A 50/50 U.S. Senate is not the end of the world for reasons we will amplify in Part 2. But it will be a very nasty fact of legislative life during the next two years, at least. So you can pin the tail of responsibility on the political donkey who earned it: Donald J. Trump.
Any number of pedigreed conservative pundits are on his case this AM for last night’s debacle in Georgia. One such was Holman W. Jenkins of the Wall Street Journal, who opined:
Mr. Trump was the most known person ever to run for the presidency; he spent 40 years advertising his gaucheries to the American people. His outsider act was central to his appeal, but that hardly required coming up short on political calculation, discipline and patience. Mr. Trump plays checkers. The game is chess. His slim loss in the Electoral College should rankle, all right, because it shows how different the outcome might have been if he had done a few little things differently—including listen to advice.
We beg to differ. When it comes to politics, the Donald doesn’t even play checkers. He simply spouts and pouts like a 4-year old in the sandbox who thinks that every spade, shovel and pail belongs to him alone and that any kid who thinks otherwise needs be bullied, belittled and bitten.
So, yes, the Donald single-handedly blew it in Georgia owing to his juvenile attacks on the state’s Republican governor and secretary of state, and this, in turn, paved the way for removal of Mitch McConnell as majority leader of the US Senate.
But that’s the silver lining, and a big one at that. To wit, there is not a snowball’s chance in the hot place that a semblance of sustainable capitalist prosperity, personal liberty and democratic governance can be revived in America during the decade ahead unless the existing Republican Party is subject to an abrupt mercy killing, and that from the ashes there arises a genuine Opposition Party to fight the Dems’ Government Party now ensconced in all three branches.
Mitch McConnell is the living embodiment of an apostate Republican Party that has traded every semblance of the GOP’s historic Taftian platform of small government, sound money, fiscal rectitude and non-intervention abroad for a lifetime sinecure in the Washington Swamp.
In that modality, McConnell has been lauded as a master tactician, but at the end of the day those talents were dedicated not to great purposes of sound government, but to the petty care and feeding of the business lobbies, the NRA, the right-to-lifers and the military-industrial-intelligence-neocon complex that provided the votes and the loot to keep the Senate in nominal “Republican” hands. But when it comes to honest money, fiscal sanity, the Forever Wars and diminution of the Great Leviathan on the Potomac, McConnell has been AWOL for most of the 52 years he has suckled on the public teat.
After entering the Senate in 1985, McConnell rose from height to height in the Senate GOP hierarchy, first as chief bagman for the Senate GOP campaign committee in the 1990s, then Senate GOP Whip in 2002 and finally Senate GOP Leader in 2006, where has has remained in minority and majority iterations ever since.
We mention this progression because it just so happens that your editor quit the Reagan White House as OMB Director in 1985 over disgust with the GOP betrayal of fiscal rectitude, and warned that unless there was an abrupt and through-going return to the old-time fiscal religion, the US would experience massive multi-hundred billion deficits “as far as the eye can see”.
Needless to say, even we did not imagine that 35 years would pass in this manner. Nor did we foresee that what we called the GOP Senate’s College of Cardinals—-fiscal stalwarts like Budget Chairman Pete Domenici, Finance Committee Chairman Bob Dole, GOP Leader Howard Baker—-would pass from the scene, only to be replaced by the likes of principle-free Swamp creatures like Mitch McConnell.
Yet the facts speak for themselves. The plodding Mitch McConnell did not rise to the top owing to his charisma, brilliance or dedication to core GOP principles. He was simply a journeyman political fixer—master of the schmear, artful dispenser of the pork, unparalleled collector of tribute from the PACs and the interest group racketeers, whose shingles hang on every street in the Imperial City from Capitol Hill to Georgetown and for miles north and south of the great swamp of waste on the other side of the Potomac known as the Pentagon.
That is to say, Mitch McConnell defines the post-Reagan GOP and is the poster boy for the GOP’s culpability for the chart below.
At the beginning of 1985, the public debt was $1.66 trillion and it amounted to just 40.0% of GDP. That latter figure, as depicted by the brown line in the chart, is significant because it puts the huge Reagan deficits of the early 1980s in context.
As it happened, between the peak of LBJ’s guns and butter policies in 1966 and 1985, the public debt share of GDP had actually fallen steadily from 41.3% in Q1 1966 to a low of 30.6% of GDP in Q3 1981 because not withstanding moderate red ink most years, the public debt grew more slowly than America’s robustly expanding GDP.
But Q3 1981 is a significant inflection point because that’s the quarter in which the historic Reagan tax cut and fiscal package were signed into law. This included the massive defense increases, which took the Pentagon’s budget from $140 billion under Jimmy Carter’s last full budget (FY 1980) to just shy of $300 billion by FY 1985, and domestic entitlement reforms that fell drastically short of the White House plan.
It was also the quarter in which America’s 40-years march toward reducing the huge WW II debt burden (which reached 120% of GDP in 1945) came to an abrupt and what turned out to be permanent halt.
In any event, the immediate fiscal math of the Reagan program became insuperable and the deficit and public debt surged upward. Still, by 1985 it was not too late to turn back. By then the public debt had rebounded to 40.0% of GDP—a level that was consistent with the Federal debt burden carried by the US economy during the halcyon years of post-war prosperity between 1955 and 1985.
Here’s the thing of historic importance: Back in the day, the GOP College of Cardinals sincerely wanted to cap the debt at that level, and then steadily return to the old maximum that the Federal budget should be balanced during periods of peacetime prosperity. That is, of the very kind of strong and consistent economic growth that actually prevailed between 1985 and the year 2000.
Unfortunately, owing to the Gipper’s sweeping “Morning In America” victory in 1984, the California Reaganauts and GOP political operatives who kept him tightly cocooned in the White House sold him on the spurious notion that the US economy would eventually grow out from under the debt. Therefore, the worrisome rebound in the debt share of GDP would bend to the flat-line all on its own, meaning no more taxes increases (after three modest ones in 1982-1984), no more political ball-busting entitlement reforms and blue skies for the Gipper’s coveted defense build-up.
Consequently, there was no pivot back to fiscal rectitude at the very moment in the economic and political cycle (Reagan was immensely popular by 1985) in which it would have been most easily accomplished. To be sure, the College of Cardinals was not quite done and under George H.W. Bush and then Bill Clinton, they forced through sizeable deficit reduction packages that included various mixes of tax increases and spending reductions.
But these only braked the rise—they did not restore the very fiscal rectitude that was needed to keep America’s budding Welfare State democracy reasonably solvent as the great demographic anomaly of the 78-million strong Baby Boom passed through its productive years, heading for the massive retirement bulge in the 2020s and beyond, which is now upon us.
Stated differently, any traditional GOP fiscal conservative who looked at the demographics in the year 1985 would have been horrified by the debt trajectory shown below. Massive public debt is always a form of fiscal robbery from future generations, but the 1985-2030 interval owing to the Baby Boom was the very worst time in history to allow unrelieved fiscal incontinence to have its way.
As shown below, during the 35 years between 1985 and 2020, the public debt has grown from $1.7 trillion to $27 trillion or by 16X. That’s a rate if growth with which no amount of supply-side growth energy—-from the plausible to the delusional—could ever keep pace. Consequently, the debt to GDP ratio has soared from a manageable 40% to 127% at a time when there was no existential threat and national emergency like that of WWII.
We put the monkey squarely on the back of the McConnellized GOP. The above disaster would never have happened under the old College of Cardinals, who understood that despite its political inconvenience, on fiscal matters the GOP’s role in American democracy is to function as the Opposition Party.
By contrast, ever since the New Deal, the Dems have become the Government Party. As such, they are fair game for political blame, but unless the Senate GOP does the heavy fiscal lifting, there is no hope of stopping the disastrous path to fiscal ruin depicted above.
As it happens, last night was a twofer. Mitch McConnell Republicanism has been stripped of its power and the Donald has turned himself into a pariah who will lead what we hope will be a failed post-January 2020 blood-letting in the GOP that could pave the way for the reconstruction of a true Opposition Party from the ruins of the McConnellized and Trumpified GOP.
As it happens, the other GOP Senator from Kentucky stands for exactly the opposite of McConnell’s bastardized Republicanism. That is, Senator Rand Paul understands better than anyone else on today’s Washington scene that the crushing Leviathan on the Potomac thrives owing to the neocon Warfare State and the 12 Keynesian madmen who have turned the Fed into what amounts to an economically suffocating monetary politburo.
Needless to say, in the wake of the coming GOP civil war, Rand Paul will have to contend with a passel of fake conservatives and neocon warmongers like Senators Cotton, Cruz, Hawley, Rubio and more, as well as war-loving nightmares like Nikki Haley.
A betting man, of course, would not place a lot of money on the odds—-the Senator’s brilliance and canny knack for politics notwithstanding.
Then again, reconstruction of the GOP under the leadership and sound money, non-interventionist agenda of a Rand Paul is the only way out of the disaster that commenced in the mid-1980s.
That’s when the College of Cardinals was shoved aside by a camarilla of junior Reaganauts and supply-side fanatics (viz. Art Laffer), and when this fiscal mistake was drastically compounded in 1987. That is, the Texas pols in the US Treasury (Jim Baker) convinced the Gipper to fire the great Paul Volcker and replace him with one of the true villains of the 20th century—-Bubbles Alan Greenspan.