Wednesday evening’s dysfunctional Republican primary debate on the economy failed to give any further clarity as to who the party’s nominee will be in next year’s contentious presidential election. The 10 highest polling GOP candidates fought for every second of airtime in the truncated two-hour debate in a bid to prove their strength and economic prowess to voters.
Unfortunately, what voters got was a mish-mash of regressive and fantastical tax schemes mixed with heavy doses of populist rhetoric, which made some of the candidates sound less like Ronald Reagan and more like Elizabeth Warren.
For many of the candidates, last night was probably their last chance to address a national audience. Four of the 14 remaining Republican candidates weren’t even allowed on the main stage and were forced to take part in a debate earlier in the day, which few watched. Of the 10 candidates who managed to secure a place on the main stage last night, eight had poll numbers in the single digits, meaning many of them could find themselves on the campaign-killing second-string debate next time around.
Several candidates chose to lash out in bombastic tirades in a desperate attempt to get noticed by any means possible. Some were more effective at this than others. Ohio Gov. John Kasich focused his feigned outrage toward the frontrunners, saying their regressive “flat” tax plans were a “fantasy,” while begging voters not to be fooled by false prophets. “Folks, we’ve got to wake up,” Kasich pleaded. “We cannot elect somebody that doesn’t know how to do the job. You have got to pick somebody who has experience, somebody that has the know-how, the discipline.”
Unfortunately, Kasich, who headed the powerful House Budget Committee in the 1990s, was ruthlessly shredded by the GOP frontrunner, Donald Trump, who shamelessly dismissed the governor’s success in balancing Ohio’s state budget as “lucky,” attributing the state’s budget surplus mostly to a windfall in revenue received from a tax on energy producers and not to Kasich’s experience and hard work.
While fracking revenue has helped to pad Ohio’s budget over the years, it was hardly the sole reason for the governor’s success in taking the state from a deficit to surplus. Indeed, Kasich’s attempt to raise taxes on oil and gas companies was rejected this summer by the Republican-controlled state legislature. The money would have gone to help pay for an income tax cut, which Kasich believed would help stimulate the state’s economy.
But that wasn’t the worst part of the Kasich-Trump exchange. No, Trump then accused Kasich of being on the board of Lehman Brothers during the financial crisis, “when it went down the tubes and almost took every one of us with it,” the billionaire sneered.
Kasich was never on the board of Lehman Brothers. He was a banker in a satellite office in Ohio and had no input into the goings on at the bank’s headquarters in New York. Indeed, given Kasich’s conservative record, it is doubtful that if he were on the board he would have let the company lever up as much as it did.
But the points were scored, facts be damned. Kasich is just another fat cat Wall Streeter who nearly destroyed the financial system. “Kasich” closed.
While Lehman’s collapse did help light the spark that sent the financial crisis into overdrive, it is unfair to say that the bank, “started it all.” There were a slew of factors that led to the 2008 financial crisis and, while Lehman and Wall Street certainly played a big role, neither were solely to blame.
Kasich and Trump’s spat set the tone for the night: Wall Street and the big banks were evil, the Federal Reserve needs to be reined in, and our financial markets were somehow “rigged” to help the rich and wealthy.
Was this the Republican debate? Such populist rhetoric was once reserved solely to the far end of the left wing, but somehow made its way into the GOP debate.
Former HP CEO Carly Fiorina, who won the most talking time during the debate, was probably the most vocal on this topic, noting: “Why are there five even bigger Wall Street banks now, instead of the 10 we used to have on Wall Street? Because when government gets big and powerful, the big feel like they need to get even bigger to deal with all that power, and meanwhile, the small and the powerless—in this case, 1,590 community banks—go out of business.”
She goes on…
“Big government favors the big, the powerful, the wealthy and the well-connected, and crushes the small and the powerless.”
So what exactly does Fiorina propose to do about all of this injustice? She didn’t really say and, unfortunately, the moderators didn’t probe further as she went over her allotted time. But it sounds like she is in favor of “breaking up” the big banks, a policy championed by Sen. Bernie Sanders of Vermont. Indeed, Fiorina’s distrust of Wall Street and her antagonistic views seemed as if it was ripped out of a speech that Elizabeth Warren, the firebrand liberal senator from Massachusetts, might give to stoke her base.
But Fiorina wasn’t the only candidate on stage shooting off populist rhetoric in a bid to get more attention. Sen. Ted Cruz of Texas said he is in favor of “auditing” the Federal Reserve, stealing a page right out of the Paul Family’s Populist Playbook—as in the family of former Rep Ron Paul of Texas and his son Sen. Rand Paul of Kentucky. Ron Paul tried for years to get the Fed to open its books. He even wrote a book called End the Fed in which he called for the central bank to be disbanded and for the U.S. to return to the hopelessly antiquated gold standard, in which the monetary supply is essentially fixed. Rand Paul, who was standing next to Cruz in the debate, echoed his support for his father’s policy, noting that he introduced a bill to audit the Fed back in 2011.
Messing around with the Fed is not a conservative ideal; it is a radical and populist one. The central bank was intentionally set up to be independent of congressional review to prevent the government from unduly influencing its monetary policy decisions. Cracking open the Fed would be like opening a financial Pandora’s Box as it would compromise the agency’s independence in the minds of investors. Demand for U.S. government debt would almost certainly fall, which could have potentially apocalyptic financial consequences, not just for the U.S. but for the world economy.
But it isn’t just the candidates on the far right who support government intervention into the economy. Governor Jeb Bush of Florida said last night that “our monetary policy” must be radically changed. He didn’t explain exactly how he would do that, as decisions regarding monetary policy are exclusively reserved to the Fed. If he wanted to change monetary policy, he would have to mess with the independence of the Fed in some way, which would be as bad, if not worse, than what his radical opponents support.
Populism has infected the Republican primaries and is now threatening to kill it. While some of this rhetoric plays well to the more conservative members of the party, it runs the risk of alienating and confusing the rest of the rank and file. This is why there is no clear Republican nominee this far into the primary season. If the Republicans don’t get their act together, they might as well pack up and hand the keys over to Hillary Clinton.