Individual Age Economics

First Principles: Arguing the Economy

Candidates for office, it has been said, will show up for the opening of an envelope. This is especially true for those seeking an office like state treasurer. So it was that in early October of last year I found myself waiting for my turn to speak at the Yavapai County Tea Party forum. By then it was clear that as a Democrat campaigning statewide in Arizona in 2010, the effort I was engaged in could be reasonably called an “uphill climb” only if the hill in question was named Everest. Nevertheless, I was hopeful, though not blindly optimistic, that there was a path to victory—one that, at least partially, would run through convincing audiences like this one that, though a Democrat, I was the candidate who was more attuned to their concerns.

It didn’t take long for me to realize that this was one avenue that was closed off. Before it was time for my opponent and me to take the stage, I sat listening to the candidates for Congress debate. Like the audience at an old-time Saturday morning cliff-hanger, the crowd cheered the hero Republican and hissed at the villain Democrat. I turned to my campaign staffer and whispered through a tight smile, “Pull the car around when I get up there. We may have to make a run for it.”

It was the kind of gallows humor on which campaigns thrive, and despite receiving my own share of jeers while speaking, the people there were as friendly to me personally as they were completely uninterested in voting for me. But something bigger was at play that Saturday evening in Prescott than Tea Party politics and the ruminations of a doomed candidate for an obscure office.

The moderator, wearing a ten-gallon hat and sporting a Yosemite Sam moustache, told both congressional candidates that the first question would be about the subject polls had identified as the most pressing public concern: jobs and the economy. The freshman incumbent, a Democratic former state legislator, began her answer by defending her vote for the stimulus package and, over a chorus of boos, asserted that local teachers, firefighters, and police chiefs were thankful that government spending had saved their positions. She went on to tout investment in wind and solar energy as a way to create more local jobs. The Republican nominee, a prominent Flagstaff dentist endorsed in his primary by Sarah Palin, proclaimed, “I’m a simple person. I speak hick.” He offered fulsome praise for hard work and personal responsibility, and the only policy idea he offered was a brief mention of cutting the capital-gains tax. He won on Election Day by six percentage points.

With the country battered by the Great Recession, the economic debate in the 2010 elections came down to this: an often half-hearted support of government spending from Democrats; economic nihilism from Republicans. In the teeth of the worst economic calamity in more than a half century, in the aftermath of a lost decade in which most families saw their standard of living drop, in the wake of 30 years of declining real income, in the face of America falling behind in innovation and education, both progressives and conservatives have offered little in the way of new answers as their long-held orthodoxies run headlong into new realities.

Over the past decade, both parties have had their moments in which they could, as much as is ever possible in our system, put into action their basic economic philosophies. Both the Bush tax cuts of 2001 and the Obama stimulus of 2009—the former Lafferism, the latter Keynesianism—attempted to drive economic growth by injecting more money into the economy. But at a time when the economy is global, capital is mobile, and a few extra dollars in a family’s bank account can go to purchase Chinese-made TVs and sippy cups at Wal-Mart, such efforts have far less impact than they once did. In the meantime, in an era of staggering deficits and debt, government by hot check—whether through tax cuts or spending—exacts its own price on the nation’s economic stability.

Thus America has responded to the enormous challenges the economy faces in the short-term and long-term alike with a complete failure of vision and verve. Each side frets endlessly about its own version of a nightmarish future ahead—and then fails to do much of anything about it. For conservatives, the coming apocalypse looks like modern Greece—an economy overwhelmed by entitlement spending and the demands of rapacious public-employee unions for ever-larger pension benefits. For progressives, the fear is we’re becoming ancient Rome—a society riven by inequality, where wealth is concentrated in the hands of a tiny, insular aristocracy that buys off the masses with bread and circuses.

So how was it, then, that in December of 2010, both parties came together around a package of tax cuts and benefits that added some $900 billion to the deficit over the next five years while preserving lower tax rates for the richest 2 percent of the nation?

Hamiltonian Means to Jeffersonian Ends

While much of the news coverage of the deal was filtered through the prism of Washington’s concerns—partisan advantage, political hypocrisy, electoral positioning—it was an ultimately revealing exercise about the state of our economic ideas. Every Republican in the Senate voted to oppose Senator Chuck Schumer’s attempt to let only the tax cuts for millionaires expire. Many liberal commentators saw the defense of lower taxes for the top .03 percent as a sop to Republican campaign contributors, but something more honest and fundamental was at play. Conservatives sincerely believed that these 315,000 Americans are the “job creators”—the men and women who take the risks, build the businesses, hire the workers, and drive our economy.

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