Sequester and Jobs

You may not have noticed – perhaps you have more interesting things to do – that the next big crisis is unfolding in Washington. As the economy wallows in semi-stagnant directionless mode our fearless leaders in Congress are getting vexed over another of their self-inflicted wounds. You’d have thought that by now they’d stop doing this.

The current crisis is the sequester. This is an absurdity that civilized and grown up countries don’t have. Here in the US things are different. The ongoing conflict between the past, as represented by a minority of right wing Republicans, and the future, as represented by everyone else, threatens to force us into decline and irrelevance. After all a nation that cannot even organize a national budget is one that cannot be taken too seriously.

The problem, as we all know, is that we no longer have a national consensus on what sort of society we are or want to be. There is one that worked well in the 1950’s and 1960’s but was tossed aside by Reagan and replaced by his right of center notion of deregulated individualism. Then there’s the even more right wing radical idea of the current Republican party.

The issue is that the Reaganite America failed. It wasn’t just him of course. The entire last four decades has been dedicated to the pursuit of right wing ideas. The economy we live with now is the natural outcome of that pursuit. If you want to know what old fashioned Republican economics does take a look around. That’s what we have.

True, there are vestiges of a left of center past. We have a modest set of social programs. Social Security and Medicare in particular are very successful and very popular. They protect the vast middle class from the dangers of downside risk. They have enabled us to limit poverty in old age which was a scourge only a few decades ago and is largely forgotten by our younger generations.

We also had a small dose of left of center economics with the 2009 stimulus, but the effects of that effort have now dissipated. It was a success in that it stopped the rot. It was always insufficient to turn the economy around.

Which brings us to the sequester.

The reason we were unable to get a decent stimulus, and thus end the crisis quickly, was that the notion of government spending as a positive aspect of a modern economy is such an anathema to contemporary Republicans that they were determined to prevent anything more substantial. They thus doomed us to stagnation. This was deliberate. For some reason they are still hanging onto the outdated economics of the Reagan era. Worse, they now want to double down on their philosophy. With Reaganism exposed as a crass failure – it produced the inequality, wage stagnation, loss of competitiveness, and lack of jobs we now suffer from – the only logical next step for those committed to a right wing ideology is to eradicate all further vestiges of the golden era of the 1950’s and 1960’s. This is why we hear so many claims from the right that they keep losing elections because they are not conservative enough. It is a scream for purity and a search for an idealized, but unattainable world. A neo-libertarian vision now drives them forward. Augmented by a good dose of 1800’s puritanical belief in the power of the scourge as incentive.

Central to this vision is the notion that the government can never be a positive force in the economy. Government jobs we are told endlessly are not ‘real’ jobs. Only private sector jobs are ‘real’. Government spending cannot generate ‘real’ jobs. Only private investment can. This is nonsense. But it is powerful nonsense and often sways voters who rarely concern themselves over such things and only experience the government as an intrusive force – red tape and taxes are the usual limit of most people’s contact with government. So divorced are most folks from government that became quite possible for Tea Party activists to protest against Obama by calling for government to keep its greedy hands off their Medicare payments. The irony was lost on them, but we must note it well. This is not an argument about nuanced details in an otherwise shared vision. This is about the destruction of what we know and its replacement by a totally different world.

The sequester is an outcome of this radicalization of the discussion.

I noted our inability to write a national budget. People regularly complain about its absence.

But how can we write a budget when we cannot even agree what it is supposed to cover?

So dramatic is the split in our nation that there is no common ground on which to start the budgeting process. The voters themselves are to blame. They seem unable to vote for, and support, a national vision. We have two nations co-existing in one boundary. One wants to slash government spending, the other wants to maintain it. Until the two halves are reconciled nothing can happen.

The sequester is simply a recognition of this reality.

An interesting aspect of the demise of Reaganism is the convoluted arguments the right has to resort to.  On one hand Republicans scoff at the possibility that more government spending could create jobs, on the other we get John McCain moaning about the possible loss of 350,000 jobs if we cut defense spending. Obviously he sees defense spending as legitimate and social or infrastructure spending as illegitimate. And he clearly thinks that a teaching, police, or fire protection job is less important than a defense contractor job. But either government spending creates jobs or it doesn’t. He seems not to get the contradiction in his argument.

But we do.