Both Democrats and Republicans Are Bad For America’s Finances

To me it’s a truism, but one that few people grasp: Both major US political parties are the same. To watch excitement over the midterm elections as a chance to “throw the bums out” in favor of the other party, when the bums are Democrats and the saviors are Republicans, is to watch irrationality in full bloom.

Don’t get me wrong. I share the frustration of those who desperately want real leadership in Washington. I knew early on that President Obama’s hope and change shtick was a load of bull, and hardly original. That “change” continues working as a campaign theme shows mostly the unchanging landscape of politics. It always stinks, which is why we always want change. It would be great if things went well so the campaign slogans could become “keep it like this forever,” but instead we’re constantly desperate for change. Now that Obama’s performance in the White House has confirmed him to be like his predecessors — even down to continuing the same useless wars he once vociferously opposed — it would be nice to see people reassess their view of politics. A simple acknowledgment of the following would be encouraging:

No matter how interesting the new package, no matter how silver the talking tongue, no matter how different from the status quo the candidate appears to be, if he or she is backed by the same money bags that backed the previous politicians who made our current mess, we’ll be no better off.

Instead of placing that view front and center, we transformed in just 18 months from a nation of voters excited to end the awful Bush era with the fresh new hope of Obama, to a nation of voters excited to end the awful trends of the Obama era with the fresh new hope of the Tea Party Republicans.

Maybe stepping away from the emotion-packed labels of Democrat and Republican will help make the irrationality of this behavior more clear.

Pretend we’re remodeling our kitchen and have two carpenters at our disposal: Deemsel and Ruprit. We go with Deemsel for the first phase, and boy does he screw it up. The cabinets are crooked, the floor is sloped, and none of the outlets work.

We promptly fire Deemsel and put Ruprit on the job. A week later, the cabinets look worse, the floor now contains holes in addition to being sloped, and the outlets are visibly smoking. Ack! What to do?

If you’re the American electorate, you get excited about the chance to replace Ruprit with Deemsel — again. Deemsel gets back in there, rips the cabinets from the wall and starts filling the floor holes with toxic chemicals. You can scarcely believe your eyes, so you throw Deemsel out the front door and quickly whistle to Ruprit. He rushes back in and starts sledge hammering the outlets. Ack! Repeat.

Get it? Deemsel and Ruprit are our only choices. They both “trained” at the same school of crooked carpentry. In the case of politicians, both Democrats and Republicans get their funding from the same special interest groups that have leeched the US Treasury dry. Just as the solution to Deemsel screwing up the kitchen was not to hire Ruprit, nor is the solution to Democrats screwing up America’s finances to elect Republicans.

They’re both the same, and they both stink.

Blogger Jeff at All Financial Matters tackled this issue last weekend. He assembled an economic history of the United States for himself because he’s “tired of the rhetoric.” He identified himself as a Republican, but believes that if “Republicans are responsible for our current mess, then I think the American people have a right to know.”

In a two-page PDF, Jeff presented the economic results and S&P 500 performance for each administration from Roosevelt to the second Bush. Some highlights:

  • Both parties spend like mad.
  • Of the nine administrations (Roosevelt and Truman are counted as one), only four grew receipts at a faster pace than outlays. Those four were: Roosevelt/Truman, Eisenhower, Carter, and Clinton.
  • The most recent 31 years of data show that the worst combination is a Democratic House and a Republican president. Jeff continues: “None, however, have been good because all of them increased the federal debt every year. The only one that came close to not growing the debt was the year 2000 when we had a Republican House and Clinton as president.”

There you have it: Deemsel and Ruprit hard at work bankrupting your nation. Despite the trend going back as long as almost any of us have been eligible to vote, we still think the answer to Deemsel screwing it up is to send Ruprit back in, or vice versa. The following 1934 editorial cartoon from the Chicago Tribune shows that the troubles we face today are not new (click to enlarge):

The only real solution is to elect a third party that swears off financing from the same gang of special interests that control the purse and puppet strings of the two major parties. That won’t happen, because without that big funding no third party stands a chance of winning elections. That leaves only campaign finance reform as a possible solution, but that will never fly because the people who would plan and enact it are the ones who are in power because of the current system of campaign finance — and their backers aren’t eager to give up influence for the good of the people.

That’s why we’ll just keep screaming for change while choosing the same people to give us the same garbage that makes us scream for change again. Deemsel’s in the White House, and some people are excited to send Ruprit in his new Tea Party hat to Washington to shake things up.

Let’s see if we can get this more accurate than Bush got it: Fool me once, shame on you; fool me twice, shame on me. My fellow American voters, how many times will we get fooled before we feel a sense of shame and finally ask why we bother to choose between Deemsel and Ruprit every couple of years?

Perhaps abstaining from voting would send the clearest message that none of the usual suspects boasts a mandate.

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47 Comments

  1. Doug Kettler
    Posted August 26, 2010 at 1:27 am | Permalink

    Jason,

    You are spot on about both the Republicans and the Democrats being the same poison to our government.

    However, abstaining from voting is the worst thing that one can do. You forego the only amount of power that you have and leave the decisions in the hands of others who applaud the fact that their vote has just increased in “market share.”

    The solution, in my view, is to fix the political landscape from the local level on up. One’s vote holds far more power in a local election that it does in a national one. If a community can be convinced that responsible fiscal policies are a requirement to hold office in their district, the nation benefits a tiny bit as a whole.

    Unfortunately, your piece in the subscriber letter regarding the state of the runaway U.S. debt has caused me a certain amount of hopelessness with regard to the entire matter. Hit the reset button first, then we can talk about how to vote responsibly.

    • Posted August 26, 2010 at 6:11 am | Permalink

      Starting locally is a good suggestion, but doesn’t have a track record much better than the national level. California and several other states are bankrupt due to the same corrosions that eat away at Washington’s fiscal health. If that’s not local enough, Orange County went through the same thing 15 years ago — due to an investment in derivatives, no less. Scant wisdom trickled up from that ignominious failure.

      As for the debt, yes, I’m afraid that issue is already beyond the horizon line with sad implications for US economic growth. The middle class will disappear almost entirely as interest on the debt becomes a permanent impediment to growth, and very few of the new underclass will understand why life became so hard.

  2. Daniel
    Posted August 26, 2010 at 2:12 am | Permalink

    We need presidential candidates who run solely on their own funds, without taking a single dime from friends, relatives, constituents, corporations, or any other influential entity. My dream for some time been to launch a presidential campaign financed entirely through wealth I create in some entrepreneurial endeavor. I would like to be in a place where I can commit to spending up to US$1B of my own money on my U.S. presidential race. My political views are libertarian, so perhaps this would not fly with the general American public – who, as much as they claim to hate the establishment, also seem reluctant to vote for anyone outside of the establishment.

    Of more pressing and immediate concern, however, has been the lack of success in my entrepreneurial ventures of late. The restrictive government policies and abhorently burdensome taxes I’m experiencing aren’t helping.

    • Posted August 26, 2010 at 6:20 am | Permalink

      Self funding would, indeed, be best. Some object to it on the grounds that only rich people would be able to win elections. However, the ability to create capital is a nice test of how well a person would be able to manage public affairs. If a person has been entirely unable to create a financial base, then they probably don’t understand well enough the way society works and should not end up in charge of much of it.

      On the other hand, if a person can raise enough capital through small contribution amounts, say $5,000 as a legal limit, that could qualify as understanding the workings of society well enough to manage part of it. Too, that would be more tempting to people of modest means with a genuine desire to contribute new ideas. If a person had a spare $100,000 lying around, for instance, they’ve done a good job providing for their family and that’s probably enough to run a decent local campaign. However, few would want to risk their entire nest egg on that ambition. The ability to raise other people’s money in a way that doesn’t influence leadership would expand the pool of interested candidates.

      Did you really write “spending up to US $1B of my own money” to run your own presidential race? Now, there would be a person unworried about the financial consequences of running for office. If that level is what’s needed to be self funded, however, the concept will be meaningless as the candidate pool would be too small to introduce new ideas.

      • Daniel
        Posted August 26, 2010 at 9:22 pm | Permalink

        Yes, the $1B figure is what I meant. Unfortunately, factoring the candidate’s own funds, contributions from constituents/interests, and party efforts, the average per-candidate expenditure (from the Republican and Democrat parties) on a presidential campaign rests around $1B. In fact, if and when I get to the point where I can make a reasonable run myself, the real costs will likely be much higher. And I will need to contribute all funds myself, because I wont’ be taking donations from constituents and I won’t have the backing of a political party.

        Of course, this is all unless we end up with some form of campaign finance reform. But again, look at who would be doing the reforming. I think our founding fathers would shudder to see the political mess in Washington if they were alive in the present day.

        • Daniel
          Posted August 26, 2010 at 9:23 pm | Permalink

          * won’t

      • Marcel Valcarce
        Posted August 28, 2010 at 12:39 am | Permalink

        While it’s true that someone starting from scratch and creating enough capital on their own to run for office would be a good litmus test as it were. But what worries me are the rich kids who would be spending not their own hard earned money, but rather family wealth which they had no part in creating. Are they going to be good leaders? Maybe, but likely as not they would be terrible.

        Public financing is the only way to guarantee a government of the people by the people for the people. With all people being represented.

  3. Posted August 26, 2010 at 2:26 am | Permalink

    Abstaining from voting?! That’s literally exactly what they want people to do. And that is what they do. In the wide majority of elections, the wide majority of registered voters simply do not bother to show up at the polls. Thus, most Democrats and Republicans are elected with the support of only 10-25% of registered voters, and the numbers are even lower in terms of eligible voters.

    The reasons people don’t vote are simple to discern. They recognize that it does not matter whether Democrats or Republicans are in charge, as you demonstrate yourself.

    The solution is to vote for alternatives to the Republicans and Democrats. Today, freedom and independence begins with freedom and independence from the misrule of Democrat-Republican party government. The only wasted vote is a vote for a Republican or Democrat. Support third party and independent alternatives to the reproduction of the two-party state and duopoly system of government.

    • Posted August 26, 2010 at 6:31 am | Permalink

      In 2008, around 63% of voters turned out. I agree that the only wasted vote is for the establishment, but ask anybody who’s voted for the third party in any election in their lives what that felt like. It’s usually just the equivalent of voting against the establishment candidate closest in view to the third-party candidate because they steal each other’s votes.

      For instance, Ross Perot saw to the defeat of the first Bush in 1992 when they shared the conservative voter base and enabled Clinton to become president with just a plurality of the vote. Here was the breakdown:

      43% Clinton
      37% Bush
      19% Perot

      Obviously, had Perot not gummed up the works for Bush, he would have been reelected despite having lied about not raising taxes (“Read my lips…”).

      Unfortunately, that’s what happens in most third-party situations. A vote for Perot was actually a vote against Bush, and thus a vote for Clinton — precisely the worst candidate to win in the view of a person inclined to vote for Perot. That’s why voting for the third candidate is seen as throwing away a vote. In fact, it’s worse than that because it’s voting for the least appealing candidate (from the third-party supporter’s perspective).

      Thus, many voters logically see their choices as being only this establishment goon or that one, and don’t see the point of showing up. George Carlin felt that way, for example.

      I hear you: voting for a third party that isn’t funded by the same groups that fund the establishment is the answer. I just don’t see it working, and thus don’t expect change, and thus look out for my own best interests as well as possible. I think that’s about all anybody can do, which is why I explained how to do so in my new book, Financially Stupid People Are Everywhere: Don’t Be One of Them.

      • Zack
        Posted August 26, 2010 at 10:11 am | Permalink

        Jason, I have to disagree with you here on principle. I certainly understand your reasoning that voting for the 3rd party (Perot) is like throwing your vote away or voting for the least appealing candidate. When you choose to exercise your Privilege (not Right) to vote then you should to give your support to the candidate whom you believe will be the best Leader, and not simply to the candidate who you think will win.
        I was not old enough to vote when Perot ran for President, however if I had been old enough to vote I would vote for Perot even knowing the outcome. My father (very conservative) voted for Perot and he regrets it, but I tell him that he made the right choice. Bush and Clinton were not that different. What did he really lose? If he had not voted then he would have wasted his Privilege; and if he had voted for Bush then he would have gotten more of the same anyhow.
        The key is not only to vote for third party but to do everything in your power to get everyone else to vote for the third party. More people listen to you than do me, so if I can convince you to vote and, even better, get you to convince others to vote 3rd party then we may see the ‘change’ we all want. We may not see the change, but years from now when future generations read the history books and ask me: “What did you do to try changing the outcome?”, I want to say that I voted for the third party and I tried to convince everyone I spoke to to vote for the third party… even if they have to ask me if there really was a third party or if I was just making that up.

        • Posted August 26, 2010 at 6:36 pm | Permalink

          Good for you, Zack! The privilege of voting is a good principle to stand upon. Rather than go back and forth on this, how about a solution to the “Perot problem,” that is, the third-party candidate problem? It’s called instant runoff voting (IRV). It enables you and your father to vote for the third-party candidate without fear of wasting your vote, because you actually rank all the candidates in your order of preference. If your first choice doesn’t get a majority, maybe your second choice would.

          Here’s a video on it:

  4. Posted August 26, 2010 at 7:30 am | Permalink

    Thanks for the mention, Jason. Excellent post.

    I think we should outlaw special interest groups…all of them (corporations, AARP, unions, lawyers…ALL OF THEM). They aren’t needed. Control should be given back to the states. Those who don’t like what their states legislate can move to another state.

    Taxes should be less and services should be limited. We don’t need the government involved in the bulk of our lives.

    • Posted August 26, 2010 at 7:00 pm | Permalink

      Hear, hear! You’re most welcome for the mention, Jeff. Thank you for work you did on the subject, and for making it public.

  5. Posted August 26, 2010 at 12:44 pm | Permalink

    Federally Funded Elections.
    If we, the U.S. voters, and the politicians are serious about what is truly best for our America, then candidates should run on the Federally Funded Elections platform. Once elected and the historic FFE law is passed, politicians will no longer be legally bribed, nor will they have to waste time prostituting themselves for those campaign contributions. Rather, they’ll be set free to seek truth and do what is best for our country. That’s if anyone’s serious.
    With my one vote, I can only hope.

    • Posted August 26, 2010 at 7:04 pm | Permalink

      I’d love to see this take hold, but I doubt that it ever will. We can’t forget that the reason special interests spend so much to buy politicians is that it gives them power. They don’t want to lose that, so they’re going to use it to fend off anything that would make their financial power irrelevant.

      Nonetheless, it’s a good idea, Paul. More info at:

      http://www.fec.gov/pages/brochures/pubfund.shtml

  6. Jerry Whitsitt
    Posted August 26, 2010 at 9:27 pm | Permalink

    Based on the current landscape, which is all we have at the moment, we must choose the lesser of two evils. For me, I’d rather not choose the socialistic, distribute the wealth policies of the Democrats, which ultimately lead to the higher taxes we will all see very soon.

    • Posted August 27, 2010 at 8:49 am | Permalink

      The problem, however, is that the need for higher taxes did not arise just in the last 18 months — and I think we all know that. Our collapsing fiscal house began slumping under the attacks of both Deemsel and Ruprit decades ago. Obama is not helping, true, but the situation would be no better under a McCain administration.

      Until somebody in Washington understands that money is a scarce resource, we’ll continue to the unfortunate end of our current path.

  7. Daniel
    Posted August 26, 2010 at 9:28 pm | Permalink

    As for abstaining from voting…it was tempting in 2008. Could we have ended up with candidates any worse than those two?!? (Well, there was 2004…..) Talk about confusion and poor choices: on the one hand, a candidate far to the left of the political spectrum, with a running mate only moderately closer to the center. And on the other hand, a major wild-card (that’s my polite, Internet-friendly term) with a running mate far to the right on the political spectrum.

    I know it’s been said many times in many places, but to reiterate: doesn’t either political party recognize that most Americans are not truly very partisan? That the majority of us want what’s best for the country, with no radical solutions to the problems we’re facing? It seems that with each passing election, candidates move further and further away from the center, creating not only a more partisan electoral environment, but also convincing more and more Americans to….abstain from voting. This is a more direct attack on democracy and the American system than terrorismwill ever be.

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