It's Official: Republicans Don't Care About Uncertainty At All
Old GOP economic theory: Uncertainty is holding back the recovery. New GOP economic theory: We will destroy the economy with uncertainty if we don't get our way.
I'm old enough to remember when Republicans wanted to reduce uncertainty.
It was 2012, and it was the centerpiece of Mitt Romney's economic agenda. Actually, it was just about the only piece of Mitt Romney's economic agenda. It was also 2011, and it was the centerpiece of John Boehner's economic agenda too. (You can guess how many pieces that economic agenda had). But whether 2011 or 2012, the idea was that deficit spending and new regulations were why the recovery had been so weak, that businesses were waiting to invest until they knew what future tax rates and rules would be. And that undoing this red ink and red tape was the path to prosperity.
This was, of course, nonsense. There was never any evidence that too much uncertainty, rather than too little demand, was why the recovery was and continues to be stuck in stall speed. If anything, the evidence points the other way. As I've pointed out before, more uncertainty has actually been associated with more job growth since 2008, probably because stimulus shows up as "uncertainty." But say what you want about the merits of blaming uncertainty, at least it was an ethos. Here's how Boehner described it in a speech to the Economic Club of New York in May 2011:
I believe our mission as legislators is to liberate our economy from the things that impede growth ... to provide clear policies, so that innovators and entrepreneurs have the green light to move forward and create jobs, without having to worry about second-guessing from Washington
Mission not accomplished. Well, unless you think using the threat of a debt default to win policy concessions you couldn't win at the polls gives people less to worry about from Washington. That's what Republicans did in 2011, and it's what they look set to do again in 2013, even after already shutting down the government. But this time is a little different. Back in 2011, the Republicans used the debt ceiling as leverage to cut spending, which they thought was causing uncertainty. Now, it didn't make logical sense to threaten economy-ending uncertainty over a possible debt default to cut uncertainty over spending. Nor did it make economic sense to do so when the economy was weak and interest rates were stuck at zero. But there was a semi-coherent, if unempirical, ethos to it all.
No more. This time the Republicans are using a shutdown, and quite possibly the debt ceiling too, as leverage to delay or defund Obamacare. That, and a goody bag of everything else Mitt Romney ran on and lost. Now, I'm sure plenty of Republicans think forestalling the tyranny of subsidized health insurance for poor and sick Americans justifies these anti-democratic tactics, but it's hard to see how it reduces uncertainty. Say Obama does cave -- which he won't -- and delays health reform for a year. What are businesses supposed to think then? Should they plan on it happening or not? Who knows. Then there's the more obvious, and potentially catastrophic, uncertainty over whether the government will default on its debt. Republicans couldn't do much more to scare households than threatening to start a new financial crisis, just because they lost an election.
It's almost as if they never really cared about uncertainty or spending or anything else, but were just looking for respectable-sounding excuses to hold the economy hostage, again and again and again. That's the only thing that isn't uncertain nowadays.