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If Republicans want to run the government like a business, why do they keep "selling" below "cost"?

If Republicans want to run the government like a business, why do they keep "selling" below "cost"?
Jack Hughes
July 22, 2012

Republicans often say that government should be run like a business. If we use that business analogy, let us consider that the government's "products" are the services it provides: defense, Social Security, Medicare, law enforcement, food and transportation safety, environmental protection, medical and scientific research, etc. The "price" government charges for these "products" is the taxes it collects.

Using the business analogy, let's say the business of America was humming along nicely in 2000 -- "turning a profit," i.e., running a surplus. But the Republican economic philosophy is that "customers like low prices therefore cutting prices is good," and after the inauguration of President George W. Bush, Republicans lowered the price for government products -- by cutting taxes -- at an arbitrarily low rate below "operating costs." Imagine how this approach would affect a business in the real world. Bankruptcy would result -- and quickly.

Republicans understood that the resulting deficits were unsustainable. The costs for the products exceeded the prices they were charging to deliver them to consumers. But after arbitrarily cutting the price and recognizing that they were now generating deficits, these Republican "businessmen" reached an odd conclusion. They convinced themselves that since "cutting prices is good" then the only other explanation for their red ink must be higher operating costs -- they were spending too much.

Remember, first they were making a profit, then they cut the prices, then they started losing money, and then blamed operating costs for their problem. The possibility that the lower revenues from the reduced prices never occurred to them. Our Republican "businessmen" then reached the conclusion after careful, sober, consideration that, even after laying-off millions of workers to cut costs, they were still spending too much. So, unfortunately, they must eliminate the product lines and go out of business -- even though the products were selling like hotcakes. In a real business these would be considered either grossly incompetent or suspiciously dishonest businessmen.

Our Republican "businessmen" are so fixated on the concept of "cutting prices" that they would rather go out of business than raise their prices. Somehow, they convinced themselves that the price could be whatever the customer wanted to pay, not what they needed to pay to keep the company in business.

No business could survive if the price it charged for its products was lower than the cost to produce them. Yet since the Reagan years (with the exception of the Clinton administration and despite unanimous congressional Republican opposition) that has been the official economic policy of the US government -- resulting in an enormous national debt.

Faced with this $14 trillion dollar national debt -- generated by irresponsible "low prices" Republican tax cuts -- the Republican solution is to cut or eliminate vital and popular "products" like Social Security, Medicare and Medicaid. They have been aided in this scheme by an incoherent and feckless Democratic Party and a news media owned by the same plutocratic interests that control the Republican Party.

While there are always some products offered by the US government that are of questionable value, most of the big-ticket items are of obvious public utility, meet a vital societal need and enjoy strong "consumer demand" by citizens.

The Republican opposition to Big Government programs like Social Security and Medicare is not due the national debt. The national debt is due to the Republicans' opposition to these programs since they can only be financed by a system of progressive taxation -- which is the real Republican target.

Republicans know they could never attack popular programs like Social Security and Medicare directly -- it would be political suicide. So for a generation Republicans have utilized a strategy known as "starving the beast," which means depriving the government of revenue through tax cuts.

Scams like the so-called Ryan Plan, which destroys Medicare and will cut, if not eliminate, already stingy Social Security benefits are just the inevitable endgame of the "starve the beast" strategy. After decades of deliberately engineered budget deficits through insufficient taxation, Republicans now point to vital programs like Social Security and Medicare and say "Unfortunately, we just can't afford it."

But what is never mentioned in this debate about costs and spending and the debt is that we could afford it, if we just raised taxes -- especially on wealth.

We started in 2000 with annual surpluses with the Clinton tax rates, then enacted the Bush tax cuts, immediately started racking-up huge deficits, and the Republicans now try to convince us the problem is one of "over spending." Republicans could apply that economic theory to unemployment and reassure the jobless that they are just "over-spending."

The manufactured confusion over the cause of the federal deficit would be more credible if the entirely predictable result had not been foreseen as early as the 2000 presidential debates, when Al Gore rightly criticized George W. Bush's irresponsible tax-cut scheme when he first proposed it.

Why would Americans fall for such a scam? How could such an assault on middle-class interests and prosperity be so brazenly and openly perpetrated? Surely Americans are not fools or amnesiacs and remember why these government programs were necessary in the first place. Will middle-class America passively acquiesce as their country is looted in order to further enrich the already wealthy?

Unfortunately, Republicans do run government like a business in that they sell this steaming turd like modern American corporations do -- with slick propaganda and deceptive advertising on TV. Just as they lie that deficits are caused by "over-spending" instead of "tax cuts," Republicans now utilize rigid message discipline and clever distortion -- mixed with shameless lies -- more resembling a psychological warfare operation than traditional political campaigns.

Like our hypothetical Republican "businessmen," Republicans in Congress and in state governments they control have embarked on a radical program of governmental disestablishment through tax cuts and the resulting de-funding of necessary government functions. State governments across the country are staging "going out of business" sales and liquidating state assets to private corporations at bargain prices.

When democratically elected, accountable governmental power is disestablished, unaccountable corporate power will fill the void. That's what Republican blather about "tax cuts" really means.
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