For Americans still suffering from persistent unemployment, falling incomes and rising inequality, politicians of either party probably generate little enthusiasm. Yet although political ennui is understandable, the disaffection and demoralization of Democrats has created a dangerous political vacuum that is being filled with misleading data, urban legends and outright lies. Indeed, the entire Tea Party movement was founded on false assumptions about the economic program that probably saved the country from a second Great Depression.
The nascent protests that came to be known as the Tea Party began as angry populist rants against the Troubled Asset Recovery Program (TARP), that notorious “bailout” of drowning banks and insurance companies, and the American Recovery and Reinvestment Act, better known as the “stimulus program.” Red-faced traders and furious housewives joined forces against what they wrongly called “socialism,” warning that our freedom was endangered, and that the nation might soon perish under burgeoning inflation and draconian regulation. They grew even more frantic when the Obama administration directed hundreds of billions of dollars in TARP funds toward the auto industry in loans and shares–more socialism!
The real reason behind the irritation of the traders and their spokesmen on cable television was simple enough. The government had restricted their usual obscene bonuses in recognition of the fact that they had been saved by taxpayer funds from their own gross misconduct–and should be not be rewarded for surviving on the teat. As for the Tea Party housewives and their cohorts, the motives ranged from xenophobia to paranoia. But as the recovery lagged–and the Obama White House failed to communicate its aims and achievements–those typical symptoms of right-wing delusion showed up in a broader segment of the voting public.
In the meantime, the Republicans and their allies in the media managed to mischaracterize the president’s health care reform bill as both a “government takeover” and a gift to the health insurance industry, although in reality it was neither. Most Americans who say that they dislike the bill have very little knowledge of its actual provisions–which are quite popular when polled individually.
The average voter is equally unlikely to know the essential facts about the preservation of auto companies, the stimulus package or TARP–which was approved with the votes of the same Republican leaders they may soon promote into the majority.
Nonpartisan experts both within and outside government have said for months that TARP not only saved the country from untold economic disaster, but that its repayments and warrants will end up as highly profitable investments. The auto industry isn’t quite as sure to prosper as the banks, of course, but there is a reasonable likelihood that the government will make money on those investments, too–while preserving a vital industry and millions of jobs.
As for the stimulus, economists across the ideological spectrum have contradicted the popular perception–promoted by Tea Party publicists–that the program didn’t work and may even have done harm. The Republicans insist that government cannot create jobs and that public expenditure only “crowds out” private-sector investment.
But contrary to that Chamber of Commerce mythology, the private sector is currently sitting on more than $3 trillion, in banks and corporate accounts, that is not being invested because of insufficient demand. Rather than the rampant inflation predicted by the Tea Party ideologues, we have seen no real inflation–because demand is still insufficient to reinflate the economy. The Obama stimulus program was enough to prevent the complete deflation that might have led to a depression, but not enough to begin a full recovery in employment.
The same conservatives who now claim that President Obama’s program didn’t work are those who once warned that President Clinton’s program would lead to ruin–just before the greatest peacetime expansion in history. Believe them at your peril.