by Ali Meyer | Republicans must make good on their promises of reduced spending.
Republicans have strayed far from their traditional roots of fiscal conservatism. Once hailed as the party of fiscal responsibility, the conservative movement has betrayed its history of forward thinking and trust in the market in order to grant instant gratification to a few irresponsible citizens, which can only bode poorly for the future of this country. This trend towards fiscal irresponsibility has been exemplified most recently by the bailout, the proposed legislation surrounding it, and the ominous opinions held by “conservative” leaders about the free market.
The mantra of “less government” has kept Republicans in power in various positions for decades, simply because it appeals to people. Less taxes and less spending, letting the market choose prices, and valuing property rights are all tenets of free market economics that many citizens agree with. Naturally, these are enhanced by capitalism’s ability to support economic growth and to find good solutions to looming problems, to augment the standard of living, and as Milton Friedman would have argued, to promote political freedom.
Unfortunately, prominent Republicans, who ostensibly support free markets, have recently acted and voiced opinions contrary to their purported beliefs. President Bush, in an prototypical case, both advocates and condemns the free market in the same breath: “I’m a strong believer in free enterprise. So my natural instinct is to oppose government intervention. I believe companies that make bad decisions should be allowed to go out of business. Under normal circumstances, I would have followed this course. But these are not normal circumstances. The market is not functioning properly.” Demonstrating flippant leadership, the President did not pause to consider why the market “is not functioning properly,” but instead pushed for measures that would address the effects of the economic downturn, not the causes.
Similarly, GOP presidential nominee John McCain predicted that should the bailout fail to pass, “the present crisis will turn into a disaster,” and “the gears of our economy will grind to a halt.” And during his campaign, he said that the government should “give you a mortgage you can afford,” and called businesspeople “greedy.” In addition, the current Republican administration has also belatedly attacked the “casino culture” of Wall Street “greed,” has presided over record federal deficits, supported a prescription drug benefit that smacks of the welfare state, and passed the largest farm bill in history.
Ron Paul, a former Republican presidential candidate, is one of the few Republicans who has not wavered in his enthusiasm for free markets. Ron Paul surprised the nation with his unusually devoted contingent of supporters who advocated a return to the gold standard, a repeal of the 16th Amendment and the end of the income tax, an end to inflationary practices (printing money out of thin air), and the end of the “American empire,” among other positions. The support garnered from Paul’s strictly free market opinions ought to have been taken seriously by the Republican establishment, but it clearly was not; one of the results of Republican policies is the bailout, which most advocates of the free market agree will ultimately be detrimental to the country.
Ron Paul has unsurprisingly advocated an end to “government meddling” as the solution to the recent economic downturn. He opposes the bailout because it attempts to prop up markets, preventing the liquidation of bad debt and worthless assets at market prices. It also sets a precedent; financial institutions will engage in riskier investment schemes because they know that the government will bail them out if necessary. “Using trillions of dollars of taxpayer money to purchase illusory short-term security, the government is actually ensuring even greater instability in the financial system in the long term.”
There were quite a few possible solutions to ensure the economic well-being of the country without the bailout. House Financial Services Committee Chairman Barney Frank (D-Mass.) said at the start of bailout negotiations, “We don’t have a choice now of debating whether this is a good or a bad thing.” In retrospect, the bailout was not a good idea; it sets a dangerous precedent, will create great incentives for creative bookkeeping, and does not address the causes of the economic downturn. As Ron Paul said, big corporations are like drug addicts; “they’ve got to take their fix. It’s too tough getting off these drugs. And the drug here is easy credit.”
Instead of throwing money at the problem, the Republican administration ought to have returned to its fiscally responsible roots and searched for other ways to sustain the economy. The government should have extracted itself from the mess of Fannie and Freddie and made efforts to reduce the size of the federal budget by cutting unnecessary social programs, pork, and bureaucracy.
There is never a bad time to reassert the benefits of the free market, but if it is ever necessary, it’s now. The bailout was an unfortunate mistake, but it can be righted with more free market friendly policies. The Republican Party needs to return to its historical grounding and support free markets both for its own longevity and for the sake of the country.
Ms. Meyer is a sophomore majoring in Philosophy.