Sarah Palin has endorsed an article in Human Events calling for an end to the New Deal and the Great Society. The article, by John Hayward, is entitled "The Treachery of Empty Promises" and opens by discussing a March op-ed by Senator Marco Rubio of Florida in which he said he would vote to defeat an increase in the debt limit "unless it is the last one we ever authorize, and is accompanied by a plan for fundamental tax reform, an overhaul of our regulatory structure, a cut to discretionary spending, a balanced budget amendment, and reforms to save Social Security, Medicare, and Medicaid.”
On Friday, Sarah Palin said on Fox News, “Hells (sic) no, I would not vote to increase that debt ceiling. Otherwise it just shows the American people we’re not serious yet. We’re still going to incur more debt. No and we don’t have to increase the debt ceiling in the next few weeks. It turns my stomach to hear this assumption articulated that ‘well we have to,’ despite the fact we’re raking in, the federal government, six billion a day. Take that money and service our debt first and pay down some of that debt. Make sure that we’re showing the international financial markets and our lenders that we’re serious about getting our debt and our deficit problems under control.”
The country has been operating under for most of its years since its founding. Both Ronald Reagan and George Bush II ran deficits that were greater than all of their predecessors combined; however, the country maintains a AAA rating from Standard and Poor's despite their recent negative outlook warning. However, Michael Hiltzik of the LA Times notes that S&P missed other major meltdowns such as Enron and the Mortgage Meltdown.
Mr. Hayward, in his article, sides with Ms. Palin over Mr. Rubio and advocates that the Republicans take a hard line on deficit spending -- no more increases in the debt ceiling whatsoever. However, the American political system is a system of checks and balances designed so that one group doesn't become too powerful. At some point even a hard-liner like Ms. Palin, should she be elected, will have to compromise with political opponents in order that the government can function. Newt Gingrich and the Congressional Republicans attempted to shut down the government in an attempt to force then-President Bill Clinton to accept massive cuts in social spending, a move which backfired on them in the election of 1996 as Bill Clinton successfully pinned the blame on them for the government shutdown.
Hayward notes that should Rubio be serious about his demands and worst come to worst, he will be "just one disappointing Senate vote away" from Palin's position. While Hayward, the Washington Post and FOX News have accused the Obama Administration of trying to persuade S&P not to issue their credit warning regarding the US government, the Obama administration has publicly downplayed the warning. In a popup disclaimer on the front of its section about credit ratings, S&P states that credit ratings are opinions about relative credit risk, they do not constitute investment advice, they are just one factor that investors should consider in making investment decisions, they are not indications of market liquidity, and they are not guarantees of credit quality or of future credit risk. The Post, in its article, attributes the claim to "two people familiar with the matter." FOX News attributes their statement to "a senior administration official" and states that S&P told administration officials that the US was in danger of losing its credit rating. However, the FOX article quotes Treasury Secretary Tim Geithner as telling FOX Business News last Tuesday morning that there was no risk that the US would lose its AAA credit rating.
Hayward warns that the consequence of Obama's reelection would be an "inevitable crash of the system providing those benefits painful beyond belief." Yet one of the problems with that is the interests of America's creditors -- they might decide that it is in their best interest to get some money as opposed to none at all. Refusing to extend any more credit might be tantamount to Mutually Assured Destruction -- the creditors might lose billions or trillions of dollars that they might have otherwise gotten while the US government can no longer function because of their inability to borrow money. Thus they will likely decide to continue to extend credit to the US despite their high deficits -- like they have been for the last 225+ years. Thus Treasury Secretary Tim Geithner has a point when he states that there is no risk of the country losing its AAA credit rating.
Congressman Paul Ryan of Wisconsin has been a rising star within Republican ranks to the point where most other Republican and conservative sources have quoted his plans as gospel truth. Hayward argues that Paul Ryan's plan gives people choices as opposed to what he says would happen if Obama were reelected, the collapse of the government system would follow, and people would have no choices at all. Mr. Hayward says that existing Medicare beneficiaries would be grandfathered in and new enrollees would get some say in how their money was spent. However, such a plan, even if it were the best possible plan, is a difficult sell -- elderly people do not want to lose their benefits. Many live off Medicare and Social Security and would automatically vote against someone who would cut them, even for other people. The idea of grandfathering in existing beneficiaries is thus designed to soften the blow of such a plan. President Bush's attempt to overhaul Social Security in 2005 following his reelection backfired to the point that Congressman Sam Graves (R-MO) sent out a mailer to all his constituents promising to protect Social Security. Hayward understands these risks, yet praises Ryan for what he says is wanting to put his career on the line as opposed to what he calls the "con-men" who he says will lead the country into the abyss.
Thus the strategy of what the Republicans are trying to do in trying to take back the White House is clear -- sell themselves as people who are willing to do stuff that is right even if it is not popular and characterize Obama and the Democrats as con-men who are simply out to win a popularity contest. This is similar to what George Bush did when campaigning for office in 2000 -- try and project a willingness to do what was right as opposed to what was popular in running against a popular president in Bill Clinton. The approach may win elections, but it wears thin after a while -- President Bush's popularity finally plummeted to the point of no return during his second term.
Yet not only is Ms. Palin's idea of not raising the debt ceiling a tough sell among elderly voters who might lose their benefits, it is even a tough sell among some Republicans. For instance former Treasury Secretary Paul O'Neill equated Palin, Ryan, and other people supporting such a plan as terrorists in an interview with Bloomberg Television. He had this to say:
“I think the people who threaten not to pass the debt ceiling are our version of al-Qaeda terrorists,” O’Neill said in an interview today on Bloomberg Television’s “InBusiness With Margaret Brennan” program. “They’re really putting our whole society at risk by threatening to round up 50 percent of the members of Congress -- who are loony -- who would put our credit at risk.”
“The Congress needs to be responsible and adult and take action,” O’Neill said today. “This is not about permitting spending in the future. This is permitting us to pay the bills we’ve already incurred. This whole conversation is irresponsible.”The whole difference between Rubio and Palin may be philosophical -- Palin and her allies like Hayward favor a much more simplistic approach while Rubio and his defenders see the debt ceiling as a bargaining chip to force the Obama administration to do what the Congressional Republicans want. Regardless of the approach, Hayward says that "one way or another," the New Deal and the Great Society are history. Thus the 2012 race might very well become a philosophical battle between those who want to continue the New Deal, which has been part of the government since Roosevelt and those who want to return the government to previous eras. Should someone like Palin win and seek to enact her plans, it might trigger demonstrations and protests which would dwarf those in Wisconsin as people would fight to preserve their benefits.