Speaking with television reporter Howard K. Smith in January 1971, Richard Nixon described himself as "now a Keynesian in economics." Smith later noted that because the GOP's basic economic philosophy involved budget balancing, a Republican following the pro-deficit, pro-spending John Maynard Keynes would make Calvin Coolidge "turn over in his grave."
The subsequent 40 years of GOP history must have made Coolidge's spinning corpse dizzy indeed. To borrow the Milton Friedman phrase often (and incorrectly) attributed to Nixon, Republicans are "all Keynesians now."
Sure GOP leaders have taken turns slapping Keynes. But as the Washington Post's Dana Milbank recently noted, the tax cuts versus stimulative spending debate occupying Washington "is largely premised on the Keynesian view that government should somehow boost demand in a recession." Remember the episode of Star Trek with the mirror universe Mr. Spock? You could tell he was sinister because of his goatee. The Republicans' economic philosophy these days is like Keynesianism with a goatee. They too want to run up big deficits to stimulate the economy.
In fact the GOP's deficit-detonating tax-cut proposals make the Democrats with their spending look like pikers. The stimulus bill, remember, cost $787 billion. The tax-cut bill that Senate GOP Leader Mitch McConnell unveiled last week—a combination of making permanent the Bush tax cuts and throwing in a host of other tax credits—has a price tag of around $3.9 trillion. For those keeping score at home, the self-styled party of fiscal responsibility wants to blow a hole in the budget nearly five times larger than the alleged profligacy they have spent the last year or more condemning.
Or to put it another way, the new GOP tax proposal would double the projected budget deficits over 10 years. Yes, these are the Age of Obama's guardians of fiscal responsibility, the people who have tirelessly and tiresomely proclaimed their rediscovered, Coolidge-ian budgetary rectitude and have piously bemoaned the crippling debt being foisted upon our children and grandchildren. Those concerns lasted right up until the GOP started ordering the new gavels for the committee chairmanships that conventional wisdom says are coming their way.
Robert's 10th Rule of Politics: A party's dedication to fiscal responsibility is inversely proportional to its political power. Money really is the mother's milk of post-Keynesian politics. The less influence your side has on how it's distributed, the more appealing not doling it out becomes.
Of course even during their time in the wilderness, the GOP commitment to balancing the budget was circumscribed by the party's bizarro Keynesian tax-cutting orthodoxy. Renewing the Bush tax cuts, at a piddling deficit cost of $2 trillion over 10 years, has been an article of faith. So too has the talking point that letting the tax cuts lapse would qualify as an "Obama tax increase." Let's be clear: George W. Bush and the GOP-ers in Congress passed the tax bills, including the sunset provisions (which were necessary for the illusion of fiscal responsibility). Bush and the GOP own any 2011 tax increases as surely as they have the tax cuts for a decade.
Last week's $3.9 trillion offer is just a pipe dream, of course, a campaign ploy. The real tax action in coming weeks will involve whether to extend the Bush cuts for people making more than $250,000. What's striking about the debate is the extent to which Republicans are on the wrong side of it. Almost a dozen nonpartisan polls over the last couple of months have asked about extending the Bush tax cuts for those making over $250,000. The answers are surprisingly consistent. The New York Times/CBS News poll released last week is typical, with 53 percent favoring Obama's plan to roll back the tax cuts on those making over $250,000. Or look at last week's Pew Research Center poll, which showed that 29 percent of Americans favor extending all the tax cuts.