Over at "It's the Economy Stupid," there's a good blog today by Angry Bear:
Seriously, if regressive tax cuts come at the expense of growth (either directly or because they foreclose some alternative and more stimulative policy) then they don't even help they rich. Or, more precisely, they improve the relative (to everyone else) wealth of the rich, but come at the expense of absolute wealth.The problem with Bear's analysis is that he thinks the Republican Party is the party looking out for the best interests of capital. This is only partially true. The Republican Party is the party of crony capital first and foremost, and crony capital doesn't give a damn about the larger economy. What does Bechtel and Halliburton care about US GDP growth when there's free feeding at the government's "reconstruction of Iraq" trough?? Or USX when there are steel tariffs to be won?? Moreover, the Republican Party is the party of capital in the narrowest sense. Capital cannot see the forest for the trees; this has always been the case. So when capital takes the reigns without any effective opposition (and after all, the Republicans now control every branch of the US government, for the first time since the 1920s *hint* *hint*), it will pursue a very narrow view of its interests, focused on short-term gains at the cost of the long-term health of the system itself.
Another way of seeing this is to ask your rich friend which they would prefer: (1) Paying a marginal tax rate of 39.6% and having the economic growth of the Clinton Years, or (2) Paying a marginal tax rate of 35% and having the economic growth of the Bush Years (I or II)?
This is why the Democratic Party (or at least the Republican wing of the Democratic Party -- you know, the DLC types) is capital's best friend although always to be spurned. The Democrats look to the health of capitalism much more than do the Republicans. The former know capitalism is inherently crisis-prone while the latter continue to believe their mythology about self-regulating markets. After all, when the Republicans could only think to pour gasoline on the fire of the Great Depression, Franklin Roosevelt had to sweep in to save capital from itself. He was capital's best friend and was never even thanked for it.
So it's no surprise that the Republicans are willing to drive the real economy into the ground. They might even be successful in forcing 'the other guy' (whether in Africa or the Middle East or Europe) to pay for the disaster (see the General's comment below re the politics of deflation). If we understand that capital can't see beyond the end of its own nose without help from those with an eye for the Big Picture, and also understand that the Republican Party is completely captivated by ideology and has no ability today to be self-reflective (power breeds hubris, after all), the current convergence of a bad economy and bad policy is really no surprise.