Taxing, Spending, Printing and Borrowing v. Debt Reduction: Ideology in Play

As we watch, we are seeing the campaign season heat up for the next Presidential election cycle. Interestingly, we are hearing the GOP party machinery attempt to model their campaign along the "winning" strategy of Senator McCain's failed '08 bid, which tells us to ignore social issues and focus on the economy. Meanwhile the Democrats tell us that we've recovered and Mr. Obama's policies have been a great success; 9% unemployment and a housing market worse than the Great Depression are bumps in the road.

Both parties are tap-dancing around the fact that elections are actually all about the social issues. Economic policies are formulated along ideological lines.

Take a look at Tim Geithner's testimony to the House Small Business Committee, for example. Geithner testified that the taxes on small business must go up to ensure funding government programs at the current level. Geithner's ideology makes it unthinkable that government could conceivably be smaller.

Then there's Ben Bernanke's statements indicating that the Federal Reserve Bank doesn't have a "precise read" on the nation's current economic situation. Their economic theory confidently predicted , and their ideology let them to believe, that the economy simply could not fail to recover under the impetus of the Obama Stimulus. The Fed, believing in the borrow-and-spend theory, engaged in a massive "Quantitative Easing"which poured massive amounts of cash into banks. Most of that money seems to have gone into boosting the stock market, and little into the hands of the middle and lower economic classes. Strangely enough, since most of the new money went into the hands of the well-to-do, the Fed has seen the new money produce little in the way of economic recovery. So they are puzzled.

The debt ceiling negotiations are stalled right now, and it's about ideology. The Democrats have already floated the idea of raising taxes and passing another, perhaps even larger, Stimulus package, because their ideology drives massive government based on taxing, spending, printing, and borrowing massive amounts of money. Meanwhile the Republicans are proposing a reduction in government programs and spending to control the ballooning debt, which their social theory calls for limited government and little, or eventually no, debt.

It is all about ideology and social theory. The Democrats tell us that the economy has already recovered, and push their social agenda. The moderates in the GOP need to realize that both parties claim their ideology will "help the economy." Moderates in the GOP need to get on board and push the conservative social agenda, using the failed Stimulus and other failed Democrat policies to show that the Democrat social agenda has failed. Talking about the economy without providing a plan to fix it will not win elections.