Remember who said that? The answer is below. But first…

What is really behind Republican opposition to the President’s stimulus plan? Was the vote Wednesday merely a reflection of an extremely conservative Republican House that would never agree with anything the Democrats would put forward anyway? Did House Democrats really poison the process, as Republicans alleged, by keeping them out of the process of drafting the bill? Are the Republicans sincere in their belief that the House plan will not create enough jobs and will not do a good enough job stimulating the economy? Or, as some Democrats are saying, are the Republicans merely following Rush Limbaugh, who has been demanding that they vote against President Obama’s plan? (Oh, and Limbaugh is also hoping that our new President fails, if you hadn’t heard. What a great guy.)

There’s a lot of speculation and shock out there about the Republicans rebuffing the President after he made such a dramatic overture to them over the past week. But is it really so mysterious? It seems to me that the Republicans are just going ideological and making a savvy political bet.

Under President Bush, Republicans had no clear identity when it came to government spending, and the stimulus presents an opportunity to define themselves. You can hear this happening in the self-congratulatory tone Republicans are taking at the moment in resisting the stimulus. They are going back to being “deficit hawks,” they say. But they are only deficit hawks when Democrats are in office, of course.

A great segment Saturday afternoon from the radio show This American Life clarified to me how much the current debate goes back to a British economist from the early 20th century, John Maynard Keynes. Remember Keynes? You were groggy that morning in economics class too, huh? Keynes is the guy who said–and I paraphrase, sorry economist readers–that to get out of a downturn in the business cycle, the government must spend money to stimulate the economy even if that means running up large deficits. Libertarians hate this idea because they think the free market should always be left to correct itself when the economy sours. But as Keynes pointed out, the economy correcting itself could take a really, really long time, and as he put it, “In the long run, we’re all dead.”

I’ll try to find the podcast of the radio segment and post it here because this excerpt from All Things Considered yesterday doesn’t do it justice. The entire piece is very much worth listening to. In the segment, Adam Davidson discusses the stimulus with a conservative economist and it becomes clear that one of the biggest fears conservatives have right now is that President Obama might actually come close to proving that Keynes was right. (You can’t really “prove” things in economics, but this would be close.) In other words, if the economic stimulus plan passes and the economy recovers in a year or two, a big chunk of the way liberals view the world would have been vindicated by the test of the current recession. A lot of liberals believe that Keynes was already vindicated by FDR during the wartime spending that got us out of the Great Depression, but conservatives tend to disagree. So, if Keynes is proven right now, that would be very, very bad for Republicans because, since the 70s, they have believed that Keynesian economics was dead. As the radio piece goes into, politicians abused Keynesian theory in the 60s and 70s, thus setting the stage for conservative economists and Reagan to take control of the policy debate and argue that Keynes was wrong. If President Obama is right, we will have a new liberal era not only because liberals are in power at the moment, but because they have retaken control of the policy debate from the Reaganites who have set the tone for the past thirty years.

So, since Republicans think Keynes was full of it and that applying his theory to reality won’t work, it’s not much of a surprise that they are opposing President Obama’s stimulus plan. It makes sense for them from both ideological and political points of view. Ideologically they can define themselves as anti-Keynesian libertarians who think we just need to cut taxes and “wait it out”. Politically, they wouldn’t get any credit from the public if Obama’s plan works, so signing onto it wouldn’t do them much good. And if it doesn’t work, they will be able to say “See, we told you so.”

Still, President Obama’s plan contains enough tax cuts that some Republicans may want to sign on in the end. They may think that the plan has more than a fifty percent chance of working. And if it does work, then wouldn’t they be better off having voted for it than against it? The President and the Democrats would still get most of the credit, but at least those who went with the winning team would look smart and bipartisan. Plus, they could always argue that the economy turned around primarily due to their pushing for more tax cuts, not from the government spending.