Two Santas?

In recent years, it has become a ritual for Republicans to threaten to shut down the government and crash the U.S. economy by refusing to raise the debt ceiling. This is like finishing your meal in a restaurant and refusing to pay the bill. These childish tantrums are in direct violation of the 14th Amendment: “The validity of the public debt of the United States, authorized by law … shall not be questioned.”

The debt ceiling was invented in 1917 to allow the Treasury to issue bonds without having to get Congress to do so each time. In 1979, Dick Gephardt was a new member of Congress, tasked with the drudgery of getting the votes to raise the debt ceiling. He solved the problem by getting the “Gephardt Rule” enacted: The debt ceiling is automatically raised to match the spending already approved by Congress.

This worked just fine, until Newt Gingrich took power in 1995 and eliminated the rule. Hence, the endless unconstitutional questioning of the debt ever since.

But the real root of the problem came in the 1970s from a right-wing propagandist you probably never heard of: Jude Wanniski. He is the guy who invented the nonsense term “supply side economics,” a concept refuted by every economist. That led to the Reagan-era tax cuts for the wealthy and tax increases for millions of ordinary citizens.

Wanniski also invented the Two Santa Claus Theory: That Democrats started playing Santa Claus during the Franklin Roosevelt administration, giving out goodies like Social Security and unemployment insurance and later Medicare. Republicans played the role of Scrooge, always trying to “shoot Santa” in his words. This led to Democratic victories for decades.

He urged Republicans instead to have their own Santa: The Tax Cut Santa. Most of the tax cuts would go to the wealthy Republican donors. A few tax-cut scraps would be thrown to working people – often temporary, with a sunset. Massive PR would hype the minute cuts for workers.

But there was another “benefit” for Republicans: By cutting taxes, this raised the deficit and debt, which allowed them to scream that there is no money for “entitlements” that the Democratic Santa was giving out. The Republican Santa essentially would shoot the Democratic Santa.

Reagan’s budget advisor David Stockman admitted this was a conscious plan called “starve the beast.” Republicans have no actual interest in balancing the budget. They just use this story to prevent Democrats from playing Santa with benefits for workers.

In President Biden’s latest State of the Union, he pointed out that Donald Trump and his Republican Congress ran up the largest debt in U.S. history. He did this by giving massive permanent tax cuts to his wealthy donors, and by writing millions of stimulus checks with his name boldly displayed. And a small temporary tax cut for workers that would end after his term ended.

In the past 40 years, every Republican administration from Ronald Reagan to Trump increased the deficit. And every Democratic administration lowered the deficit. Bill Clinton even lowered the total national debt. Clinton also shot the Democratic Santa by throwing millions of children into poverty by “ending welfare as we know it.”

Here are some wise words by a former president: “The Federal government cannot avoid or escape responsibilities which the mass of the people firmly believe should be undertaken by it” and “Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history.”

That was written by Republican President Eisenhower in 1954. He was far more liberal than the Democratic presidents from Jimmy Carter to Barack Obama, who naively stopped playing Santa. Biden is wisely reviving the Democratic Santa and calling out Republicans for trying to shoot that Santa.

You may ask whether we can afford Santa. Wrong question. It all depends on what Santa is giving and who he is giving to. Tax cuts to the wealthy go into creating stock-market bubbles like those in the Roaring ’20s and the late ’90s. The results were devastating crashes as the bills came due.

However, investments in education, child nutrition, health care, public works, and sustainable transportation and energy have a positive return. Social Security and disability payments go in the hands of people who worked for those payments and who will spend that money back into the economy.

Full disclosure: Thanks to radio host “professor” Thom Hartmann for the education about the Two Santa Claus Theory.