Keynesianism

Electoral Right-Wing Keynesianism: Our System of Political Economy Defined

If you want a term to concisely describe the political economic system of the United States, a useful one might be Electoral Right-Wing Keynesianism. Despite its clumsiness and non-obvious references, the term nevertheless neatly embraces the motives, programs and outlook consistent to BOTH ruling American political parties for several generations with little sign of abatement.
There are differences of course, but the main difference between the two parties is merely this: The Democrats are the Electoral Right-Wing Keynesians who dishonestly deny being right-wing, while the Republicans are the Electoral Right-Wing Keynesians who dishonestly deny being Keynesian.

The Basics: The Keynesian component.

We are all Keynesians now, Nixon accurately said of the political class, including his own Republican party, back in the early 1970s. What did that mean? Officially, it meant that our governmental economic overseers – the elected officials and the Federal Reserve -- essentially believe that government must be ever ready to provide a fiscal stimulus to the economy via aggressive spending. This is to happen by temporarily incurring high debt and even risking inflated currency. And it should be done even within an ostensibly "free" or "liberal" economy. Strictly interpreted – and it usually is not, as we shall see – such steps are supposed to take place only at those times when the economy is hurting. That program is called Keynesianism because it was most influentially advocated in modern times for a modern capitalism-oriented society by British civil servant John Maynard Keynes in the early middle 20th century.
Most would agree that for better or ill the Keynesian system does prevail in most advanced countries including the USA. But how is the American version a "right-wing" variant? How can that be? Isn’t Keynesianism a "left" idea?
Actually, and sorry to many of my fellow libertarians and to American conservatives who deludedly think otherwise, Keynesianism is not an idea sprouting from the conventional left, it is actually more of a centrist concept, with even a rightish tinge at times. It also had arightish purpose in its conception – to save an overall free enterprise system from radical insurrection and subversion in a time of economic collapse.
Nevertheless, because Keynesianism has a “command economy” premise and purpose – i.e. the government directing investment and providing for it via aggressive deficit spending -- it can be considered in general terms more left-leaning than right. And certainly in its purer form, it appeals to the political left-of-center Paul Krugman types.
But still it can have a strong right wing manifestation. And this is what we have in the USA. And it has been "right wing" not just with, nor especially with, Mr. Nixon.
Really? Where else has Keynesianism been a noteworthy right wing idea?
Well, have you ever heard of something called the supply-side economics of Ronald Reagan? Yes? Well, that was one classic form of right-wing Keynesianism.

More basics. Right-wing Keynesianism.

“Reaganomics” engaged in deficit-spending but did so via lowering or restricting taxes to well below unrestrained spending levels rather than by increasing spending. But the result is the same – deficit spending with a stimulus goal. More cash was to be in the hands of business, and to a degree, the consumer. We can call it “right-wing” because instead of Mr. Keynes’ ideas in its pure form, where targeted deficit investments in bad times were to be followed afterwards by balancing the budget in recovery times, the Reaganites sought to hold and reduce taxes permanently and ideologically, justifying this by claiming that the increased but stimulative deficit environment would magically self-correct due to increased economic activity. (Which it didn’t.) And eventually, they implied, the good Reaganites or Republicans would responsibly try to cut spending. (Which they didn’t. Go out and google, for example, the GW Bush prescription drug plan.)
This right-wing view of a magic self-correction without tax increases is not precisely pure Keynesianism, but it is a Keynesianism we can call "right-wing" in that ideologically there are never to be, or almost never to be, tax increases to make up for the stimulative deficit. That is wise conservative "right-wing" political messaging in a country founded on an anti-tax revolution and whose citizens like to keep their wealth.
And it is Keynesian in spirit at its core: Deficit –spending stimulation.
This has continued with the Bush stimulus in 2008. Of course, by not engaging in increased New Deal-style or other jacked up direct public spending investment, or not doing so obviously by restricting payment to the innards of the damaged financial sector, and also not pursing higher taxes later on, the GOPers of the more recent stimulus get away a bit with claiming to not be Keynesian. In the recent stimulus, once out of office, the Republicans verbally embraced the anti-stimulus Tea Party (originally an anti-Keynesian movement against the Bush-GOP stimulus!) and then forgot quickly that they had initiated the stimulus and its deficit financing. (Sort of like the way the Democrats “forgot” they started the Vietnam war once Nixon was in). Formal penance from the 2008 stimulus by the GOP took place in the debt-ceiling debate anyway when the Republicans pretty much rigidly opposed all tax increases designed to cover the deficit spending to which they had heartily contributed.
Meanwhile, the Democrats get to be phony leftists by complaining with compassionate fury that tax cuts are wrong and the rich are getting economic wealth unfairly. But those are ultimately only just words to steal the righteous progressivistic class warrior’s heart away. In the end, it’s "just words" because the Democrats too remain part of the same "right-wing" political economy.
How are they part of the right-wing side? They are by being fundamentally tax averse.
Tax averse? The Democrats? How?

Read more here.