For GOP, Nation-Building Needs to Come Before Deficit Reduction

For GOP, Nation-Building Needs to Come Before Deficit Reduction

If Republicans win the U.S. Senate today, the first imperative of the 114th Congress should be adopting a budget strategy that reconnects the GOP with its middle-income base, the foundation of all center-right majorities. Such a shift would dramatically improve the party’s chances of not only winning the White House–but also successfully defending 24 Senate seats–in 2016.

The party must ditch the deficit-cutting retrenchment agenda pushed by the Wall Street Journal, conservative think tanks, and the Republican House–which sank Mitt Romney and turned today’s Senate contests into nail-biters. Rather, it must laser-focus on fully utilizing American resources and labor (not merely capital) to extend the current Wall Street boom throughout the entire country.

While it’s tempting to equate budget-balancing and bean-counting with governing, Republicans must recognize that our flood of red ink stems from the collapse of the high-wage economy that America enjoyed from World War II to the end of the Cold War. Without an economy that works for Main Street, a recovery of 20th-century proportions–and fiscal sanity–remains out of reach.

Indeed, the Congressional Budget Office has been forced to revise its hopelessly bullish GDP projections downward every year since the onset of the Great Recession–another symptom of misguided policies that have favored capital over labor, and trade over industry, since George H. W. Bush broke his no-new-taxes pledge. Even if Republicans could secure an ideal regulatory and tax environment, history offers scant evidence that small businesses would be able to create what is urgently needed: tens of millions of stable, family-wage jobs with generous benefits.

The only hope of reviving Middle America with a flourishing private sector–and very little means-tested welfare–is to recover the robust nation-building that animated successful Republican presidents like Abraham Lincoln, Theodore Roosevelt, Dwight Eisenhower, and Ronald Reagan. Since the nation’s founding, becoming and remaining a superpower has not relied on the whims of the market but rather a certain synergy between the federal government and private enterprise in developing our defense base, manufacturing and energy-producing prowess, and transportation infrastructure.

Consequently, the 114th Congress should follow Alexander Hamilton, the founder who thought most strategically about political economy and called for large-scale, shoot-for-the-moon projects to revive a nation sapped by decades of drift and decay. Examples of nation-building that would pay huge dividends–especially by modeling economic patriotism by using only materials forged at home by U.S. firms employing American workers–include:

  • Transportation breakthroughs by 1) developing “critical commerce corridors” of interstate highways with New Jersey Turnpike-style “dual configurations” that separate truck from automobile traffic; 2) renovating Amtrak’s Northeast Corridor, including constructing dedicated high-speed tracks for the service’s exclusive use; and 3) reviving the U.S. aeronautics industry, while transforming transcontinental and international travel, by resurrecting the old Boeing SST.
  • National defense and security initiatives encompassing 1) the building of that long-ago promised smart-tech, double-barrier border fence from McAllen to San Diego; 2) a new generation missile-defense system to keep America and our allies safe from Iran, Hamas, the Islamic State; and 3) the fulfillment of Ronald Reagan’s vision of a 600-ship Navy.
  • The unleashing of the estimated $128 trillion (that’s “trillion” with a “t”) worth of natural gas and oil that lies under federal lands and waters to ensure cheap and abundant energy, a prerequisite of an expanding middle class and healthy employment rates, for generations. To diffuse hardcore Green opposition, Congress could fund a long-term project to transform CO2 into a solid suitable for building materials or landfill.

To finance this preeminently conservative, pro-American vision, the GOP will need a business-like approach to governing. Congress should adopt capital budgeting, distinguishing between productive, rate-of-return investments on the one hand, and general government spending on the other. Surely, there’s plenty to cut in government operations, from foreign aid to utterly lame departments like Housing and Urban Development, as well as duplicative means-tested public-welfare programs. (The GOP should not even think about fiddling with Social Security and Medicare, largely self-financing and earned-benefit programs serving mostly Republican-leaning voters.)

Yet even hundreds of billions in savings would not offset capital-intensive projects costing trillions. So Congress should demand that the Federal Reserve launch a Q-E round that helps the struggling heartland the same way it bailed out the already prosperous New York financial district.

That’s no far-fetched idea. Demanding “grand old parity,” former FDIC chairman Sheila C. Bair, the unsung heroine of the George W. Bush administration, suggested something similar last year: “Given that the Federal Reserve insists on giving us cheap money, let’s use it for the benefit of the country by issuing long-term debt to finance such projects and repay it over decades through dedicated taxes and user fees.” The liabilities might also be repaid by imposing modest severance fees on all that untapped gas and oil under federal lands.

No doubt, the mechanics and specifics of these and other nation-building ideas need to be worked out. However, great countries–and great parties–do not find excuses for nixing initiatives with economic and political promise; they find the resources and proceed ahead.

By projecting leadership on behalf of America’s beleaguered middle class, the Grand Old Party would, fix its long-standing image problem once and for all, demonstrate that it can indeed govern, and find itself well-positioned not only to keep its Senate majority but also take down Hillary in 2016.

–Robert W. Patterson served in the administrations of President George W. Bush and Governor Tom Corbett of Pennsylvania.


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