A political quip from the early 1900s proclaims: "What this country needs is a really good 5-cent cigar." Today, one might declare: "What this country needs is a really good Republican Party."
For nearly a century, the Republican Party controlled both the presidency and the U.S. Congress in only two periods: 1921 to 1933 and 2001 to 2006. In both periods, the GOP, guided by its trickle-down theory, led the nation into economic disaster: the Great Depression of the '30s and the Great Recession this past decade. In our better moments, however, Republicans and Democrats have united to create a vibrant middle class -- the cornerstone of America's high-powered economy.
Facing America's greatest economic breakdown, Democrats and progressive Republicans led by President Franklin D. Roosevelt (1933-45) created a new economic order -- neither laissez-faire capitalism nor socialism but a "managed capitalism" emphasizing government intervention to restore our broken economy. In the evolution of the New Deal, Republican presidents played a major role: Teddy Roosevelt (1901-09) planted the seeds for FDR's program, while Presidents Dwight Eisenhower (1953-61) and Richard Nixon (1969-74) expanded the New Deal legacy.
Indeed, it was an obscure Republican businessman, Marriner Eccles, who shaped much of the New Deal. Sired by an illiterate Mormon father with two wives and 21 children, Eccles would climb the ladder to become a multimillionaire tycoon when the stock market crashed. Despite his enormous wealth, Eccles blamed the massive meltdown on the concentration of the country's wealth in the richest people siphoning away the purchasing power of most other citizens.
Mass production requires mass consumption, he insisted, which, in turn requires government policies to pump up the purchasing power of the masses, at the cost of going deep into debt during depressions. Despite Roosevelt's fondness for balanced budgets, he put this Republican upstart in charge of the Federal Reserve Board, enabling Eccles to promote many policies adopted by FDR's New Deal: public works putting millions back to work, unemployment benefits, old-age pensions, minimum wages, higher taxes for the wealthy, etc.
Undoubtedly, Eccles was influenced by Henry Ford. After installing his high-powered assembly line in 1913, Ford introduced the $5 eight-hour day, doubling his workers' wages; slashed costs for his Model T, enabling his employees and middle-class workers to buy the cars; and created millions of jobs in his factories and related industries. For New Dealers, Ford had provided a convincing model endorsing Eccles' principle -- mass production demands mass consumption.
With the New Deal, followed by World War II and postwar GI benefits, American leaders catapulted the nation from the Great Depression to the postwar Great Prosperity. After witnessing government's capacity to deal with recessions, endemic in capitalist economies, many political and business elites enlarged the new social order to share the American Dream with all Americans (blacks, students, the poor, the jobless, the elderly, the sick) creating a broad, prosperous middle class -- the engine driving our high-powered economy. Despite taxes, our buoyant economy elevated most people, even those at the top.
"This is how elites once behaved," said George Packer, staff writer for the New Yorker.
But by the late 1970s, the dream was evaporating under the impact of economic forces and government policies, driven by a new brand of conservative elites, hell-bent on dismantling the New Deal establishment, and relying primarily on the GOP to carry out their mission. It started in 1981 with President Ronald Reagan, whose administration touted its "supply-side economics" based on efficiency and lower costs. But "efficiency" wedded to the trickle-down principle meant producing more goods with fewer workers, moving our industries to Third World, low-wage countries, and reaping huge profits for those at the top while depressing wages for many below.
Meanwhile, the administration slashed taxes in favor of the rich, shortchanged social programs supporting middle and lower classes and increased the military budgets. In 1985, Reagan endorsed the organization, Americans for Tax Reform, led by Grover Norquist -- "the billionaires' best friend [who] hijacked the GOP on behalf of the rich," as Rolling Stone's Tim Dickinson put it. Loaded with millions of dollars poured into his coffers from powerful corporations to influence elections, Norquist persuaded politicians to take his Taxpayers' Protection Pledge to never increase taxes. Today, the Republican presidential candidates and most of the party's members of Congress have taken the pledge.
By the 1990s, Republican leaders had abandoned their party's traditional role as guardians of fiscal responsibility, poised to pounce on the "tax-and-spend" Democrats while the country was sinking deep into the red. With the national debt spiraling out of control, Presidents Reagan, George H.W. Bush and Bill Clinton increased taxes to staunch the bleeding. Unfortunately, President George W. Bush relapsed into the tax-cutting habit, plunged the country into two bankrupting wars, doubled the debt to nearly $10 trillion and left office with the greatest recession since the Great Depression.
When President Obama was inaugurated in 2009, he was sailing into a perfect storm: millions of people losing their jobs and homes; our industries fleeing to foreign countries; two wars and a military-industrial complex draining our fragile economy; a soaring debt financed heavily by foreign creditors; and a Republican leadership adamantly opposed to increasing taxes to pay our bills.
Moreover, the Senate's Republican minority, armed with the filibuster, unleashed a cascade of roadblocks hindering Obama's strategies to stimulate the economy. But now, the battlefield is shifting from Congress to Campaign 2012, where both parties, with plenty of garbage, must make their case to the voters.
Republicans, I submit, have the toughest job to sell their anti-government, anti-tax policies, even to many prominent Republicans.
David Stockman, Reagan's budget adviser, minced no words in November 2011 when he blistered GOP leaders, saying the "party has totally abdicated its job in our democracy, which is to act as the guardian of fiscal discipline and responsibility." Referring to the Norquist pledge, Paul O'Neil, former Treasury secretary for Bush 43, blamed Republicans for damaging America "because they were slaves to an idiot's idea of how the world works." Sounding a similar note, former Republican Alan Simpson denounced his former colleagues for kowtowing to Norquist. "If re-election means more to you than your country," he scolded, "then you shouldn't be in the legislature."
Despite decades of anti-government rhetoric, the New Deal legacy remains deeply ingrained in the American people, even Republicans. In recent surveys, pollsters discovered that Republican majorities are at odds with their party leaders on several issues: e.g. support for Social Security, Medicare, Medicaid, increasing taxes for the rich, funding public works, extending Obama's benefits for the long-term unemployed. When it comes to cutting the budget, "defense is consistently the most popular program to cut" according to a Public Works survey.
And what about those "greedy" rich people, shielded by the GOP? After multibillionaire Warren Buffett declared that his upper class should pay "a lot more in taxes," the Spectrum Group asked millionaires if they supported the Buffett Rule to improve the economy -- 68 percent did.
For more than a century, Americans have tried to strike a balance between private enterprise and government intervention. That's why we need a genuine conservative party asserting the importance of moneyed investors and personal responsibility, a counter to government waste and red tape strangling entrepreneurial genius, a check to liberal excess; and a progressive party to check powerful corporations driven by profit often at the expense of the common good, and to create the conditions needed for capitalist enterprise.
When Eisenhower was elected to the presidency in 1952 -- the first Republican president in 20 years -- he tried to "modernize" his party by persuading his "right wing to accept the New Deal reforms," according to historian Stephen Ambrose. Indeed, this Republican New Dealer collaborated with his Democratic Congress to launch the largest public works program in history, the Interstate Highway System, reducing transportation costs, boosting the entire economy and creating millions of jobs from cement makers to countryside motels.
True to his party's core principle, Eisenhower was a stickler for balanced budgets, even if it meant cutting military spending. Endowed with his credentials as World War II's top military commander, he warned of the danger posed by our military-industrial complex: "Every gun that is made, every warship launched, is a theft from those who hunger and are not fed, spending the sweat of workers, the genius of its scientists, the hopes of its children."
Is Ike's administration a model for a rejuvenated Republican Party today? Indeed, is he not a beacon for all Americans in our struggle toward a just and thriving economy?
Edward Cuddy is a history professor emeritus at Daemen College.