Republican Government Is the Problem

"Government is the problem," President Ronald Reagan famously said. He was correct, but not in the way many Republicans today would have us believe. Here's why:

Today, our government faces a stagnant recovery with anemic private-sector job growth along with the loss of public service jobs due to decreases in tax revenues. The two parties in our political discourse have proposed competing roadmaps to address the issue: Republicans fight for tax breaks to incentivize job creation and argue that additional federal stimulus spending for job creation only adds to our growing deficit; Democrats call for passage of job-creating legislation to immediately pump $435 billion into our economy at a time when people and businesses show a continued reluctance to spend, while they also point out that solving the deficit problem is important, but only after addressing the more pressing issue of job losses that spun out of control during the George W. Bush administration.

So far, the economic battle is at a stalemate, while the political battle rages in Washington, D.C., where filibusters in the Senate by the Republican minority ensures President Barack Obama's American Jobs Act, or most any part of it, will not be allowed to pass by a simple majority of 51 votes. This, despite a broad swath of public sentiment measured in polling that a majority of Americans agree with many of its tenants. Which side is correct? Is this another case where Reagan's battle cry rings true? Maybe, but not necessarily as he intended.

As famed economist John Maynard Keynes said in a 1930 investigation into the causes of the Great Depression, "We do nothing because we have not the money. But it is precisely because we do not do anything that we have not the money." The competing conservative argument at the time was to remind federal officials that employment levels are determined by the price of labor, that supply creates its own demand, and that savings automatically translate into investment. Sound familiar? It's trickle down before Reagan's scriptwriters got a hold of it.

But wait, the conservatives also argued that attempts at large-scale spending invited not only runaway inflation but also tyrannical socialism. Again, ring any bells? America, under President Franklin D. Roosevelt, eventually agreed with Keynes and undertook many major spending programs to spur economic growth after the Herbert Hoover administration's hands-off policies proved to be an abject failure. Far from leading to a tyrannical state, Roosevelt's stimulus policies created immediate job opportunities and went a long way toward bringing America back from the brink of ruin during a time when government was perhaps the only entity capable of injecting money into the system. Our country went on to three decades of unprecedented economic growth under rational leadership. Only when the Reagan era ushered in a turn away from these policies supporting a strong middle class did the American economy come unglued.

What of the warning about the rise of socialism by the conservatives at the time? Never happened. Yet the charge lives, especially in the radical Tea Party signs skewering Obama. In his day, Keynes fought the socialism fearmongering by reminding supporters of classical economic theory that the rise of National Socialism in Germany prior to WWII was fueled not by big government but by mass unemployment and a failure of capitalism. Prosperity through the pursuit of full employment, Keynes argued, was the best way to achieve an independent citizenry and assure them of a vibrant democracy.

Today, Keynes would tell us the do-nothing right-wingers are creating an environment where the socialist threat they profess to abhor could rear its ugly head in the months ahead if nothing is done to address the jobs issue and growing earnings inequity between the very rich and the rest of our wage earners. In other words, Keynes today would say government, in doing nothing, is the problem, and would warn that a swing toward social anarchy not unlike the one in pre-WWII Germany is a distinct possibility unless our government takes an active role in turning around the jobless recovery of 2011.