Dave Ramsey's GOP?

It's not exactly news that these are tough times for the GOP, what with Obama continuing to enjoy a surprisingly steady honeymoon, Bush still being blamed for the recession, and Michael Steele getting things embarrassingly screwed up at the RNC. If it weren't for Nancy Pelosi and the occasional "tea party," the GOP would have few signs of light this year.

But who's minding the store for the long term? While the media focuses on near-term tactics and the prospects for gaining a few House seats in 2010, we're not hearing any candid assessments of the tough decisions the GOP must make in the coming months and years concerning the massive debt burden and overall "financialization" of the U.S. economy.

Instead of sitting around the echo chamber with Rush Limbaugh or Glenn Beck, GOP strategists should take a little time off the shouting circuit and spend an afternoon watching the Dave Ramsey Show, on the Fox Business Network.

Dave Ramsey: Financial Guru of the Conservative Heartland

Dave Ramsey is a Tennessee-born financial adviser, motivational speaker, and former real estate broker whose successful call-in radio show won him a coveted spot on Fox's new all-business cable channel. Ramsey is starker--and in many ways less sophisticated--than Suze Orman or other pop financial advisors. His focus is plainly on the elimination of debt, pure and simple. He characterizes credit cards as the greatest evil of our day, and considers materialistic overspending childish and irresponsible.

When people call in, he encourages them to seek therapy for their marital troubles, seek religious counseling for their low self-worth, sell the house and the second car, and start eating "rice and beans" for as long as it takes to get out of debt and live in financial freedom. He calls his series of books and lectures "Financial Peace University."

If you're looking to find out how everyday people--and especially Southerners--view the current American debt debacle, look no further. Ramsey's attitudes are rooted in America's traditional conservative Protestant work ethic of putting family first in all things, and in pursuing a life of modesty and carefully managed, slow-speed wealth accumulation. It's true that his advice is a bit too simple to be true, failing to capture the time-value of money or the positive possibilities of well-managed debt. But by sticking to simple truths, Ramsey makes for a compelling show and presents a seemingly clean ethical case for personal decisionmaking. He often criticizes Congress on the show for its irresponsible deficit spending. He has no praise for either political party.

Ramsey's Ethic vs. the Ethic of Credit-Card America

Since Ramsey's chief villain is the credit card, the contrast is extreme between the values he promotes on his show and the values that have dominated American culture and politics for some thirty years--namely, boosterism of Wall Street, deregulation of corporate behavior, and the spread of personal debt throughout society (to the further advantage of Wall Street firms who reap the benefits through interest charges and other fees). We have all been breaking Dave Ramsey's rules, and neither political party is innocent. Everyone who has overspent has colluded in this binge.

How ironic, then, that GOP lawmakers criticize Obama's staggering deficit spending, but also criticize his efforts to regulate the financial industry and control the excesses of business. For the past thirty years, these two philosophies--opposition to government debt and support for private debt speculation--somehow managed to mesh in the rhetoric of the Republican Party. But now, in the wake of the economic crisis, this union may have been swept away as a viable political strategy.

Only since the 1980s has conservatism been so associated with adventuresome banking practices. And never before has a political party rooted in the rhetoric of Southern populism been so tied to an ideology of deregulated, highly leveraged gamesmanship by the rich and overspending by the burdened middle class.

The question for today's GOP, then, is how to come to terms with what we might call its potential "Dave Ramsey wing." Will its strategists and elected officials rediscover an old economic conservatism to match its social conservatism? Will the party embrace an ideology of prudence, modesty, and economic family values to match its opposition to abortion and its fear of urbanity, cosmopolitanism, and secular culture?

The Politics of Today's "Financialized" America

Southern populist rhetoric has not traditionally been joined with boosterism of unfettered Wall Street risk-taking. When FDR beat Hoover in 1932, he didn't have any Wall Street tycoons in his coalition. Amidst a traumatic financial crisis that affected most of society, he made his appeal against the "malefactors of great wealth" and used the rhetoric of the populist South and West to build a new regulatory regime that reined in Wall Street excesses. Back in 1896 and 1900, when William Jennings Bryan ran for president, he railed against the big monied interests of the Northeast and declared that religion was the source of all true morality. Even Andrew Jackson, in the 1820s and 1830s, ran against big Northeastern wealth in the name of the common people and their values.

It's all the more amazing, then, that for the past thirty or forty years, the Republicans have used the rhetoric of the old Democratic Party in pursuit of the goals of the old GOP. One can't help but wonder if this odd configuration can survive the new economic realities facing America. And in this era of massive fundraising and unregulated campaign contributions, can any corporate interest be opposed in the name of the people? Can any political party afford to clarify its message to voters at the expense of key financial supporters on Wall Street and elsewhere?

Conservative Republicans have an opportunity today, at least in theory, to hone an effective message against the Democrats, thanks to the bizarre half-measures Obama and Geithner have taken to keep the banking crisis under control. If Republicans can match their criticisms of Obama with a legitimate economic program that truly breaks from the Bush record by taming Wall Street and aiding the middle class, then they will vindicate the Dave Ramsey wing and bring many new supporters to their cause.

If they don't, or can't, then our economic recovery lies entirely in the hands of the Democrats, with a much-reduced GOP doing little more than sniping at Obama's heels. If that's the direction we're heading, then we had better pray Obama is truly free of influence from his Wall Street backers. Because if the Democrats fail to rein in our speculative, debt-driven economy, then we are in for a bigger fall than we have yet sustained, as the rest of the world retreats from buying our debt and bailouts turn into explicit government support for financial corporations. Such a turn of events would signal a decline in our share of the world's economic revenues and would also be accompanied by a loss of confidence in our bonds by foreign governments--which would mean a very dramatic devaluation of the dollar (in other words, hyperinflation).

Economics = Destiny

Economic observers from every political persuasion have noted with alarm that Geithner's policies largely perpetuate the profligacy and lack of vision that characterized the final Bush-Paulson years. Commentators as diverse as Paul Krugman and Niall Ferguson now agree that aggressive federal action is needed to restructure de facto insolvent banks (like Citigroup and Bank of America), and that a comprehensive rewrite of our regulations--and a new spirit of enforcement among our bureaucrats--will be needed to interrupt the unending cycle of speculation and bailout that has dominated our financial sector since the early 1980s. Will Obama and Geithner really do this? Or are they too beholden to the same Wall Street interests that dominated the Clinton administration? There is reason to be pessimistic, as the amount of Wall Street money donated to Obama in 2008 vastly outstripped the amount given to McCain.

In Kevin Phillips's recent book, Bad Money, one of the many illuminating charts lists the various bailouts our government has engineered since the early 1980s, sometimes with the help of Congress (such as the S&L Bailout of 1989-1992) and sometimes through the Federal Reserve alone (such as the bailout of Long-Term Capital Management in 1998). Phillips explains that these bailouts, which had already cost trillions of dollars before the current crisis began, helped prop up an economy of unprecedented debt speculation which ended up making the financial industry the single largest sector of our GDP, dwarfing the manufacturing sector after the mid-1990s. This "financialized" economy relied, ultimately, on America's international economic preeminence to manage its debt. Now, with East Asia rising and holding most of our debt, we are reaching the limits of our ability to fund this system.

Even worse, the East Asian financial systems are command-driven, dominated by government goals and operating as anything but free markets. If America is to show the world that a free market can work, we will have to change the way our banks lend money, reducing their speculative impulses and returning some of that capital to the middle class. With an economy less based on boom-and-bust and on endless government bailouts, and more on prudence, thrift, and taking the long view, we can restore our place in the world as the nation of successful free-market risk-takers who know when to hold 'em and know when to fold 'em.

Dave Ramsey and the Power of Opposition

In the end, there is no substitute for an effective opposition with a coherent and workable economic theory to keep the governing party honest. America desperately needs a GOP that makes a genuine appeal to the conservative roots of its Southern base. The GOP must dispense with its nostalgia for Reagan and Bush and promote a new kind of conservatism for an era of overblown debt and financial adventurism on the home front, and increasing economic precariousness abroad. It must base this new conservatism on the traditional heartland values that work around the kitchen table: integrity, avoidance of debt, commitment to family, self-reflection, and deferral of gratification. If it can articulate these principles with sincerity--and match its policies to its rhetoric--then the GOP can become a coherent challenge to Obama's sprawling economic policy and earn the title of Dave Ramsey's party.

If, on the other hand, the GOP finds itself unable to wrench free of its old-GOP creed of deregulation, debt speculation, and government-bashing in favor of corporate interests, then we are truly stuck. No other coherent opposition to Obama is likely to emerge, considering the expense involved in political campaigns. That would mean it's all in Obama's hands, and if he fails to change the system, we're at the mercy of a two-party political system with only one economic policy: speculating and leveraging and financing this country into increasing disparities of wealth, an increasingly burdened middle class, and significant economic decline.