It is a glum season of the year around Washington, DC, where I live. I live 20 miles out from the city, in Northern Virginia, but the gloom oozes out our way like a gaseous cloud on a World War I battlefield. Everywhere I hear conversations in restaurants, malls, and coffee shops, where people are asking each other, “What has happened to the country? Why can’t our political leaders seem to get anything done any more? What’s going to become of us?...”
Democrats – of which there are many in this liberal-leaning yuppie area – are asking slightly different questions. One of them is the title-question of this article. I think I know the answer. But to answer it, it’s first necessary to explain who the “good” Republicans were.
Beginning after FDR’s election (1933), and for most of the ensuing six decades, Republicans had minority status in the halls of federal power. Democrats held the presidency from 1933 to 1953, and for 34 of the 62 years, 1933-’95. More significantly, Dems held both houses of Congress for all but a handful of those years. Republicans had to carve out some kind of meaningful supporting role while Democrats basically ruled the roost. Politicians like Gerald Ford (R-MI) – elected representative in 1948, and later served as vice-president and president – had careers that began and ended entirely within the period of solid Democrat rule.
During that era, Democrats had enormous fun spending money and handing out goodies to constituents who were eager to receive them. They enacted both Social Security and Medicare – giant underfunded entitlement programs which have grown beyond all expectations to threaten the very financial stability of the country. Voters rewarded Democrats by electing and re-electing them, until their ascendancy looked permanent. Along the way, Democrats became known as the party of Compassion and the party of Minority Support. The latter was ironic, since it was Democrats who maintained Jim Crow laws and racist suppression of blacks in the south. But no matter: Dems were the party that “cared.” A clear majority of voters thought the party of the donkey – personified by the patrician FDR – identified more closely to their personal lives than country-club Republicans who wore two-toned shoes and blazers.
Republicans, on the other hand, established themselves as the party of fiscal responsibility. The role was open, as few Democrats were interested in paying the bills. Wags called Republicans “tax collectors for the welfare state.” Whenever the bill was toted up for a new Democrat program, the good old GOP could be counted on to count the shekels and propose the taxes needed to cover it. This wasn’t popular with many voters, so Republicans’ electoral success was depressingly modest. Democrat majorities typically ran on the order of 270-160 in the House, and even as high as 333-89 (1937-’39). Democrat majorities in the Senate were mostly 60% or more, and as high as 78% – also 1937-’39. With those kinds of majorities, Democrats could pass most legislation over the veto of a Republican president, as they often did.
It was not until the Reagan era that Republicans actually controlled the Senate for three Congressional terms in a row (1981-’87), and not until 1995 that they held both houses for three terms in a row. Only from 1995-2007 did Republicans hold the House for six consecutive terms. Since 1933, the GOP has never held a veto-proof or filibuster-proof majority of 60% in the Senate.
The advent of Ronald Reagan ushered in a new GOP attitude toward their customary role as the green-eyeshade gang who paid the bills. Mr. Reagan declared that Republicans wouldn’t be doing that anymore. Instead of raising taxes – as the “good” Republicans always did in the past to pay for Democrats’ spending – he lowered them. The historic tax-reform of 1986 – which Mr. Reagan championed – simplified the tax code and reduced it to just two rates for the first time in history.
The lowered rates set off a six-year boom which brought a flood of revenues into federal coffers. Mr. Reagan’s budgets would have been balanced – or nearly so – except for Fed Chairman Paul Volcker’s insistence on pushing interest rates to levels as high as 15% in order to fight inflation. Interest payments on the national debt rose to over $200 billion a year – a major factor in a federal budget which didn’t reach $1 trillion until 1987. (If interest payments were 20% of today’s federal budget, they would be $750 billion. Instead, they are 1/3 of that.)
Despite this setback, Mr. Reagan’s new principle of “no more tax-collectors” liberated Republicans from the losing policies that had dogged them for the previous half-century. Instead, the GOP became (mostly) committed to tax policies which lowered rates and increased revenues – a somewhat counterintuitive result which Democrats evidently don’t understand, perhaps willfully. During Mr. Reagan’s presidency, tax revenues went from $517 billion, in 1980, to $909 billion in 1988 – an increase of over 75%.
President George W. Bush also obtained significant tax cuts, although they were phased in more gradually and were not as deep as the Reagan cuts. Under Mr. Bush, revenues went from $2,026 billion (2000) to $2,568 billion (2007) – an increase of 27%. But those lowered tax-rates were scheduled to lapse to their 2000 levels on December 31, 2010, unless extended by a specific act of Congress.
Following a smashing Republican victory in the congressional elections of 2010, under significant pressure from voters not to raise taxes in the midst of a recession, the outgoing 111th Congress passed (and Mr. Obama signed) a two-year extension of the Bush rates. Although he tried mightily to extend those rates only for earners of incomes under $200,000 a year, Mr. Obama did not succeed in doing so. Republicans would not countenance an increase in taxes for any income-stratum of taxpayers.
This failure has frustrated Mr. Obama immensely, causing him to lash out at Republicans as “obstructionists” who (he claims) are preventing meaningful progress on cutting the federal deficit. Raising taxes on “the rich” – Mr. Obama calls them “millionaires and billionaires,” although he really means individuals earning over $200,000 (and families making $250,000+) – is a foundational plank of the Obama platform. His liberal base insists on it, so he must have it, even though economists argue that confiscation of all income of people earning at these levels would still not cover the federal deficit. (Of course, revenues produced by100% tax rates are only notional. A 100% tax-rate would produce no actual revenue, since no one would bother working if he knew all of his income would be confiscated.)
The latest frustration for Mr. Obama and spend-aholic Democrats has been the failure of the Budget Supercommittee – a hokey device created during the midsummer stare-down of the so-called Debt Ceiling Crisis. The SC was supposed to fashion a balance of budget cuts and tax increases that would achieve targets set by a Congress that couldn’t possibly make those cuts via its standard operations. It reminded one ever so much of the old cartoon where a scientist has filled a blackboard with a raft of complex calculations, in the midst of which is the statement, “Then, a miracle occurs.” A colleague pointing to the statement is saying, “This step might need more development…”
Democrats tried every which way to get Republican members of the Supercommittee to agree to some kind of tax increases on “the rich,” but it was no-go. Senator Pat Toomey (R-PA) actually proposed a plan which would have lowered all tax rates, while closing loopholes to produce some $250 billion in new revenues over 10 years. At first, some Democrats expressed interest in the plan, but Democrat leadership in the Senate eventually killed it by insisting on $1 trillion in new revenues. Republicans rejected that demand, producing an impasse that could not be overcome.
Democrats decry disappearance of the “good” Republicans. (Even Senator Toomey failed to measure up.) What happened to them? The short answer is that the Reagan Hurricane blew them away. The longer answer is that the country moved into a new era of investment, prosperity, wealth and fiscal awareness. To hear economists and pundits now, you wouldn’t think so. But this is just a recession – a temporary situation. Statistics show that 54% of adults are invested in stock markets in some way – far above the 20% of 1980. Today there are over 3 million millionaires in the country – i.e., people with net worth over $1 million. (These are not necessarily people who earn over $200,000 a year.)
What does it all mean? It means that the country has changed in a significant way. The USA is now a right-of-center country – far different from the Democrats’ old base of the 1930s, ‘40s and ‘50s. A large, growing bloc of voters – both declared Republicans and independents – can no longer be fooled by class-warfare and envy politics. They have had enough of tax-and-spend politicians, and they are electing Tea Party-sponsored representatives and senators who won’t raise taxes, not even when Democrats promise – cross-their-hearts! – that massive budget cuts will follow immediately after taxes go up.
Mr. Obama drew millions of worried voters with his glorious (but vague) promises of “hope and fundamental change.” Those promises flopped. The story is no longer selling, except to a shrinking cadre of leftists who still believe the Cornucopia of Other People’s Money is bottomless.
The “good” Republicans of yesteryear are gone. The only “good” they did was to enable Democrats to spend us into the poor house. May they not return.