I have just read a long interview with Karl Rove posted by a
His attitude towards information warfare is too. The great advantage now held by the Republicans, he points out, is that millions of Americans can now get their news from Rush Limbaugh and the internet, rather than from major newspapers and wire services. That means, of course, that they can learn to understand the day’s news as a battle between valiant conservatives and wimpy, treacherous liberals, and millions undoubtedly do. He suggests that the internet has hurt the Democratic Party by encouraging its shriller elements. Actually it has the same effect on both sides, the difference being that Rove, by a variety of means, has managed to get and keep President Bush in the White House during the last two elections, one of which he almost certainly lost and the second of which he won by a very narrow margin.
Talking about the economy, though, Rove really hits his stride: He begins by listing Bush tax cuts and claiming they are responsible for “the creation of five million jobs” and for increases in home ownership. Then he says:
“And what has happened over the last 2 years? You match that kind of economic growth with the kind of spending restraint that we’ve seen in the federal budget, and some powerful things happen. Last year, between the increased revenues and restraints on spending, we had a dramatic decline in the deficit – well below the expectations of all the budget forecasters. And it’s happening again this year where revenues are running 11% above projections. That’s not because taxes have been raised, it’s because the economic growth has been so much higher as a result of lower taxes that we are blowing through the projections for the second year in a row in revenue.
“As a result, we are well on the way to reducing the deficit – despite the fact that we are in a war and having to pay for the largest natural disaster in
The reality is somewhat different. As I pointed out many months ago, Bush’s tax cuts in the first three years of his Administration had an unprecedented effect on the budget. Even Reagan’s cuts (and a huge recession) had forced federal revenues to fall in only one year, fiscal 1983. Bush’s cuts dropped federal revenues for three years in a row, a combined 15% or so drop by fiscal 1984. They have indeed risen quite rapidly since then, and reached 2.15 trillion this year, passing the 2000 figure for the first time. Meanwhile, outlays rose from $1.86 trillion in fiscal 2001 to $2.47 trillion in fiscal 2005—that is why we have a $330 billion deficit. “The budget deficit is in pretty rapid decline to where we will cut the deficit in half by 2009,” Rove says, but the executive branch’s own figures say no such thing. According to them, the fiscal 2005 deficit (fiscal 2005 ended last October 1) was $318 billion, a $100 million drop for last year, but the fiscal 2006 deficit will be $423 billion. Rove claims interim figures are more optimistic. We’ll see.
The basic rhetorical technique here is borrowed from Ronald Reagan, who also began his term with a big recession and then took credit for the jobs added in the recovery as if he had started at the bottom. Having gone from a $128 billion surplus (fiscal 2001) to a deficit of over $400 billion, Rove and President Bush now take great credit for getting it back down to $300 billion and promise more. Of course, future predictions of improvement are based on the scheduled expiration of some of the Administration’s tax cuts, which they have no intention of restoring. The device of passing tax cuts for only a few years at a time, I suspect, is designed to make Republicans and Democrats vote on taxes year after year and provide Republican candidates with sound bites.
Rove argues, of course, that Bush’s tax cuts have created the economic recovery. But remarkably, the money poured into the economy by his tax cuts—most of which, of course, has gone to very wealthy Americans—is dwarfed by the expansion of credit during his Administration. The deficits in his first four budgets total $1.266 trillion dollars, but during the same time, outstanding mortgages have grown by about twice that much. Consumer debt has grown another $3-400 billion, making a total private debt increase of nearly $3 trillion dollars. That, it would seem, is where the money to fuel consumer demand has been coming from.
Having apparently escaped indictment, Rove now has another rabbit to pull out of his hat, a victory in the November elections. His economic argument, above, will be one of his two pillars. The other will be blasting the Democrats as hopelessly weak and inadequate for threatening to pull out of
It has occurred to me recently that think tanks like the American Enterprise Institute, the Heritage Foundation, and the Project for a New American Century are critical to the current Republican enterprise in a way that does not get much attention. They provide homes—families, really—where the holders of “conservative” beliefs can reinforce one another’s confidence rather than have to face reality or contend with opposing views. Supply-side economics has never worked, but it fits the political needs of Republicans so well that two or three generations of them have embraced it since 1980. William Kristol has apparently said that he may fold up the PNAC because its main mission, the overthrow of Saddam Hussein, has been accomplished. In those tanks, Republican thinkers learn to refer to anything useful the federal government does as “programs that have failed,” and therefore not the sort of thing in which one would want to invest more money in, say, after Hurricane Katrina. These think tanks originally began as a response to the Brookings Institution, but it suffers from a critical disadvantage, a respect for facts and an assumption that others share it. Rove is counting on the men and women who get their news from Fox and Rush Limbaugh, and they have provided the critical margins in the last three elections. The Republicans today hold their economic premises every bit as firmly as their ancestral elephants believed in free markets before the Depression, and nothing but a similar catastrophe, I suspect, will change any of their minds.