John Taylor Says It Was Obama's Fault that the Tea Party Forced Republican Legislators into the Debt-Ceiling and Shutdown Debacles...
After reading Suzanne Somers on ObamaCare in the Wall Street Journal, Anil Dash writes:
Next the WSJ will run a denial of income inequality penned by the General Lee from Dukes of Hazzard. (The car will get its math wrong.)
I am afraid all I can offer him today is John Taylor, whose thesis really is: Blame Barack Obama for the shutdown and debt-ceiling debacles of October:
It is a common view that the shutdown, the debt-limit debacle and the repeated failure to enact entitlement and pro-growth tax reform reflect increased political polarization. I believe this gets the causality backward..... [It's the Obama] economic policy changes... growing out of the 2008 financial crisis...
These debacles were, in John Taylor's mind, really not the fault of the Tea Party, the House Republican "grownups" who decided to bless the Tea Party, or the Senate Republican "grownups" who decided not to tell their fellow party members to sit down and behave like grownups.
Besides, John Taylor says, noticing that the Tea Party exists is rude:
Claiming that one political party has been hijacked by extremists... prevents a serious discussion of the fundamental changes in economic policies in recent years, and their effects...
John Taylor: Americans worried about sluggish growth and high unemployment are not extremists:
It is a common view that the shutdown, the debt-limit debacle and the repeated failure to enact entitlement and pro-growth tax reform reflect increased political polarization. I believe this gets the causality backward..... [It's the Obama] economic policy changes... growing out of the 2008 financial crisis.
The crisis did not reflect some inherent defect of the market system that needed to be corrected, as many Americans have been led to believe. Rather it grew out of... the Federal Reserve['s holding] interest rates excessively low compared with the monetary policy strategy of the 1980s and '90s.... Meanwhile, regulators who were supposed to supervise... Fannie Mae... and Freddie Mac... allowed large deviations from existing safety and soundness rules.... After the housing bubble burst the value of mortgage-backed securities plummeted, putting the solvency of the many banks and other financial institutions at risk. The government stepped in, but its ad hoc bailout policy was on balance destabilizing....
The... Troubled Asset Relief Program... significantly worsened the crisis by creating even more uncertainty.... The Fed continued to intervene... growing worry about the Fed's ability to reduce its asset purchases.... The 2009 fiscal stimulus package... cash for clunkers... subsidies for first-time home buyers... have not led to a sustained recovery.... Actions taken during the immediate crisis... added to uncertainty.... Dodd-Frank... called for hundreds of new rules and regulations... it remains unclear how large complex financial institutions operating in many different countries will be "resolved" in a crisis.... The mandates at the core of the Affordable Care Act represent an unprecedented degree of control by the federal government of the activities of businesses and individuals, adversely affecting incentives to hire and work and eventually worsening the federal-budget outlook. Federal debt... increased to 73% of GDP this year from 41% in 2008—and according to the Congressional Budget Office, it will rise to more than 250% without a change in policy....
Many both inside and outside the government quite reasonably seek to return to the kinds of policies that worked well in the not-so-distant past. Claiming that one political party has been hijacked by extremists misses this key point, and prevents a serious discussion of the fundamental changes in economic policies in recent years, and their effects.
