Eric Cantor, who was first elected to the Congress from Virginia's 7th District in 2001, is the majority leader for the GOP in the House of Representatives. A lawyer and CPA, he is a prominent voice in the Tea Party movement as well as a fervent supporter of Grover Norquist's pledge against raising any taxes. He has also now announced his support for a constitutional amendment that would require a balanced budget by the federal government, the effect of which would be to deny the ability of the Untied States government to borrow money or to engage in deficit spending, even in times of war or economic calamity.
Cantor's website describes him as "a results-oriented leader in Congress who is committed to helping solve problems for America's families. He has developed a broad range of innovative solutions to promote free markets, economic growth, job creation and national security....In Congress, Eric has earned a reputation as a strategic thinker and ideas-driven conservative. The Weekly Standard featured him as an emerging leader among an impressive group of "Young Guns of the House GOP." Congressional Quarterly has described him as 'the GOP's communicator, rainmaker and consensus builder...'."
Cantor's website boasts that he "has worked to lower taxes, eliminate excessive regulation, strengthen small businesses, and encourage entrepreneurship. He was the chief sponsor of a 2006 bill to make permanent the slashed individual income tax rates for capital gains and dividends, rewarding entrepreneurs, retirees and investors with the ability to create more opportunity for their families and jobs for our communities. He has long been a key player in health care, fighting for greater choice for families. He authored the Tax Relief and Health Care Act of 2006, which made it easier for families to save for their health care needs through Health Savings Accounts. The legislation became law in late 2006."
Not surprisingly, Cantor's website omits any information about the employment of his wife, Diana, who is a Managing Director in a division of Emigrant Bank, a subsidiary of New York Private Bank & Trust Corp. As reported by Susie Madrak in her blog (Crooks and Liars, February 17, 2009), Ms.Cantor's bank benefited from the $700 billion Wall Street bailout that Cantor helped steer through Congress last fall. The New York bank received $267.2 million from the U.S. Treasury's Troubled Asset Relief Program .
Eric Cantor's opposition to any extension of the federal government's debt limit with substantial cuts federal spending must be viewed in the light of current economic reality. The Economist magazine ( "The struggle to eat," July 16-22, 2011) reports that, as of April, 2011, because of poverty -including the exhaustion of unemployment benefits - forty-five million Americans- or 1 in 7 U.S. citizens - were receiving food stamps.This Sunday's New York Times ("Week in Review," July 17, 2011) documented a -6.9% decline in overall discretionary consumer spending since 2007, the steepest decline recorded since the Great Depression. Included in the data are a 24% contraction in home sales, 26% declines in purchases of automobiles and washers and dryers, and a 19% drop in consumer purchases of stoves and ovens.
Paul Krugman has observed. ("Letting Bankers Walk," New York Times, July 18, 2011), "The big drag on the economy now is the overhang of household debt, largely created by the $5.6 trillion in mortgage debt tat households took on during the bubble years."
From the perspective of economic policy, the austerity measures endorsed by GOP legislators across the country, as exemplified by the budget endorsed by the GOP caucus and supported by Congressman Cantor, are counter-productive. If adopted, these austerity measures would only compound and prolong the current recession which has been caused by a collapse of the demand function. The absence of demand - in the consumer and labor markets - is directly related to the loss of well-paying jobs and the hollowing-out of the middle class in this country.
In such an economic environment, government spending in the form of further stimulus - not retrenchment - is the only viable solution. Keynes' General Theory emphasized the importance of achieving equilibrium in the markets and the necessity of an ever-expanding, consumer-driven population of employed workers to stimulate the aggregate demand in advanced industrial, capitalist economies.When the consumption function was depressed, as during the Great Depression and now, Keynes recommended pump-priming by the government--the expenditure of public monies through monetary policy--in order to create conditions approximating full-employment.
The multiplier effect from government-created fiscal policies which embrace stimulus-spending can be measured and documented. Hence, for example, New Deal spending helped to mitigate the worst effects of the great depression. Nevertheless, it took World War II, as right-wing critics endlessly note, to end the Great Depression. The lesson, however, escapes neo-conservatives like Congressman Cantor: What World War II demonstrated was that government spending on a scale even more massive than the New Deal was needed to restore economic vitality. That, too, is the lesson of the most recent stimulus-packages proposed by the Obama administration: They have been too timid but, despite their modesty, further stimulus has been blocked by economic illiterates in the U.S. Senate.
Eric Cantor, like his female counterpart, Michelle Bachmann, is an economic troglodyte. He is, like Bachmann, by professional training a tax lawyer- i.e, a bean counter - who is able to calculate with arithmetic precision short-term and long term capital gains on a tax schedule but cannot comprehend the calculus which Keynes used to explicate his General Theory.Cantor's knowledge of economics appears to have been informed by Milton Friedman and the Chicago School of Economics-micro-economists or monetarists whose economic theories sought, after Keynes' demolition of their ideas - to defend or to reinvigorate the classical liberal economic orthodoxy espoused by Adam Smith, David Ricardo, and later by Böhm-Barwerk, the nineteenth century Austrian School of Marginal Utilitarianism and by Ludwig von Mises.
The classical liberal paradigm of unfettered competition and limited government involvement no longer explains economic reality, as Cantor well knows; otherwise he would not defend tax subsidies for the wealthy and a lack of government regulation, including enforcement of consumer protection laws and vigorous enforcement of anti-trust legislation.Unfettered competition based upon free market decisions in which goods and services are sold to the most willing buyers no longer creates individual opportunity for most Americans or an abundance of business opportunities.Rather, the insecurities of the marketplace persuade those who are successful to institutionalize their advantages. Monopolies, oligopolies and plutocracy are the result.
Those who advocate the virtues of the market economy need, at the very least, to acquaint themselves with Keynes or his American disciples such as John Kenneth Galbraith, Gardner Ackley, Walter Heller or Paul Samuelson, to try understand how macro-economic fiscal policies need to work in a recessionary economy. An unthinking, theological devotion to discredited 18th and 19th century nostrums from classical liberal economic theory - as advocated by the likes of Eric Cantor - is a prescription for continued economic stagnation and an implosion in the GDP. Cantor's willingness to torpedo the "full faith and credit" of the United States' government with respect to the debt limit authorization in order to pander to his right-wing base is evidence of his ideological recklessness and his inability to understand complicated issues of fiscal and monetary policy.
More than twenty-five hundred years ago, Socrates lamented that "No man undertakes a trade he has not learned, even the meanest; yet everyone thinks himself sufficiently qualified for the hardest of all trades, that of government." Eric Cantor is living proof of Socrates' prophetic insight.