Fools and Knaves: A Pragmatist’S View of the Economic Warfare Being Waged by the Republican Party Against the Great American Middle Class

By Howard Green

Republicans have proven adept at getting middle-class voters to vote against their own pocketbooks. George W. Bush and his advisors promised economic growth, jobs and an ownership societybut delivered a housing finance bubble, Wall Street profits fueled by fraud, a recession, budget deficits, low economic growth, massive job losses and upward transfers of middle-class wealth.

In Fools and Knaves, author Howard Green explores both the short-term and long-term effects of Republican-controlled government on the nation. When the Republicans left town, they handed the tab for clean-up to taxpayers and then obstructed every effort to repair the economy that they broke. Whats more, they now favor cuts to government programs for the poor, government shutdowns, and threats of credit default. The financial crisis of 2007 was no accident; it flowed from GOP policies that were intended to benefit the 1 percent as well as themselves. Republicans succeeded beyond their wildest dreams, and today the wealthiest among us pocket virtually all the gains associated with the rebuilding of our economy. Meanwhile, the middle-class suffers home foreclosures, job losses, and reductions in real income.

Fools and Knaves makes it clear that while appealing largely to social conservatives and older, white, blue-collar voters, Republicans make promises to the middle class but actually deliver results only to the wealthy. Everyone elseespecially those who are younger, better educated, female, and from minority householdsis now getting the message: Republicans have nothing to offer them.

• Language: English
• Publisher: iUniverse
• Release date: Mar 18, 2014
• ISBN: 9781491725146

Howard Green

HOWARD GREEN is an author and broadcaster. A founding anchor at Business News Network, he spent fifteen years at BNN, where he hosted Headline, the network’s flagship interview program. Green is also the author of the bestseller Banking on America and is an award-winning documentary filmmaker.

Book preview

Fools AND Knaves

A Pragmatist’s View of the Economic Warfare Being Waged

by the Republican Party against the Great American Middle Class

Howard Green

iUniverse LLC

Bloomington

FOOLS AND KNAVES

A PRAGMATIST’S VIEW OF THE ECONOMIC WARFARE BEING WAGED BY THE REPUBLICAN PARTY AGAINST THE GREAT AMERICAN MIDDLE CLASS

Copyright © 2014 Howard Green.

All rights reserved. No part of this book may be used or reproduced by any means, graphic, electronic, or mechanical, including photocopying, recording, taping or by any information storage retrieval system without the written permission of the publisher except in the case of brief quotations embodied in critical articles and reviews.

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ISBN: 978-1-4917-2514-6 (e)

ISBN: 978-1-4917-2515-3 (sc)

ISBN: 978-1-4917-2516-0 (hc)

Library of Congress Control Number: 2014904480

iUniverse rev. date: 3/17/2014

Contents

J’accuse: A 14 - Count Indictment

Economic Darwinism, With And Without Fetters

The Unfettered Free Market In Usa Healthcare

A Walk On The Supply Side

The Hollowing Out Of America

On Being Governed With Energy

Bullets And Ballots

Lurching Forward – With Keynes Or Without Him

The Simple Joys Of Deleveraging

Missing Class

Mind The Gap

Context Also Counts

Election Day 2012 And The Morning After

The Empiricist Strikes Back!

A Few Not-So-Easy Fixes

And That’s A Wrap

TO DEE, still learning what it means to be the best girl in the world.

TO MICHAEL, for giving me so many reasons to be so proud.

TO JORDAN, with thanks for being my grandson.

"If you can bear to hear the truth you’ve spoken

Twisted by knaves to make a trap for fools,

Or watch the things you gave your life to, broken,

And stoop and build ‘em up with worn-out tools"

RUDYARD KIPLING [IF – ]

J’ACCUSE: A 14 - COUNT INDICTMENT

T here walk among us today a chastened group of people. Once upon a time, these people were true-blue – sorry, make that deep-red – Republicans. Some even carried water for Barry Goldwater in 1964 after all but memorizing The Conscience of a Conservative, as there is nothing quite so stirring to young hearts as the call for personal freedom. After the Reagan years, however, they had their first doubts and, after suffering the embarrassment of sharing a party label with Dick Armey and Tom DeLay, they pretty much knew just how taken they were. Some would even wager that a resurrected Senator Goldwater would be the first to agree that Conservatives today have behaved, and continue to behave, unconscionably .

With Bush 43, the army of the disillusioned knew for certain that the GOP had been hijacked by conservatives who didn’t know a conscience from a cockatoo and whose commitment to unfettered free markets and sound fiscal policy was largely a front for a license to pillage in an endless game of looking out for number one. You want truth? Here is truth: conservative Republicans today, lawmakers and pundits alike, are fools or knaves.

Who today is not amazed at the incongruity of deep-red Republicans waving the Bible in one hand, the flag in the other and invoking God’s name against those who think differently but, when given their chance to govern, do so as if they have never actually opened that Bible? At long last, do we not know that we are, at least to some extent, our brother’s keeper and that serious danger lurks at the point where brotherhood intersects with the unforgiving logic of the unfettered free market?

The GOP’s true gospel today is to preach like creationists, behave like Darwinists and rationalize it all in the name of personal freedom. The fittest will not only survive, they will feast on the bones of their less fit brethren and somehow it is all supposed to be for the greater good simply because their actions were unfettered and freely taken. The only good news is that we need no longer trouble ourselves with the effort required to debunk what passes today for conservative Republican orthodoxy. We now have more than enough history – empirical evidence – to make further debate unnecessary as we pass from economic theory to historical reality.

The GOP has shown again and again that in the game of good government, orthodoxy trumps reality every time. Further, it seems not to matter whether we are talking domestic economic policy or foreign policy; in both cases, the conservatives’ approach just fails to deliver. Domestically, Bush 43 followed the free-market orthodoxy of Ayn Rand and managed only to further hollow out the American middle class and deliver the worst economic recession since 1929. Overseas, Bush 43 followed the orthodoxy of the ‘neo-cons’ and kicked off two wars – only one of which was necessary – and he then mismanaged both. Logic suggests that as evidence accumulates to discredit the orthodoxy, the orthodoxy gives way but, when it comes to the GOP, things often seem to work quite differently. The reality is that, in the face of GOP orthodoxy, reality counts for nothing.

Although most economists enjoy making predictions, starting in the here and now and then forecasting what will happen tomorrow and then the day after and the day after that, our gaze, at least for the moment, will be fixed on time gone by. We will be looking at a big bunch of yesterdays, wanting only to uncover truths that are lying in wait for us, truths that are often readily found in historical data. Then, once we have picked over and made some sense of these truths, we will be better positioned to make the important choices that will impact upon our future. At the very least, we’ll be able to compare what was predicted to happen with what actually did happen.

The natural sciences enjoy a significant advantage over the social sciences; controlled experiments by, say, chemists and physicists can produce data that tends to be clear, unambiguous and, for the most part, utterly convincing. Economists and political scientists, on the other hand, must give up a measure of clarity and learn to live with ambiguity but this does not mean that, now and again, we cannot call upon readily available and reasonably convincing empirical data.

It is also the case that, in the social sciences, data is often viewed with a healthy degree of skepticism, and credibility often turns on such side issues as the interests that are being protected by whoever it is that is offering up the data in the first place. Where the source is known to be unbiased and non-partisan, the data gains in credibility and, similarly, where the data is corroborated by other studies done by other disinterested parties, credibility is again enhanced. When the studies are done by unbiased and non-partisan parties, and when those studies are corroborated by similar studies done by others, again unbiased and non-partisan, and still the data is either ignored or dismissed, it often indicates that the skepticism being shown is really self-interest masquerading as professional disagreement.

We are, then, going to do some plain vanilla scorekeeping and look at what the Republican Party – and its driving ideology – has actually done for us and, since scorekeeping is all about numbers, we shall focus largely on the numbers. This removes the discussion from the realm of competing biases, opinions, values, and emotions, i.e., qualitative discourse, and place it instead squarely where it belongs, i.e., where it can be quantitatively examined using cold analysis and logic. The numbers shall constitute the evidence and, when we are done, we will have presented evidence that is overwhelming and compelling. It will not be enough to simply express a differing opinion, for opinions are a lot like noses … everyone, it would appear, has at least one. We will be very discriminating when it comes to opinions, paying close attention to those that are supported by empirical data, and simply dismissing those that are not.

Let’s remember, too, that when certain elected lawmakers willfully ignore empirical data and choose instead to protect special interests, the damages to the nation can be painful indeed. Ignore credible data and outcomes can range from war to economic depression and even to climate change. When several hundred ‘ayes’ and ‘nays’ are spoken in the name of more than 310 million Americans and those elected representatives choose to put their own special interests ahead of those of the 310 million, it is your and my job, your and my healthcare, your and my balance sheet, and your and my home that are put in peril. It never seems to be theirs.

We’re also more than a little aware of that old saw – often attributed to Mark Twain, but who knows? – to the effect that "There are three kinds of lies; there are lies, there are damned lies and there are statistics." Yes, we’re going straight for the statistics and then we’re going straight to the people who use them as well as to the people who ignore them. We’d like to think that the people who ignore them always do so at their own peril but, sadly, it ain’t necessarily so.

It is, of course, true that there are many different points of departure in any effort to compare and contrast the American political left with the American political right, and we will be touching on many of them in the pages that follow. For the moment, suffice it to say that each holds to a different value system and neither of those two value systems can be said to be, in any objective sense … wrong. It happens, however, that the political left and the political right clash not only in terms of values, but also with regard to objective reality … facts.

At the ‘values’ level, most of us will at least give lip service to some version of ‘utilitarianism’, i.e., the greatest good for the greatest number, but when push comes to shove, narrower tribal values almost always triumph over broader, national values. In short, we do tend to favor policies that promote our own best interests. The super-wealthy, for example, typically hold small government as a particularly high value … and the smaller that government, the better. The poor, on the other hand, believe that only a larger government can ensure that they are not completely devoured by an economic system that owes more to the values of Ayn Rand than to those of, say, Emma Lazarus or Jesus of Nazareth.

When voters elect Republicans to represent them in Washington and then those representatives vote to reduce the availability of food stamps, we are certainly seeing a clash in values. Does the 1% so highly value a smaller government that it will tolerate millions of poor children going hungry, or making do with limited or no access to affordable health care? Similarly, when the poor vote for an increase in entitlements that only the rich will pay for, are there not some fundamental questions of self-reliance raised? These are all questions of values and, as our tribal instincts kick in, clashes of values are all but inevitable. This is why people have historically sacrificed so much for the privilege of living in a democratic republic. Let those value systems clash … we’ll get it all sorted out in the voting booth.

Although it would be difficult to hold Republican values in lower regard than we already do, our quarrel here is less about clashing values than it is about clashing facts. Today we increasingly see opinions, lies and deception being passed off as facts, and in all cases, it is in service to narrow tribal values. When the 1% and their GOP hired hands argue that deregulation and ‘trickle-down’ (a.k.a. ‘supply-side’) economics will support the values of the 99% – especially economic growth and the creation of new jobs – they are not speaking truth. Some may actually believe that they are speaking truth while others may be happy wishing what they are saying were true and letting it go at that. Ignorance and good intentions notwithstanding, any statement to the effect that ‘supply-side’ economics benefits the 99% is simply not true, i.e., the statement is not supported by empirical data. What we actually learn from empirical data gathered over many years is that Republicans routinely misrepresent facts and, when voters put their trust in those Republican candidates who so shamelessly lie and mislead, the only interests served are those of the 1% … each and every time.

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We will be discussing at some length the financial crisis of 2007 and the Great Recession of 2008, always with a view toward separating fact from fiction and sense from nonsense. We all, the 1% and the 99% alike, experienced economic consequences from the George W. Bush years, a time when we saw a convincing demonstration of what life is like in a smaller-government world given over to the values of Tea-Party Republicans and economic Darwinists. For the 1%, the economic consequences of the George W. Bush administration were celebratory, but for most of the 99% … not so much.

Following the election of Bush 43 and the wholesale deregulation of the financial sector, it took only a few short years until the entire banking system imploded, several big banks were gone forever, still bigger banks needed taxpayer bailouts, millions of Americans lost their jobs, millions of American homes went into foreclosure and trillions of dollars were obliterated from our gross domestic product. These are, of course, facts … not opinions. Do we really want to go on living this way? Once we know the facts, after all, it’s all about values … and the choices we make to live according to those values.

We all understand that opinions and value statements, while important, are very different from corroborated, non-partisan and unbiased data, and we will take considerable care to keep them apart. Consider the following statement of opinion: It is very much the business of government to redistribute wealth and income from the rich to the poor and middle class. It is fair to assume that most, if not all, Democrats would share that value while most, if not all, Republicans would not. Our progressive system for paying income taxes does redistribute income downward by requiring the wealthy to pay a greater share of their income in taxes than do the poor or middle-class. This system of ‘redistribution’ is simply one of many answers to the question of what kind of nation we choose to be. Another possible answer might involve the sort of upward distributions of wealth – from the middle class to the very wealthy – that followed hard on the heels of the rise of the GOP when George W. Bush first won the White House.

More voters seem to prefer a nation in which the super-rich forego becoming super-super-rich in order that the sick have more affordable access to healthcare and the elderly not have to sell the cutlery in order to eat. It’s simply a choice … and an existential choice at that. If Republicans want to see a different America, a more Darwinian nation wherein the strongest prevail and the weakest succumb, they are certainly entitled to hold this view, to convince others to think the same way and then to vote accordingly.

When Democrats support greater taxation of the rich, whether in the interests of fundamental fairness or to better maintain the overall growth of the national economic pie, they typically make little, if any, attempt to deny, minimize or paper over it. Our wealthiest Republicans, on the other hand, not only deny that upward redistributions exist, they resort to a sophisticated system of distortion and deception to both bring such upward redistributions about and then, once they have done so, to deny its existence and accuse unhappy middle-class Democrats of engaging in class warfare and playing the politics of envy. In the process of engineering these upward transfers of wealth, Republicans create fascinating – but deceptive – names for what they do, among them … trickle-down economics, supply-side economics and job-creators. In similar fashion, when Democrats attempt to strengthen the rules of the free market in order to ensure a more orderly and fair playing-field, Republican lawmakers quickly characterize these rules – falsely – as job-killing, knowing full well that nothing is more frightening to the poor and middle class than the loss of their employment.

It is actually important that we know … when the super-rich get their new and disproportionately large tax cuts, does money actually ‘trickle down’? Do new jobs really get created when we cut taxes on the rich? What do the numbers – the facts – tell us about these questions? Are all those laws and regulations really job killing? Are Keynesian programs little more than ineffective orgies of spending as claimed by the GOP, or is it more about preventing all that middle-class money from being invested in a program that will mostly benefit a lot of people who tend to vote Democratic? We will look at the numbers and we will learn. Equally important, when the numbers tell a convincing story and the GOP dismisses it all with a wave of the hand and offers up no data in rebuttal, we can be forgiven if we treat such dismissals as just another form of deception.

Our problem with the many lies told by the GOP leadership is not about the moral outrage at being deceived but, instead, it’s about the day-to-day impact that these untruths have on the vast majority of the poor and middle-class. GOP fools (i.e., those who are truly ignorant of the facts) deserve more pity than scorn, but GOP knaves know full well that these lies, intended to benefit only the already wealthy, will bring suffering and hardship to a huge number of hard-working Americans but, like economic Darwinists everywhere, they just don’t give a damn.

When George W. Bush reduced income tax rates disproportionately in favor of the super-wealthy, he was redistributing income upward. There may be opinions to the contrary but the data clearly says it is so. Similarly, when those who earn money by the sweat of their proverbial brow pay income taxes at a higher marginal rate than do those who earn money by putting their money to work, it is not only an upward distribution of wealth, it is manifestly unjust.

By what logic, after all, should a teacher or plumber pay income taxes at a marginal rate almost twice that at which Mitt Romney pays? Middle class wage-earners who pay income taxes at a marginal rate twice that of Mitt Romney, even as he earns tens of millions of dollars each year, are effectively subsidizing his income taxes, and the nation receives no benefit from having given the Romneys this subsidy. The carried interest loophole is, at the end of the day, an upward distribution of wealth, a tax subsidy for the super-wealthy and a penalty for having earned money the old fashioned way. We’ll come back to all of these issues in later chapters … and in considerably greater detail.

In early 2013, Louisiana’s Republican Governor Bobby Jindal proposed to eliminate the State’s income tax and replace the lost revenue by increasing sales taxes. Since it all comes out ‘revenue neutral’ in the end, is there anything wrong with this proposal? As it happens, Louisiana’s income tax is progressive and falls most heavily on the wealthy, while sales taxes are regressive and fall most heavily on the poor and middle class. In other words, Louisiana taxpayers are looking at a proposed change that would mean a big gain for its top 1% but a big burden for its bottom 60%. This is another good example of an upward redistribution of wealth and, although it happens with great regularity, Republicans pretend otherwise and respond with cries of ‘class warfare’ should anyone take exception to plans of the sort being proposed by Governor Jindal.

Yes, we all understand that any transfer of wealth, whether up or down, brings negative consequences to those whose wealth was transferred but, while negative consequences attach in both instances, the nature of these consequences differ considerably. In the case of a downward transfer, the super-rich simply accumulate a bit less money but, in the case of an upward transfer, hunger, sickness and fear are often among those unhappy consequences. In similar fashion, when Republicans either weaken the rules of the marketplace or prevent useful Keynesian economic programs from being carried out, the practical consequences can be terribly injurious – if only to the 99%.

When self-interested Republicans so misgovern that the economy is left in shambles and they offer nothing to help clean up the mess apart from a bailout of the miscreants, blocking effective recovery methods and, finally an attempt at yet another upward transfer of wealth, we know that the painful consequences of their malfeasance will be felt for years to come – again, by the 99%. The real problem with a hollowed-out middle class is not the moral failing it represents but rather the negative impact of that hollowing-out on the national economy. The plain and simple fact is that we all need a healthy and growing middle class if our own long-term prosperity is to be assured. Of course, if pragmatism is to take a back seat to short-term greed, we will end up always looking over our shoulder and expending most of our energy just trying to survive. We should not, after all, want to learn economics sitting only at the feet of Ayn Rand or Charles Darwin.

Finally, when Republicans threaten to bring about default on our public debt as part of a tactical gambit to engineer still another upward transfer of wealth, the very threat brings negative consequences to the 99%. An actual default, rendered far more likely by virtue of its having been threatened, would bring catastrophic consequences to not just the 99% but also to bankers, business owners and investors, in short, the 100%. We all, Republicans and Democrats alike, will bleed if that Republican finger on the default trigger gets itchy … and it seems always to be itchy. Of all the games ever played by Republican lawmakers, the ‘debt ceiling’ game is by far the most recklessly foolish.

Now that we have a better idea of where we are heading, we have only to begin the task of separating the truth from the untruth, putting aside values and opinions and spending virtually full-time on facts … data-driven facts. We already understand that Democrats and Republicans have differing opinions on many issues and we have already agreed that there is nothing wrong with that. Our quarrel is not about the opinions and values held by Tea Party-inspired GOP lawmakers but, instead, it is with their typically irrational rationales that are buttressed only by deception and lies.

It will not be enough to reply that one can prove anything by selecting the numbers that most favor one’s thesis: our numbers are real, they are available from independent sources, they are corroborated, they are available to everyone and they tell a story that is far greater than the mere sum of their parts. If our argument is to be rebutted, it must be done with equally valid objective evidence, and the likelihood of this being done is vanishingly small. At the end of the day, of course, one is either convinced … or not. And so, we begin.

If it were up to the GOP, Americans today would have no Social Security program to help get them through their retirement years. Poorer Americans would not know the safety provided by a welfare program – ‘Aid to Families with Dependent Children’. Civil rights would be entirely unprotected by laws, and the right to vote would depend largely upon one’s color and the state in which one lives. Our elderly would not know the security provided by Medicare, our air and water would be in constant jeopardy without the environmental protections provided as a matter of law. Women would certainly not have the right to privacy that allows them to practice contraception, and many of them would be crowding hospital emergency rooms bleeding from coat-hanger abortions.

Republicans would certainly have seen to it that there were no estate taxes to keep us from being burdened with an economic class of pure privilege. Income taxes would be ‘flatter’ and there would be no taxes on businesses, a combination that would probably also mean that our most privileged and wealthy would be living behind iron gates patrolled by armed guards to protect the resident-owners from the angry American barbarians. Finally, the Republican prescription for getting us out of the ‘Great Recession of 2008’, the worst economic contraction since 1929, would have resulted in another depression exactly as the Great Depression of 1929 was extended when, in 1937, President Franklin Roosevelt was convinced by Republicans to reduce the flow of federal spending.

Would we as individuals and as a nation be better off today if Social Security, Aid to Families with Dependent Children, the Civil Rights Act of 1964, the Voting Rights Act of 1965, Medicare, Medicaid and food stamps had never come into existence? It is an inescapable fact that, despite every Republican warning to the contrary, these programs did not prevent the United States of America from becoming the most powerful nation in history with a strong middle-class and a standard of living exceeding that of any other nation. We were the economic envy of the world and uncounted millions of people voted with their feet by doing anything and everything to get here, get a job and have a shot at becoming an American. The evidence seems fairly convincing that Democrats must have done a few things right to get us to where we were before the U. S. Supreme Court helped to elect George W. Bush to be our 43rd President.

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In the spirit of Winston Churchill, who is credited with having said; However beautiful the strategy, one should occasionally look at the results, let us now consider, by the numbers, what George W. Bush and his fellow Republicans gave to our nation during their most recent eight years in the White House.

1. They failed, despite their commitment to a strong national defense and, despite ample warning of all that al Qaeda had planned for us, to connect the dots and thwart the 9/11 attack.

The Christian Science Monitor reported (May 17, 2002) that information on possible terrorist strikes were filtering through our intelligence systems in the months before the 9/11 attacks, and that some of this information mentioned Osama bin Laden’s network. The Monitor also reported that the White House acknowledged that Bush 43 was told by the CIA that suspected members of Al Qaeda had discussed the hijacking of airplanes. The article also reported that the White House said that Bush’s daily intelligence briefings in August, weeks before the attack, included concern that Al Qaeda would hijack planes.

It is, admittedly, a bit of a stretch to convincingly assert that another President, Democrat or Republican, would have done better under these circumstances but it is nonetheless true that 9/11 represented the worst failure of American security in our entire history and no one was held accountable. Given the choice of holding no one accountable and holding accountable the President and Commander-in-Chief, it cannot go any other way if for no other reason than that Bush 43 brought with him into office a combination of arrogance and swagger that ill befits a chief executive with so little control over world events. President Bush was simply writing checks that his limited intellect and ability could not possibly cash and, having presided over 9/11, he must carry it forever as his legacy.

2. They pretended to take rapid retributive action for 9/11 with an ill-defined mission in Afghanistan, then lied to the American people about Iraq’s having weapons of mass destruction, and, finally, invaded Iraq despite it having had no role in the attack.

After launching our retributive attack on Afghanistan, Bush used as the justification for further war Iraq’s refusal to declare its weapons status and allow UN inspectors to freely determine whether UN resolutions were being complied with. In truth, Iraq did declare (in December 2002) that it was free of weapons of mass destruction, Iraq did allow UN inspectors to inspect (in autumn of 2002) any site of its choosing and, finally, UN inspectors did conduct inspections and found nothing.

It is one thing to have to admit that Iraq complied with the ultimatum with which it was presented and was simply not believed but it is quite another to claim – as did the Bush Administration – that there was no compliance. Perhaps unable to face, in his disbelief, the prospect of an error in judgment, Bush chose instead to pretend that Iraq refused to comply, thereby lying to the American people and to the world.

The financial cost of this pointless invasion of Iraq is almost $3.0 trillion dollars, plus another half-trillion dollars in future veterans health care and disability payments, a far cry from the promise made by Paul Wolfowitz, a conservative Republican and a leading theoretician of the Iraq war, that its cost would be funded largely, if not entirely, out of Iraqi oil revenue. That was just one more prediction that w ill never come to pass and yet these conservative Republicans continue to issue predictions without ever being called upon to explain their abysmally low batting average.

Perhaps well aware that the cost of these two wars (some $4.0 trillion to date and most likely another trillion or so more, including all the long-term medical care that will be required for those who are physically and psychologically scarred) would be outrageously high and damaging to the American economy, the George W. Bush administration funded both the Iraqi and Afghanistan wars year after year via supplemental appropriations that appear completely outside the normal Pentagon budget. In short, the true monetary costs of the war were being systematically hidden from the American people. The human cost of the two wars includes some 6,500 American lives, more than thirty-two thousand Americans maimed or wounded, more than 200,000 diagnosed with post-traumatic stress disorder and hundreds of thousands of Iraqi deaths, all thanks to the Bush administration’s up-front lie followed by its incompetent management of the war. How can anyone convincingly argue that it was worth it?

A false pretense for the war in Iraq was soon followed by a poorly defined mission statement, the commitment of too few troops to prevent both looting and sectarian war from breaking out between the Sunni and the Shi’a and, finally, the complete absence of a rational exit strategy. As if all this were not enough, the invasion of Iraq has given our nation all of:

•  a war that has lasted more than twice as long as American involvement in WWll,

•  a shift in the balance of power in the region in favor of the one nation, Iran, whose policies are most inimical to American security interests,

•  American armed forces were tied down in two simultaneous war theaters, thereby reducing our ability to both project American power and to respond to real military threats,

•  the burden of nation-building in Iraq as well as Afghanistan, two of the most unlikely candidates for a successful transplant of the democratic political process. We recall the wisdom of Bush the Elder prosecuting Operation Desert Storm with the objective of expelling the Iraqi invaders and returning Kuwait to its previous, if largely medieval, form of government. Then we have George W. Bush deciding that a collection of tribes and religious sects whose cultural institutions, education system and values are inconsistent with most everything we have come to understand as being essential to a civil society, can be transformed, effectively overnight, into something resembling a Jeffersonian democratic republic.

These were, and remain, fool’s errands and, worse, errands we can ill afford. The ongoing cost in Afghanistan alone exceeds $100 billion per year with nothing to show for past expenditures and little hope of future returns. The most frequent justification given by Republicans – especially those Republicans connected with the Bush administration – for these two wars is that we have been made safe. Vice President Cheney went so far as to say on NBC’s Meet the Press (September 10, 2006): There has not been another attack on the United States and that’s not an accident.

For reasons we may never understand, Mr. Cheney seems always to have had the most tenuous relationship with truth and it is no different here. We note that Cheney begins counting on the day after 9/11, effectively giving both Bush and himself a free pass on the almost three thousand innocents killed on 9/11. While Cheney correctly asserts that there hasn’t been another 9/11, we have been targeted and attacked, successfully and unsuccessfully, both before Mr. Cheney’s statement and after it. Consider all of the following:

•  One week after 9/11, anthrax spores were mailed to US Senators, media outlets and civilians. Seventeen individuals were infected and five died as a result.

•  Three months after 9/11, Richard Reid, a.k.a. the shoe bomber, attempted to blow up a US bound flight from Paris. He was thwarted only by his fellow passengers.

•  In 2009, Najibullah Zazi was arrested by the FBI in a plot to carry out multiple bombings in the NYC Subway system. He had received terrorist training in an Al Qaeda training camp.

•  Also in 2009, Umar Farouk Abdulmutallab, a.k.a. the underwear bomber, unsuccessfully attempted to detonate plastic explosives over Detroit, Michigan.

•  Also in 2009, Nidal Malik Hasan, an American Army officer of Palestinian descent shot and killed 13 American soldiers and wounded 29 others on an Army base in Texas. He was linked to Al Qaeda via Muslim clerics on-line.

•  In 2010, a Pakistani-American, Feisal Shahzad built a car bomb and attempted to detonate it in Times Square. The device failed to explode.

Contrary to Mr. Cheney’s claim, the anthrax mailings were an attack and, although it occurred after 9/11 and prior to Mr. Cheney’s televised claim, he just pretended it never happened. The ‘shoe bomber’ did not succeed in his attack – yes, it too was an attack despite Mr. Cheney’s claim to the contrary – but no one, including Cheney, can claim that the failure was in any measure due to the Bush administration’s response to 9/11. The shoe bomber was thwarted only by his fellow passengers and, since Bush’s response was not a factor, it also gives the lie to Cheney’s claim of it being no accident. Similarly, although the attacks came well after Cheney’s false claim, the ‘underwear bomber’ and the ‘Times Square bomber’ failed not because of Bush’s response to 9/11 but because of the bombers’ own accidental incompetency. In sum, Cheney lied.

Included in the Bush administration’s response to 9/11 were large federal grants to state and local governments, ostensibly with a view toward ensuring that law enforcement agencies would be better positioned to prevent and combat terrorism in the USA. Step one for any state or local politico wanting to get on this federal gravy train was to get local attractions listed in the National Asset Database as potential terror targets. Suddenly we learned that potential targets of terrorism tend to cluster in states that vote Republican.

As it happens, the state of Indiana, a deeply red state, listed some 9,000 terrorism targets, a number that exceeded New York State’s by 50% and was twice that of California’s – both of which tend to vote Democratic. In fact, Indiana was, according to the Bush administration, the single most target-rich of the 50 states. Doubtlessly, Hoosiers sleep better at night for George W. Bush’s concerns for their safety, knowing that would-be terrorists are awake in mountain caves with maps of Indiana tacked to the walls as they figure out how to take out a well-protected petting zoo in suburban Indianapolis.

After twelve years and counting, we cannot avoid the conclusion that Dubya’s response to 9/11 was jarringly ineffective. When we also consider the number of American casualties, the near exhaustion of our ground troops after multiple deployments and Bush’s doubling of the Pentagon’s budget, we come face-to-face with the uncomfortable truth that we are today less strong as a nation then we were before George W. Bush began making command decisions. There is just no way around the fact that the wars in Afghanistan and Iraq were bonehead plays that will be costing us – in both human and financial terms – for at least another generation.

3. They bungled the capture of Osama bin Laden at Tora Bora by outsourcing the operation to a bunch of locals, none of whose loyalty or competency was equal to the importance of the task.

President George W. Bush, the Commander-in-Chief, was so determined to invade Iraq that he chose not to commit American troops in Afghanistan to settling our score with Osama bin Laden but, instead, stage them for the coming invasion of Iraq and, in so doing, the Great Decider took his eyes off the ball and quickly struck out. Bin Laden ran free for almost 10 years until he was finally assassinated in early May 2011 by a Special Forces team dispatched by President Obama. In any event, our accomplishments in both Iraq and Afghanistan are measured largely in terms of American casualties and squandered American treasure.

4. They authorized torture, thereby reducing our moral standing in the world and increasing the threat to our own fighters in the event they are taken prisoner.

Calling it enhanced interrogation instead of torture may have allowed President George W. Bush to sleep better at night but he might as easily have called it enhanced recreation for all the difference it would make to his credibility and presidential legacy. As to the results achieved, there is not a shred of evidence to support the argument that the nation was made safer by our having so compromised our principles. In late autumn of 2012 the Senate Intelligence Committee, having reviewed some six million pages of C.I.A. documents, completed a 6,000-page report on these interrogations. Although the report itself is ‘classified’, California Senator Dianne Feinstein (Chairman of the Senate Intelligence Committee) and Michigan Senator Carl Levin (Chairman of the Senate Armed Services Committee) stated publicly and for the record that coercive interrogation techniques had nothing to do with locating Osama bin Laden. [Feinstein.senate.gov, April 30, 2012].

Another study was conducted by an 11-member, independent and nonpartisan panel convened by the Constitution Project, a legal research and advocacy group. The panel was led by two former members of Congress, one Republican (Asa Hutchinson) and one Democrat (James R. Jones), both with experience in the executive branch of government. In mid-April 2013, the panel released a 577-page report declaring that never before in American history had there been the kind of considered and detailed discussions … directly involving a president and his top advisors on the wisdom, propriety and legality of inflicting pain and torment on some detainees in our custody. The Report concluded that … it is indisputable that the United States engaged in the practice of torture …, and further, that the nation’s highest officials bore ultimate responsibility for it. [New York Times, April 16, 2013]. It is fair to presume that the phrase the nation’s highest officials includes President George W. Bush and Vice President Cheney.

Finally, as if to counter possible charges of partisanship, the Panel included a 22-page appendix to the Report that included dozens of legal cases in which similar treatment was either prosecuted as torture in the United States or denounced as torture by American officials when practiced by other countries.

Although President Obama was roundly criticized by Republicans for going soft on suspected terrorists during interrogations, these Republicans failed to mention firstly, that in 2006 (during the Bush 43 administration), the Supreme Court ruled that Al Qaeda suspects had to be treated humanely lest American officials face charges of war crimes, and secondly, also in 2006, President Bush announced that the Administration was suspending the use of waterboarding, secret detentions and other such abuses of power. Did President Bush go soft?

Even as the debate continued as to the efficacy and morality of torture, we heard John McCain speak out often against torture (hardly a surprise given that McCain was a prisoner-of-war during the Viet Nam War and was repeatedly and brutally tortured), and Rick Santorum – while still contending for the 2012 Republican presidential nomination – argued on an evening syndicated news radio program that John McCain doesn’t understand about interrogating people under torture (The Hugh Hewett Show, May 17, 2011). Most of us live our entire life convinced that nobody’s perfect and then Rick Santorum opens his mouth and changes the very standard by which fools are judged, reminding us that there is, after all, such a thing as a perfect fool. As an aside, Hugh Hewett, of course, did not exactly cover himself in journalistic glory by failing to challenge his guest while on the air.

Santorum also appears blissfully unaware that the Spanish Inquisition (an arm of the Roman Catholic Church established in 1480 to maintain Catholic orthodoxy in Spain) made frequent use of waterboarding – la tortura del agua – as a form of torture during the middle-ages. We are all entitled to wonder, as we stare blankly in fear and amazement at how such a fool as Rick Santorum can be considered by anyone to be presidential material.

5. They corrupted the Justice Department by repeatedly valuing political loyalty over competency.

President George W. Bush certainly did his best to make it appear as though political loyalty and a membership in the Federalist Society (an organization of conservatives and libertarians dedicated to reform of the American legal system) actually had something to do with the administration of justice. Bush political appointees to the Department of Justice assessed the qualifications of U.S. Attorneys in large measure in terms of whether they were members in the Society. For the eight years of the Bush 43 administration, Lady Justice peeked from behind her blindfold in order to better sort the politically loyal from the politically questionable. The damages to the justice system are still being repaired.

6. They took control of the nation’s economy from the Clinton administration at a time when median income had increased by some 14% even as the economy produced, for three consecutive years, a significantly large annual budget surplus and quickly converted these into a reduction in median income of almost five percentage points and the largest budget deficit in history.

Although it was widely, if intuitively, felt for some time, the nasty truth was confirmed in the November 12, 2010 issue of the Kiplinger Letter: the years 2000-2009, covering the entire administration of George W. Bush is considered to have been a lost decade. By a wide variety of measures, say the Kiplinger editors, there was almost no growth. Stock values ended the decade virtually flat. Americans’ median income – adjusted for inflation – was, in 2009, $49,777, 5% lower than it was 10 years before. Real GDP gained only 20% from the start of 2000 to the end of 2009.

The Census Bureau notes that the number and the percentage of people living below the poverty line rose from 11.9% in 1999 to 13.2% in 2009. Perhaps the most telling fact of all, total employment remained essentially unchanged from the start of the decade to its end. Finally, as if more such data were needed, The Chicago Sun-Times reported in mid-July 2011, that a study carried out by the Economic Policy Institute showed that between 2004 and 2009 – the Bush 43 years – the median net worth of American white households fell 24% while that of American black households fell by 83%. Even as these numbers demonstrate that the American middle-class has been severely hollowed out by the GOP’s policies, Republicans never seem to tire of telling the American people what is best for the economy.

What the Republicans never manage to do is explain why, despite their having been alone in the driver’s seat, the nation ended up in such a horrible place, a place to which, we shall assume, the Republicans did not choose to go. Worse, far worse, they did it after taking control of the government from a Democratic administration that left behind only a legacy of budget surpluses and virtually full employment.

In 1993, President Bill Clinton pushed through a budget bill that called for increased taxes. Republicans denounced the bill as the largest tax increase in American history (it wasn’t) and Rep. Newt Gingrich (R – Georgia) predicted; The tax increase will kill jobs and lead to a recession, and the recession will force people off of work and onto unemployment and will actually increase the deficit. The Republican orthodoxy, this time in the person of Newt Gingrich, once again had it wrong. All wrong. In fact, the exact opposite happened, suggesting that Republicans may not be the most reliable source of useful information.

Unemployment fell, an economic boom ensued and Clinton ended up presiding over the longest period of economic expansion in American history. The problem, as we see over and over again, is the Republican orthodoxy. The question with which we must wrestle is whether this orthodoxy is sheer wrongheadedness – the ‘fool hypothesis’ – or whether it is a scam devoted to protecting and enriching the GOP’s wealthy constituency – the knave hypothesis. We will continue to explore this question in greater detail.

7. They instituted income redistribution policies that reduced the size of the American middle-class and increased the flow of income to the top 1% of earners even as wages and salaries remained essentially flat for the bottom 99%.

If there is one metric that always set the United States of America apart from every other nation in the world, it is the size and strength of its middle-class. The American middle-class is both cause and effect; as a cause, it helps to foster such traditional values as hard work, education, ambition, thrift, and honesty, all of which help to bring forth individuals who add real value to the economy and become, themselves, part of the middle-class or even perhaps, truly wealthy. It is the great middle class that is depended upon to buy virtually all that our nation’s economic engine produces. When wealth is transferred from the middle class to the wealthy, there soon will not be sufficient purchasing taking place to keep employment levels high enough to keep the engine running on its own power.

It is also fair to say that the American middle-class is itself the effect of an economic model that exists almost nowhere else. It seems beyond self-evident that any policy that serves to increase the size of the American middle-class is in the best interests of our nation and, conversely, any policy that reduces the relative size – or strength – of the American middle-class works against our best national interests. (N.B. The U.S. Department of Commerce currently considers middle-class to be all those whose income distribution lies between the 25th percentile (approximately $51,000 p.a.) and the 75th percentile (approximately $123,000 p.a.))

The Center on Budget and Policy Priorities confirms that the tax cuts enacted in 2001 (early in the George W. Bush Administration) provided taxpayers with approximately $1 trillion in tax cuts, cuts that made the distribution of after-tax income more unequal. From data released by the Urban Institute-Brookings Institution Tax Policy Center, we learn that solely as a result of the tax cuts enacted in 2001, households in the bottom fifth of the income spectrum received cuts that increased their average after-tax income by 0.3% while households in the middle fifth saw their average after-tax income rise by 2.5%. In contrast, the top one percent of all households saw an average increase in after-tax income of 5.4% and households with incomes exceeding $1 million received an average tax cut that represented 6.0% of their after-tax income. In fact, the $180,000 average income gain for these households earning more than $1.0 million p.a. was more than three times the average middle-income household’s total income.

The U.S. Census Bureau reports that between 1947 and 1979, median family income grew at an annual rate of 2.4%; between 1979 and 2008, however, that growth rate declined to .4% per year (N.B.: data are here expressed in terms of median, not average as in the paragraph immediately above). Most telling is the fact that during the George W. Bush administration, median family income was essentially flat, and, once Bush’s Great Recession took hold, median family income declined 3.4 percentage points to approximately 1997 levels.

For another view of this problem, consider the Real Median Income of Working Age Households, again as reported by the Census Bureau. Between 1993 and 2000, the period best understood as the Clinton administration, real median income grew from approximately $52,300 p.a. to $60,800 p.a. Once Bush 43 and a solidly Republican Congress took office, real median income of working age families declined steadily to $56,791, again to levels not seen since 1997. Now comes the kicker: during the eight-year Bush 43 administration, GDP grew steadily – until Bush’s Great Recession took hold, of course – which raises the question of just who among us was benefitting from all this economic growth.

The US Census Bureau also reported that, after allowing for both upward and downward mobility between poverty and middle-class, a net total of some 12 million Americans fell out of the middle-class and into poverty between 2000 and 2009 – the George W. Bush years. When expressed in terms of the total population, we see that the poverty rate when Bush 43 took office in 2000 was 11.3% then grew to 12.7% in 2004, then fell to 12.3% by 2006 and then grew once more to 14.3% when he finally left office. Could this be what Bush 43 meant by "compassionate conservatism"?

Can we now look to the wealthiest among us to act as the engine that will pull us out of the economic doldrums and back into prosperity and higher economic growth? Unfortunately, we cannot, given that their marginal propensity to spend is but a tiny fraction of what is typical of the American middle-class. Instead, we hear the wealthy, led by GOP presidential hopefuls, speak of ‘class warfare’ and the ‘politics of envy’.

When we add to this the loss of jobs and home foreclosures suffered by these middle-income taxpayers, we see just how much future fear must be sown and how many flags waved in order to distract the voters from what actually happened. A reduction in the relative size of the middle class ought not to be the sort of accomplishment on which to base an election campaign.

8. They – Ronald Reagan and George W. Bush, with encouragement from free-marketeer Fed Chairman Greenspan – deregulated financial markets, thereby driving their fundamentalist market ideology over an economic cliff, causing some $50 trillion to evaporate from global balance sheets (almost $15 trillion from the USA) and plunging a good part of the world into deep recession. By the time Bush left office, the collective net worth of Americans alone was diminished by 8.6% ($5.5 trillion).

In mid-June 2012, the Federal Reserve reported in its triennial Survey of Consumer Finances that the wealth of the median American family in 2010 was equal to what it was 20 years before. In other words, two decades of accumulated middle-class prosperity was wiped out. Put another way, the average middle class family lost almost 40% of its net worth between 2007 and 2010. In only three years of the GOP-engineered recession, the middle-class was effectively hollowed out. Of all this lost American wealth, the Fed went on to say, 75% of it was due directly to the bursting of the subprime housing bubble, a bubble that was the inevitable outcome of the wholesale deregulation of the American financial sector.

Former U.S. Senator Phil Gramm (R – Texas), whose conservative credentials are well known, co-wrote the legislation (the Gramm-Leach-Bliley Act) that repealed that portion of the Glass-Steagall Act that mandated a clear separation between traditional commercial banking and investment banking. Glass-Steagall was enacted in 1933 after the banking system was brought close to collapse as the result of speculative banking practices. The Act worked exceedingly well, and the United States – and the banking system – prospered greatly until once again the old Republican unfettered free-market orthodoxy raised its ugly head.

The most telling blow to Glass-Steagall came in 1998 during the Clinton years, when CitiCorp merged with Travelers Insurance to form Citigroup, a clear violation of the Glass-Steagall Act. Then Fed Chairman Alan Greenspan, a firm believer in the Republican orthodoxy of the unfettered free market, arranged an exemption from Glass-Steagall and, exactly as planned, by the following year, Glass-Steagall was no more.

In similar fashion, the Federal Reserve had full power to regulate the mortgage market but Chairman Greenspan, making it abundantly clear that he was ideologically opposed to market regulation, did nothing as the financial sector feasted on the sub-prime mortgage market that underlay the toxic derivatives. In sum, the old Republican orthodoxy that had already given us the Great Depression of 1929 was again in the ascendency. Although Chairman Greenspan was soon openly humbled, the ideologists of the unfettered free market only grew in arrogance, blaming homeowners for taking out mortgages they could not afford to repay.

InjuryBoard.com reported in June 2008 that then Senator Gramm received almost $5.0 million in campaign donations from the finance, insurance and real estate sectors before he led the fight to repeal Glass-Steagall. It must, in all fairness, be noted that the deregulation of the financial sector was accomplished with the active assistance and support of New York Democratic Senator Chuck Schumer whose election campaigns have long been leavened by contributions from New York’s financial sector.

Eliminating the various controls against financial chaos – Glass-Steagall among them – taken together with a reduction in the marginal tax rates on those who were best positioned to take advantage of the situation, amounted to a license to loot the economy to the ultimate disadvantage of the nation and the overwhelming majority of its people. It looked a lot like The Lord of the Flies, as Wall Street’s children, unburdened by rules, played havoc with the American economy. By 2011, two years into the Obama administration, the fallout from the bursting housing bubble continued to take its toll on homeowners. Americans saw the total value of their homes drop by some $6.5 trillion, leaving many of them considerably overleveraged with respect to their home mortgage and, additionally, on the wrong end of the ‘housing-wealth effect.’

When times were good, the rising value of homes brought with it the feeling that one’s wealth had so grown that it could easily support some growth in one’s spending. When the housing bubble burst in 2007 and homes had lost much of their value, homeowners faced not only a problem of being overleveraged but also the negative side of the ‘housing-wealth effect.’ Suddenly the American homeowner actually experienced the feeling of having been made poorer, and this feeling, together with a mortgage that exceeds the market value of the home, led directly to a significant reduction in consumer spending.

Between the falling value of homes and the losses suffered by retirement accounts and other such assets, the average household experienced a reduction in wealth of about 25% as a consequence of Bush 43’s Great Recession. Add to this the losses in real income over the entire decade following the election of Bush 43 and it is hardly any wonder that consumer demand is weak. Once, then, we agree that the weakened consumer corps will not play its accustomed role in leading our way out of a recession, who is left to lead the way forward?

According to the GOP, all we need do is lower the taxes on the wealthy – the ‘job creators’ – and new jobs will follow as if by magic. Unfortunately, however, there is not a shred of economic logic that suggests how it can be that new jobs, i.e., new capacity, will be created by otherwise intelligent businessmen when there is insufficient demand for the goods and services they offer. That, of course, leaves the public sector and Keynesian economics to drag us forward, and the biggest problem here is not that Keynesian economics does not work but, instead, that Keynesian economics means a greater role for the federal government at a time when Conservatives and Tea Partiers are all demanding that government be downsized.

Republicans of all stripes found themselves having to choose between economic recovery on the one hand and their most holy of orthodoxies on the other, and the winner was … orthodoxy by a country mile. Those who most depend upon economic recovery – the eviscerated white working class – were and continue to be sold a mix of social conservatism and a passel of lies to the effect that the economic mess is all the fault of President Obama. Amazingly, they largely buy it despite how much against their economic interest it happens to be. These issues will be discussed in considerably greater depth in later chapters.

9. They virtually eliminated federal oversight over markets, a mistake that led directly to, inter alia, the Enron debacle, apparent insider trading and, later, the failure of the SEC to see the Madoff fraud being perpetrated under their very nose despite that fraud having been repeatedly pointed out to them.

Soon after Bush 43 was elected president, Senator Gramm helped to pass legislation that both deregulated derivatives trading in general, and specifically exempted energy trading from all regulatory oversight. This latter provision was lobbied for by Enron, a major campaign contributor to Sen. Gramm and on whose Board sat Senator Gramm’s wife, Mrs. Gramm having been paid more than $1.0 million before the exemption was passed.

The Enron debacle that followed was made possible only by the regulatory exemption made possible by the well-compensated Gramm household. Sen. Gramm and his fellow Republicans crafted a self-destruct button for Enron, and Enron pushed it for, literally, all it was worth: by late 2001, some $11 billion in Enron shareholder value was worth nothing. Was Gramm acting all the while in what he truly believed to be the best interests of the nation, or was he acting in the best interests of himself and his wealthy patrons? If the former – given the outcome – Gramm is a fool, if the latter, he is most certainly a knave.

A much relaxed Securities & Exchange Commission (S.E.C.) under Bush the Younger either ignored or just never saw the signs of insider trading by hedge fund and mutual fund managers who profited by using information passed on to them by bankers, business executives and lawyers. By the end of George W. Bush’s first term as president, the S.E.C. had reduced its enforcement staff by almost 150 and its risk management group was reduced to one. Bush’s team always maintained that the financial sector was over-regulated and over-watched, preferring to let the market seek its own level.

Fortunately for the nation, Bush’s laissez-faire attitude went out along with his administration and the Obama administration’s S.E.C. and Justice Department soon began their own investigations. In March 2013, SAC Capital (a hedge fund) settled civil charges of insider trading on the part of certain