First of all, I have to admit that my prediction was wrong. I predicted that Paul Ryan would not be the Republican nominee for Vice President in 2012. My reasoning was simple: I didn’t believe that Mitt Romney would risk being overshadowed by his running mate on questions of economic policy. However, Mitt Romney did indeed choose Paul Ryan as his running mate late last Friday, thus demonstrating that he is comfortable running for President on a fiscal blueprint that is known as “The Ryan Plan” rather than “The Romney Plan.”
The selection of Paul Ryan immediately transforms the presidential race, turning it from an up or down referendum on President Obama’s performance into a choice between two starkly different views of economic policy. The Republican Party, which proudly labels itself a “brand,” will now embark on an effort to sell a plan that includes tax cuts for the wealthiest Americans, reductions in monies spent on programs that benefit low income Americans, and the acceptance of unrestrained budget deficits because defense spending is left untouched. The sales pitch is that this combination will lead to a faster economic recovery. The question is whether anyone will buy what they are selling.
Simple demographics indicate that the cultural issues that have traditionally defined the Republican Party since the 1980s have become less important to an electorate that every year becomes younger and less white. Opposition to same sex marriage, opposition to any immigration reform that includes amnesty for those who are already present in the country, and reduced access to abortion and contraception for women will all continue to be popular policies in certain segments of the country, but they are not issues that will attract majority support nationally.
For this reason, the Romney campaign has chosen not to focus on these issues, even though they provide a stark contrast with the policies of the Obama Administration. Younger voters are simply more egalitarian, and more tolerant, than older voters on cultural issues. Support for the Republican position on these issues is strongest with whites who are currently over age 55, a demographic that is shrinking annually through natural attrition (I do not say this with any relish, as I am fast approaching that age cohort myself).
By re-focusing this election on economic policy, the Romney campaign is gambling that the budgetary plan advocated by Paul Ryan will prove popular with younger voters and will buck the demographic trend on cultural issues. Ryan is a straightforward and unabashed advocate of the theory that cutting federal taxes will lead to increased federal revenues and that entitlement programs that benefit the poor should be cut in order to fund tax cuts for the wealthy. Proponents of this view call it “supply side economics” while critics label it “voodoo economics.” Paul Ryan happens to articulate a version of this economic theory that is so purified and absolutist that not even Friedrich Hayek would recognize it.
It is important to recognize that the Republican Party was not always associated with the belief that markets should operate free from any government regulation or interference. The idea that the federal government should adopt economic policies that level the playing field for entrepreneurs and poor laborers can be traced back to the Lincoln Administration. Later, Teddy Roosevelt led a Republican wing of the Progressive Movement that viewed the federal government as a necessary counterweight capable of protecting the public from the growing economic power of corporations. As President, TR didn’t favor comprehensively regulating the markets, but he did advocate aggressive government prosecutions of the most egregious corporate offenders as a way for the federal government to send a message of self-restraint to corporate leaders.
More recent Republican Presidents have governed in ways that the 2012 ticket now firmly rejects. Deviations from the mantra of cutting taxes and cutting social spending include the tax increases adopted by Presidents Reagan and George H.W. Bush, and the expensive social spending programs initiated by George W. Bush (“No Child Left Behind” and the Medicare Prescription Drug Benefit).
The Republican Party of 2012 has repudiated all of this history. It has done so at the very time when the unacceptable risks assumed by the financial sector in the run up to the 2008 economic crisis, the resulting recession, and persistently high unemployment have all combined to leave many persons fearful of their future. Voters who are anxious about their economic future are not likely to favor reductions in the federal “safety net,” nor will they vote to reduce the federal government’s power to protect consumers from predatory business practices.
However, by choosing Paul Ryan to be the economic face of his campaign, Mitt Romney has decided against changing his free market message to appeal to today’s nervous electorate. Instead, he has decided to purge his message of any moderation whatsoever and to double down on his selling efforts. It’s as if Coca-Cola responded to poor sales for “new Coke” by keeping its new flavor and doubling the marketing budget.
Not only will elderly Republicans react negatively to Ryan’s proposals to privatize Social Security and transform Medicare, but so will younger voters who blanch at the prospect of bearing a growing proportion of the cost of their parents’ health care (a result which is inevitable if the Medicare vouchers that Ryan advocates rise in value at a rate lower than the annual rise in health care costs).
The Republican sales effort will involve labeling President Obama a communist who will collectivize the means of production and redistribute incomes. In other words, “buy our unpalatable product because the alternative is worse.” This sales pitch is doomed to fail, because voters know that social democracies such as Great Britain, Canada, Germany, and Israel all maintain adequate taxpayer-funded social safety nets without slouching towards communism. The stark choice presented by Team Romney is too obviously a false choice.
The truth is that the majority of the voting population in this country likes our moderately socialist spreading of the burden of health costs and the costs of supporting the elderly, and they oppose proposals to significantly diminish these programs. Polling consistently demonstrates this acceptance. Not only do all generations benefit personally from these policies, either currently or in the future, but such policies of moderate redistribution to the less well off are also consistent with the basic morals espoused by all of the major religious denominations.
In a democracy, it is seldom fruitful to lecture the crowd about the wrongheadedness of its preferences. Segments of the Republican Party have been “educating” the public on the supposed benefits of supply side economics since the Reagan Administration, and the majority of the public isn’t buying. However, rather than pursuing less extreme economic plans, or modifying its views in accord with changing economic conditions, the strategy of the Republican Party in 2012 has been to keep the same policy whilst reducing the size of the crowd that votes, through Voter ID laws and through aggressively partisan re-districting efforts.
This is at best a short-term strategy, given the demographic reality, to say nothing of the fact that it is a bald attempt by office seekers to shape the electorate to their own personal benefit. In other words, instead of following the market, and adapting their policies, the Republicans are focusing on polishing their existing brand.
Ironically, the Republican political strategy runs counter to the basic principles of creative destruction, as applied in the private equity market and as espoused eloquently by “Larry the Liquidator” in the movie “Other People’s Money.” Here is what Larry, played by Danny De Vito, tells the shareholders of a struggling company:
[Y]ou know the surest way to go broke? Keep getting an increasing share of a shrinking market. Down the tubes. Slow but sure. You know, at one time there must’ve been dozens of companies making buggy whips. And I’ll bet the last company around was the one that made the best goddamn buggy whip you ever saw. Now how would you have liked to have been a stockholder in that company? You invested in a business and this business is dead. Let’s have the intelligence, let’s have the decency to sign the death certificate, collect the insurance, and invest in something with a future.
Better yet, watch the clip.
With his Ayn Rand inspired, absolute fealty to the free market, Paul Ryan makes the perfect buggy whip. There is no longer any place for economic moderates in the Republican Party. Mitt Romney is now ready to sell an economic policy that is as extreme and uncompromising as his position on cultural issues. His problem is that there just aren’t enough consumers out there who are willing to buy it.
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