariff increases on China, Europe, and others.
  6. At the same time, contrary to Trump’s relentless promotion of fossil fuels (coal, oil, and gas), the public favors investments in renewable energy and remaining in the Paris climate agreement.

.. Trump has tried to implement his radical agenda using three approaches.

1) The first has been to rely on the Republican majorities in the two houses of Congress to pass legislation in the face of strong popular opposition. That approach succeeded once, with the 2017 corporate tax cut, because big Republican donors insisted on the measure, but it failed with Trump’s attempt to repeal Obamacare, as three Republican senators balked.

.. 2)  The second approach has been to use executive orders to circumvent Congress. Here the courts have repeatedly intervened, most recently within days of the election, when a federal district court halted work on the Keystone XL Pipeline, a project strongly opposed by environmentalists, on the grounds that the Trump administration had failed to present a “reasoned explanation” for its actions. Trump repeatedly and dangerously oversteps his authority, and the courts keep pushing back.

.. 3) Trump’s third tactic has been to rally public opinion to his side. Yet, despite his frequent rallies, or perhaps because of them and their incendiary vulgarity, Trump’s disapproval rating has exceeded his approval rating since the earliest days of his administration. His current overall disapproval rating is 54%, versus 40% approval, with strong approval from around 25% of the public. There has been no sustained move in Trump’s direction.

.. In the midterm elections, which Trump himself described as a referendum on his presidency, the Democratic candidates for both the House and Senate vastly outpolled their Republican opponents. In the House races, Democrats received 53,314,159 votes nationally, compared with 48,439,810 for Republicans. In the Senate races, Democrats outpolled Republicans by 47,537,699 votes to 34,280,990.

.. Summing up votes by party for the three recent election cycles (2014, 2016, and 2018), Democratic Senate candidates outpolled Republican candidates by roughly 120 million to 100 million. Nonetheless, the Republicans hold a slight majority in the Senate, where each state is represented by two senators, regardless of the size of its population, because they tend to win their seats in less populous states, whereas Democrats prevail in the major coastal and Midwestern states.

Wyoming, for example, elects two Republican senators to represent its nearly 580,000 residents, while California’s more than 39 million residents elect two Democratic senators. 

Without control of the House, however, Trump will no longer be able to enact any unpopular legislation. Only policies with bipartisan support will have a chance of passing both chambers.

.. On the economic front, Trump’s trade policies will become even less popular in the months ahead as the American economy cools from the “sugar high” of the corporate tax cut, as growing uncertainty about global trade policy hamstrings business investment, and as both the budget deficit and interest rates rise. Trump’s phony national-security justifications for raising tariffs will also be challenged politically and perhaps in the courts.

.. True, Trump will be able to continue appointing conservative federal judges and most likely win their confirmation in the Republican-majority Senate. And on issues of war and peace, Trump will operate with terrifyingly little oversight by Congress or the public, an affliction of the US political system since World War II. Trump, like his recent predecessors, will most likely keep America mired in wars in the Middle East and Africa, despite the lack of significant public understanding or support.

.. Nonetheless, there are three further reasons to believe that Trump’s hold on power will weaken significantly in the coming months. First, Special Counsel Robert Mueller may very well document serious malfeasance by Trump, his family members, and/or his close advisers. 

.. Second, the House Democrats will begin to investigate Trump’s taxes and personal business dealings, including through congressional subpoenas. There are strong reasons to believe that Trump has committed serious tax evasion (as the New York Times recently outlined) and has illegally enriched his family as president (a lawsuit that the courts have allowed to proceed alleges violations of the emoluments clause of the Constitution). Trump is likely to ignore or fight the subpoenas, setting the stage for a major political crisis.

.. Third, and most important, Trump is not merely an extremist politician. He suffers from what author Ian Hughes has recently called “a disordered mind,” filled with

  • hate,
  • paranoia, and
  • narcissism.

According to two close observers of Trump, the president’s grip on reality “will likely continue to diminish” in the face of growing political obstacles, investigations into his taxes and business dealings, Mueller’s findings, and an energized political opposition. We may already be seeing that in Trump’s erratic and aggressive behavior since the election.

.. The coming months may be especially dangerous for America and the world. As Trump’s political position weakens and the obstacles facing him grow, his mental instability will pose an ever-greater danger. He could explode in rage, fire Mueller, and perhaps try to launch a war or claim emergency powers in order to restore his authority. We have not yet seen Trump in full fury, but may do so soon, as his room for maneuver continues to narrow. In that case, much will depend on the performance of America’s constitutional order. 

If a Prince Murders a Journalist, That’s Not a Hiccup

Frankly, it’s a disgrace that Trump administration officials and American business tycoons enabled and applauded M.B.S. as he

  • imprisoned business executives,
  • kidnapped Lebanon’s prime minister,
  • rashly created a crisis with Qatar, and
  • went to war in Yemen to create what the United Nations calls the world’s worst humanitarian crisis there.

Some eight million Yemenis on the edge of starvation there don’t share this bizarre view that M.B.S. is a magnificent reformer.

.. Trump has expressed “great confidence” in M.B.S. and said that he and King Salman “know exactly what they are doing.” Jared Kushner wooed M.B.S. and built a close relationship with him — communicating privately without involving State Department experts — in ways that certainly assisted M.B.S. in his bid to consolidate power for himself.

The bipartisan cheers from Washington, Silicon Valley and Wall Street fed his recklessness. If he could be feted after kidnapping a Lebanese prime minister and slaughtering Yemeni children, why expect a fuss for murdering a mere journalist?

.. M.B.S. knows how to push Americans’ buttons, speaking about reform and playing us like a fiddle. His willingness to sound accepting of Israel may also be one reason Trump and so many Americans were willing to embrace M.B.S. even as he was out of control at home.

In the end, M.B.S. played Kushner, Trump and his other American acolytes for suckers. The White House boasted about $110 billion in arms sales, but nothing close to that came through. Saudi Arabia backed away from Trump’s Middle East peace deal. Financiers salivated over an initial public offering for Aramco, the state-owned oil company, but that keeps getting delayed.

.. The crackdown on corruption is an example of M.B.S.’s manipulation and hypocrisy. It sounded great, but M.B.S. himself has purchased a $300 million castle in France, and a $500 million yacht — and he didn’t buy them by scrimping on his government salary.

.. In fairness, he did allow women to drive. But he also imprisoned the women’s rights activists who had been campaigning for the right to drive.

Saudi Arabia even orchestrated the detention abroad of a women’s rights activist, Loujain al-Hathloul, and her return in handcuffs. She turned 29 in a Saudi jail cell in July, and her marriage has ended. She, and not the prince who imprisons her, is the heroic reformer.

.. The crown prince showed his sensitivity and unpredictability in August when Canada’s foreign ministry tweeted concern about the jailing of Saudi women’s rights activistsSaudi Arabia went nuts, canceling flights, telling 8,300 Saudi students to leave Canada, expelling the Canadian ambassador and withdrawing investments. All for a tweet.

.. Western companies should back out of M.B.S.’s Future Investment Initiative conference later this month. That includes you,

  • Mastercard,
  • McKinsey,
  • Credit Suisse,
  • Siemens,
  • HSBC,
  • BCG,
  • EY,
  • Bain and
  • Deloitte,

all listed on the conference website as partners of the event.

.. We need an international investigation, perhaps overseen by the United Nations, of what happened to Jamal. In the United States, we also must investigate whether Saudis bought influence with spending that benefited the Trump family, such as $270,000 spent as of early 2017 by a lobbying firm for Saudi Arabia at the Trump hotel in Washington. The Washington Post reported that Saudi bookings at Trump Chicago increased 169 percent from the first half of 2016 to the first half of this year, and that the general manager of a Trump hotel in New York told investors that revenues rose partly because of “a last-minute visit to New York by the Crown Prince of Saudi Arabia.”

.. If Saudi Arabia cannot show that Jamal is safe and sound, NATO countries should jointly expel Saudi ambassadors and suspend weapons sales. The United States should start an investigation under the Magnitsky Act and stand ready to impose sanctions on officials up to M.B.S.

America can also make clear to the Saudi royal family that it should find a new crown prince. A mad prince who murders a journalist, kidnaps a prime minister and starves millions of children should never be celebrated at state dinners, but instead belongs in a prison cell.