Grover Norquist’s Leaky Bathtub

DHinMI has another very interesting post about prospects for the Democrats in the upcoming election in 2006. He hit one hot button of mine. The promise of a disturbing history of economic sabotage yet to unfold. The Bush Administration has planted several booby-traps in our economy that may well enable them to accomplish their long range goal of shrinking the Federal government at the expense of the poor most of all, but also the middle class.
The Next Hurrah

The political trends seem to be converging in ways that suggest that Grover Norquist will not achieve his goal of reducing government to a size where he could “drag it into the bathroom and drown it in the bathtub.” And for abetting Norquist’s’ pursuit of his insane and megalomaniacal dream, the Republican party is on the verge of losing control of Congress and losing the benefits of the (mistaken) perception that they have had momentum and popular support behind their unending attacks on government and governance. Just as George W. Bush and Karl Rove let Grover Norquist get his hands on government and he dragged it to the bathroom to drown it, America appears to have pulled the plug from the tub.

Unfortunately, too much water may have already run out of the tub. Grover Norquist had an idea that caught on with conservatives a long time ago, long enough for them to have improved on the idea. It started with Ronald Reagan. He decided he would make sure that America's appetite for government spending would be forever squelched by a plan that might also help Reagan with his other great ambition, winning the Cold War by escalating the arms race until the Soviet Union economy collapsed. It's called "starving the beast". Bill Moyers spoke of the plan in June of 2004.

Senator Daniel Patrick Moynihan tried to warn us 20 years ago, when he predicted that President Ronald Reagan's real strategy was to force the government to cut domestic social programs by fostering federal deficits of historic dimensions.

But then Bill Clinton did what no Democrat was ever expected to do, he balanced the Federal Budget without significantly raising income taxes. That was a major setback for the foes of big government. So when Bush took office, he was determined to further Reagan's policies. Then 9/11 presented him with an historic opportunity. He would spend the US economy so deep in debt that no matter what happened in future elections, there would be so much owed in the National Debt, government would have to dramatically increase taxes or shrink the Federal budget just to allow payment of interest on the colossal outstanding loan. John Podesta understands the problem. He was the last chief of staff to serve under Clinton and currently heads the Center for American Progress. He was quoted in a January 2005 New York Times Magazine article, "Breaking the Code" by Nicholas Confessore.

Podesta has little faith in the conservatives' trickle-down approach. He also says it is bad economic policy -- "fatally flawed," as he put it. "We're already seeing the current account deficit increase by $600 billion a year," he continued. "People are mortgaged to the hilt. The middle class is now being fundamentally squeezed. They've gotten no benefit from the tax reduction. G.D.P. growth is going almost all to corporate profits. And we're creating an overall economic circumstance in which the dollar is certain to drop, interest rates are certain to rise and growth over the long term looks kind of sketchy." To understand why the G.O.P. has pursued such a policy, Podesta argues, you have to look at the political dividends, not the economic ones. "What are the structural elements of what they are trying to do with the tax code?" he began, busying himself at a small coffee machine. "I would say there are three. One is to eliminate taxation on wealth and investment. Second is to create a revenue stream that aims at a government the size of which we haven't seen almost since before the Depression." Already, he points out, the government takes in far less than it spends, forcing the Bush administration to borrow billions of dollars to cover the revenue lost from cutting taxes. "Three is that if you build in taxation only on wage income, you have massive resistance by the middle class to letting those taxes rise. So you've kind of locked in three structural components that end up being highly beneficial to wealthy people, and I think, from a conservative governance point of view, create not just restraint on the growth of government, but essentially pressure to downsize the government."

Raising taxes on the middle class will be a tough road to hoe. Raising taxes on the wealthy and corporations during the coming sustained economic "correction" (read "recession" or even "depression") is contrary to wise fiscal policy. Raising taxes during a recession prolongs or even worsens the downturn. Globalization is coming home to the American worker. So far wages have just stagnated. Already however, we're seeing bankrupt airlines demanding staggering rollbacks of wages and benefits. New jobs go overseas everyday because labor is cheap. If we simply raise trade tariffs to make American goods competitive at home, inflation will spin us deeper in recession.
Soon we will discover how well Bush and his cronies have done their dirtiest deed of all. They have deliberately sabotaged the health of the American economy to further their narrow elitist interests: lining the pockets of the rich and ensuring a weak central government that can't compete with the power and influence of mega multi-national corporations. May they burn in a historical hell fire.