All the President's zombies

August 24, 2009 - Op-Ed Columnist

All the President’s Zombies

By PAUL KRUGMAN

The debate over the “public option” in health care has been dismaying in many ways. Perhaps the most depressing aspect for progressives, however, has been the extent to which opponents of greater choice in health care have gained traction — in Congress, if not with the broader public — simply by repeating, over and over again, that the public option would be, horrors, a government program.

Socialism! Nazism!

Washington, it seems, is still ruled by Reaganism — by an ideology that says government intervention is always bad, and leaving the private sector to its own devices is always good.

Yeah, we sure learned that lesson. Let the free market reign, then, when it gets in trouble, and it pleads for help, don't get in its way. Cut taxes. Let capitalism work. So say the Republicans.

Call me naïve, but I actually hoped that the failure of Reaganism in practice would kill it. It turns out, however, to be a zombie doctrine: even though it should be dead, it keeps on coming.

Hell, even Democrats invoke Regan's memory now, even if they think his policies a failure and his reign a disaster: too many people idolize the Gipper to let the right wing monopolize his memory.

Let’s talk for a moment about why the age of Reagan should be over. First of all, even before the current crisis Reaganomics had failed to deliver what it promised. Remember how lower taxes on high incomes and deregulation that unleashed the “magic of the marketplace” were supposed to lead to dramatically better outcomes for everyone? Well, it didn’t happen.

Yet even the people hurt by Reaganomics want the Democrats to cut taxes for the rich, to allow corporations to hold sway over the economy, and to keep government out of everything (except for their favorite tax loopholes, mortgage interest deduction chief among many).

To be sure, the wealthy benefited enormously: the real incomes of the top .01 percent of Americans rose sevenfold between 1980 and 2007. But the real income of the median family rose only 22 percent, less than a third its growth over the previous 27 years.

27 years of Reagan (8), Bush 41 (4), Clinton (8) and Bush 43 (8).

Moreover, most of whatever gains ordinary Americans achieved came during the Clinton years. President George W. Bush, who had the distinction of being the first Reaganite president to also have a fully Republican Congress, also had the distinction of presiding over the first administration since Herbert Hoover in which the typical family failed to see any significant income gains.

But he was a good ole Texas boy (by way of Groton and Yale, but never mind).

And then there’s the small matter of the worst recession since the 1930s.

An inconvenient detail the Democrats and liberals bring up because they hate America and want to give aid and comfort to its enemies.

There’s a lot to be said about the financial disaster of the last two years, but the short version is simple: politicians in the thrall of Reaganite ideology dismantled the New Deal regulations that had prevented banking crises for half a century, believing that financial markets could take care of themselves. The effect was to make the financial system vulnerable to a 1930s-style crisis — and the crisis came.

Clinton deregulated with a vengeance, too.

“We have always known that heedless self-interest was bad morals,” said Franklin Delano Roosevelt in 1937. “We know now that it is bad economics.” And last year we learned that lesson all over again.

Socialist, that Roosevelt.

Or did we? The astonishing thing about the current political scene is the extent to which nothing has changed.

And now the right wing is screaming socialism, painting Hitler moustaches on the President, and scaring the hell out of the Democrats, who can not get their stuff together long enough to pass some legislation. Not yet, anyway.

The debate over the public option has, as I said, been depressing in its inanity. Opponents of the option — not just Republicans, but Democrats like Senator Kent Conrad and Senator Ben Nelson — have offered no coherent arguments against it. Mr. Nelson has warned ominously that if the option were available, Americans would choose it over private insurance — which he treats as a self-evidently bad thing, rather than as what should happen if the government plan was, in fact, better than what private insurers offer.

The sky might fall.

But it’s much the same on other fronts. Efforts to strengthen bank regulation appear to be losing steam, as opponents of reform declare that more regulation would lead to less financial innovation — this just months after the wonders of innovation brought our financial system to the edge of collapse, a collapse that was averted only with huge infusions of taxpayer funds.

Lobbying spending has been furious.

So why won’t these zombie ideas die?

Part of the answer is that there’s a lot of money behind them. “It is difficult to get a man to understand something,” said Upton Sinclair, “when his salary” — or, I would add, his campaign contributions — “depend upon his not understanding it.” In particular, vast amounts of insurance industry money have been flowing to obstructionist Democrats like Mr. Nelson and Senator Max Baucus, whose Gang of Six negotiations have been a crucial roadblock to legislation.

Or on pushing the lies and distortions that allow hsi benefactors to reap in great profits.

But some of the blame also must rest with President Obama, who famously praised Reagan during the Democratic primary, and hasn’t used the bully pulpit to confront government-is-bad fundamentalism. That’s ironic, in a way, since a large part of what made Reagan so effective, for better or for worse, was the fact that he sought to change America’s thinking as well as its tax code.

Thus far, the effort seems lackluster, though it may yet prove to be too early to call.

How will this all work out? I don’t know. But it’s hard to avoid the sense that a crucial opportunity is being missed, that we’re at what should be a turning point but are failing to make the turn.

September and October will prove the President's mettle: will he be able to knock heads together and have legislation passed? We'll see.