Tag Archives: Economics

Fear and Loathing in Washington D.C.

Washington DC Capitol - HDR

“President Obama will negotiate with the Syrian butcher Assad and erase his red line, will capitulate to Vladimir Putin, and he will negotiate with the happy face of the killer regime in Iran, President Rouhani, but not with Republicans over issues all presidents have always negotiated over.”

That quote – from American conservative radio host/shame-free liar and propagandist Hugh Hewitt – encapsulates how far the U.S. has to go to overcome the most embarrassing and pathetic government shutdown in the history of the country. Not every conservative in the United States is as crazy or deluded as Hewitt, but enough are to where an angry, xenophobic, racially charged minority, belonging to one faction in one house of government, has been able to manufacture a government shutdown threatening to destroy the US and global economy unless the party opposite capitulates to their bidding.

The truth is, no American president has ever “negotiated” repealing a duly enacted law [the Affordable Care Act] whilst being blackmailed with the destruction of his government, or indeed with the destruction of the global economy. But this line of baseless rhetoric has become the new mantra of the Republican Party and their apologists: repeat the lie until enough Americans have been coerced that they [Republicans] are not singularly to blame for the disastrous impasses the country continuously finds itself in (e.g. sequestration, shutdown, debt ceiling, etc.). This isn’t just a minority problem – it’s a party problem. The American Tea Party may be [entirely] comprised of callous fools and disgraceful opportunists, but we’re mostly here because “moderate” Republicans have consistently folded to these vandals rather than stand up to them.

It’s important not to forget that Republicans manufactured the U.S. government shutdown for one reason and one reason only: to stop poorer Americans from getting health insurance funded by cuts to Medicare and the taxing of the richest Americans. Let’s also keep in mind that Congress itself passed the healthcare law in 2010; the Supreme Court then affirmed its constitutionality through its landmark ruling earlier this year; and the majority of Americans want it – as proven when they re-elected the President who signed it.

In a few weeks (or sooner), the shutdown/default crisis will long be over and maybe even forgotten. The federal deficit will in all likelihood continue to fall, and growth will probably resume. But the long-term inadequacies of the U.S. political system will continue to be exploited by the Republican Party, creating a sort of dystopic future for American politics. The American people put pretty much all of the blame of the shutdown/default crisis on the shoulders of Republicans, but conservatives can still expect to hold enough seats in the House come the 2014 midterm elections (mainly because of the way district lines are drawn. Republicans were lucky enough to have had a huge win at the state level in 2010, which coincided with post-census redistricting or gerrymandering). Democrats may very well win the White House again in 2016 with Hillary Clinton or Papa Joey B, but the Congress will probably remain the same, meaning we’ll see more shutdowns/threats of defaults before it’s all said and done.

I’ve been able to gauge the puzzled, incredulous looks of my international friends at the LSE – many of whom come from democratic countries – when they hear that an extremist minority party caused the “most powerful” democracy in the world to close up shop. I tell them that American politics, as constructed by James Madison (“father” of the Constitution), was designed with stagnation, derision, and polarization in mind. But the country’s founders couldn’t foresee something as inane as the Tea Party (and warned against political party’s altogether); they couldn’t possibly expect the damning practice of gerrymandering districts or the influence of special interest groups both in elections and public policy.

Mostly, I’ve had to tell my foreign friends that what they’re currently seeing and reading about is not at all what American politics was meant to be. But they better start getting used to it, because it’s here to stay.

Photo: Nicolas Raymond

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Could The Shutdown/Debt Ceiling Cost Republicans The House?

Because the American people are a fickle bunch, the usual order of things is that the sitting President’s party loses seats in the House during the midterm election. Conventional wisdom would then lead one to accept the points expressed by The New Republic and Real Clear Politics in their estimation(s) that it’s unlikely Democrats will overturn the Republican majority in 12 months. The rule has exceptions, of course. Clinton’s Democrats actually picked up a few seats in 1998, following Speaker Newt Gingrich’s 21 day government shutdown.

It’s been reiterated quite exhaustingly that one of the main reasons Republicans have been able to keep the House despite losing the national popular vote to Democrats by 1.5% is that they enjoy the considerable majority of gerrymandered districts. In short, Democrats needed to win the House by a margin of more than 7% to become the majority party.

Fast forward to today. If this WaPo/ABC news poll is any indication (and I’d like to think it is), the country soundly puts the blame of the shutdown and the upcoming debt ceiling disaster on the shoulders of the GOP.

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But while public opinion of the GOP might be very low, commentators have rightly noted that President Obama garners considerable blame (deservedly or not) for the current Washington impasse. That may be true, but luckily for the President and his party, Obama is not running for re-election in the next 12 months. That point led Public Policy Polling to conduct a set of district-level polls meant for ascertaining Congressional preference — which has, in the past, tracked the national vote pretty closely. So, PPP set out to survey 24 congressional districts held by Republicans, and asked voters there to chose between their current Congressional representative and a Democrat. Here are their results, plotted against last year’s election result:

It’s important to note that we’re talking about surveys taken during a government shutdown explicitly engineered by Congressional Republicans, but the results show that Democrats swung 23 races (below the red line) while Republicans held one race (above the red line). If the results hold (and I don’t expect them to), Democrats will win the House. Comfortably.

I say I don’t expect this to last because, well, Americans have the tendency to forget about things like the shutdown when it comes time to vote. The midterm elections are still a long away off to where Republicans can successfully coerce their constituents to re-elect them to the House. I do expect Democrats to pick up some votes, which is not totally inconsequential since they’d be able to force the chamber to actually vote on resolutions that Boehner refuses to allow.

The survey doesn’t take into account how voters will feel about House Republicans if the Government hits the debt ceiling, but given the plausible disaster that would ensue if such a thing were allowed to happen, when compounded with the shutdown and the [still] terrible sequester, these results could hold true to the midterm, and possibly even increase.

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Republicans Ready Themselves For Self-Destruction

Rep. John Boehner

According to Robert Costa over at the National Review, the Republican leadership has given up: Boehner will allow the lunatic tea-party bandits in the House to move a resolution to keep funding the government, save for Obamacare. And, once that falls apart in the Democratically controlled Senate, and the next step is a government shutdown, the Republican leadership will try/pray/hope/beg/borrow/steal enough votes from their party in order to keep the government open. If you’re looking for an apt word to summarise this, might I suggest “stupidity”.

From Costa:

Here’s how my sources expect the gambit to unfold: The House passes a “defund CR,” throws it to the Senate, and waits to see what Senator Ted Cruz and his allies can do. Maybe they can get it through, maybe they can’t. Boehner and Cantor will be supportive, and conservative activists will rally.

But if Cruz and company can’t round up the votes, the House leadership will likely ask Republicans to turn their focus to the debt limit, avoid a shutdown, and pass a revised CR — one that doesn’t defund Obamacare.

The really mind-boggling truth to all this is that everyone knows what the deal is here: the bill will survive the House and Tea partiers who have done a really amazing job convincing stupid people that Obamacare is a bad thing will have a day of celebration. Then Harry Reid will light the stupid bill on fire and toss it in the trash in the Senate. In the end, we’ll be right back where we started, only that much closer to a government shutdown.

And unless the Republican leadership — which has pretty much lost all leverage and control over the party — can convince the loons of the far-right to relent and pass a funding bill, the government will indeed shutdown. The silver-lining? If-and-when that happens, only one party will be to blame.

(Photo: Medill DC)

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Best Of The Week

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I feel like in years to come, we’ll look back on events this week and wonder what we could have done, or argued, differently. I don’t know what will happen if we intervene in Syria. No one can know something like that. What I rely on instead is what little I know about regional history, past military interventions, sectarian violence and the great fallacy that is international law. But despite my furious objection to intervention, my heart breaks that so many innocent people have died — and will die. In a perfect world, we could act as guardian protectors for all those who cannot protect themselves. Provide justice from above. But this isn’t a comic book, and limited air strikes won’t make a bit of difference in the rate of death, turmoil and despair in that poor country. What will happen, I fear, is that we’ll be sucked into another war.

That means more death. More suffering. That’s what I’m opposing.

The most popular post of the week — unsurprisingly — was one of my many pieces on the subject: Syria Is Not Iraq. It’s Much Worse.

Other notable posts included Republicans Were Invited To Attend And Speak At MLK Ceremony. They Didn’t Show Up.; Did The Worst Chemical Weapons Attack In Decades Just Happen In Syria?; the hilariously contentious Starbucks Is Better Than Your Local Coffee Shop. Deal With It.; The Arguments For (And Against) Intervention In Syria; and finally, Boomers, Ye Be Warned: Millennials Are Not Anti-Politics.

More after the holiday.

Publius

(Photo: Chair. Joint Chiefs of Staff)

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Spain’s Tax On The Sun Reveals Dilemma Of Prioritization Under Debt

PS10

By Mnemosyne:

Despite having the ninth largest external debt in the world, Spain’s capacity for solar energy ranks as one of the highest, often receiving a nod of approval by environmentally concerned critics. But the onset of the debt crisis in 2008 resulted in difficulties with carrying out the government’s subsidy program for the panels, as well as a decreased demand for energy.

With debt continually growing, some estimating by nearly 26 billion euros, that decrease in demand has only persisted, if not worsened. Spain’s generation of solar power is now estimated to be 60% greater than any demand. Industry Minister Jose Manuel Soria defends the proposal to fine private users up to €30 million if their solar panels are not hooked to the national grid in order to be taxed and measured by claiming that these users benefit from having a back-up power system from the grid.

“The decree is an attack to market freedom that aims to prevent people from competing with established utilities,” Jose Donoso, managing director of Spain’s solar lobby group UNEF, said in an interview. “It’s like if they charged you when you turn off electric heaters and use a wood stove.”

Initial subsidizing of the solar industry incentivized individuals to pursue environmentally friendly means of self-generated energy. Opponents, however, argue that implementation would make self-generated solar energy more expensive, thus pushing more people back into the arms of its electrical grid counterpart. Spain’s shift in being the forerunner for supporting a clean, natural source of energy, to eradicating economic incentives, depicts the prioritization shifts that nations under debt undergo.

Perhaps a few years down the line, once a larger number of people were incentivized to turn towards solar energy in Spain, it would be a more viable means of steady income. But to play the hand too early results in at least two losses for the state: less trends towards clean energy, and less income in the long run. As individuals switch to the cheaper electrical grid once more, Spain’s capacity to utilize it as an export diminishes.

Debt destroys a nation’s priorities. Spain joins a long list of states that have essentially shown how fiscal desperation can lead to bad policy. The kind that does as much damage to the environment as it does a nation’s long-term well-being.

(Photo: Marco Cevat)

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Bring Back Bankruptcy For Student Loans?

graduation caps

Prior to 1976, student loans were dischargeable in bankruptcy. Since then, the only way to get out from paying back your student loans — if you don’t have the money — is to default, or die. And even then, the debt remains.

The total student loan debt in this country stands at more than $1 trillion — that’s more than either auto loans or credit card debt. Spurned on by the fact that in the very near future, the country will be thrown into chaos because millions of young Americans will default on paying back exorbitantly high student loans, the Center for American Progress issued a new report, calling for a combination of reasonable standards for ensuring the repayment of student loans, backed by a carefully crafted bankruptcy option for those who realistically cannot meet their debt:

Congress should move to make some student loans dischargeable in bankruptcy. Given the persistent myth of the young borrower declaring bankruptcy at the start of his or her career, it is understandable that no one wants to be seen as opening the floodgates to potential abuse. The way to approach this issue, however, is to establish clear and public standards for what we at the Center for American Progress refer to as Qualified Student Loans, or loans that cannot be easily discharged in bankruptcy, which has been done for other types of financial products as a way to identify safer financial products. Qualified Student Loans would include loans, both federal and private, that have reasonable repayment conditions such as low interest rates and access to favorable forbearance, deferment, and income-based repayment options. These loans would also be qualified based on the successful track records of the institutions and programs receiving the proceeds as a way to ensure that these are programs that—by virtue of their graduate employment rates—give graduates a reasonable chance to repay. Loans not meeting both standards—borrower-friendly terms and some evidence that graduates, based on their employability, are likely going to be able to repay these loans—would be eligible for discharge in bankruptcy just as credit cards are. Other loans—Qualified Student Loans—would maintain the undue-hardship provision while at the same time benefiting from greater borrower protections.

Considering the amount of lobbyist influence that went into getting rid of student loan bankruptcy in 76′, I can only imagine the kind of onslaught the banks would unleash on members on Congress if this ever became a serious talking point. It probably never will, mind you. Very likely, we’ll get to a point in this country where we’re staring down the face of another recession, only this time, the ones most affected will be those who have not even begun to establish themselves.

But if President Obama is serious about helping defaulting college students and graduates, this is certainly the place to start.

(Photo: Flickr user John Walker)

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Australia’s $16.88 Minimum Wage Dwarfs U.S. At $7.25

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Australia’s $16.88 an hour minimum wage rate is proof enough to many that increasing the amount workers make doesn’t stifle growth. In fact, Australia hasn’t had a recession in 2 decades. But as the chart above from Business Insider’s Matthew Boesler shows, Australia is not alone in offering a higher minimum wage than the United States ($7.25).

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Study Finds That The More Sex You Have, The More Money You Make

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According to a new study from the Institute for the Study of Labor at the University of Bonn, if you’re getting laid, you’re probably getting paid too:

We estimate that there is a monotonic relationship between the frequency of sexual activity and wage returns, whilst the returns to sexual activity are higher for those between 26 and 50 years of age. In addition, heterosexuals’ sexual activity does not seem to provide higher or lower wage returns than that of homosexuals, but wages are higher for those health-impaired employees who are sexually active. Over-identification tests, robustness checks, falsification tests, as well as, decomposition analysis and sample selection modelling enhance the study’s strength. Contemporary social analysis suggests that health, cognitive and non-cognitive skills and personality are important factors that affect the wage level. Sexual activity may also be of interest to social scientists, since sexual activity is considered to be a barometer for health, quality of life, well-being and happiness.

Now, the study is limited to the Greek population in 2008, so I guess keep that in mind. But if the Greeks are — and there’s no reason they shouldn’t be — reflective of the rest of humankind, then the results do indeed correlate that sex and wages rise together. None of this means that if you just get laid more, you’ll make more — you still have to put in the work. But if you want to be happier — happiness leads to more productivity, and more productivity leads to more money — why not work on those old pick-up lines again?

Ahem .. hello, ladies.

(Photo: Via Wikicommons)

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Best Of The Week

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The most popular posts of the week both had to do with the saddening swell of violence and terror in Egypt this week: Violence Erupts In Egypt — Reactions & Analysis, and my follow up piece Egypt Quickly Descending Into Hell.

Other highly circulated pieces included Californians Use Less Electricity Than Everyone Else — Here’s Why; our brutal and effective Photo Of The Day: “Not All Violence Is Physical”; and whether or not it’s time to mark The End Of The Art Gallery?

Just a few recommendations, in case you missed them: Is Washington In A Post-Policy Moment?; my thoughts on why Obama’s Economic Approval Rating is so terribly dismal; Here’s How Little The Public Knows About The Deficit; and a small defense of Edward Snowden, Time To Give Credit Where Credit Is Due.

For good measure, also check out Rep. Steve King’s latest racist rant. Good luck with that Hispanic vote.

See ya!

Publius

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Is Washington Really In A “Post-Policy Moment”?

Washington Monument (Washington DC)

Peter Suderman has an interesting theory about the state of affairs in government: Washington, he says, is in a “post-policy moment”. His core premise is that both parties have achieved their respective political — or ideological — goals: Democrats have been able to semi-successfully defend the entitlement state — passing a confusing but so-far-effective universal health care bill, while also overseeing the sea of change concerning gay marriage and other important social issues. Republicans have succeeded in keeping taxes relatively low, defense spending absurdly high, and state’s rights reinforced through the Supreme Court’s decision to gut the Voting Rights Act.

But here’s why I think Suderman is off the mark:

    “This is what really lies underneath the recent policy stagnation,” he writes, “not obstructionism, but exhausted party agendas with nowhere left to go.”

I can buy that both parties are semi-satisfied with their political agendas and therefore would rather not exert too much energy or intellectual thought in new policy ideas, but the argument that it’s all about exhausted party agendas and not obstructionism is going a step too far. It’s all about obstructionism. Ezra notes as much:

    What lies under the recent policy stagnation is clearly obstructionism — or, if you prefer, the gridlock of divided government. After all, 2009 and 2010 were only a few years ago, and they were the most rapid period of policy accomplishment in generations. Democrats didn’t run out of agenda. They ran out of votes.

And he goes on to explain the sorts of genuine policy measures both parties would pursue if they had the majority they needed — more simply, the votes they needed:

    For Democrats, the agenda is clear: Immigration reform would be the first big bill to move. The harder lift would be a cap-and-trade plan to deal with global warming, though given big enough majorities, one might pass. Universal pre-K would quickly end up on the president’s desk.
    …After that the size of the agenda falls quickly. A significant package of infrastructure investments would be signed into law, of course. A modest gun control package would emerge. Something along the lines of President Obama’s budget would replace sequestration.
    …if Republicans were actually in power I think the chance that they’d be willing to detail, pass, and implement the Ryan budget, as written, approaches zero. But they’d probably pass some softer version of it that would include a move toward premium support in Medicare and block grants to Medicaid and food stamps.

And that’s really the rut of the issue here: policies are moved and realized by votes. Without the votes, ideas are useless and often not even publicized. Washington progresses through ideas, but it runs on votes, and until one party controls the means of government — and I mean the Presidency, House and Senate — then obstructionism will rule the day.

We’re not in a post-policy moment. We’re in a no-policy moment.

(Photo: flickr user Shubert Ciencia)

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Poll: Obama’s Economic Approval Rating Is … Bad.

Mirroring the drop in his overall approval rating, Gallup finds that only 35% of Americans approve of how the president is handling the economy:

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One would except such low numbers during an economic recession or debt-ceiling fight, but the U.S. economy is actually growing again — though not as fast as we would have liked thanks to Republican led sequestration — and the state of the U.S. economy is miles better than anything we’re seeing in Europe right now, or any other developed country for that matter. But i’m not so idealistic to think that many Americans consider those things when they offer their thoughts on the economy. The public’s approval rating of Washington’s leaders is at an all-time low (less than 10%); it’s not surprising then that Obama, as the head of the Washington leadership, would be considered under the same level of disapproval. It’s undeserved, mind you, but that’s probably the reason for the low percentage nonetheless. As long as Republicans run the House, blocking every single piece of positive, pragmatic legislation, while also allowing the country to face a sequester that hampered growth and ballooned the deficit, Obama will never be able to execute his economic policy.

And look, as cretinous as the Republican platform sounds, they’re really just doing what they’re supposed to do. It’s obstructionism on crack, yeah, but the opposition party is supposed to be obstructionist. Do enough damage to the economy so Obama gets the blame; make sure people know that it’s because he can’t bridge the partisan divide; gerrymander the living hell out of white districts to make sure you dominate the white vote; and assure 2016 voters that psuedo-conservative economics is the way of the future.

But the U.S. economy is growing (slowly); the deficit is falling faster than we imagined; unemployment is … well … shitty, but getting better; and future prospects are looking good, assuming we don’t go backwards — or don’t go Republican.

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Here’s How Little The Public Knows About The Deficit

Nobel winning economist Paul Krugman wanted to know how much voters knew about the plunging federal deficit, so the good folks at Google put together a Consumer Survey to find out:

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And here’s what it really looks like:

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It’s not a Gallup Poll or anything, but I imagine if the survey was expanded to cover the whole of the country the results would either be really close, or a lot worse. Part of it has to do with misinformation, of course, but the other sad truth is that most Americans don’t know that much about public policy, and even less about the country’s economic status. When I post something about some weird Republican gaff by some nobody congressperson from some small state, the traffic is astounding. Posts like this, not so much.

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“Scoop, if true”: How The New York Post Gave Up On Journalism Altogether

The New York Post is a groundbreaking news organization. Some magazines and newspapers waste time by vetting sources, checking facts, reporting on things that exist — you get the idea. 20130807-155530.jpg

Not the Post. They have no such time for that nonsense. I mean, why make yourself all tired and whatnot by finding sources when you can just have your readers tell you what’s what?

Take today’s column by Michael Goodwin for an example. Goodwin quotes one of his readers — again, who cares who he is, right? — who has a real life “scoop, if true”.

    Reader Don Reed has a scoop, if true. “People are going nuts trying to smoke out the identity of Eliot Spitzer’s clandestine girlfriend,” he writes. “I think it’s Huma.”

    Stop the presses!

Give the man a Pulitzer!

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The Economy Of Low Expectations

From the Los Angeles Times:

A private report Wednesday from payroll firm Automatic Data Processing Inc. showed the private sector created 200,000 jobs in July, the most since December.

The federal government’s employment report for July, to be released Friday, is expected to show a gain of 185,000 net new jobs in non-farm payrolls last month.

With the unemployment rate forecast to tick down to 7.5%, enough positive data is piling up to allow Fed officials to decide next month to begin reducing the central bank’s monthly purchases of $85 billion in bonds.

The good news is that the unemployment rate is decreasing; the bad news is that it’s decreasing because people are leaving the workforce — not because people are getting jobs. This Center on Budget and Policy Priorities chart tells the story:

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On the left we see the yellow line showing the official unemployment rate since 08′. In 5 years, it’s dropped from 10 percent to under 8. So, yay. But on the right we have the more important red line showing the actual employment rate — or more simply, the percentage of people with jobs. That line has barely moved.

What it tells us is that the unemployment rate is down because people have left the unemployed ranks — not because they’ve gotten jobs, but because they left the workforce altogether. Some of that is the natural consequence of an aging population, but a lot of it is the basic truth that the economy is a heck of a lot worse than the unemployment rate suggests.

And the news out of Commerce yesterday did little to make me feel better about it:

The Commerce Department reported Wednesday that the economy expanded at a 1.7% annual rate in the second quarter, exceeding analyst expectations of about 1% growth.

Although still weak, the pace of growth from April through June showed that the economy is weathering this year’s tax increases and federal spending cuts.

The 1.7% growth rate was a significant improvement over the 1.1% rate in the first quarter, which was revised down from an earlier 1.8% estimate.

So, I guess if you keep your expectations to a bare minimum, we’re making progress. Look, the economy would be faring much better — theoretically — if sequestration didn’t take place (call your local Republican legislator and thank them), but it’s still a terrible mess. The sooner we realize that a lower unemployment rate doesn’t mean we’re out of the boondocks, the better.

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Quote for the Day: “Can Republicans Be Economic Populists?”

Ronald Reagan (Home Is Where The Story Begins) Tampico, IL

“The Republican postelection ideological repositioning project has chugged along fitfully and without satisfaction until just recently, when a solution struck with the blinding force of revelation. The concept is to define the Republican Party as the populist opposition to the Obama administration. Obama, goes this line of reasoning, is not the advocate of the people he puts himself forward as but the defender of bien-pensant elites. Republicans are — or should be — the party of stripping the elites of their government favors.”

(…)

“If you define privilege as “privilege meted out by government,” then, ergo, the Democratic Party is the party of privilege — the court party, the elites. There is certainly room to flay the GOP for its deviations — its farm bills, its business tax breaks — while ignoring both the main sources of economic and social privilege in America and disposition of the two parties toward it. But the right-wing populist analysis is still a magic trick, a way of transmuting the party that taxes the rich to provide health insurance to the sick and poor into the party of the rich and powerful. Far from the basis for a realistic program for the Republican Party, it’s merely a form of self-deception.”

Jonathan Chait, Can Republicans Be Economic Populists?

(photo by Wayne Wilkinson)

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