• Election Reactions from Beast writers • The 10 Biggest Election Wins• Howard Kurtz: A Democratic Bloodbath Last night’s biggest loser was not the Democratic Party. Democrats will rebound. In fact, the GOP’s victories probably improve Barack Obama’s chances of reelection since he can now position himself as a check on Republican radicalism, as Bill Clinton did in 1996. The real loser is Keynesianism: The idea that when businesses and individuals stop spending, government must. That idea will not rebound; it’s over for this period in economic history. First Britain, and now the United States, are responding to the worst economic contraction in 75 years by contracting government, despite the fact that the world’s best economists are screaming that it’s exactly the wrong thing to do. As Virginia Thomas might say, “Have a good day!”
You can already see the shift in the media commentary. On MSNBC, Keith Olbermann and company gleefully skewered the newly elected Republicans for not being more specific about what they’ll cut and gleefully predicted a civil war between Tea Party zealots who want massive cuts and Republican establishmentarians who don’t. But in so doing, they implicitly conceded that the question of the next two years will not be whether government contracts, but by how much. The best case scenario is gridlock: Obama blocks large-scale cuts as his 2009 stimulus money peters out, which means America goes from stimulus to no stimulus. The worst-case scenario is that in trying to balance the budget, Republicans force the White House into substantial cuts, which means America goes from stimulus to anti-stimulus. That’s the same move Franklin Roosevelt made in 1937, which according to many economists prolonged the depression for several years.
In retrospect, maybe the greatest blame lies with America’s pre-recession policies. For years, green-eyeshade types had been warning that America needed an economic surplus to prepare for the huge entitlement costs imposed by the baby boom retirement. Instead, George W. Bush—with a boost from Alan Greenspan—spent the surplus on war, tax cuts and expanding entitlements, leaving Americans anxious about debt even before the economic meltdown. Had America’s government done something about its long-term fiscal problems while times were good, perhaps America’s people would be more tolerant of the short-term spike in debt required by Keynesian stimulus. Instead, debt—even necessary debt--has become a metaphor for governmental irresponsibility and national decline. Fiscal restraint is to the anti-Obama Republicans what sexual restraint was to the anti-Clinton Republicans: the ultimate character test.
The Republicans have taken refuge in an anti-government ideology premised on the lunatic notion that America is the only truly free and successful country in the world.
Historians may also look back at 2010 as the first post-9/11 election in which fears of China loomed larger than fears of Al Qaeda. Given that China has stimulated its way out of recession and is set to pour even more government money into infrastructure, leaving America further behind, I doubt it will be the last. In his Senate victory speech, Republican megastar Marco Rubio announced that “America is the single greatest nation in all of human history. A place without equal in the history of all mankind” because “almost every other place in the world…what you were going to be when you grow up was determined for you.” Almost every other place in the world? From China to India to Brazil, hundreds of millions of people are rising economically in ways their parents could scarcely have imagined, in part because their governments are investing in infrastructure in the way the United States did in the late nineteenth century. The American dream of upward mobility is alive and well, just not in America. And rather than looking at what those other countries are doing right, the Republicans have taken refuge in an anti-government ideology premised on the lunatic notion that America is the only truly free and successful country in the world. That ideology won last night, and Keynesianism lost. Have a good day!
Peter Beinart, senior political writer for The Daily Beast, is associate professor of journalism and political science at City University of New York and a senior fellow at the New America Foundation. His new book is The Icarus Syndrome: A History of American Hubris. Follow him on Twitter and Facebook.