Why did Republicans Abandon Keynes?

Posted by Michael A. Kamperman on March 8, 2011

The question is why, not when.  We know when happened after Barack Obama won the Presidency in November of 2008.  Earlier in 2008, McConnell, Boehner, and Cantor joined the vast majority of Republicans and Democrats in voting for the Economic Stimulus Plan of 2008, which was signed by President Bush.  This was the fist stimulus of the depression and basically mailed out a few hundred dollars in tax refunds to millions of Americans.  It was pure Keynsean Economics, which is have the government stimulate demand when the private sector is unable to.  It will never be clear if the revolt in the House was purely freedom from party discipline, or a desire to derail President Obama.  Whatever, the recent abandoment of Keysean Economics has opened the flood gates to Libertarianism in the Republican Party.  Put simply, the Republican party has moved from the party of less government to the party of almost no government.  In moving they have left moderates in their wake.  Moderates like me.  When it comes to choosing a quality education for our children versus lower taxes, I choose the children.

My thoughts are the Republican leadership has a tiger by the tail and at this point risks being eaten if it lets go.  The objective of this blog is economics.  But politics has a significant effect on economic outcomes by dictating policy.  Because of the rise of the Tea Party the Republican Leadership dares not let go of that tiger’s tail.  But let go they must if they want to see economic prosperity in America.  Firing Teachers is no way to create jobs in the near term,  nor the long term.

The point is the abandonment of Keynes is not based on intellectual rigor, it is based on pure politics.  Those playing these politics don’t understand the obstacles they are placing in front of economic recovery and job creation.  Shockingly, the Obama Administration has decided to play anti-Keynsean lite rather than confront head-on the return to Hoover style early 1930′s economic policies.  Texas, my home state, desperately needs the federal government to pass another stimulus plan.  The state is slated to cut $15 billion over the next two years because stimulus funds will soon run out rather than increase the budget by the $13 billion needed to maintain current services based on population growth.  Texas already is run lean, so they will be cutting into bone, not fat.  Republicans used to believe government needed to be run efficiently and effectively.  Now they not only preach government is not the solution, they preach government needs to be all but eliminated.  I’m sorry, my niece and nephew need a quality education and my family needs the highest moral authority charged to any state…national security.  Republicans danced with the devil when they abandoned Keynes, now many of them rue the day they did.