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    Reagan insider: 'GOP destroyed U.S. economy'

    Paul B. Farrell


    Aug. 10, 2010, 12:45 a.m. EDT

    Reagan insider: 'GOP destroyed U.S. economy'
    Commentary: How: Gold. Tax cuts. Debts. Wars. Fat Cats. Class gap. No fiscal discipline
    By Paul B. Farrell, MarketWatch
    ARROYO GRANDE, Calif. (MarketWatch) -- "How my G.O.P. destroyed the U.S. economy." Yes, that is exactly what David Stockman, President Ronald Reagan's director of the Office of Management and Budget, wrote in a recent New York Times op-ed piece, "Four Deformations of the Apocalypse."

    Get it? Not "destroying." The GOP has already "destroyed" the U.S. economy, setting up an "American Apocalypse."


    Jobs recovery could take yearsIn the wake of Friday's disappointing jobs report, Neal Lipschutz and Phil Izzo discuss new predictions that it could be many years before the nation's unemployment rate reaches pre-recession levels.
    Yes, Stockman is equally damning of the Democrats' Keynesian policies. But what this indictment by a party insider -- someone so close to the development of the Reaganomics ideology -- says about America, helps all of us better understand how America's toxic partisan-politics "holy war" is destroying not just the economy and capitalism, but the America dream. And unless this war stops soon, both parties will succeed in their collective death wish.

    But why focus on Stockman's message? It's already lost in the 24/7 news cycle. Why? We need some introspection. Ask yourself: How did the great nation of America lose its moral compass and drift so far off course, to where our very survival is threatened?

    We've arrived at a historic turning point as a nation that no longer needs outside enemies to destroy us, we are committing suicide. Democracy. Capitalism. The American dream. All dying. Why? Because of the economic decisions of the GOP the past 40 years, says this leading Reagan Republican.

    Please listen with an open mind, no matter your party affiliation: This makes for a powerful history lesson, because it exposes how both parties are responsible for destroying the U.S. economy. Listen closely:

    Reagan Republican: the GOP should file for bankruptcy
    Stockman rushes into the ring swinging like a boxer: "If there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nation's public debt ... will soon reach $18 trillion." It screams "out for austerity and sacrifice." But instead, the GOP insists "that the nation's wealthiest taxpayers be spared even a three-percentage-point rate increase."

    In the past 40 years Republican ideology has gone from solid principles to hype and slogans. Stockman says: "Republicans used to believe that prosperity depended upon the regular balancing of accounts -- in government, in international trade, on the ledgers of central banks and in the financial affairs of private households and businesses too."

    No more. Today there's a "new catechism" that's "little more than money printing and deficit finance, vulgar Keynesianism robed in the ideological vestments of the prosperous classes" making a mockery of GOP ideals. Worse, it has resulted in "serial financial bubbles and Wall Street depredations that have crippled our economy." Yes, GOP ideals backfired, crippling our economy.

    Stockman's indictment warns that the Republican party's "new policy doctrines have caused four great deformations of the national economy, and modern Republicans have turned a blind eye to each one:"

    Stage 1. Nixon irresponsible, dumps gold, U.S starts spending binge
    Richard Nixon's gold policies get Stockman's first assault, for defaulting "on American obligations under the 1944 Bretton Woods agreement to balance our accounts with the world." So for the past 40 years, America's been living "beyond our means as a nation" on "borrowed prosperity on an epic scale ... an outcome that Milton Friedman said could never happen when, in 1971, he persuaded President Nixon to unleash on the world paper dollars no longer redeemable in gold or other fixed monetary reserves."

    Remember Friedman: "Just let the free market set currency exchange rates, he said, and trade deficits will self-correct." Friedman was wrong by trillions. And unfortunately "once relieved of the discipline of defending a fixed value for their currencies, politicians the world over were free to cheapen their money and disregard their neighbors."

    And without discipline America was also encouraging "global monetary chaos as foreign central banks run their own printing presses at ever faster speeds to sop up the tidal wave of dollars coming from the Federal Reserve." Yes, the road to the coming apocalypse began with a Republican president listening to a misguided Nobel economist's advice.

    Stage 2. Crushing debts from domestic excesses, war mongering
    Stockman says "the second unhappy change in the American economy has been the extraordinary growth of our public debt. In 1970 it was just 40% of gross domestic product, or about $425 billion. When it reaches $18 trillion, it will be 40 times greater than in 1970." Who's to blame? Not big-spending Dems, says Stockman, but "from the Republican Party's embrace, about three decades ago, of the insidious doctrine that deficits don't matter if they result from tax cuts."

    Back "in 1981, traditional Republicans supported tax cuts," but Stockman makes clear, they had to be "matched by spending cuts, to offset the way inflation was pushing many taxpayers into higher brackets and to spur investment. The Reagan administration's hastily prepared fiscal blueprint, however, was no match for the primordial forces -- the welfare state and the warfare state -- that drive the federal spending machine."

    OK, stop a minute. As you absorb Stockman's indictment of how his Republican party has "destroyed the U.S. economy," you're probably asking yourself why anyone should believe a traitor to the Reagan legacy. I believe party affiliation is irrelevant here. This is a crucial subject that must be explored because it further exposes a dangerous historical trend where politics is so partisan it's having huge negative consequences.

    Yes, the GOP does have a welfare-warfare state: Stockman says "the neocons were pushing the military budget skyward. And the Republicans on Capitol Hill who were supposed to cut spending, exempted from the knife most of the domestic budget -- entitlements, farm subsidies, education, water projects. But in the end it was a new cadre of ideological tax-cutters who killed the Republicans' fiscal religion."

    When Fed chief Paul Volcker "crushed inflation" in the '80s we got a "solid economic rebound." But then "the new tax-cutters not only claimed victory for their supply-side strategy but hooked Republicans for good on the delusion that the economy will outgrow the deficit if plied with enough tax cuts." By 2009, they "reduced federal revenues to 15% of gross domestic product," lowest since the 1940s. Still today they're irrationally demanding an extension of those "unaffordable Bush tax cuts [that] would amount to a bankruptcy filing."

    Recently Bush made matters far worse by "rarely vetoing a budget bill and engaging in two unfinanced foreign military adventures." Bush also gave in "on domestic spending cuts, signing into law $420 billion in nondefense appropriations, a 65% percent gain from the $260 billion he had inherited eight years earlier. Republicans thus joined the Democrats in a shameless embrace of a free-lunch fiscal policy." Takes two to tango.

    Stage 3. Wall Street's deadly 'vast, unproductive expansion'
    Stockman continues pounding away: "The third ominous change in the American economy has been the vast, unproductive expansion of our financial sector." He warns that "Republicans have been oblivious to the grave danger of flooding financial markets with freely printed money and, at the same time, removing traditional restrictions on leverage and speculation." Wrong, not oblivious. Self-interested Republican loyalists like Paulson, Bernanke and Geithner knew exactly what they were doing.

    They wanted the economy, markets and the government to be under the absolute control of Wall Street's too-greedy-to-fail banks. They conned Congress and the Fed into bailing out an estimated $23.7 trillion debt. Worse, they have since destroyed meaningful financial reforms. So Wall Street is now back to business as usual blowing another bigger bubble/bust cycle that will culminate in the coming "American Apocalypse."

    Stockman refers to Wall Street's surviving banks as "wards of the state." Wrong, the opposite is true. Wall Street now controls Washington, and its "unproductive" trading is "extracting billions from the economy with a lot of pointless speculation in stocks, bonds, commodities and derivatives." Wall Street banks like Goldman were virtually bankrupt, would have never survived without government-guaranteed deposits and "virtually free money from the Fed's discount window to cover their bad bets."

    Stage 4. New American Revolution class-warfare coming soon
    Finally, thanks to Republican policies that let us "live beyond our means for decades by borrowing heavily from abroad, we have steadily sent jobs and production offshore," while at home "high-value jobs in goods production ... trade, transportation, information technology and the professions shrunk by 12% to 68 million from 77 million."

    As the apocalypse draws near, Stockman sees a class-rebellion, a new revolution, a war against greed and the wealthy. Soon. The trigger will be the growing gap between economic classes: No wonder "that during the last bubble (from 2002 to 2006) the top 1% of Americans -- paid mainly from the Wall Street casino -- received two-thirds of the gain in national income, while the bottom 90% -- mainly dependent on Main Street's shrinking economy -- got only 12%. This growing wealth gap is not the market's fault. It's the decaying fruit of bad economic policy."

    Get it? The decaying fruit of the GOP's bad economic policies is destroying our economy.

    Warning: this black swan won't be pretty, will shock, soon
    His bottom line: "The day of national reckoning has arrived. We will not have a conventional business recovery now, but rather a long hangover of debt liquidation and downsizing ... it's a pity that the modern Republican party offers the American people an irrelevant platform of recycled Keynesianism when the old approach -- balanced budgets, sound money and financial discipline -- is needed more than ever."

    Wrong: There are far bigger things to "pity."

    First, that most Americans, 300 million, are helpless, will do nothing, sit in the bleachers passively watching this deadly partisan game like it's just another TV reality show.

    Second, that, unfortunately, politicians are so deep-in-the-pockets of the Wall Street conspiracy that controls Washington they are helpless and blind.

    And third, there's a depressing sense that Stockman will be dismissed as a traitor, his message lost in the 24/7 news cycle ... until the final apocalyptic event, an unpredictable black swan triggers another, bigger global meltdown, followed by a long Great Depression II and a historic class war.

    So be prepared, it will hit soon, when you least expect.


    Stopped Payings CC's: 8/14/2009 | Retained Attorney: 9/23/2009 | Filed CH 7: 12/7/2009 | 341 Meeting: 1/21/2010 - Complete | Discharged: 4/9/2010
    "One person pretends to be rich, yet has nothing; another pretends to be poor, yet has great wealth."

    #2
    Actually, the American people destroyed the economy. Obsession with cheap junk from China, living beyond their means and thinking that gov't services are free.

    Comment


      #3
      Good article! Too many people want to blame welfare and social programs, immigrants and unions...when actually the loss of the middle class and the so called "American Dream" can be laid at the feet of the Republicans and their programs and wars.

      I still have some hopey, changey hopes....but then I saw the news piece today about thousands of folks lined up for Section 8 applications in Atlanta. For Applications! In Atlanta--the Southern capital...the city that I saw grow and proper in the 70's and 80's.

      I feel like the social revolution will come sooner rather than later because the Right Wing and the Republicans won't participate in solving our problems...and because the rich corporations and wealthy Americans have abandoned our country and the workers who made them rich. And this won't be a tea party.
      Filed Chapter 13 4/14/10
      341 Scheduled for 5/26/10
      Plan Confirmed 9/17/10

      Comment


        #4
        What a load of crap. Geithner a Republican hack? Nixon's gold policy, Reagan's tax cuts and Republican spending are the causes of our current fiscal situation?

        But I thought it was all Bush's fault! I mean he squandered the wonderful financial situation that Clinton handed him. Back in the good ol' days of the Clinton administration we had budget surpluses. How did that happen if the Republicans ruined the economy before Clinton got there? The fact of the matter is that the banking and housing crises of late were primarily the fault of a Democrat controlled legislature. Who were the "Friends of Angelo?", Who refused Republican attempts to reform Fannie and Freddie when it was still possible?

        These kind of hatchet jobs are pitiful. The bottom line is that the political class considers itself entitled to whatever it wants, plays favorites with special interest groups instead of looking out for the welfare of the country. I don't care if you're a Republican or a Democrat, your representative will sell you out in a heartbeat.

        What really saddens me is how many "progressives" look to Government as the answer to society's ills, while Government looks at the people like we're cows, complacent and ready to be milked until it's time for the slaughterhouse.
        Case Closed > 2/08/2010

        Comment


          #5
          "The bottom line is that the political class considers itself entitled to whatever it wants, plays favorites with special interest groups instead of looking out for the welfare of the country. I don't care if you're a Republican or a Democrat, your representative will sell you out in a heartbeat."

          Stopped Payings CC's: 8/14/2009 | Retained Attorney: 9/23/2009 | Filed CH 7: 12/7/2009 | 341 Meeting: 1/21/2010 - Complete | Discharged: 4/9/2010
          "One person pretends to be rich, yet has nothing; another pretends to be poor, yet has great wealth."

          Comment


            #6
            Yeah and the left blamed Bush for 911 after he was only in office for 7 1/2 months. It couldn't be possible that 8 years of Clinton wasn't possibly responsible for allowing Bin Laden to plan this evil deed? Politicians in general don't give a damn for the common person in this country. Both sides use them for their personal gain. All must be voted out.

            Comment


              #7
              Originally posted by mtngirl47 View Post
              Good article! Too many people want to blame welfare and social programs, immigrants and unions...when actually the loss of the middle class and the so called "American Dream" can be laid at the feet of the Republicans and their programs and wars.

              I still have some hopey, changey hopes....but then I saw the news piece today about thousands of folks lined up for Section 8 applications in Atlanta. For Applications! In Atlanta--the Southern capital...the city that I saw grow and proper in the 70's and 80's.

              I feel like the social revolution will come sooner rather than later because the Right Wing and the Republicans won't participate in solving our problems...and because the rich corporations and wealthy Americans have abandoned our country and the workers who made them rich. And this won't be a tea party.
              Lenin would be proud of you.
              Well, I did. Every one of 'em. Mostly I remember the last one. The wild finish. A guy standing on a station platform in the rain with a comical look in his face because his insides have been kicked out. -Rick

              Comment


                #8
                Originally posted by mtngirl47 View Post
                Good article! Too many people want to blame welfare and social programs, immigrants and unions...when actually the loss of the middle class and the so called "American Dream" can be laid at the feet of the Republicans and their programs and wars.

                I still have some hopey, changey hopes....but then I saw the news piece today about thousands of folks lined up for Section 8 applications in Atlanta. For Applications! In Atlanta--the Southern capital...the city that I saw grow and proper in the 70's and 80's.

                I feel like the social revolution will come sooner rather than later because the Right Wing and the Republicans won't participate in solving our problems...and because the rich corporations and wealthy Americans have abandoned our country and the workers who made them rich. And this won't be a tea party.
                Quick mtngirl47 get a life vest on or you'll certainly drown in the koolaid! and I have to ask if you happen to live in Hashville, NC?

                For the uninformed Hashville refers to Asheville, NC, which has turned into Berkeley East of late.
                ==================================
                Filed: 4-30-2010
                341 Complete: 6-16-2010
                Discharged and Closed 8/17/2010

                Comment


                  #9
                  Originally posted by jacko View Post
                  Actually, the American people destroyed the economy. Obsession with cheap junk from China, living beyond their means and thinking that gov't services are free.
                  Agree and disagree.

                  Agree: cheap junk from China

                  Disagree: many big companies, corporations in the US are now moving to China and many third world countries because they're attracted to cheap labor over there. These companies manufactured products in China and "imported" back to the States to make big profits. I'm surprised to see how many products we use in our daily life today from TVs, computers to even $.99 items are from China. I believe when Clinton gave China permanent MFN (most favored nation) privilege, that was a mistake. Who's to blame? Clinton or those big US corporates/companies making the products in China pushing Clinton to sign?
                  Filed chapter 7 Jul 13, 2010 341 hearing Aug 12, 2010 Trustee's report of no distribution Aug 20, 2010 Discharged Oct 13, 2010 Closed Oct 28, 2010.

                  Comment


                    #10
                    For more than a century ideological extremists at either end of the political spectrum have seized upon well-publicized incidents such as my encounter with Castro to attack the Rockefeller family for the inordinate influence they claim we wield over American political and economic institutions. Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as "internationalists" and of conspiring with others around the world to build a more integrated global political and economic structure - one world, if you will. If that's the charge, I stand guilty, and I am proud of it...we are grateful to the Washington Post, the New York Times, Time magazine, and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during these years. But the world is now more sophisticated and prepared to march towards a world government which will never again know war, but only peace and prosperity for the whole of humanity. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in the past centuries...
                    And a comment from
                    Even the criminals have fallen on hard times in America's poorest city as the long-term unemployed struggle to keep a grasp on normality


                    I am surprised you guys don't know that the economic crash was deliberately engineered by the big six world banks to consolidate all wealth and power into their hands. Credit Default Swaps and various other financial instruments and Derivatives were designed to crash national economies - they were back by NOTHING - A FRAUD.

                    I am also surprised how many of you are still deceived by the false Left / Right Paradigm in both the States and the UK - all our political parties are owned by the big six beast banks (Citigroup, Goldman Sachs, HSBC, JP Morgan Chase, Chase Manhattan, BIS) and all serve their banker masters. Whatever party you vote in you get the same damn criminal treasonous government.

                    Welcome to the New World Order - hope you enjoy the tyranny and genocide that is coming soon...
                    --Bluthund

                    And this:
                    The 10 biggest companies in the world today include 6 banks, 3 oil and gas companies, and one conglomerate. The Democratic / Republican back-and-forth mudslinging is just smoke and mirrors to disguise the true nature of the beast. The two heads are merely two heads of the same monster that serves its master, the elite bankers. Welcome to the machine. For the vast majority of us, we end up slaving our lives away to make the fat cats richer.

                    Watch Money as Debt to learn more.
                    --wanderluster

                    Comment


                      #11
                      I actually agree with many of Dave Stockman's points, but to call him a Reagan insider is misleading. He did work for Reagan, but he never believed in Reagan's agenda. Before Reagan he was a member of the wing of the Republican Party that favored high taxes and low deficits, and that opposed the policies that Reagan wanted to enact. I'm not saying that he was wrong about all of that, but I'm just pointing out that this Reagan insider never believed in what Reagan was doing to begin with, so it's not as if he's had some big revelation about Reagan's policies and is trying to tell the country about it.

                      Comment


                        #12
                        Originally posted by dakota112 View Post
                        Yeah and the left blamed Bush for 911 after he was only in office for 7 1/2 months. It couldn't be possible that 8 years of Clinton wasn't possibly responsible for allowing Bin Laden to plan this evil deed? Politicians in general don't give a damn for the common person in this country. Both sides use them for their personal gain. All must be voted out.
                        This is a distortion of facts. Bush was blamed for 911 because there were security alerts that happened in the weeks and days leading up to the attack that were ignored.

                        How do we "vote out" politicians without creating new politicians that will become just as corrupt and and insulated? Money corrupts and power corrupts and politicians end up having access to both. Simply voting is not going to change this entrenched system in my opinion. Lobbyists would have to be controlled, powerful senate and house committees would have to be reorganized, political appointments would have to be curtailed, government agencies would have to be changed, etc, the list goes on and on. A few tea-party wins are not going to change any of the above, and those tea-party people will just become part of the system they were railing against.
                        You can't take a picture of this. It's already gone. ~~Nate, Six Feet Under

                        Comment


                          #13
                          Originally posted by backtoschool View Post
                          This is a distortion of facts. Bush was blamed for 911 because there were security alerts that happened in the weeks and days leading up to the attack that were ignored.
                          And who put up the "Chinese Wall" that ensured those alerts would not be connected and essentially ignored? None other than Jamie Gorelick, a Clinton appointee.

                          We can go back and forth like this for a long time. I do agree that voting in the next bunch of criminal politicians to take their turn at the trough is no solution. The things that Obama promised but failed to deliver, such as transparency, a ban on lobbyists, etc, would go a long way in the right direction, but as Obama has amply demonstrated, we can't depend on any politician to rise above the influence and keep their word.
                          Case Closed > 2/08/2010

                          Comment


                            #14
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