As I listen to him and, in particular, his advisor Phil Graham, talk about the economy, I’m not sure McCain really wants the White House because he’s handing Obama everything he needs to win, at least when it comes to the economy.

Republicans are relying on ancient economic rhetoric to communicate old nostrums about markets and big government as their “response” to the economic problems we face, but they are sounding irrelevant and thoughtless. Nothing they say seems to address actual problems in the economy.

Graham’s recent “insight” that we have a “mental recession” and are a “nation of whiners” is just the point. He cites a 1% growth figure to back up his view, as if 1% is something to be proud of. He mentions nothing of oil, nor of the rising unemployment rate along with rising prices (a stagflationary situation) and yet this man has a Ph.D. in economics! I suppose the price of oil is all in our heads.

The only allowable policy response to the economic problems at hand on the republican side seems to be to cut taxes. Will that address the problem of soaring oil prices and the innumerable consequences they’re having on the economy? The drumbeat of McCain supporters are just pointing to old hat ideas, regardless of whether they address the actual problems we face. They cannot think creatively about our problems because they are wedded to ideological nostrums. Much of this rhetoric boils down to the idea that the way to handle matters is for the government to get out of the economy, as if government interference was the cause of the real estate bubble bursting and high oil prices (though, maybe the US Government has played a role in high oil prices if we think of the effect on prices of US policy in the Middle East). This line seems to say that when the economy is in or near a recession the government should just do nothing. Why? Because the economy is self-regulating and a recession will correct itself.  

The stop whining message is no different than that famous retort “let them eat cake,” attributed to Marie Antoinette before she lost her head. It also says that our would-be leaders are out of touch with what people are experiencing, which reminds me of President Bush back in February who, after hearing that gas prices might climb to $4.00 a gallon, responded "Oh, yeah? That's interesting. I hadn't heard that." How could he not have known this? It must be that he is so insulated and well fed himself that he doesn’t really care. Or maybe he likes high oil prices, given how close he is to oil interests.

That the government should do nothing in response to our economic problems was perfect economic advice for Herbert Hoover, at least from FDR’s point of view. Conservative rhetoric on the economy has not changed one bit in a hundred years. This rhetoric might sound okay when times are good and pundits on cable TV tell us about a rising stock market, but it sounds like illiterate and thoughtless nonsense when times are bad. McCain and his supporters sound like Hoover’s advisors, whose hardened, ideological “truths” about the economy probably made the depression worse and opened the door to a revolutionary change in politics. It was off with their heads, and they had asked for it.

It’s true that a recession will sooner or later fix itself, but how long does that take (think in terms of years rather than months here) and why is it acceptable to let the standard of living of the public fall if something could be done to correct the situation? Why should voters tolerate that? Of course, they won’t tolerate it and they’ll communicate that at the polls. It would be quite the feat anyway for an incumbent party to win the White House in hard economic times. A cursory look at our electoral history will tell you that.

Is this what McCain and his supports are trying to say—that we should just stop whining and let the economy fix itself? If so, then McCain might just as well hand the victory to Obama because he could not possibly win with such irrelevant and thoughtless nonsense on the economy. Maybe McCain should get rid of Phil Graham and take some advice from an economist who actually understands how the economy works and use that information to produce a convincing vision on the economy.

The other plank to McCain’s economic plan is a tax cut. It’s probably an open secret among economists that tax cuts along lines of the Bush tax cuts will likely do very little for economic growth, yet McCain seems to be hanging his hat on this. While it is nice to have a bit more disposable income, the Bush tax cuts were sold to the public on a phony economic argument. The idea was simply that income tax cuts, though heavily favoring the rich, will stimulate investment and grow jobs.

The phony part of this reasoning is that income tax cuts, which increase disposable income, have no relationship at all to investment, which is mainly influenced through the interest rate. The conspicuous variable that would be influenced by income tax cuts is consumption. Given that the rich already consume at peak levels, however, a tax break for them would not do much to stimulate the economy through consumption either. Maybe a special tax break, such as an investment tax credit, would stimulate investment, but the idea that investment will grow because of an income tax cut to the rich is total fiction.  If the Bush tax cuts did stimulate growth, then why are we now looking at barely 1% growth? Where did all that stimulation go? Why did Bush feel compelled to offer the public a stimulus check from the Treasury? And why was there a need to extend unemployment benefits?