The Era of Little Government is Over

Does this quote sound familiar?

"The economic ills we suffer have come upon us over several decades. They will not go away in days, weeks, or months, but they will go away. They will go away because we as Americans have the capacity now, as we've had in the past, to do whatever needs to be done to preserve this last and greatest bastion of freedom.

In this present crisis, government is not the solution to our problem; government is the problem."

Those words come from Ronald Reagan's first inaugural address in 1981. They have been more or less the guiding philosophy of the Republicans for the last three decades.

And now, somewhat belatedly, the G.O.P. has decided that they are a lie. In fact, they are proving even as I write these words that their entire political philosophy is based on a lie.

The lie is the idea of "let the market prevail." The notion that a free market economy, let undisturbed by government, is the best possible economic system. Laissez faire, dog-eat-dog capitalism.

Because in this present crisis, with less than two months to go before a presidential election, the Republicans are looking to bail out private companies to the tune of more than a trillion dollars in what has been called "Wall Street socialism."

Kevin Philips sets the scene well in a blog on Huffington Post:

We're not just looking at a real estate mess. Over the last quarter century, the total of public and private credit market debt in the United States -- most of it, in fact, is private -- has more than quintupled from $8 to $48 trillion, the biggest such orgy in world history. Over that period, domestic financial debt - the money borrowed by the financial sector for expansion, consolidation, empire-building, leverage, exotic mortgages, gambling, you name it - swelled from just $1 trillion to some $14 trillion. Employing these economic steroids, the financial sector ballooned itself from 14-15% of what back in the mid-1980s was the Gross National Product to 20-21% in 2004 of the newer Gross Domestic Product calculation. In the meantime, the once-dominant manufacturing sector fell far behind, dropping to just 12% of GDP. In a nutshell, the economy has been hijacked in recent decades by the very groups who now purport to have remedies - Wall Street, from whence Paulson emerged, and the money-bubbling, don't regulate the dangerous practices Federal Reserve Board, from whence Bernanke comes.

In other words, we don't really make anything anymore, are awash in debt, and in general we are in shit up to our eyebrows.

And when the going gets tough, the Republicans abandon their core beliefs and rush to suckle on the government tit for a trillion dollars worth of corporate welfare in a last desperate attempt to save failing financial instuitutions (not to mention the presidential election).

Philips points out that at least some Republicans are being intellectually consistent in this matter:

Ironically, the best hope for resistance comes not from the left but from free-market elements of the Republican Party. I have not had much good to say about the GOP for years, but recent events may hint at their political and ideological renewal. Sometime back, when Congress passed the Fannie Mae and Freddie Mac bail-out program, Senator Charles Grassley of Iowa, the ranking Republican on the Senate Finance Committee, ultimately voted against it. He had worked on its early stage, but ultimately voted no because seeing a pay-off to "Wall Street and K Street (the Washington lobbyist corridor)". Then the Republican National Convention, in a rejection of Bush, Paulson and Bernanke, put an anti-bailout section in its 2008 platform. A few days ago, the ranking Republican on the Senate Banking Committee, Richard Shelby of Alabama, called on the Fed to reject bail-outs and allow the markets to work even if the consequences are "brutal." And on September 18, a hundred Republican members of the House of Representatives sent a letter to Paulson and Bernanke requesting that the two men "refrain from conducting any additional government-financed bail-outs for large financial firms."

These guys may end up being the last rats left drowning on the sinking ship of laissez faire capitalism, but at least they get points for consistency. Unlike the vast majority of Republicans, who at this point would be willing to do pretty much anything to keep these private financial institutions afloat.

The Republican Party is bankrupt. They have no ideas, no guts and no idea what to do except to throw government money at the problem. They are completely discredited.

It's time for the Democrats, as they did in 1932, to get into power and, ironically enough, save capitalism from itself. Like the old song says, we did it before.

And we can do it again.