Republican officials had hoped for a recession, but it did not come -- and without it, they are left with no economic message or agenda. Here's how Jennifer Rubin describes their dilemma in The Washington Post:
After hollering for more than two years about President Biden’s handling of the economy, Republicans have lost the recession issue. And, worse for them, they don’t have a coherent economic vision.
Even grouchy pundits concede that the economy is solid, suggesting the administration is “sticking the soft landing,” as the Wall Street Journal put it. (“Fresh economic data this week reinforced optimism that inflation can fall without the U.S. suffering a recession,” the Journal reported.) Gross domestic product, adjusted for inflation, rose at an annual rate of 2.4 percent in the second quarter. The Federal Reserveand many economists now do not expect a recession. To boot, inflation is abating.
“Employers spent 4.5% more on wages and benefits in April to June from a year earlier. … That marked a slowing from a 4.8% increase the prior quarter,” the Wall Street Journal reported. “The employment-cost index, a measure of compensation growth closely watched by Fed officials, also posted its smallest quarterly increase in two years.” Moreover, “the personal-consumption expenditures price index, the Fed’s preferred inflation measure, rose 3% in June from a year earlier … down from a 3.8% rise the prior month.”
For some time, Biden’s economic results have far outstripped the media’s portrayal of the economy and the public’s perception of it. However, as consumer confidence and GDP climb and inflation falls, perception and media reports might finally converge with reality.
And what is the GOP alternative? Republicans certainly did not practice fiscal sobriety or spending restraint under the previous administration. Indeed, defeated and indicted former president Donald Trump scolds Republicans for talking about entitlement cuts.
Republicans not only enacted a $2 trillion tax cut that opened a gusher of red ink, but they also spent like there was no tomorrow. The right-wing Manhattan Institute conceded, “When President Trump entered the Oval Office, CBO projected the cumulative 2017-2027 budget deficits would be $10.0 trillion. When he left office four years later, CBO’s projected deficits for the same period were $13.9 trillion.” In addition, “The president signed or enacted $7.8 trillion in new initiatives, the costs of which were partially offset by $3.9 trillion saved from economic growth revenues and technical re-estimates of taxes and spending levels.”
Republicans did not repeal Obamacare; it was too popular. They did not eliminate government departments, as they’d promised for years to do. Aside from some crank think-tankers and rich donors, there is no grass-roots political movement for less government or less spending. In none of his four presidential races has Trump run on small-government conservatism. Those who do get slaughtered in the primaries.
Moreover, GOP tax cuts that primarily benefited the rich made a mockery of any notion of “tax reform.” Republicans continued to make the tax code vastly more complicated, showering K Street lobbyists with special giveaways.
We’ve come a long way since Republicans preached fiscal restraint, limited government and free markets. Republicans now feed their special-interest donors, perpetuate crony capitalism and grow the debt.
Moreover, in the fury over niche culture-war issues, they’ve begun using government to punish corporate critics. Coupled with trade tariffs and anti-free-market restrictions on legal immigration, Republicans are more entranced with Viktor Orban’s style of strong-arm, crony capitalism than Adam Smith’s invisible hand of free markets.
Democrats have changed, too, thanks to Bidenomics. Tax increasesunder Biden and Obama were modest, rolling back a fraction of Republican predecessors’ cuts and exempting even the upper middle class. Meanwhile, in lieu of vast expansion of the social safety net, Biden adopted an industrial policy reliant on private industry to follow public investments. The result has been a bonanza of private investment, manufacturing and green energy development. Call it tempered capitalism or cooperative capitalism.
Republicans want to indulge their rich patrons, butDemocrats seek to counter the gigantic power of Big Pharma (e.g., with modest cost controls on Medicare prescription drugs), Big Oil (e.g., by spurring investment in green energy) and China (e.g., the Chips legislation).
Republicans want to help tax cheats and expand the debt by hamstringing the IRS, and Democrats want to corral cheats and reduce the “revenue gap.”
Gone is the battle of Republicans’ free-market capitalism vs. tax-and-spend liberalism. A Republican Party devoted to cronyism and insistent on increasing economic inequality now faces a Democratic Party that modestly controls debt, spurs work (see the exceptionally high job participation among working-age people) and encourages private investment in forward-looking industries. So far, that has been a remarkably successful formula.
No wonder Republicans want to hyperventilate about Hunter Biden. They no longer have a recession — or an economic rationale.
