Trading Misery for Power

For all the confusing factors that came into play in this election, there seems to be some kind of consensus that the basic problem is the economy. Same old, same old: "It's the economy, stupid!" That is, economics is supposed to drive politics – but that is not the way it seems to be working out.


When the economy is down, true enough, out goes the party in power. The Democrats lost over 60 seats in the House and not just because it was the midterm after a new president took office. Rather, the unemployment rate was stuck at 9.6 percent and the Democrats did not appear to recognize the need to create jobs. The voters were also well aware that the Republicans did not have a plan, beyond their usual cutting of taxes, but the Democrats were in power so it was their responsibility.


The American economy is truly in a directionless funk and there is no political or economic consensus on how to revive it. For six months, from September 2008 to February 2009, there was actually a bipartisan agreement that the economy was collapsing around us and needed direct action in the marketplace to salvage it. The ensuing salvage operation was financial. It required TARP, control of AIG, Freddie and Fannie, and it mandated bankruptcy of GM and Chrysler. The salvage operation may have been messy but it was bi-partisan and it worked. Republicans and Democrats should be happy about that. The alternative was unspeakable.


Then it came time to restart the economy and both parties fell back on politically motivated, faith-based economic platforms that are principally intended to rally and then reward their backers. The Republicans cut taxes to the rich and the Democrats give stimulus spending to the middle class. But note: politics became more important than economics.


In this election America passed up an opportunity to have an intelligent dialogue on the economics of the crisis. Now, after the election, the Republicans are treating the lingering, high unemployment of the Great Recession as a gift from the economic gods.They think it will give them what they want most, according to Sen. Mitch McConnell, a one term presidency for Barack Obama. The Republicans are quite willing to let millions suffer economic hardship for years to gain their political ends.


The Republicans are willing to pander to the Tea Partiers on their right wing and demand fiscal restraint with spending cuts, knowing that it will just push the unemployment rate higher. They want to send President Obama into the 2012 election with a fired up opposition and a very disappointed base – an enthusiasm gap, if you will. The Republicans will use the politics of no to frustrate any Democratic economic revival plan and prolonged the recession. Then they will blame the Democrats.


For their own moneyed constituents, the ill effects of the recession are long over. The Dow Jones Industrial Average is back up over 11,000, profit ratios are climbing, executive salaries are again astronomical and the rich are getting richer. Unemployment is no problem for them since, for their constituency, it operates as a wage suppressant that redistributes money from the poor to the rich.


Republicans intend to take the presidency in 2012, take credit for the recovering economy and finally, in the name of fiscal responsibility and small government, raise the wage tax, institute a regressive value-added tax and cut Social Security benefits. They will buy Tea Party political support with the misery of working families.


Democrats do, of course, have a plan. They recognize that this recession is the result of a lack of aggregate demand. The working class must somehow get the money to buy the goods they are producing. The Democratic plan therefore entails another stimulus package, subsidizing exports, encouraging domestic green production and weakening the dollar.


That clashes in every respect with the conservative Tea Party and its populist/nationalist agenda to cut spending, balance the budget, buy-American and strengthen the dollar. The mainstream Republicans intend to watch all that play out between the Democrats and the Tea Partiers and laugh all the way to the White House.


It is a bold plan the Republicans have hatched but I don't think it will work. I trust, and that trust is faith-based, that an aroused citizenry will once again recognize that the economic well-being of all its citizens is important and more important than partisan politics.