While this is excellent analysis, the reality is much simpler if you go on psychology of Republicans rather than economic theory:After watching a media appearance by Fred Thompson, Josh Marshall poses a very good question: do conservatives and/or Republicans actually favor a deep recession as a way to purge the economy of speculative excesses and debt?
While I am quite sure that Republicans are not about to hoist banners reading "Deflation Now!" a look back at the conflicts over the first "bailout" package and some of the GOP rhetoric surrounding the presidential campaign should make it clear that there is in fact a strong undercurrent of conservative hostility to any sort of relief measures that don't simply involve tax cuts or deregulation. Those who convinced themselves that the mortgage crisis was caused by ACORN and poor and minority borrowers certainly are in no hurry to succor such Obama-supporting miscreants. More generally, there's always been a large faction of conservatives who favored the occasional "healthy" recession to wring "excess demand" out of the economy. One of the innovations associated with the GOP's embrace of supply-side economics was a partial abandonment of that point of view as "root canal" or "Hooverism." But in the face of an actual recession, like the one St. Ronald Reagan presided over in 1981-83, there was no notable conservative support for any economic stimulus that didn't focus on high-end or corporate tax cuts.
At Open Left today, Matt Stoller argues that conservatives aren't that interested in economic stimulus because creditors actually benefit from debtors in a deflationary climate. That's true so far as it goes, though it's not clear the rank-and-file base of the GOP can currently be described as the "creditor class." But I think there is a large and important kernal of truth in Matt's analysis, not on economic grounds, but on moral grounds: conservatives like to think of themselves as sober and self-reliant people who don't get themselves into the kind of financial trouble that merits government intervention. For those who don't immediately face personal financial calamity in the current economy, it's easy and very seductive to think of "economic stimulus" as identical to moral hazard, and deeply resent the use of tax dollars to relieve less worthy citizens of the consequences of their risky behaviors, particularly if a recession is thought of as good for the economy in the long run.
- The Republicans just got their asses kicked in the elections.
- They want to get back in power.
- The easiest way to get back in power is to blame the economy on Obama.
- Therefore, the GOP will do everything in their power to obstruct Obama's economic policy and then blame the Democrats.
The GOP will run Washington and will do so with help from the Village Idiot class, who will helpfully launch "The Economy Was Better Under Bush!" articles left and right.
That's it. That's the plan. You don't need to understand economics. Hell, the GOP doesn't understand economics at all, that's how we go into this. The Right Wing Noise Machine doesn't understand a damn thing about economics. But they understand spin.
They will ruthlessly attack Obama and the Dems. It's nothing more than obstruct legislation, force concessions, claim victory, blame the Dems, repeat.
The GOP doesn't have any solutions to this mess. They simply want to paint anything Obama does as bad and will as a result blame him for everything bad that will happen over the next two years, and then hold up "The Librul Media's Treatment Of Bush" as their argument that payback is a bitch.
Then they figure they'll swoop in and sharply reduce the Democrat's margins in Congress in 2010 and outright take back Congress and the White House in 2012, and Obama will go down as The Worst President Ever Because He's Worse Than Bush Was.
That's it. That's the entire plan, folks.
And unless the Dems finally find their spine and fight back, it will play out exactly like above. I guarantee it.