Republican's Have Become Keynesians

Richard Nixon famously said "We are all Keynesian's now". He made that comment in reference to his plans to stimulate the economy prior to elections. The GOP attitude towards Keynesian ideas changed when Obama took office and proposed a stimulus plan to deal with the recession. They argued that the private economy would grow its way out of recession without increasing government spending. Moreover, they argued that rising deficits would cause business to lose confidence in the future. Business investment would stall and jobs would be lost. Deficit reduction, produced by cuts in government spending, was proclaimed as the best way to end the recession and create jobs. Keynes was declared dead by the GOP in favor of the living dead, or zombie ideas that refuse to die.

Today, we are witnessing a revival of Keynesian economics in the GOP. They are now arguing that cuts in government spending will lead to a loss of thousands of jobs. Government spending is now a critical component of employment in the economy. What caused this dramatic transformation in the GOP? It turns out that the GOP takes a Keynesian position on government spending and employment when there is a threat to a cut in military spending. They are opposing cuts in the military budget by claiming that it will lead to the loss of jobs. This is an amazing display of cognitive flexibility and illogic that will endear the GOP to its base. The message is that cutting government spending on things like education, and reducing the numbers of teachers, will reduce budget deficits and produce jobs. On the other hand, cutting government spending on the military, which would reduce budget deficits, is bad for the economy and it will increase unemployment. Keynesian economics is only viable in a military state. It will play well in South Carolina and other southern states that depend upon military spending.