With two surprise winners emerging from last week’s Iowa caucuses, the race for the nomination in each party has become closer and more difficult to predict. On the Democratic side, the candidates are battling with issues of change, experience, charisma and electability. As muddled as that situation appears, things are even more difficult on the other side.

The Republican Party in 2008 is going through an identity crisis. While the polled supporters of President Bush have disappeared faster than Waldo at a candy stripers convention, candidates for his job are playing a game of tug of war over many of Bush’s major positions.

The war in Iraq, tax rates, recession and social and religious concerns are the issues largely dominating the Republican political landscape. If you agree with the current administration’s position on any of those three issues, there is a candidate for you in this year’s primary. But you simply aren’t going to find all the issues addressed in one person.

The traditional values of the Republican Party include several social, economic and foreign policy stances. Many Republican voters traditionally align themselves with the Christian Right and make many decisions politically and personally from the chapters and verses of the Bible.

Long ago, the Republican Party became the unofficial voice of evangelical Christians. All four of the leading candidates on the Republican side are Christians who believe in many socially conservative measures. Only Rudy Giuliani has dared to be different with his relaxed views on abortion and gay marriage. While Giuliani may have ventured to be different than his opponents, he has not yet distanced himself from the base values of the Republican Party, the party of the Bible.

Economically, however, Republicans have distanced themselves from many of the Bible’s teachings. Only one candidate has married the teachings of the Bible with his economic political positions. This one candidate is quickly becoming a strong contender for the nomination, and may also be pulling the wool over the eyes of his voting base.

Former Arkansas Gov. Mike Huckabee, last week’s winner in Iowa, shapes almost all of his opinions and views from his religious beliefs. The former Baptist minister caters to the more extreme and evangelical side of the Christian Right and has become its “savior” in this election. Unlike his Republican opponents, Huckabee does not differentiate between religion and party politics when it comes to issues.

If it is a wholly conservative and Republican position to lower taxes and limit the government’s power in the economy, Huckabee believes the Christian opinion should be the opposite.

“Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me.”
— Matthew 25:40

This is a Biblical quote that Huckabee has often used as a way to explain his positions. Traditionally, Republican politicians have found a way to keep their religious and social beliefs separate from their economic stances. Huckabee has found a way to mix the two together, giving a very liberal and traditionally Democratic economic message wrapped in his right-leaning religious doctrine.

Perhaps this is the across-the-aisle uniter we’ve been looking for since the nation as divided as ever during the 2004 and 2006 elections. Perhaps Huckabee can uniquely appeal to the ideologies of both parties without truly alienating either one.

Most likely not.

Many financial analysts view Huckabee’s attitudes toward Wall Street and the corporate world as frightening and potentially dangerous. His record also indicates that he is not a proponent of free trade, and he has also supported a raise in the minimum wage. These are normally ideas that contradict with many Republicans.’

Most of Huckabee’s economic views are shared by his colleagues on the left. Yet if Huckabee were running as a Democrat, his religious views would likely keep him out of any serious consideration. So which has become more important to the country?

A nomination of Huckabee would cast economic concerns to the back burner and spotlight only the religious and social differences between the two parties. The Republican Party would be solely the party of the Christian Right. The party that Thomas Jefferson helped start — the party of limited government and fiscal responsibility — would now be the party of Jerry Falwell and Pat Robertson.

For all the religious conservatism of the Bush administration, it lived up to many of the doctrines of the Republican Party economically and internationally. One of the few criticisms Bush receives from the members of his party is that he has been too liberal when it comes to his spending. As far as socially liberal members of the left are concerned, Mike Huckabee would bring to office all of the worst parts of George Bush, while still not completely satisfying their left-leaning economic views.

For religious conservatives, ask yourselves what is more likely: Will Huckabee be able to live up to his promises of overturning Roe v. Wade and passing a constitutional amendment to ban gay marriage, or will he find both issues to be far too difficult while dealing with what is likely to remain a Democrat-controlled Congress?

Voters in Iowa have already made their voices heard, and if New Hampshire echoes their sentiments, the fiscal conservatives may find their voices silenced completely in the coming national election. Candidates like John McCain, Mitt Romney and Giuliani will find their campaigns in peril if Huckabee can carry New Hampshire. Yet the harm done to their individual campaigns could pale in comparison to the harm done to our economy over the next four years.

In an election year when we could easily be seeing a recession and weakening of our stock market and currency, a left-leaning, anti-Wall Street candidate like Huckabee will likely make matters worse.

The Republican Party is searching for its identity, and voters will have to decide between attainable political goals and unrealistic ideological changes. Which will it be, New Hampshire — fiscal responsibility with a limited reach of the federal government or a faith-based approach to all things political? The decision will be made today, and the future of an entire party may be on the line.

Until next time,
Jamie Ellis
January 8, 2008

Greg’s Endnote: If guys like Huckabee get their way, we may be in for an economic slowdown. Voters around the country will be deciding our fate within the next few weeks. If the country enters into another stagnant period, you’ll have to be pretty crafty to see any growth from your investments. Luckily, there are still stocks that you can feel comfortable betting on, even when times get tough.

What Mike Huckabee Means to the Economy was originally featured on Whiskey and Gunpowder

In February 2000, the last year of the Clinton administration, Greenspan appeared before the Senate Banking Committee. He recommended the government use the federal budget surplus to pay down the national debt. The chairman amplified: “The growth potential of our economy under current circumstances is best served by allowing the unified budget surpluses…to materialize, thereby reduce Treasury debt held by the public.” Meaning: We should direct budget surplus dollars to reduce the federal debt. (This is accomplished by government-initiated purchases of U.S. Treasury securities.) The salient circumstance was that Clinton was not proposing a tax cut.

One year later, Greenspan worked for new management — the Bush administration. President Bush wanted a tax cut to kick off his tenure. Greenspan marketed the tax cut as fiscally responsible, given recent surpluses. His advice was rendered on Jan. 25, 2001, to the U.S. Senate Committee on the Budget. The Wall Street Journal reported the next day: “Giving a big boost to President Bush, Chairman Alan Greenspan reversed his long-held view and said he now sees room for significant tax cuts in the federal government’s financial future…. [O]ver the coming decade, the latest budget surplus numbers show not only room for reductions, but even a need.” The New York Times on the same day: “Alan Greenspan, the Federal Reserve chairman, gave his blessing today to a substantial tax cut…. In a clear shift from his previous position that reducing the national debt should be the focus of fiscal policy, Mr. Greenspan said improvements in the economy’s long-term potential and the swelling surplus projections had ‘reshaped the choices and opportunities before us.’”

In his testimony, Greenspan expressed concern “that continuing to run surpluses beyond the point at which we reach zero or near-zero federal debt brings to center stage the critical longer-term fiscal policy issue of whether the federal government should accumulate large quantities of private (more technically nonfederal) assets.” Of the 10,000 most likely problems the government should consider, this was not one of them. Over $5 trillion in the hole, the possibility of eliminating the federal debt ranked behind that of Venus crashing into Mars. (In January 2001, the Congressional Budget Office had projected the federal budget surplus would reduce the government debt by $5.6 trillion over the next 10 years. This gem of infinite interpolation gave Greenspan the cover he needed. In 2002, the CBO reduced its surplus estimate by $5.3 billion.)

Whether his audience scratched their heads at Greenspan’s flight of fancy, another statement should have awakened their curiosity. Greenspan prefaced his tale of woeful surpluses by discussing “recent projections… [which] make clear that the highly desirable goal of paying off the federal debt is in reach before the end of the decade. This is in marked contrast to the perspective of a year ago, when the elimination of the debt did not appear likely until the next decade.” The Nasdaq had fallen 43% from its March 10, 2000, peak. Tax revenue had risen from 12.5% of personal income to 15.4% during the boom years. In 2000, this 2.5% increase equaled $237 billion — precisely the same as the total 2000 budget surplus. It suited Greenspan’s purposes to express mystification during testimony: “We still do not have a full understanding of the exceptional strength in individual income tax receipts during the latter 1990s.”

Greenspan could not have been blind to the source of the budget surpluses: capital gains, exercised stock options, and bonuses. These tributaries had dried up. Without these flows, his fear of paying down the national debt, or even running a balanced budget, made no sense. And while Alan Greenspan could claim that paying down the debt was a bad thing, it is a tribute to the man that his audience accepted such a silly pretense approvingly.

The Greenspan campaign for renomination in 2004 kicked off its media blitz on Feb. 11, 2003. The Boston Globe reported that Greenspan viewed Bush’s (new) tax cut plan with a chilly reception: “Greenspan… used the opportunity to admonish the federal government for losing its ‘fiscal discipline.’” In the chairman’s words, a “return to fiscal discipline should be instituted without delay.” That was the stick; on Feb. 12, Greenspan offered Bush the carrot. The Wall Street Journal reported: “Federal Reserve Chairman Alan Greenspan muted his initially chilly reception of President Bush’s tax cut plan, offering more praise for eliminating taxes on dividends and playing down the near-term consequences for the federal deficit.” (Emphasis added.) President Bush announced that he would reappoint Greenspan for a fifth term on Feb. 22.

On April 30, mission accomplished and Bush now bound by the reconfirmation, the chairman slithered back: “Alan Greenspan…told Congress today that the economy was poised to grow without further large tax cuts, and that budget deficits resulting from lower taxes without offsetting reductions in spending could be damaging to the economy. Opponents of the large tax cut favored by President Bush took Mr. Greenspan’s testimony as support of their position.” (Emphasis added.) The dissembling was obvious; yet no one questioned Greenspan’s motives.

On April 21, 2005, the chairman’s bewildering tax and federal budget advice came full circle. At a Senate Budget Committee meeting, Democratic Sen. Paul Sarbanes of Maryland pursued a ragged thread in the Greenspan tapestry. The senator contended that Greenspan’s endorsement of the president’s 2001 tax cut was the “green light” that George Bush needed. Greenspan replied that he had not “specifically” endorsed the tax cut plan. The chairman claimed: “You will not find anywhere in the public record that I supported the [2001] tax cut.”

Reading the Jan. 25, 2001 speech today (available for anyone to judge on the Federal Reserve Board of Governors Web site), his support is obvious. He was rooting for a tax cut.

This civil servant had made false assertions to the people’s elected representatives before. When a vote to balance the budget loomed early in Clinton’s presidency, Greenspan said a Fed study showed a balanced budget would reduce interest rates. The Fed had conducted no such study. Greenspan testified to Congress in 1993 that tapes of Federal Open Market Committee meetings were destroyed after summaries were written. Thus, no transcripts existed. He later admitted to Banking Committee Chairman Henry Gonzales that he had known for years transcripts were kept, but only remembered when a “senior staff member jogged my memory in the last few days.”

Back to Sarbanes, Greenspan deflected the criticism with a tried-and-true tactic: flattery. Greenspan revealed “an alternative program of tax cuts and spending increases then proposed by the Democratic Party’s leadership would have achieved the same desired reduction in surpluses.” Now we have it. He had not specifically endorsed the Bush tax cut. Yet he also told Sarbanes that he, “like many economists,” had been wrong about the surpluses he warned of in 2001. So why was he endorsing the Democrat’s program if he had been wrong about the motivation for promoting a tax cut? We will never know. Greenspan had triumphed once again using another tried-and-true tactic: confusion.

In The Age of Turbulence, Greenspan praises Bill Clinton and criticizes George Bush. This has been good publicity for his book, but misdirected. He is not turning his back on the Republican Party; Greenspan’s only allegiance is, as it has always been, to himself.

Regards,
Fred Sheehan

October 5, 2007

Greenspan Was Never a Republican — He Was an Opportunist was originally featured on Whiskey and Gunpowder