My Content

Republican Party

My Fellow Democrats, We’re Becoming the Party of Freer Markets (Try Not to Faint)

by D.J. McGuire

When I chose to become a Democrat (a few hours after Trump was declared the victor of the presidential election), I expected a difficult period of adjustment. I’d left the GOP six months earlier, but leaving one major party and switching to the other one are two very different things.

Of course, Trump had ensured the two parties had flipped their supposed positions on national security. Those who have listened to the More Perfect Union Podcast since November 2016 are well aware that my opposition to Bashar Assad’s Syrian regime was what led me to vote for Hillary Clinton in the first place. Trump’s behavior towards Vladimir Putin in particular has made it far easier to be a conservative Democrat than I thought possible – not that it makes up for the damage to the free world. What I assumed would cause the largest headache was watching my old party on economic policies (where at least in theory they preferred freer markets) while my new one clung to its instincts for greater government intervention.

Nearly two years later, much to my surprise, that isn’t what I’m seeing. Sure, the Democrats are clearly moving leftward on health insurance, but they’ve moved in the opposite direction on freer trade (the voters far more dramatically than the elected officials).

Meanwhile, the Republicans…oh, dear. The party has largely swallowed whole Trump’s rampant protectionism, either lapping up tariffs as the great panacea or naively telling themselves it’s all about getting “better deals” – never mind that the only two agreements Trump has reached are either worse than the status quo (Mexico) or no longer operative according to Trump (the EU handshake).

Meanwhile, Trump has also spent time whacking the Federal Reserve for raising interest rates, even complaining to Bloomberg about how he couldn’t depreciate the dollar for his trade wars because the Fed wouldn’t play ball.

Then came the social media wars. At first, I figured Laura Ingraham insisting on turning Facebook and Twitter into public utilities was just an extreme one-off. I was wrong (CNBC).

U.S. Attorney General Jeff Sessions will meet with state attorneys general later this month to discuss concerns that tech companies “may be hurting competition and intentionally stifling the free exchange of ideas on their platforms,” the Department of Justice said in a statement Wednesday.

The proposed meeting between the country’s top prosecutor and state officials is the first major signal of potential antitrust action against Silicon Valley and follows recent claims by President Donald Trump of political bias and censorship by major social media firms.

Here’s what Sessions’ Justice Department had to say:

“We listened to today’s Senate Select Committee on Intelligence hearing on Foreign Influence Operations’ Use of Social Media Platforms closely. The Attorney General has convened a meeting with a number of state attorneys general this month to discuss a growing concern that these companies may be hurting competition and intentionally stifling the free exchange of ideas on their platforms.”

Keep in mind, the hearing was supposed to be about how foreign intelligence uses social media to influence the American people. Instead, the DOJ is all about government mandates (or worse) about “political bias”.

If the Republican Party continues on this course (and given that Trump is pushing the matter, this is very likely), then it will become the party of nationalizing Silicon Valley, the party of putting America’s most dynamic and fastest growing sector under government control.

Michael Lind once pondered, in Politico, that “The Democrats of 2030 may be more pro-market than the Republicans.” At the rate the GOP is going, despite the desire of many Democrats for government-monopoly health insurance, the switch will come much sooner than 2030. Indeed, one could argue it’s happening right now.

So be prepared, my fellow Democrats, and try not to faint.

D.J. McGuire – a self-described progressive conservative – has been part of the More Perfect Union Podcast since 2015

I’m Fed Up With Trump’s Ramblings on Monetary Policy

by D.J. McGuire

Amidst the whirl and rush of the now painfully normal nonsense spewed by the president, few outside the financial markets noticed his comments on monetary policy during his interview with Reuters. They were important comments nonetheless – and discouraging on all fronts. For someone who defines his worldview on countering inflation, political chicanery on monetary policy, protectionism, and malinvestment (and for a quarter-century, defined himself as a Republican based on those things), I was saddened and angered – but not surprised – by Trump embracing all four (again).

This is Trump taking aim at the Federal Reserve:

“I’m not thrilled with his raising of interest rates, no. I’m not thrilled,” Trump said, referring to Powell. Trump nominated Powell last year to replace former Fed Chair Janet Yellen.

U.S. stock prices dipped after Trump’s comments to Reuters and the U.S. dollar .DXY edged down against a basket of currencies.

Trump, who criticized the Fed when he was a candidate, said other countries benefited from their central banks’ moves during tough trade talks, but the United States was not getting support from the Fed.

“We’re negotiating very powerfully and strongly with other nations. We’re going to win. But during this period of time I should be given some help by the Fed. The other countries are accommodated,” Trump said.

On one level, this is just typical bull-in-the-china-shop-talk from Trump, concerns about which are usually valid (and they are here) but still go ignored by his supporters (as will these). In this case, there’s more to it, which just makes things worse.

For starters, Trump is making clear that the domestic economy is not important in his thinking. I doubt he is even aware that the Fed actually has a legal mandate to ensure price stability. He is fixated on his trade war, period.

This means that inflation – which eats away at investment returns, creates havoc in labor markets, and increases suffering for fixed income recipients – is likely to be even worse than it is now (and at present, it’s bad enough to wipe out any wage gains – See Bloomberg), especially in policy areas where Trump can avoid the Fed. Last year’s tax cut was a prime example of a Keynesian, inflationary stimulus endorsed and signed by the president. I fear it won’t be the last.

Moreover, Trump’s comments are yet another sign that the Republican Party – which in my youth prided itself on sound monetary policy and a strong dollar – no longer has any interest in both. This makes it that much harder for the nation to learn and internalize the lessons of “quantitative easing” – the last decade’s experiment with radically expansionary monetary policy. Contrary to Keynesian orthodoxy, the mass monetization of any debt the Fed could find led not to roaring increases in aggregate demand, but rather a shift in thinking on paper assets. Bonds were treated as stocks (with a focus on price rather than yield) and a new asset bubble (in bonds) took the place of the last one (housing). Thus, not only did investment in the real economy remain slow to recover, but the asset bubble exacerbated wealth inequality, which further increased income inequality.

Under Janet Yellen, the Fed at least began the process on unwinding this error. Under Jerome Powell, it is now trying to bring interest rates back to at least normal without knocking the economy into recession. This is a tricky task in any time, let alone one where the President of the United States is demanding policies that would make the bubble even bigger (and more likely to pop, badly).

I know that Trump-Nixon parallels are in vogue, but the current president’s complaints remind me of his predecessor’s surrender on economic policy in 1971, when he announced, “We are all Keynesians now.” Trump is – with more verbiage and less intellect – effectively saying the same thing. Whether Democrats will note this and take political advantage by exploiting a new angle to win over never-Trump conservatives remains to be seen.

D.J. McGuire – a self-described progressive conservative – has been part of the More Perfect Union Podcast since 2015

What Trump Has Wrought: Virginia Edition

by D.J. McGuire (who lives and votes in Virginia)

Last year, as my fellow MPU podcasters inquired as to why Donald Trump’s nomination would be enough for me to leave the Republican Party, I cited the Goldwater effect to explain how one campaign can change a party, permanently. The Republican nominee in 1960 (before Goldwater) ran on the Civil Rights Acts of 1957 and 1960, and was bitterly disappointed to have won roughly one in three African-American votes. The Republican nominee in 1968 (after Goldwater) ran on a “Southern strategy”, and was largely content with having won barely one in eight African-American votes. The nominee in both years was the same man: Richard Nixon.

As it happens, a similar example has been revealed in Virginia: Ed Gillespie.

Read More

​ Ed Gillespie’s Fake Tax Cut

by D.J. McGuire (who lives and votes in Virginia)

As Virginia’s campaign for governor careens to its conclusion on November 7, I do believe I have managed to solve at least one mystery of Election 2017. Namely, what in the hell happened to Republican nominee Ed Gillespie‘s tax cut proposal?

The answer is: it was a mirage.

Read More

Why I AM a Democrat

by D.J. McGuire

In reading Bruce Bartlett’s compressed autobiography-turned-advice column, I couldn’t help but feel the old supply-side economist had, for the most part, been just a few steps ahead of me. My dissolution with President Bush the Younger came a few years after his 2005 broadside against same (although I dimly recall even then considering his critique having merit), and of course, I left the Republican Party in the last year of the Obama Administration, rather than its beginning. I’ve even felt the liberation of sloughing off the political orthodoxy that comes with partisan tribalism.

Read More