Carrots and Sticks

Pushy politicos, "kooky" moderates and boondoggles out the wazoo...

(Source: Getty Images)

Bill Bonner, reckoning today from Poitou, France...

Gina Raimondo is a Washington hack. She was identified years ago, by the New York Times as a “rising star’ in the firmament of democratic politics. In 2016, she went to the World Economic Forum, where she no doubt picked up the game plan. And now she is US commerce secretary…even though she knows diddly-squat about the real world of business.

Ignorance is a job qualification. Otherwise, she wouldn’t say things like this:

I want the United States to be the only country in the world where every company capable of producing leading-edge chips will have a significant R&D and high-volume manufacturing presence…. It is America’s obligation to lead. We must push like no time before.     

Ms. Raimondo believes that her desires, regarding what kind of business people do in the US, have some importance. She thinks she must not only guide the $24 trillion US economy…but ‘push’ it.

Pushing sounds like work; you could work up a sweat. But how tough could it be to spend other people’s money from the comfort of an air-conditioned office? Or whack businesses with more laws and regulations that punish them for not doing as they are told? After all, there are only two ‘push’ possibilities – the carrot or the stick.

“Kooky” Moderates

In the 1950s, President Dwight Eisenhower and Sen. Robert Taft played golf and enjoyed each other’s company. They didn’t always agree. But they were the leading lights of the Republican party, and on the important points, they were of like mind: go easy on the carrots and the sticks.

Budgets should be balanced. Foreign wars should be avoided. And The People should be left alone to seek happiness however they could. In other words, don’t be too pushy.

Taft died in 1953. Eisenhower retired in 1961.   

John F. Kennedy replaced Eisenhower in the White House. More of an activist on social issues, Kennedy was nevertheless not far from Eisenhower on fiscal and foreign matters. He was in the process of reining in the military/industrial…and CIA…complex – about which Eisenhower had warned him—when he was murdered in 1963.

Since then, both Democrat and Republican parties have been taken over by a new breed of politician. In public, the two parties rage against each other. But, on the important matters— carrots and sticks – they are more solidly united than ever. As to both, they want more. And the moderate views of the Eisenhower-Kennedy Era are now labeled as “far right.” Or, in the case of RFK, Jr., “kooky.”

The two parties used to be predictable and reliably balanced. Republicans thought Big Government was a monster at home…but an angel overseas, where it could correct the mistakes to which foreigners were prone. Democrats saw US power as devilish abroad…but it sprouted wings at home, where it could raise up the poor and downtrodden.  

Out of Carrots

Today, both parties believe the federal government is an archangel everywhere, and that the solution to all problems – domestic and overseas – is more carrots and sticks.  

Alas, the feds are running out of carrots. KPBS: 

The federal deficit nearly tripled, raising concern about the country's finances

The Treasury Department said Thursday that the budget gap from October through June was nearly $1.4 trillion — a 170% increase from the same period a year earlier. The federal government operates under a fiscal year that begins October 1.

The deficit ballooned both because of a sharp increase in government spending and a significant drop in tax revenues.

Said Maya Macguineas, president of the Committee for a Responsible Federal Budget. "How can anyone possibly think this trend is sustainable?"

You have to wonder. How can the feds spend $100 billion on a war in the Ukraine…another $52 billion at home, in Ms. Raimondo’s chip industry boondoggle…and yet another $50 billion bailing out regional banks?   

How can it even think of ‘reparations’…or the trillions it could spend on the Green Agenda?  

A “Grotesque Act”

Or, backing up 3 years, to the Time of Trump…how could our leaders – Republican and Democrat alike – ever imagine that they could shut down almost the entire economy (where in the Constitution did it give them the right?)…at a cost of $16 trillion…handing out money so recklessly that former US budget director (under Ronald Reagan) David Stockman called it “the most grotesque act of fiscal malfeasance in American history.”

So far this century, the federales have dispensed $27 trillion worth of carrots…that they didn’t have (as measured by the increase in the national debt). Eisenhower, Taft, Kennedy would all be appalled. Where were the conservatives? The Republicans? Where was anyone at all who was not completely brain dead?

They have been purged from both parties. Spending runs wild.  

The peaceniks are gone too. More about them…and the declining marginal utility of sticks…tomorrow.

Regards,

Bill Bonner