StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



Mike Pence: Not Ready for Prime Time

30 Nov 2010
Posted by Bruce Bartlett

Yesterday Rep. Mike Pence, Republican of Indiana, chairman of the House Republican Conference and likely candidate for governor of Indiana gave an important speech to the Detroit Economic Club. We know it was important because Pence's staff told everyone it was and because it was given at a venue where many important economic speeches by the likes of John F. Kennedy have been given. So my expectations were pretty high when I sat down to read it. Here, I thought, I will finally find a serious Republican analysis of our economic problems and serious proposals for fixing them.

Unfortunately, Pence's speech was nothing of the kind. It was a hackneyed rehash of every simplistic idea ever floated on Larry Kudlow's TV show, which appears to be the only source of information Pence has on the economy. I don't know how else to explain his obsession with inflation, a strong dollar, Fed bashing, tax cuts and the gold standard. Pence could have given the same identical speech in 1980 and barely needed to change a word. In the Pence/Kudlow world it is always 1980--stagflation is the primary problem and tight money and tax cuts are the cures.

The problem is that stagflation isn't the problem today. We have stagnation all right, but the "flation" we are suffering from today doesn't stand for inflation, but deflation. But because it is always 1980, right wingers are incapable of seeing that monetary policy functions very, very differently in an inflationary and a deflationary environment. They seem utterly incapable of comprehending constraints like the zero-bound problem, which sets a floor on how low interest rates can go. They are also incapable of seeing the exchange value of the dollar except in macho terms, which demands that the dollar be strong at all times. That makes about as much sense as saying the price of oil or any other commodity should always be strong. That's obviously nuts, but the dollar is no different. It must be allowed to adjust freely for changes in supply and demand or the result will be imbalances--too much will be imported if the dollar is overvalued, too little exports, thus increasing American's international indebtedness. Indeed, it was right wing saint Milton Friedman who taught economists the truth of this mechanism.

But Pence and Kudlow don't draw the line just at demanding a strong dollar regardless of the economic circumstances, they would hold American monetary policy--and hence the economy as a whole--hostage to the fluctuations of the price of one commodity: gold. If the price of gold rose, as it has lately, the Treasury and the Fed (assuming there still is a Fed, which most gold bugs like Ron Paul believe should be abolished) would be required to deflate the economy; to tighten monetary policy and force down all wages and prices until the price of gold fell back to whatever arbitrary level it had been set at. And it's worth reminding right wingers who claim to worship at the alter of Milton Friedman that he thought the gold standard was completely nuts. There is also no doubt that he would be supporting the Fed's policy of quantitative easing since he have the same identical advice to Japan in the same circumstances.

Finally, I just want to call attention to Pence's ultra-gimmicky plan for dealing with the deficit: a constitutional amendment limiting federal spending to 20 percent of GDP. No need to spell out spending cuts or anything politically unpopular, just let the Constitution do all the dirty work. What a total crock. I could go on at length about what a crackpot proposal this is, but I already did a few months ago when Pence first put forward this dopey idea. 

In conclusion, Mike Pence isn't ready for prime time. His proposals show no hint of understanding the true nature of our economic problems or any evidence that he has thought more than five minutes on what to do about them. The sad thing is that Pence at least spent five minutes; most other Republicans don't appear to have spent even that much. They just have interns watch Kudlow's show and write down whatever slogan was highlighted and then repeat it. At a minimum, this is a really stupid way for a major political party to make policy.

Mike Pence isn't ready for

Mike Pence isn't ready for prime time. His proposals show no hint of understanding the true nature of our economic problems or any evidence that he has thought more than five minutes on what to do about them

The underlying problem is that most voters vote the economy and blame/credit the party in power, while republican campaign contributors support minimal taxation. The republicans noticed that if their actions hurt the economy while democrats are in power, they get rewarded. Note the shift from Cheney's "deficits don't matter" to today drumbeat.

That's how Pence and others manage to push tax cuts and deficit reduction at the same time.

You may regard this as cynical, but it explains our current situation rather well.


So your defense of Pence...

is that he is a liar rather than an ignorant fool? 


Could be the best he's capable of

Yglesias wrote several years ago that Pence hadn't heard of moral hazard and didn't understand it when explained to him. It could be that Pence has thought a long time on this subject, and the speech was the best he can do.


I'm saying he's willing to

I'm saying he's willing to torpedo the economy in order to achieve political power and reward his campaign contributors. That's hardly a defense.


I vote ignorant fool. But

I vote ignorant fool. But also one of the smarter Republican members of congress. It can't be said often enough that Republican congressmen are some of the stupidest people on the planet.


Mike Pence is a disingenuous

Mike Pence is a disingenuous blowhard? Color me surprised, since there are so few of those in the House leadership. . .


speakin of the 1980s....

You are ignoring that Reagan's advisers, I recall I think particularly Stockman and Kemp, were mad as hell that Volker was unrelenting in his disinflationary pursuit, screwing with their supply side intentions...They begged and pleaded for easier monetary policy. One suspects that the current crop would have similar policy inconsistencies when the whip cream hits the fan.


That's true.

I don't know about Stockman, but Kemp, Wanniski, Roberts and many other supply siders were highly critical of Volcker and were angry at Reagan for reappointing him as Fed chairman in 1982. Keeping him was clearly the correct decision.


That's a good point. Come to

That's a good point. Come to think of it, I once heard Pence say that he considers himself to be a "Jack Kemp Republican," so you might be on to something.


To be a Jack Kemp Republican,

To be a Jack Kemp Republican, you'd have to be within a standard deviation as smart as Jack Kemp. I'd agree with others here that Pence ain't got the chops to manage that.


Mike Pence is middle aged

He will never be ready for prime time.


C'mon Mr. Bartlett...

"Here, I thought, I will finally find a serious Republican analysis of our economic problems and serious proposals for fixing them."

Did you really think this was going to happen? These guys don't give us sound policy, they give us Luntz's talking point of the day.


ditto

There's no reason, given the last 15-20 years of US history, to believe that the GOP is about to put out any rational thought on any policy. From Mike Pence, of all people! ("one politician who I think is rarely dishonest in his presentation of his views is Representative Mike Pence (R-IN), who gives every indication of being genuinely stupid.")


"Here, I thought, I will

"Here, I thought, I will finally find a serious Republican analysis of our economic problems and serious proposals for fixing them."

C'mon. No you didn't. Pence isn't new in town and neither are you. You were just looking for a good set-up for you comment, to get the rest of the text off to a good start. You never, ever expected Mike Pence to rise to the standard of historic speeches delivered at the Detroit Economic Club. Big kidder.


"The freedom to succeed must

"The freedom to succeed must include the freedom to fail. " - Pence

That's one of the sillier sound bytes that keeps getting parroted by the Republicans. Apparently there isn't enough failure in America.


And yet, how is that "silly"

And yet, how is that "silly" exactly? Do you believe that it is government's role to "save" people from possible failure, or that government should ensure the freedom to succeed and, yes, fail?

Which do you parrot?


It's silly because there is

It's silly because there is tons of failure in the country. Govt containing systemic risk isn't the same as not allowing failure to occur. There is ample freedom to fail.


Just read this on calculated

Just read this on calculated risk blog and wanted to add it to my comment:

"The 149 bank failures this year is the highest total since 1992 (181 bank failures)."

Plenty of freedom to fail.


Freedom to fail

Pence's one-liner is a pithy and effective defense of America's comparatively pro-debtor bankruptcy law. (It still is, by world standards.) It's a shame that the R's are opposed to American exceptionalism here. I wonder why?


In other news....

.....Diane Feinstein is pushing for an end to ethanol subsidies.

This COULD be a stroke of genius if the Democrats played their cards right (they won't) - put forth a bill to end ALL farm subsidies, oil subsidies, mineral subsidies etc. Watch the rural red staters get worked into a tizzy, and then throw their "shrink the federal government back to 1790 levels" Tea Party drivel right back in their faces. We need to tear down all the misinformation and outright mistaken worldviews before we can have an intelligent debate about the deficit. There's room for legitimate disagreement; there's no room for people who think the budget could be balanced if we just got rid of waste, fraud, and welfare.


If all the old Tea Patiers in

If all the old Tea Patiers in their Medicare-paid scooters ever come to realize that most of the money gets spent on them and on their beloved military, tax rates will be back at FDR levels.

They've been told for thirty years now that all that "out of control spending" goes to lazy welfare queens and they believe it. Ending farm subsidies would be a good place to start. Let the rugged individualist, Republican-voting Red Staters get a good dose of the "magic of the market place".


"right wingers who claim to

"right wingers who claim to worship at the alter of Milton Friedman"

It seems there are less and less of them, or they are really quiet. Seen from the official Republican positions today, Friedman is a left-winger.


Bruce, all due respect, but

Bruce, all due respect, but you are living in the past. The days when there were Republican politicians who actually thought genuinely about policy and the good of the nation are gone. All they currently care about is political power. Everything they say and do is 100% to the end of securing and maintaining absolutel political power and destroying any opposition. That is it.

You guys on this blog keep acting surprised that Republicans and conservatives seem to be taking inconsistent positions with respect to supposed stated policy goals, and therefore don't "make sense". None of this is at all surprising and makes perfect sense when you accept their *real* goals.


In my weaker moments I wonder

In my weaker moments I wonder if the current crop of Republicans actually have it right. By that I mean this.. the U.S. is in a period of completely unavoidable decline based on demographics and decades of wasteful policies. Since that decline cannot be reversed only slowed - might as well accelerate the hell out of it and make sure me, my family and my friends have enough money to buy themselves and their heirs into the guarded, gated communities of the future - think rich families in Argentina or Brazil.

Of course, the optimism then kicks in and I believe we can reverse these trends with cooperation, honest arguments about spending, fairness and the role of US military and diplomatic power in the world. Then I read any article, or watch any TV show about anything and I wonder if Kudlow needs an intern.


Indeed, it was right wing

Indeed, it was right wing saint Milton Friedman who taught economists the truth of this mechanism.

But I've noticed, as time has gone on, that the pantheon of Republican saints have two things in common: 1) they are safely dead so they can't protest and 2) they were all a lot more 'liberal' than current Republicans. It seems to me that the current Republican party really is purely a resurrection of the old school southern Democratic party of the 1920's or so.

max
['So they only want to go back in time to 40 years before that.']


Sigh

Being from Indiana, I've known for a long time that Pence is just genuinely dumb and will believe whatever he's told by those who give him money.

Being said, to those calling for an end to farm subsidies...

You'll see food prices skyrocket as farmers will be forced to make up that income by passing it on to the consumer. Or, if market forces determine that prices stay low, then you'll see supply plummet as farmers go out of business since they can't afford the upkeep of their farms anymore. Either way, prices go up (supply very limited in once case) for you and me, significantly.

I don't know if you think farmers are rich or are making a ton of money with the subsidies, but I can assure you they aren't.


Or maybe we could just be

Or maybe we could just be "smart" with subsidies so we aren't paying farmers to plant corn and soybeans that either rot in silos, or are turned into artificial sugar, cheap packing materials and un-natural fodder for food animals that should be eating grass or bugs. Corn is used in everything because it's cheap, it's cheap because it's artifically kept so by government support. The whole problem with any proposal made on either side is the all or nothing mentality. We either have to end farm subsidies or extend or end the Bush tax cuts. There are a myriad of ways we could get more for the dollars we spend and cut in an intelligent manner from all government departments. But we can't even agree on the big picture - we'll never agree on the details. Clinton's budget was balanced by just these very things, plus higher taxes. As much as it was made fun of, the Gore Governement Accountability office actually dug into these individual programs and tax breaks and made some significant changes. The Bush administration then hired corporate hacks or mentally challenged Blue Bloods to run all the agencies and then flooded them with all the money they could ever need. Now if we fire one TSA worker Fox News will scream about the entire domestic airline fleet going up on flames. I really need to take the rosecolored glasses off huh?


not so

Your prognostications of gloom and doom with ended subsidy ring false. If every dollar of subsidy was turned back to the taxpayer (i.e., deficit remained constant), then you'd have a net positive. The price of food and such may go up slightly, but the consumer would have more money to pay for it. Especially since that money has NOT been washed through an inefficient federal bureaucracy that takes far more money than it gives out.

The most credible argument for subsidy is that it props up the little guys and keeps the ADMs and ConAgras from completely taking over the markets.

Yet, the vast majority of the subsidy ends up benefiting the huge agribusinesses:
http://www.heritage.org/research/reports/2002/02/farm-subsidies-are-amer...

Pence is off the mark in a couple ways, but he is smart and honest, and I like him a lot.

He does need a little more economic insight though. The general accusation that Republicans always think it's 1980s is sadly correct more often than not.


Kyle, farmers are not getting

Kyle, farmers are not getting rich or making a ton of money with subsidies: someone else is. That someone else is large agribusiness corporations, whose preferred crop is subsidies, not plants. They work hand in hand (or are simply identical to) the Wall Street firms who have created markets in agricultural commodity derivatives (thus changing the old futures markets, which were economically sensible ways of smoothing prices of a commodity that arrived irregularly into yet another casino -- with the help of some important rules changes in the futures exchanges).

That should let you realize that subsidies are not designed for farmers, at least not now (whether they ever were I don't know). They are a political product grown by lobbyists, who harvest them for their sponsors. But of course, you can watch Pence and all the other "defenders of the family farm" out there every campaign season talking about how they are there to protect the interests of good hard-working families just trying to hold on to their 200 acres. The only people stupider than Pence at such events are the farmers who believe him.


Nice Kudlow Jab

Totally agree with your sentiments about Larry Kudlow (you should have added Stephen Moore). He is the ultimate one note wonder. Every problem is prevented and resolved by tax cuts. In 1980 the supply side case made sense - cut taxes and bring down marginal rates. Since then, that premise has been accepted across party lines, and the only difference is in tinkering slightly with the rates. But I just love the circular reasoning of the Republican supply siders: raise taxes in a good economy and growth will falter; raise taxes in a weak economy and the recovery will be damaged. That's beautiful. Thank God Bush didn't raise taxes once the economy got back on its feet in the mid 2000's - we might have had downturn! People would have stopped working so hard if they had to give more money to Uncle Sam! You've got to love it in a perverse way.




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