–Republicans continue to be their own worst enemy, by Harold Meyerson

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Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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The Washington Post published an article by Harold Meyerson, (Opinion Writer, June 2, 2011) titled, Republicans continue to be their own worst enemy. The article began with the well-deserved criticism of Paul Rand:

If you think it is Wisconsin Rep. Paul Ryan’s gutting of Medicare that is pulling the Republicans down, you need to think bigger. The House Budget Committee chairman’s proposal to convert Medicare into a private insurance-voucher plan is indeed a political calamity for the GOP, as the results of last week’s congressional special election in Upstate New York showed. But it’s far from the only disaster that the party has visited upon itself.

Mr. Meyerson then goes on to give what he considers to be additional examples of Republican self-immolation:

In Florida, only 29 percent of voters told the Quinnipiac pollsters last week that they approved of Gov. Rick Scott’s five-month tenure in office, during which Scott has endeavored to slash business taxes — already among the nation’s lowest — while also reducing spending on schools and cutting care for the developmentally disabled.
[ . . .]
Things are looking just as bad for the GOP’s new crop of Midwestern governors. In Wisconsin, Scott Walker, whose proposal to curtail collective bargaining for public employees triggered a nationally watched eruption of protest . . .

(Re.) Ohio Gov. John Kasich: . . . approval rating was a bargain-basement 33 percent, while his disapproval rating had risen to 56 percent. Voters . . . asked if they intended to support the referendum likely to appear on this November’s ballot that would repeal the Kasich-backed law sharply limiting collective bargaining rights for public employees. Ohioans said, by a 55 to 35 percent margin, that they’d vote to repeal it.
[ . . .]
In Michigan, Gov. Rick Snyder had a 33 percent approval rating, against a 60 percent disapproval rating, in a May survey that also found that 71 percent of Michigan voters thought poorly of his budget cuts to public schools, and more than 60 percent opposed his proposed tax reductions on business. A May survey of New Jersey voters by Fairleigh Dickinson University pollsters found that Gov. Chris Christie’s favorables had slumped to 40 percent, while his unfavorables had risen to 60 percent.

Meyerson compares them with Democratic governors Jerry Brown (California) and Andrew Cuomo (New York), who have favorable ratings.

In contrast to their GOP counterparts, neither Cuomo nor Brown has proposed stripping public employees of meaningful union representation, though both have sought and obtained cutbacks to public programs. The Los Angeles Times/USC Dornsife poll also shows that Californians support Brown’s plan to retain higher tax rates rather than further decimate public schools.

Meyerson concludes:

But the Republican governors — like Ryan and his fellow Republicans in Congress — have pursued a more radical course that sharply disadvantages most Americans. . . . Republicans did not run last year on a platform of ending collective bargaining, slashing school budgets and gutting Medicare — in essence, favoring society’s most powerful at the expense of everyone else — yet that’s precisely what they’ve done since gaining power.That’s not merely bad policy; it’s bad faith — and bad news for Republicans’ electoral prospects.

It also is extraordinarily ignorant (though I don’t know whether Meyerson truly understands why), because it is unnecessary. At the federal level, a Monetarily Sovereign government does not need to cut Medicare and Social Security. The federal government has the unlimited ability to pay for these vital services. While the Tea (formerly Republican) Party rightly says that increasing taxes on the wealthy is a bad idea for the economy, cutting Medicare and Social Security are orders of magnitude worse ideas.

Not only will Medicare and Social Security cuts harm the lower and middle classes, their children and their grandchildren, but these cuts will harm the entire economy by removing money from the economy. And this whole controversy exists because the Tea/Republicans do not understand the differences between Monetary Sovereignty and monetary non-sovereignty.

By contrast with the federal government, the states, being monetarily non-sovereign, do not have the unlimited ability to support state and local programs. They are forced to cut services or increase taxes or be more efficient. In reality, there is a low limit to how far efficiency can take you, so it comes down to services vs taxes, and people want their services.

Of course, the long-term solution to the states’ (and counties’ and cities’) problems is federal support. But again, this requires an understanding of Monetary Sovereignty, a knowledge of which not one national politician has demonstrated. (Visualize 550+ people running our economy, and not one of them has even a basic understanding of economics.)

So the Tea/Republicans, who rode to power on a wave of knee-jerk discontent, now will face an electorate who have had a chance to think about realities. Carrying anti-government placards and screaming anti-government slogans will not overcome the reality that the people like their Medicare and Social Security, and if anything these programs should be expanded – and don’t you dare touch them. Here is one case, where the people are much smarter than the politicians – or is that always the case?

Of course, this all gets back to my own favorite slogan, “Those who don’t understand the differences between Monetary Sovereignty and monetary non-sovereignty, don’t understand economics” (and they should stop writing about, or voting on, economic issues).

Rodger Malcolm Mitchell
http://www.rodgermitchell.com


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No nation can tax itself into prosperity, nor grow without money growth. It’s been 40 years since the U.S. became Monetary Sovereign, , and neither Congress, nor the President, nor the Fed, nor the vast majority of economists and economics bloggers, nor the preponderance of the media, nor the most famous educational institutions, nor the Nobel committee, nor the International Monetary Fund have yet acquired even the slightest notion of what that means.

Remember that the next time you’re tempted to ask a teenager, “What were you thinking?” He’s liable to respond, “Pretty much what your generation was thinking when it ruined my future.”

MONETARY SOVEREIGNTY

Published by Rodger Malcolm Mitchell

MBA Northwestern, business turnaround expert, economist

Published

27 thoughts on “–Republicans continue to be their own worst enemy, by Harold Meyerson”

  1. This might be tilting at a windmill, but I’m going to guess that Romney knows about monetary sovereignty. Whether he has the will to bring it up in debate is doubtful. As a partner at Bain Capital, you have to believe he knows what a Treasury security really is.

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    1. I suspect that one or two of our political leaders know the differences between Monetary Sovereignty and monetary non-sovereignty, but that is a long step up from knowing what a T-security is.

      I have known a great many commodity traders, and I doubt whether any of them understood Monetary Sovereignty. They think of buying and selling and charting and trends — all mechanical factors.

      Rodger Malcolm Mitchell

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      1. Chicago is the commodity trader mecca. All those guys care about is mechanics. But if Romney is at all close to leading in the fall, there has to be a way to approach him. No one else in the Tea (formerly Republican) Party has a clue. Maybe Newt does, but he’s got no chance.
        Bush was unabashed about deficits. There had to be a reason. It’s hard to guess unless you know the inside dope.

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  2. How many voters are still stuck in the liberal/conservative dichotomy? Do they know what Monetary Sovereignty means? I doubt people are any smarter than the politicians.

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  4. I wouldn’t think it reasonable to expect the majority of the population, who are not at all expert in economics, to know any better, especially seeing as all the “experts” say the deficit is unsustainable.

    But the politicians, especicially those involved in finance deserve all of your scorn for being ignorant of the operational realities.

    Given the number of deficits they seem to run, I suspect that some Republicans are quite aware of monetary sovereignty, but pretend otherwise for reasons of political expediency.

    Out of interest, when was the last time a Republican Administration actually ran a surplus?

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    1. Hamish,

      Actually, periodic surpluses are necessary for monetarily non-sovereign governments. But since 1971, when we became Monetarily Sovereign, only a Democrat — Clinton — has run a surplus, which caused the recession of 2000.

      Rodger Malcolm Mitchell

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      1. I don’t think it’s so much that Obama being reelected will make us “toast”. Remember, Clinton had a Republican controlled Congress to deal with. Obama has a House controlled by Rs and a minority in the Senate who bascially all vote lock step. Republicans only pretend to care about a defecit when a Dem is in the White House. If a Rep. gets the White House, IMO, the middle and lower class is toast. Which is the lesser of the two evils?

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        1. “Republicans only pretend to care about a defecit when a Dem is in the White House.”

          That’s why I say let the Republicans have the White House.

          Neither party really cares about the middle and lower class. Only one party’s presidents had no qualm driving up deficits. Which is the lesser of the two evils?

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          3. I wouldn’t vote a Republican in any way, shape or form. The only reason the Dems are on this austerity kick is because the Reps keep bringing it up. The Dems–and Obama in particular–know that another stimulus wont’ pass, but it is needed. The Dems can spend like there’s no tomorrow–so why not vote them in-instead of the ones have shown they WILL completely gut social programs.

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          4. “The only reason the Dems are on this austerity kick is because the Reps keep bringing it up.”

            Yes, spineless Democrats, and Obama in particular, is the problem.

            Contrary to popular belief, history shows Republican Presidents are unashamed big spenders.

            “completely gut social programs”?
            Medicare actually was expanded under government-is-evil Bush!

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          5. Fields, the “big spender” (and hence dominant) party has switched a few times. From the Civil War to 1933 & FDR it was the Republicans. From FDR to 70s/1980 it was the Dems. From Reagan onward, it has been the Repubs. The out of power party always pretends to be for tight money. The 2010s might see another shift.

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          6. “From Reagan onward, it has been the Repubs”

            Bingo, that’s what I’ve been saying all along. Everyone here knows what happened before Nixon is irrelevant, right?

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  5. Fields and sidnee,

    We already are toast and will continue to be toast until one party or one influential politician “discovers” Monetary Sovereignty. Unless that happens, decisions will continue to be based on faulty assumptions, and we will continue to average one recession every five years — or worse.

    Can either of you name a single politician, Tea/Republican or Democrat, who seems to understand the difference between Monetary Sovereignty and monetary non-sovereignty?

    Rodger Malcolm Mitchell

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    1. You’re asking too much of the politicians. They won’t openly discuss Monetary Sovereignty even if they understand it.

      Pay attention to what they did while in power. Let me ask you again: who proved deficits don’t matter?

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  6. The best we can hope for is people voting their own selfish interest, and that usually involves tax cuts or gov. spending. We are decades away from the voting public understanding fiat currency.

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    1. Right, except that we don’t have to choose between tax cuts or federal spending. Republican Presidents did both.

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          1. It’s comforting to learn that all it takes is White House residency for the Tea/Republicans to disavow their strident “No-debt-ceiling-increase-or-else,” Tea Party ignorance, and do a quick 180, demanding increased federal spending.

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          2. I know it’s counterintuitive, so is Monetary Sovereignty.

            Don’t act like evolution deniers. Look at the evidence:

            “government is the problem” Reagan proved deficits don’t matter.

            Bush promised “humble foreign policy”, “no nation building”, and “small government”, but started wars in Afghanistan and Iraq, pushed the limits of presidential power, turned the Clinton surplus into deficits, and expanded Medicare.

            With enemies like that, does government need friends?

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