Republicans Have Crashed a National Economy Before to Set the Stage for Right-Wing Rule

"It's pretty remarkable how central a possible US financial collapse/loss of [the] dollar as reserve currency has become to GOP messaging," tweeted political strategist Simon Rosenberg on April 25, adding that the Republican goal is "to crash the US financial system to hurt Biden." He refers to the party's attempt to use the prospect of a US default on its debt to force President Joe Biden to negotiate spending reductions for Medicaid and other vital assistance programs.

Democrats have labeled the Republican bill that furthers these demands as the Default on America Act, or DOA (the habitual meaning of this acronym, dead on arrival, is also relevant). As Senate Majority Leader Chuck Schumer (D-NY) warned, the act "poses two terrible choices: either default on the debt or default on our country, with severe cuts to law enforcement, veterans, families, teachers, kids, even cancer research."  

The massive domestic and international damage that a default on U.S. debt would bring might lead some to think that the GOP can't possibly be so vindictive or irresponsible. That would underestimate the Republican party's appetite for chaos and destruction.

Republicans also have a template for crashing a national economy to facilitate right-wing rule. From 1970 to 1973, the Richard Nixon administration, with Henry Kissinger as National Security Advisor, waged economic warfare on Chile to build support for the 1973 U.S.-backed coup that removed democratically elected president Salvador Allende. Under the guidance of U.S. economists, the military dictatorship then adopted neoliberal policies that destroyed Chile's social safety net and privatized education as well as the economy.  

As an autocratic entity, the GOP would gladly unleash a "shock event," as I call coups and other cataclysmic occurrences that have allowed authoritarians to damage or destroy democracies. Today's GOP is a far-right party beholden to a violent cult leader. It no longer respects or operates within democratic norms, having liberated itself from democratic ideas of accountability. And it has no interest in bipartisanship or in sustaining a democratic political system --quite the contrary.

The Republicans' endgame is to convert America into an autocracy, building on the momentum created by Donald Trump's Jan. 6 coup attempt and state-level assaults on democracy. To this end, party elites and their media allies have orchestrated a campaign to delegitimize a sitting president that has no domestic precedent in its intensity.

Decreeing Joe Biden to be merely an "acting" head of state, as the Texas GOP did in a June 2022 resolution, speculating publicly about Biden's apparently semi-imminent death, as Nikki Haley did recently, and persistent labeling of Biden as a Socialist tyrant (favored slogan: the "Biden regime") are a few examples.

"Make the Economy Scream"

Fifty years ago, another episode of economic and psychological warfare meant to prepare the removal of a democratically elected progressive president was underway. Allende, a non-aligned Socialist, alarmed the United States and Chilean conservatives with his anti-imperialist economic and social programs. He nationalized Chile’s copper mines, expropriated 50% of farmlands and businesses to redistribute wealth, and targeted multinational corporations in Chile with a 1971 law against “excess profit.”

Yet plans had been made to end Allende's government as soon as he was declared the victor of the Sept. 4, 1970 election. Kissinger made contact with CIA director Richard Helms about coup planning just eight days later, and a Sept. 15, 1970 meeting of Helms, Kissinger, and Nixon produced the fateful directive to “make the economy scream.”

The campaign to unseat Allende brought together far-right elements within the Chilean military, the CIA and other American government agencies, Chilean media and financial elites, Chilean extremist grassroots groups, and Brazilian military officials who had participated in Brazil's 1964 U.S.-backed coup. Throughout, Kissinger, who had fled Nazi Germany as a youth, encouraged Nixon to ramp up the pressure, including by claiming in June 1971 that Allende would follow Adolf Hitler in establishing a “one-party state."

Henry Kissinger on the cover of TIME, Feb. 7, 1972, as he unleashed economic, psychological and other warfare to wreck Chile’s democracy. TIME.

Crashing the national economy involved a credit freeze and an embargo on international loans to Chile. CIA-assisted truck driver strikes in 1972 and 1973 severely disrupted the food supply, causing unrest and fears of scarcity. Polarization also did its part. With no legislative majority, and the Christian Democratic opposition determined to block his programs, Allende made recourse to legal loopholes and executive decrees, bringing calls for his impeachment. One month before the coup, the conservative-dominated Chamber of Deputies declared his government unconstitutional.

On Sept. 11, 1973, Nixon's intention to "give Allende the hook" came to fruition when the Chilean military went into action. Allende refused to flee as Hawker Hunter jets bombed the presidential palace. He committed suicide rather than surrender. Weeks later, Kissinger was promoted to secretary of state for a job well done.

By then the new junta's head, General Augusto Pinochet, had held his first press conference, reassuring the public that the government would "normalize and heal the country" from the political and economic ruin and social disarray Allende had allegedly caused. Thousands were tortured and imprisoned during the seventeen years of that "healing," and more than 300,000 Chileans went into exile, depriving Chile of intellectual and other capital.

No matter that by the early 1980s neoliberal austerity measures caused an economic crisis, with 30% unemployment and banks unable to pay their heavy foreign debt loads. To avoid even more distress, Pinochet's government had to purchase the defaulted loans of the banks and financial institutions. By 1983, 7 of 19 commercial banks and 8 of 22 investment banks in Chile were state-owned This fact is conveniently left out of accounts of how the military dictatorship and its neoliberal policies supposedly saved the Chilean economy.

Those who know this history of engineered democratic failure are able to call out similar tactics being tested today. It is why I kept a close eye on the 2022 convoy actions by far-right extremists in the U.S. and Canada, which were meant to disrupt the supply chain and cause chaos. They could return in 2023-2024.

Republicans’ aim is to convince Americans that Biden’s "Socialist regime" is illegitimate, incompetent, and a threat to their economic and other survival, leading them to support any actions the party takes to "heal" the situation.

The economic warfare threats now being made by the GOP are a huge red flag. Causing massive hardship by rendering the American economy DOA as the 2024 presidential race begins would be in line with past authoritarian actions.

References:

Oscar Guardiola-Rivera, Story of a Death Foretold. The Coup against Salvador Allende, September 11, 1973 (London, 2013).

Mónica González, La Conjura. Los mil y un dias del golpe (Santiago, 2000).

Ruth Ben-Ghiat, Strongmen: Mussolini to the Present (New York, 2020, 2021).

Augusto Pinochet, El dia Decisivo: 11 de Septiembre de 1973 (Santiago, 1979).