Today's 'Gingrichomics' Echoes GOP Eras of Old

Same conservatism-capitalism in 1876, 1912, and 1980s

By , most recently, of "Arrogant Capital: Washington, Wall Street, and the Frustration of American Politics." This article is adapted from a December speech to a Capitol Hill conference on wealth and income inequality.

CONGRESSIONAL Republicans' 1995 budget and tax-cut pledge has all too many precedents. "Gingrichomics" is not simply an extreme version of 1980s Reaganomics; it is also the heir of 1920s Coolidge-Mellon-Hoover economics and late-19th century economic Darwinism.

Moreover, as wealth and income concentration regains the levels of the Gilded Age and subsequent Roaring Twenties, the continuity of unfair economic outcomes and familiar perpetrators stands to be a central issue of the 1996 election.

Current polarization does not stem entirely from international competitiveness, domestic wage problems, or other economic causes. Perhaps one-third of the explanation also lies in the political-economic values of the United States and the rest of the West over the last decade and a half.

Recommended: Default

I say this as a Republican and author of two relevant books. The first, "The Emerging Republican Majority," published in 1969 after use in the 1968 GOP campaign, argued a new political coalition was about to give Republicans control of the presidency for a generation. The other, published in 1990, said the GOP was again favoring the rich and practicing the speculative bubble economics that was its undoing in the late 19th century and big-business era that died with the great crash of 1929.

The wealth and inequality predicament emerged virtually as the 1990 recession began. In 1992, President Bush became a sitting duck for the populism of Pat Buchanan in the New Hampshire primary, for Ross Perot as a populist independent, and for Clinton as a new Democrat who could spell m-i-d-d-l-e c-l-a-s-s.

This allowed the Reagan and Gingrich conservatives to make Bush a scapegoat. What happened in 1992 was his fault; it had nothing to do with Reaganomics. Their cocky follow-up was the Contract With America and its litany of national salvation through deregulation, rollbacks of Medicare and education, and tax cuts for business, investors, and large families. Clinton's unpopularity further played to GOP self-deception. Party strategists could insist that anti-Clinton votes were actually cast for the new Republican economic Darwinism. Only now, chastened by the recent collapse of public support for Gingrich and the new GOP policies, are party leaders getting nervous.

A recurrent rhythm

When I published "The Politics of Rich and Poor" in 1990, most of the ensuing ruckus involved a debate over wealth concentration. Too little attention went to the book's underlying thesis of a recurrent GOP policy instinct. But after each national party watershed election, there has been a recurrent rhythm. In each first stage, in 1855-60, 1896, and 1968-72, the party established its upcoming generational White House control around broad national and ordinary-citizen themes - winning a civil war and keeping the nation together in the 1860s, overcoming the national agrarian and evangelical homilies of William Jennings Bryan, and keeping America en route to its industrial destiny in 1896. The task in 1968-72 involved keeping the country from being torn apart by the Vietnam War and by cultural and racial tensions.

Yet after winning these critical elections with middle-class nationalism and economic themes, the GOP invariably redirected itself toward tax cuts, laissez-faire, and ennoblement of entrepreneurs, speculators, and financial markets. Concentration of wealth and incomes surged. By 1876, 1912, and the mid-1980s, this new bias had raised real problems for the Republican presidential coalition. And more was to come.

My book laid out 10 parallels shared by all three of the conservative go-go eras. These shared characteristics unfold as follows: (1) mostly Republican presidents and conservative philosophy; (2) desire for less and smaller government; (3) more enthusiasm for business and entrepreneurialism; (4) less regard and hard times for labor; (5) mergermania, consolidation, and reorganization of corporations and investment firms; (6) tax-rate cuts; (7) disinflation and a boom in financial assets and markets; (8) a two-tier economy favoring services and finance; (9) greater concentration of incomes and wealth; (10) increased leverage, debt, speculation, and a speculative financial implosion.

Previous go-go eras were cut short in 1893 and 1929 by economic crashes that caused indignation and a new national political mood. This should have happened in the late 1980s and early 1990s, but multiple bailouts of the financial sector enlarged the bubble instead of letting it pop.

Before "The Politics of Rich and Poor" came out, Richard Nixon, who launched the 1968-92 GOP presidential cycle with a "middle American" economic bias, gave me my lead blurb for the book jacket. He agreed Reaganomics had rekindled the GOP coalition's cyclical vulnerability. His father voted for third-party Progressive Robert LaFollette in 1924 because the GOP president, Calvin Coolidge, was too favorable to the rich.

The Republicans did lose the presidency in 1992. Bush's 37.5 percent of the total vote was the lowest since 1912 for an incumbent seeking reelection. Not only did Democrat Bill Clinton touch rich-poor themes, but Ross Perot, once a prominent Nixon-era Republican, won 19 percent of the vote as an independent running against Washington lobbyists and for the restoration of power to ordinary Americans. Pat Buchanan, another Republican with Nixon-era roots, won 37 percent against Bush in the New Hampshire primary, emphasizing help for the unemployed and calling Bush "King George."

But when Democrat Clinton took office, he turned more to his party's Washington insiders and big contributors. He continued the GOP's policy of bailing out troubled commercial banks, curbed spending to please the bond market, and boasted about new records in the Dow-Jones industrial average. By the winter of 1994-95, he added a new financial bailout - $50 billion of taxpayers' money earmarked to support the Mexican peso and rescue speculators in Mexican high-interest bonds.

This new political economy was a perversion of free-market economics. Drugstore owners can fail and employees' real wages can erode without a word from Washington. But in our new federal bailout era, big and powerful banks, corporations, and investment firms can no longer fail and thereby produce the political and economic policy countertide that made the system work in 1893 and 1929. Such propping-up amounts to financial mercantilism - government and finance collaborating to stymie market forces. Speculators can keep their profits, but if they fail, then risk is collectivized and the public pays. Socialism in health care is a bogeyman, yet "Wall Street socialism" props up 90 percent of America's great fortunes.

Skirting the issues

The Republican Party doesn't want to debate wealth and income polarization. It's even less anxious to discuss the role of bank, corporate, and currency bailouts and Wall Street socialism. But this new brand of redistributionism and collectivism is central to the squeeze on the middle class and favoritism toward the rich.

Republican voters are already frustrated. Just as 29 percent of self-identified Republicans voted for Clinton in 1992, current three-way heats show the same potential for 1996. Other surveys show 50 percent of Republicans favor a new party, 40 percent disapprove of Gingrich and Republican willingness to reduce Medicare, and 30 percent think the Republican Party puts the rich ahead of ordinary Americans. Whopping majorities opposed the Mexican peso bailout.

This is not new. In the 1890s, large chunks of the Republican electorate in the West bolted to the populists. In 1912, almost as many Republicans voted for Teddy Roosevelt, running as a Bull Moose independent, as stuck by old-line GOP incumbent William Howard Taft. And some 25 to 35 percent of farm-state and Western Republicans voted for LaFollette, the independent Progressive, in 1924.

This year's surprise is so few GOP leaders are heeding 1995's unhappy party minority. Yet in California, Ross Perot's Reform Party is winning most of its converts among registered Republicans. Pat Buchanan, running in the GOP primaries, has called for freeing the party from "elite and corporate domination" and discussions of income polarization.

Next summer's national convention will probably turn a deaf ear. Then the dissident Republicans will have to confront another decision: If their party has left them, many may have to leave it.

Share this story:

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...