Rubio and the zombies
The State of the Union address was not, Iím sorry to say, very interesting. True, the president offered many good ideas. But we already know that almost none of those ideas will make it past a hostile House of Representatives.
On the other hand, the GOP reply, delivered by Sen. Marco Rubio of Florida, was both interesting and revelatory. And I mean that in the worst way. For Rubio is a rising star, to such an extent that Time magazine put him on its cover, calling him ďThe Republican Savior.Ē What we learned Tuesday, however, was that zombie economic ideas have eaten his brain.
In case youíre wondering, a zombie idea is a proposition that has been thoroughly refuted by analysis and evidence, and should be dead ó but wonít stay dead because it serves a political purpose, appeals to prejudices, or both. The classic zombie idea in U.S. political discourse is the notion that tax cuts for the wealthy pay for themselves, but there are many more. And, as I said, when it comes to economics it appears that Rubioís mind is zombie-infested.
Start with the big question: How did we get into the mess weíre in?
The financial crisis of 2008 and its painful aftermath, which weíre still dealing with, were a huge slap in the face for free-market fundamentalists. Circa 2005, the usual suspects ó conservative publications, analysts at right-wing think tanks like the American Enterprise Institute and the Cato Institute, and so on ó insisted that deregulated financial markets were doing just fine, and dismissed warnings about a housing bubble as liberal whining. Then the nonexistent bubble burst, and the financial system proved dangerously fragile; only huge government bailouts prevented a total collapse.
Instead of learning from this experience, however, many on the right have chosen to rewrite history. Back then, they thought things were great, and their only complaint was that the government was getting in the way of even more mortgage lending; now they claim that government policies, somehow dictated by liberals even though the GOP controlled both Congress and the White House, were promoting excessive borrowing and causing all the problems.
Every piece of this revisionist history has been refuted in detail. No, the government didnít force banks to lend to Those People; no, Fannie Mae and Freddie Mac didnít cause the housing bubble (they were doing relatively little lending during the peak bubble years); no, government-sponsored lenders werenít responsible for the surge in risky mortgages (private mortgage issuers accounted for the vast majority of the riskiest loans).
But the zombie keeps shambling on ó and hereís Rubio on Tuesday night: ďThis idea ó that our problems were caused by a government that was too smalló itís just not true. In fact, a major cause of our recent downturn was a housing crisis created by reckless government policies.Ē Yep, itís the full zombie.
What about responding to the crisis? Four years ago, right-wing economic analysts insisted that deficit spending would destroy jobs, because government borrowing would divert funds that would otherwise have gone into business investment, and also insisted that this borrowing would send interest rates soaring. The right thing, they claimed, was to balance the budget, even in a depressed economy.
Now, this argument was obviously fallacious from the beginning. As people like me tried to point out, the whole reason our economy was depressed was that businesses werenít willing to invest as much as consumers were trying to save. So government borrowing would not, in fact, drive up interest rates ó and trying to balance the budget would simply deepen the depression.
Sure enough, interest rates, far from soaring, are at historic lows ó and countries that slashed spending have also seen sharp job losses. You rarely get this clear a test of competing economic ideas, and the rightís ideas failed.
But the zombie still shambles on. And hereís Rubio: ďEvery dollar our government borrows is money that isnít being invested to create jobs. And the uncertainty created by the debt is one reason why many businesses arenít hiring.Ē Zombies 2, Reality 0.
In fairness to Rubio, what heís saying isnít any different from what everyone else in his party is saying. But that, of course, is whatís so scary.
For here we are, more than five years into the worst economic slump since the Great Depression, and one of our two great political parties has seen its economic doctrine crash and burn twice: first in the run-up to crisis, then again in the aftermath. Yet that party has learned nothing; it apparently believes that all will be well if it just keeps repeating the old slogans, but louder.
Itís a disturbing picture, and one that bodes ill for our nationís future.
Paul Krugman is a columnist for The New York Times.