It's the Economists, Stupid

In eulogizing the recently departed Jesse Helms, many praised the former senator from North Carolina for always standing up for what he believed in. He certainly did -- Helms never apologized for his racist beliefs, and there is little evidence he ever renounced them. Just why anyone should be admired for advocating despicable ideas unapologetically is less than clear, but, if nothing else, no one could mistake Helms for anything but what he was.

I was reminded of that supposedly admirable quality this week when John McCain found himself on the defensive because of something said by his friend, principal economic adviser, and potential Treasury secretary, former Sen. Phil Gramm of Texas. Speaking to the editorial board of The Washington Times, Gramm expressed his frustration with a public that doesn't seem to grasp how well the economy is really doing. In what will no doubt become one of the most memorable lines of the campaign, Gramm said, "We've sort of become a nation of whiners."

McCain was quick to distance himself from the remark, of course, though he should have seen it coming. The two men have been friends for years, and McCain campaigned vigorously for Gramm's abysmal 1996 presidential bid. McCain no doubt knows that for his entire career Gramm has shared with Jesse Helms an unwillingness to work too hard to dress up his repellent views. Most members of his party labor mightily to portray their trickle-down economic philosophy as driven by the interests of regular folks; Karl Rove once argued that President Bush's plan to eliminate the tax on stock dividends was an effort to help "the little guy." Gramm, on the other hand, is quite willing to tell you that as far as he's concerned, regular folks can go straight to hell. Once, when a colleague argued that a change to Social Security would harm 80-year-old retirees, Gramm replied, "Most people don't have the luxury of living to be 80 years old, so it's hard for me to feel sorry for them."

Gramm's unique combination of callousness and cluelessness has been evident for as long as he's been in public life. While this controversy may get him banished from a public role in the McCain campaign, one might have thought that his role in the mortgage crisis would have done so already. As David Corn of The Nation explains here, in 2000 Gramm slipped into an omnibus spending bill a 262-page amendment that enabled Enron to gin up the California energy crisis that cost consumers billions (in an amazing coincidence, Gramm's wife was on Enron's board of directors). Even worse, the bill guaranteed that credit default swaps, the instruments that enabled the mortgage market to get so out of control, would be exempt from federal regulation. So when financial institutions began to pour good money after bad in the mortgage market, there were no federal regulators with the power to stop it. (Though few have fingered Gramm with the responsibility he deserves, there is one small piece of poetic justice: UBS, the Swiss bank that employs Gramm, has itself lost $37 billion in the mortgage mess.)

So the problem isn't that Phil Gramm said something jaw-droppingly insensitive, the problem is that John McCain takes advice from Phil Gramm. Until last week, McCain had been going around praising Gramm as some sort of economic genius and touting Gramm's support as evidence of his own acumen on matters financial. In February, McCain even said, "There is no one in America that is more respected on the issue of economics than Senator Phil Gramm," which is kind of like saying there is no one in America more respected on the issue of health care than Jack Kevorkian.

John McCain is no expert on economics; like most topics other than war, the issue just doesn't seem to pique his interest. If he thinks Phil Gramm is the kind of person he should be listening to, it can only be because he finds himself in agreement with Gramm's general outlook on the topic. Despite what they are prone to say, politicians don't simply look for the smartest folks around to advise them, and while they might tolerate a little bit of dissent, they want people who don't stray too far from their own thinking. McCain would probably acknowledge that Paul Krugman knows a lot about economics, but he won't be paying much attention to what Krugman has to say. McCain listens to Gramm because they share an economic philosophy, regardless of their respective opinions on the whininess of the American people.

Gramm, one supposes, simply didn't get the memo dictating that the approved GOP talking points on the economy have shifted. Until recently, Republicans were supposed to argue that though a few people here and there may be feeling a touch of uncertainty, the "fundamentals" of the economy are strong, and the Bush tax cuts have brought America a shower of economic blessings, not to mention whiter teeth and healthier gums. That may be what McCain was thinking when he devised his economic plan for the next four years, which centers on making the Bush tax cuts permanent and slashing corporate tax rates.

But as rising gas prices, the ongoing mortgage crisis, and a plummeting stock market have brought pain both deep and wide, no candidate or party can talk about strong fundamentals without voters reacting with pure disgust. So the new Republican line is that they feel people's pain. But since they're Republicans, they know the solution, and it's one that John McCain, Phil Gramm, George W. Bush, and pretty much anyone else with an "R" after their name agrees on: tax cuts for the wealthy and corporations. In other words, exactly what Bush has been delivering for his entire time in office.

Problem is, it doesn't seem to be working -- not now, and not over the course of the last seven and a half years. Last week, a few blogs pointed to this vivid graph from the Center on Budget and Policy Priorities, which sums up neatly the effects of the policies McCain so ardently wants to continue.

The graph shows what progressives have been arguing about the Bush economy for years: On the measures with some relationship to the circumstances of actual Americans -- economic growth, employment, wages, and so on -- this expansion (the period after the economy bottoms out in a recession) has been substantially worse than the average post-World War II expansion. As the CBPP notes, "Labor market progress [under Bush] was especially weak, with employment and wage and salary growth far below average and, in fact, lower than in any previous post-World War II expansion." (Emphasis added.)

The one bright spot, as you might have guessed, is that pair of bars on the right: While people haven't done so well under Bush, corporations have been doing splendidly. Although he has probably been ordered in no uncertain terms to keep his mouth shut until November, Phil Gramm would no doubt reply, "Damn straight -- let's keep it going!" And that is just what McCain intends to do. If you don't like it, well, quit your whining.

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