Tissue of Deception

One of my favorite little details in NIXONLAND about our 37th president's bottomless venality is (speaking of bottoms) the story of the TP. You know, the one about how Richard Nixon was so desperate to make the economy appear to be booming right around Election Day 1972, that he directed an 11 percent increase in discretionary government spending for the fiscal year—including the purchase of a two-year supply of toilet paper bought in one shot by the Defense Department.

In his very important recent book, Princeton political scientist Larry Bartels has established beyond reasonable doubt that, among other things, when Democrats occupy the White House the economy performs much better. Except, that is, as Kevin Drum pointed out, in election years. When, of course, they put a band-aid on the economy—or wrap it in miles of surplus toilet paper—to make it appear healthy on Election Day, whatever the long-term consequences. By now, in fact, as James K. Galbraith has demonstrated in this paper, conservatives at the Federal Reserve have institutionalized the scam as an art form. Drum labels it the Monetary-Industrial Complex, and quotes the meat of Galbraith's findings:

The hypothesis [] has two independent parts. On one side, it predicts that...monetary policy [is] more permissive in years when a Republican administration is seeking renewal, than when it is not. On the other side, the hypothesis predicts that...monetary policy [is] more restrictive, after controlling for the influences of inflation and unemployment, in years when a Democratic administration is seeking renewal.

....The results in Table 3 give striking confirmation to the most cynical historians of the 1970s. They show that, controlling for the impetus of inflation and unemployment, the Federal Reserve systematically intervened in election years [during the period 1969-1983]. Both variables are independently significant, of opposite sign, and together they suggest a habitual ceteris paribus differential in the term structure of between 200 and 300 basis points, favoring Republicans.

....Table 4 gives information on the modern period....Over the years 1984 to 2006, monetary policy moves strongly in favor of Republicans and (less strongly) against Democrats in election years.

Just some reading you might have missed last month amidst all your obsessive presidential poll-watching.

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