Why Don't Republicans Understand the Economy?

UNITED STATES - JULY 23: Speaker of the House John Boehner, R-Ohio, leaves the House Republican Conference meeting in the bas
UNITED STATES - JULY 23: Speaker of the House John Boehner, R-Ohio, leaves the House Republican Conference meeting in the basement of the Capitol on Tuesday, July 23, 2013. (Photo By Bill Clark/CQ Roll Call)

On September 9th, when Congress returns from its summer vacation, negotiations will begin on a new Federal budget and a U.S. debt limit increase. As a quid pro quo Republicans will demand restrictions on Obamacare. Once again, this raises the specter of the GOP pushing the government into default. Why don't Republicans understand that's a terrible idea that would crater the economy?

Once upon a time, the GOP stood for responsible economic policy. I grew up in a middle-class family in Southern California, where my father and grandfather ran a small business. They were Republicans, as were most of the people we knew. In those days, the GOP attracted the middle class because it was the Party of common sense: it understood business and the economy.

Over the ensuing years the Republican Party abandoned the middle class and become the party of the wealthy -- the one percent. In the '80s, Republicans fell under the spell of Reaganomics. Conservative economists infused American political discourse with three malignant notions: helping the rich get richer would inevitably help everyone else; markets were inherently self correcting; and, "government is not the solution to our problems; government is the problem." Reagan's ideology produced deregulation, tax cuts for the rich and powerful, and monopoly capitalism. It resulted in unprecedented income inequality. The American ethos changed from "we're in this together" ("I am my brother's keeper") to "you are on your own."

These changes might not factor in the latest crisis if Senators and Representatives understood that the American economy requires a healthy middle class. But these days the average member of Congress is more likely to have had a prior occupation as a lawyer than as a business person. Furthermore 78 percent of Congress people have no academic background in business or economics.

As a consequence, the Republican leadership doesn't understand the American economy; they're living in a dream world where shutting down the government doesn't impact middle-class Americans. Consider the backgrounds of the GOP leaders: In the Senate, Mitch McConnell, the Republican majority leader, is a lawyer, as is his second in command, John Cornyn. The Republican policy committee chair is Wyoming Senator John Barrasso, an orthopedic surgeon. The minority chair of the Senate Finance Committee is Orrin Hatch, a lawyer.

In the House of Representative Speaker John Boehner does have a business background. However, his second in command, House majority leader Eric Cantor, is a lawyer who has worked in his family's real estate development business.

Paul Ryan, the chairman of the House Budget Committee, directs most Republican economic policy. Ryan doesn't have much of a business background -- he's spent his adult life in politics -- but he does have an undergraduate degree in economics. What appeals to contemporary Republicans is Ryan's devotion to reactionary novelist Ayn Rand. A New Yorker profile observed that Congressman Ryan often mentions Rand: "The reason I got involved in public service, by and large, if I had to credit one thinker, one person, it would be Ayn Rand." In 2009, Ryan said, "what's unique about what's happening today in government, in the world, in America, is that it's as if we're living in an Ayn Rand novel right now. I think Ayn Rand did the best job of anybody to build a moral case of capitalism, and that morality of capitalism is under assault."

Paul Ryan has reshaped the contemporary Republican ideology by layering Rand's philosophy on top of Reaganomics. Ayn Rand believed in Objectivism: "The concept of man as a heroic being, with his own happiness as the moral purpose of his life, with productive achievement as his noblest activity, and reason as his only absolute." Ayn Rand saw a limited role for government, only the military, police, and judiciary. As a consequence, Paul Ryan and Rand's many other Republican disciples want to severely cut government spending and eliminate the social safety net. (The Paul Ryan budget attacks the core components of the safety net: Social Security, Medicare, Medicaid, Food Stamps, and affordable health care.) That's why the GOP leadership is not worried by the prospect of a government shutdown or default. They believe it will produce less government.

Republican congressional leaders have not only been influenced by Ayn Rand but also by their status as millionaires: Barasso, Boehner, Cantor, Hatch, McConnell, and Ryan, to name only a few. Indeed, 47 percent of members of Congress are millionaires.

A recent study by professors Benjamin Page, Larry Bartels, and Jason Seawright compared the political attitudes of these millionaires, the one percent, to those of the American public in general. Not surprisingly, America's wealthy are much more negative about Social Security, Medicare, food stamps, and affordable healthcare than are the 99 percent.

Republicans don't understand that it would be a terrible idea to crater the American economy because they've lost touch with reality. Hypnotized by a toxic blend of Reaganomics and Objectivism, Republicans don't understand how the economy works or the concerns of middle-class families.