Guest opinion by Harry L. Cook: The Republicans are pulling off a political miracle that threatens to stretch a deep recession out over many more years and accelerate income inequality — the rich keep getting richer and the poor get poorer.
It makes you wonder about democracy, marvel at politics and worry about economics. The Republicans are pulling off a political miracle that threatens to stretch a deep recession out over many more years and accelerate income inequality — the rich keep getting richer and the poor get poorer. And the electorate, thoroughly deluded, is happily going along.
The Republicans are actually turning the worst economic disaster since the depression of the 1930s, that they themselves created, into political capital that may very well get them re-elected and back into power in 2012.
It is all very convoluted, as economics and politics often are, but it came in two acts with the finale still under way.
Act 1 was the Republican era. It began in the early 2000s when the Bush administration, pursuing its laissez faire ideology, turned the free market loose for the housing boom and capped it off with the ultimate financial creation, that hardly anybody understood — the Credit Default Swap. The CDSs and variations, which originally purported to be insurance to be held as reserves for pension funds and the like, swamped the world financial system with trillions of dollars; in effect a giant Ponzi scheme.
The ensuing crash in 2007 resulted in financial ruin and hardship for untold numbers of families and firms, a federal debt of trillions of dollars, and high unemployment for many years.
Act II began with Obama's election in 2008. Coming in on a wave of soaring rhetoric and wishful thinking, with visions of FDR and a new New Deal in the offing, Obama was completely outmaneuvered from the very beginning. He approved the rescue of the banking system pretty much on banking terms at a cost of hundreds of billions of dollars. Subsequently he negotiated special deals with the pharmaceutical and insurance companies that they were pleased to agree to.
Unfortunately, his strategy on health care was to leave it to Congress and come in at the end, if necessary, for the finishing touches. With Obama essentially out to lunch, the Republicans cleverly turned the public against any bill by leaving out any positive features and thoroughly misrepresenting it.
Meanwhile the Democrats wasted many months trying fruitlessly to get bipartisanship support. The Republicans strung Obama along to get as much as they could and then, predictably, announced that it was not enough and unanimously opposed the final bill each House passed.
The finale opens with health care up in the air and very high unemployment. Obama has finally come out with his own plan, which melds the House and Senate plans and gambles that omitting the public option will gain enough Democratic "moderates" and Republicans to offset the losses in his base by leaving out this crucial element. If the Republicans are successful in their strategy to politically destroy the Democrats at all costs, the outlook for the country as a whole will be grim indeed.
The country cannot peacefully survive years and years of high unemployment and hopelessness.
Harry L. Cook has lived in Ashland since 1966 and was a professor of economics for Southern Oregon Universtity for 20 years.