"The GOP's Great Depression agenda"

Ryan Cooper at WaPo "Plum Line":

Paul Ryan has set everyone’s socks ablaze with a new comment suggesting he wants to shake down the country again over the debt limit. This inevitably inspired a lot of amateur psychoanalysis attempting to figure out whether he was serious or just pandering to the base. Whether that is true is an important thing to figure out, but the deeper subtext here is that the Republican Party continues to organize itself around the kind of austerity agenda that, should they obtain enough power to implement it, would cause another recession immediately, possibly a very bad one.


Let’s roll the tape:

“We, as a caucus, along with our Senate counterparts, are going to meet and discuss what it is we want to get out of the debt limit,” Mr. Ryan said on Fox News Sunday. “We don’t want ‘nothing’ out of the debt limit. We’re going to decide what it is we can accomplish out of this debt limit fight.”

The first thing that always comes to mind when top Republicans are saying crazy things is that it’s hard to know how serious they are being. As Steve Benen points out, Republicans’ last attempt to hold up the debt ceiling backfired spectacularly. It was a ransom demand so ludicrously irresponsible, so dangerous, such a violent insult to democratic legitimacy that Democrats literally had no choice other than to hold firm against it, across the board. So I suspect Steve is right when he says:

Yesterday, Ryan raised the specter of yet another crisis, in which Republicans would threaten to hurt Americans on purpose, but here’s the thing: we now know he and his party won’t actually follow through. GOP lawmakers can hold the proverbial gun to the nation’s head, but party leaders have already made it abundantly clear that they’re not prepared to pull the trigger.

So, when it comes to holding the nation’s full faith and credit hostage to get more austerity, Republicans probably don’t have the stones to go through with it. But, as Ed Kilgore never tires of pointing out, this dispute is entirely about tactics, and the agenda they actually do agree on amongst themselves would be a deeply destructive one if they could realize it.

Republicans have been so single-minded in pursuit of this agenda that even despite controlling only one half of one branch of government they have managed to impose a level of austerity unseen since the post-WWII demobilization. Currently, Republicans have less purchase on monetary policy, but they have a similarly harsh hard money agenda there too.

Paul Ryan, Republican policy king, has proposed that the Federal Reserve should be stripped of its mandate to combat unemployment, that the Fed should increase interest rates, and pegging the dollar to a basket of commodities gold standard-style.

All this basically adds up to Hoover-nomics. When the crash of 1929 gave a sharp shock to aggregate demand, Herbert Hoover went for balanced budgets and did not challenge the gold standard, thus cutting off both avenues for economic stimulus. In short order, unemployment reached 25%. All the electoral incentives in the world couldn’t convince him to change his mind, and he was absolutely crushed in 1932 polls. It took a generation for the GOP to recover its reputation.

Even some right-leaning thinkers are warning the GOP that their agenda (especially on monetary policy) could cause just such a crisis. But it is plain as day that the party’s political elites don’t believe them.

In many ways the mild, moderate nature of President Obama’s domestic agenda has been poison for Republicans. Since the base won’t allow any accommodation with anything Obama does, and since his economic policy has been conventional or even center-right, economics itself has been discredited in the GOP (a few reformist writers notwithstanding).

Whatever the motivations of Paul Ryan for his latest foray into extremist political tactics, there should be no doubt that Republicans are perfectly sincere in their desire for maximum austerity, no matter what the consequences for the country, and would implement it as savagely as possible if given the chance.