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Do Conservatives Favor a Deep Recession?

After watching a media appearance by Fred Thompson, Josh Marshall poses a very good question: do conservatives and/or Republicans actually favor a deep recession as a way to purge the economy of speculative excesses and debt?

While I am quite sure that Republicans are not about to hoist banners reading "Deflation Now!" a look back at the conflicts over the first "bailout" package and some of the GOP rhetoric surrounding the presidential campaign should make it clear that there is in fact a strong undercurrent of conservative hostility to any sort of relief measures that don't simply involve tax cuts or deregulation. Those who convinced themselves that the mortgage crisis was caused by ACORN and poor and minority borrowers certainly are in no hurry to succor such Obama-supporting miscreants. More generally, there's always been a large faction of conservatives who favored the occasional "healthy" recession to wring "excess demand" out of the economy. One of the innovations associated with the GOP's embrace of supply-side economics was a partial abandonment of that point of view as "root canal" or "Hooverism." But in the face of an actual recession, like the one St. Ronald Reagan presided over in 1981-83, there was no notable conservative support for any economic stimulus that didn't focus on high-end or corporate tax cuts.

At Open Left today, Matt Stoller argues that conservatives aren't that interested in economic stimulus because creditors actually benefit from debtors in a deflationary climate. That's true so far as it goes, though it's not clear the rank-and-file base of the GOP can currently be described as the "creditor class." But I think there is a large and important kernal of truth in Matt's analysis, not on economic grounds, but on moral grounds: conservatives like to think of themselves as sober and self-reliant people who don't get themselves into the kind of financial trouble that merits government intervention. For those who don't immediately face personal financial calamity in the current economy, it's easy and very seductive to think of "economic stimulus" as identical to moral hazard, and deeply resent the use of tax dollars to relieve less worthy citizens of the consequences of their risky behaviors, particularly if a recession is thought of as good for the economy in the long run.

This is an old, old story in American politics. Go back to the convulsions of the populist era of the nineteenth century, and read what "hard-money" advocates had to say during deflationary periods. Economics aside, "goldbugs" constantly justified their views as synonymous with honesty and integrity and the sanctity of contracts. And that was a tradition that long predated Wall Street's support for a gold standard. One of the bedrock principles of the Jacksonian Democrats was an identification of hard currency policies (and for that matter, opposition to general taxation) with the sturdy folk virtues of American farmers and artisans, who shouldn't be fleeced by capitalist predators demanding easy credit for their wicked and greedy designs. Jacksonians viewed the Second Bank of the United States with a moral and even religious horror, as a Moloch sapping the vital instincts of the citizenry.

Stir into this ancient tradition the quintessentially American habit of treating financial success as proof of moral worth and even divine favor (the latter being a staple of today's "prosperity gospel" preachers), and you certainly have the raw material for a robust conservative hostility to any government-enabled economic recovery, particularly now that it will occur under the auspices of a "liberal" Congress and administration.

Perhaps the deepening of the current recession will soon quiet such talk, as the damage spreads beyond the financial sectors and debt-ridden industries and encompasses millions of people who never took out a risky loan or ran up the credit cards (or more likely, for one reason or another, never had to). But just as Republicans like Phil Gramm couldn't stop themselves from calling economically distressed Americans "whiners" a few months ago, even in today's crisis there will be a significant group of Republicans betraying an affection for the bracing moral "lesson" being taught to the afflicted.