Nicholas Wapshott

Isolationism is back in the news. The big thinkers of the Tea Party, in their pursuit of slashing taxes, lowering public spending, and severely shrinking the size and power of the federal government, have revived an idea that has not been respectable among senior Republicans for more than 70 years. Senator Rand Paul of Kentucky believes that, to encourage more young people to vote for the GOP, the party should stop chasing divisive social issues, like incarcerating people for petty drug offenses, and take up civil liberties issues, like protecting American suspected terrorists on American soil from being summarily executed by American drones.

But that is just a start. According to a recent speech in Cincinnati, Paul thinks that, for the GOP to win younger voters, “even bigger to me than the social issues is the idea of war.” “If we didn’t have to be everywhere all the time, if maybe we tried to reserve it for when our national interests were impacted or a vital interest of ours was . . . [he left the thought unfinished] — and if Republicans didn’t seem so eager to go to war — I think we’d attract more young people.” He would prefer it “if we had a less bellicose approach, if we were for a strong defense but a little bit less aggressive defense around the world.” Paul is not suggesting pacifism. What he means by “a less aggressive foreign policy” is that he wishes America would stop taking its international responsibilities so seriously because it costs taxpayers a lot of money.

This is an extraordinary about-face for a leader of a party that in the post-war world has always proudly defended America’s right to intervene with force when and wherever it wishes. The GOP has always been the natural home for isolationists. The “Irreconcilables” that kept America out of the League of Nations were overwhelmingly Republican and it was largely Republican isolationists who advocated the neutrality laws in the Twenties and Thirties. Robert Taft nudged the party towards isolationism in his many failed bids to become the Republican presidential candidate through the Forties and Fifties. And rogue isolationist Patrick Buchanan gave the GOP establishment a scare when in both 1992 and 1996 he prospered in early primaries.

But internationalism and support for the military has been the GOP’s backbone since Abraham Lincoln. Despite Dwight Eisenhower’s belated warnings about the “military-industrial complex,” he was the most accomplished military figure to occupy the White House since Ulysses S. Grant. Richard Nixon had no compunction about secretly bombing Cambodia and Laos in an attempt to bring the Vietnam War to a close. Ronald Reagan may have wanted to trade away our nuclear weapons, and his finest hour as commander-in-chief may only have been the invasion of Grenada, but no one doubted his resolve to counter the Soviet threat by military means if necessary.

After a wobble, George H. W. Bush successfully prosecuted the Gulf War with admirable restraint. And his son, in thrall to neo-conservative hawks, waged war simultaneously in Afghanistan and Iraq, even though the casus belli of the Iraq War proved to be a  tragic red herring, expensive in monetary  and military and civilian losses. Navy fighter pilot John McCain, taken prisoner and tortured by the Vietnamese, was likely only half joking when he urged, “Bomb, bomb, bomb/ Bomb, bomb Iran”  to the tune of “Barbara Ann.”  Romney, who dodged the draft by trying to convert France’s Catholics to Mormonism, was the beginning of the end of the fighting tradition. Now, merely to attract fickle younger voters, decades of the GOP’s warrior tradition is to be jettisoned.

The most recent episode in the long-running Punch and Judy show between Sarah Palin and Karl Rove is shedding light on the schism between old-school Republicans and the Tea Party insurgents who are steadily pushing them aside. It appears it is not merely Palin’s personal antipathy to Rove that drives her spleen but a contempt for the dark arts he employs.

It is no surprise, perhaps, that the anti-intellectualism that underpins many of the Tea Party’s most absurd and offensive stances – the insistence that evidence of global warming is invented; the notion that women who are raped do not conceive; the belief that Darwin’s theory of evolution is contradicted by the Bible; the failure to understand that all economics is Keynesian; and so on – also informs Palin’s assault on the science practiced by Rove and every other established political strategist around the world.

In a zinger directed at Rove, Palin blamed Mitt Romney’s defeat on the “top-down political process” directed by a “permanent political class” in “permanent political mode” in Washington that is “busy worrying about their own political future.” “Now is the time to furlough the consultants, and tune-out the pollsters, send the focus groups home and throw out the political scripts, because if we truly know what we believe, we don’t need professionals to tell us,” she declared.

The outcome of the sequester ultimatum appears to have taken everyone by surprise. Two long summers ago, when the president and House speaker John Boehner conjured a prospect so terrible that even spending on defense would be deeply cut, they both assumed Congress would buckle rather than approve such a blow to the nation’s pride. According to Bob Woodward’s The Price of Politics, Boehner said, “Guys, this would be devastating to Defense. This is never going to happen.”

But neither man appears to have taken account of the clearly stated views of the Tea Party. There are few better ways of appreciating how the Republican Party has transformed in the last two years from a party of defense hawks to a party of deficit hawks than tracking how the sequester has turned from a threat to the nation’s defenses to an unparalleled opportunity to bring the government to heel.

If Obama and Boehner had taken heed of the strident voices offstage, they might have guessed their ostensibly idle threat to the Pentagon would be taken as a chance to reduce the size of the federal government. They didn’t, and the sequester is upon us, promising, according to the Central Budget Office and IMF, to throw 750,000 out of work and slow down already anemic economic growth by 0.6 points. No surprise there: If you take money out of an economy, activity flags and the economy shrinks.

Immigration reform is being discussed again on Capitol Hill. At his inauguration, President Barack Obama declared, “Our journey is not complete until we find a better way to welcome the striving, hopeful immigrants who still see America as a land of opportunity.” Senior Republicans, too, seem ready to make a deal. They sorely need to do so, because Mitt Romney’s damaging policy of self-deportation ensured that Hispanics voted overwhelmingly for Obama, and demographic changes mean unless the party changes tack fast it will keep losing. But there is an enormous gulf between what the Republicans need to do and what the base will go along with. What is at stake is whether the GOP remains a party of government or becomes a mere protest movement.

Although he does not have a majority in the House, the president appears in no mood to compromise. He wants to help create a more tolerant America and believes he has the country behind him. Recent polling confirms that his views on gay marriage, gun control, abortion, immigration and other social issues all chime with a majority of the electorate, and he is determined to press his case. His inauguration speech spelled out the direction he is heading in, and his Feb. 12 State of the Union address is expected to chart the course. He appears to be relishing the chance to embarrass the Republicans if they stand in the way of progress. Catching Obama’s new sense of purpose, House Speaker John Boehner has become convinced the president wants “to annihilate the Republican Party” and “shove [it] into the dustbin of history.”

Senior Republicans appear to be aware that they are out of step with America and need to make significant changes to policies and their public image if they are to stand a chance of winning the midterm elections in 2014 or the White House in 2016. Former Secretary of State Condaleezza Rice believes “the Republican Party certainly has to stop turning off large segments of the population” and urges it to face “the big issue,” immigration reform. Says Senator Lindsay Graham (R.-S.C.): “We’re in a death spiral with Hispanic voters because of rhetoric around immigration.” Senator John McCain (R-Ariz.), who burned his fingers pushing for immigration reform in 2006-07, thinks “we have to do immigration reform … There is no doubt whatsoever that the demographics are not on our side.” Conservative commentator Seth Mandel suggests it may be too late: “When they arrived here with nothing but the clothes on their back, desperate for a chance at a better life for themselves and their children, one party said, ‘Come on in,’ and the other said, ‘Turn around and go back.’”

Does austerity work? As many Tea Party activists and conservative economists suggest that the solution to America’s economic ills is a large spoonful of the bitter medicine of austerity, it is a question worth asking. A few months of misery may be worth it if the result is strong growth and full employment. First witness for the austerity prosecution is Latvia, for which some extravagant claims are being made. The economy of the former Soviet satellite and current member of the European Union was nose-diving in 2008-9. Now it is growing again.

Latvia’s premier, Valdis Dombrovskis, has written a self-congratulatory book, How Latvia Came through the Financial Crisis, with the help of Anders Aslund of the Peterson Institute, who claims that if America followed the Latvian example we would all be better off. Aslund extrapolates from the Latvian example, “Keynesian thinking has been tested, and it has failed spectacularly.” So what does Latvia’s experience of austerity really tell us? As you might expect, things are not quite as rosy as they are made out to be.

Back in 2008-9, Latvia was at its lowest ebb, losing a fifth of its output in just two years. Its second largest bank went bust, leaving thousands of Latvians without their lives’ savings. Unemployment was above 20 per cent, and 40 per cent among the young. Credit froze and construction, which prior to 2008 was booming thanks to low interest rates, collapsed. In December 2008, the Latvian government won a €7.5 billion bail-out from the IMF, the World Bank, and the EU – worth more than a third quarter of its annual GDP of $28.25 billion – on the condition that it introduce “structural reforms” and a generous, temporary safety net to offset the harsh effects of austerity. The reforms meant slashing public spending from 44 per cent of GDP to 36 per cent and removing legal safeguards from trade unions to reduce labor costs. By early 2009, violent rioting erupted on the streets of the capital, Riga.

The tourniquet applied by the outgoing Congress to the economy allows a two-month breather before we are consumed by the next deadline. The president and his party can allow themselves a brief moment of celebration for imposing higher taxes on the richest Americans, but the next stage in fixing the nation’s fiscal problems may not be as easy. By the end of February, lawmakers must find enough cuts in public spending to allow the debt ceiling to be raised. Two more months of uncertainty will prevent businesses and consumers from making spending decisions that would bolster the economic recovery.

The devil is not so much in the detail of the arguments to come as the big picture that frames the debilitating running debate. While the difference between the sides is ostensibly over taxes and public spending and borrowing, the more profound division is over where government should begin and end. For many of the Republican Party’s Tea Party insurgents, the choice is even more fundamental: whether there should be a government at all. Their unbending position, demanding an ever-diminishing role for the federal government, has levied an enormous unnecessary cost on everyone else.

Since Republicans regained control of the House in the 2010 mid-terms, when the Tea Party tide was in full force, they have attempted to freeze the size of government, coincidentally putting a brake on economic recovery. They have vetoed attempts at further economic stimulus, encouraged America’s economy to be downgraded by the ratings agencies by threatening not to extend the debt ceiling, and tried to veto any and every tax increase in the fiscal cliff talks. Their aim is to shrink government by starving it of funds. Such uncompromising absolutism has led to the dampening of business confidence and investment that would have created jobs.