Government Bailouts

England and America are two countries separated by the same language!

~Mallory Brown, Christian Science Monitor
September 1942

Brown’s observation was never more true than last night as BBC correspondents reported the Labour Party’s landslide victory after 14 continuous years of Conservative Party rule.  For example, as the vote counting ended in each parliamentary district, a “returning officer,” the equivalent of our supervisor of elections, issued a “declaration” rather than a “certification” of the results.  However, these amusing differences in language paled in comparison to the decisiveness of the massacre Scotland Yard would be hard-pressed to explain.

How did Labour pull off this landslide while the American electorate seems mired in a 50/50 standoff, despite the fact both nations face many of the same issues coming into the election?   Inflation.  Immigration.  Support of the wars in Ukraine and Israel.  Health care.  Availability and cost of housing. Above all, this was a Tory defeat, not an enthusiastic endorsement of Labour or its agenda.  As reported by the BBC,  Labour’s share of the total national vote increased by a mere two percent from 32 to 34.  In contrast, support for Conservative candidates fell from 44 to 24 percent.  In many districts, the Conservative candidate ran third behind Labour and Nigel Farage’s Reform Party.  As the head of BBC’s exit polling analysis explained, voters split their votes between Labour and the Reformists based on a strategic decision which candidate had the best chance of ousting the incumbent Conservative MP.

From a U.S. perspective, the obvious question is, “What does this tell us about out November election?”  First the good news.  Labour’s success is due in part to Keir Starmer (the incoming prime minister) rejecting the extremist and bigoted views of and calls for nationalization of commerce by former party leader Jeremy Corbyn. The majority of voters have been and probably will remain in the center of the political spectrum.

In his victory speech, Starmer acknowledged that it was no easy task to convince voters Labour was once again a center-left party. “Four-and-a-half years of work changing this party… this is what it is for. ”  Democrats can make the same argument in November.  Contrary to MAGA claims that Democrats are socialists at best and communists at worst, the numbers say just the opposite.  The dollar is strong.  Equity markets are at all time highs.  Likewise for job creation, wages and productivity.  And not one industry has been taken over by the government.  Inflation, though higher than one would hope, is lower than in any other G7 nation.

The bad news?  Incumbency is a disadvantage.  Not because incumbents have done a terrible job.  Expectations have changed.   In America, the question is no longer, “Are you better off than you were four years ago?” It is now, “Are you as well off as you think you should be?”  It makes a difference.  On July 5, 2020, these were the New York Times page one headlines.

  • As Coronavirus Slams Houston Hospitals, It’s like New York ‘All Over Again’
  • As Neo-Nazis Seed Military Ranks, Germany Confronts ‘an Enemy Within’
  • At Mt. Rushmore and the White House, Trump Updates ‘American Carnage’ Message 2020

In July 2020, unemployment was 10.2 percent and new unemployment claims rose to 18 million.   Exactly four years later, despite a slowing economy finally responding to high interest rates, June unemployment remains at 4.0  percent, and initial unemployment claims for the week of June 29, 2024, totaled 238,000.

So what does this have to do with government bailouts?  The answer is simple.  One of the two political parties in the United States consistently bails out the the other’s bad policies and performance.   George W. Bush, after eight years of GOP economic orthodoxy consisting of tax cuts and deregulation, handed Barack Obama the worst recession since the Great Depression.  Eight years later the economy was on an unprecedented growth streak.  And what did Donald Trump do?  He returned to the same failed formula but still claimed in his 2020 state of the union address, “Our economy is the best it’s ever been.”

[NOTE:  Last Wednesday, former navy intelligence officer Malcolm Nance told Democrats to stop whining and get ANGRY.  In that spirit, this angry blogger wants to put Trump’s bullshit about his economy to rest.  At the time of his January 2020 declaration, pre-COVID, the average annual growth in gross domestic product (GDP) during his administration was 2.58 percent, seventh when compared to Lyndon Johnson (5.05), Kennedy/Johnson (4.65), Clinton (4.45), Reagan (3.87) and Nixon/Ford (2.85).  Oh, I forgot one more.  Even Jimmy ‘F***ing’ Carter, when he left office in January 2001, delivered an average annual GDP growth rate of 3.27 percent.]

Here’s the difference between what happened in Great Britain yesterday and what may happen here in November.  The Tories stayed in power for 14 straight years.  And they continued the same failed policies year after year and things got worse and worse.  The British economy stagnated.  The National Health System deteriorated.  There was no cavalry to save them from themselves.  Even after Boris Johnson was ousted by his own party for mishandling the pandemic, the Conservatives answer were more tax cuts, deregulation and reduced services.  None of which resulted in benefits for average British working families.

Now, just imagine Donald Trump had been reelected in 2020 accompanied by MAGA majorities in Congress.  Want to take a wild stab what his economic recover plan might have been?  You do not have to guess.  It is all laid out in the Heritage Foundation’s blueprint for a second Trump administration “Project 2025.”  More tax cuts.  More deregulation. Reduced services including “elimination of the Head Start program.”  The same policies, that after 14 straight years in Britain, led to a historic defeat for the ruling party.  After eight straight years of MAGA rule, I am betting Americans would have overwhelming followed their British counterparts and shown Trump and his lemmings the exit door.

But Joe Biden stepped up with a different approach.  Investment rather than tax cuts. Investment that  defied the experts who predicted an inevitable post-COVID recession.  Investment that is reinvigorating American manufacturing in strategic industries. e.g. computer chips and alternative energy.   Investment that translated into historic job growth. 

The United States is better off for that change in direction.  However, a Democratic administration again bailed out MAGA world and saved it from itself.  Unfortunately, by doing so, Biden may have sealed his own fate.

For what it’s worth.

One thought on “Government Bailouts

  1. I’m for battening down the hatches, careful navigation, and riding out the storm. Ships sink otherwise.

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