But Rep. Eric Cantor (Va.), the House minority whip who led the fight to deny Obama every GOP vote for the plan, is studying Winston Churchill's role leading the Tories in the late 1930s, a principled minority that was eventually catapulted into power over the Labor Party. He calls the stimulus bill "a stinker."
Should we remind both of them about a piece Lord Keynes wrote in 1925 entitled The Economic Consequences of Mr. Churchill? Churchill as Chancellor of the Exchequer had the British pound return to the gold standard after the First World War at too what turned out to be too high of a value. Keynes correctly predicted adverse economic consequences. British macroeconomic policy during this period also was the kind of macroeconomic mix the U.S. saw in the early Reagan years – tight money combined with tax cuts. The prices of British exports such as coal and textiles became uncompetitive on world markets leading to deflation and unemployment. As Keynes predicted, this strong pound policy also caused a trade deficit. The Reagan macroeconomic mix also created a fall in net exports, which contributed to the 1982 recession.
Churchill later recognized that the 1925 return to the gold standard was a mistake. One would think that U.S. Republicans would recognize that had we chose to repeat Herbert Hoover’s policies, we would be making an even greater economic mistake. But then Eric Cantor hearts Churchill’s leadership during this period. Go figure.