The New Republican Strategy: Attack Success!

So, the latest strategy of the Republican Party is to label the Obama administration's economic strategies a failure because they. . . uh, well, worked?  Now that is an interesting take.  On the other hand, had Obama and his team done what FDR did to Hoover back in 1932, then Republicanism would be as dead as it was then.  Desperate for a way to stem the avalanche toward a deep and irreversible depression, President Hoover asked President-elect Roosevelt to join with him in developing a bi-partisan economic strategy that would work.  Roosevelt refused, believing there was nothing politically to gain by helping a Republican government head off an economic disaster.  Further complicating things for average Americans back then, was the tradition of waiting until March to swear in a new president.  For by late winter in 1932, the country was in complete financial and credit collapse, banks were failing at the rate of one per day, and jobs in the private sector were all but gone.

As any high school graduate can tell you, the cause of the Great Depression was the collapse of the Stock Market in 1929.  Too bad it isn't quite true.  Without a doubt, Wall Street played a pivotal role in the Depression scenario, but it was the banking failures of 1931 and especially '32 that really crushed the American economy.  Then as now, American businesses, both large and small, were dependent on a steady supply of credit to pay their day to day business expenses.  Everything from payrolls to the purchase of necessary raw materials was funded by short term loans from commercial banks.  Boiled down, the business cycle was pretty simple:  borrow money at the beginning of each month to cover expenses, and then pay down the loan with end of the month receivables, so one could borrow again.

The collapse of the booming securities markets of the 1920s was definitely alarming, but to average Americans it was little more than an interesting side show.  Very few workers were in the market, and for most it was almost fun to see the rich Wall Street fat cats skewered by their own insatiable greed.  But right beneath the quaking investment houses in New York, was a heavily leveraged American banking system without the reserves in capital to cover the speculation they had financed.  By the time FDR took office, and the American people really took notice, it was too late.  Banks were failing at an all time record pace, as panicked customers tried to withdraw all their savings. Credit had completely dried up, businesses could not cover their operating expenses, the work force was cut, inventories piled-up, prices plummeted and, well, you have all seen the history text photos of bread lines and shanty towns.

Leap ahead to 2008.  Wall Street is teetering on the edge as the Great American Mortgage Bubble has burst.  Investment, commercial, and retail banks, having been de-regulated by fifteen years of Republican leadership in Washington, are heavily leveraged in the bundled mortgage securities industry, and they are beginning to fail.  But this time, a Republican president, along with a Democratic President-elect, cooperate on a strategy to prevent a total collapse of our banking system.  The Bush program, called the Toxic Assets Relief Program, pumps almost a trillion dollars into the critically ill banking industry, followed in January (thanks to the Twentieth Amendment) by another trillion dollars in President Obama's Economic Stimulus package.  And guess what?  All but a handful of banks are saved.  Ten percent, rather than thirty percent unemployment, no bread lines and no Hoovervilles!  The investment markets are now recovering and most economists predict that 2010 will mark the beginning of a robust period of re-hiring and new job creation.

So what is the Republican strategy for the upcoming mid-term election cycle?  Easy, invent a problem where none really exists.  Taking a page from the failed policies of the 1920s, the Republican party is claiming that the deficits created by the Bush/Obama/Bernanke monetary policies will doom the country.  Add to that, a comical assertion that the above mentioned spending policies hurt rather than helped the economy, and you have their formula for electoral success.  Never mind the lessons of history, since there was no depression in 2008, then there would not have been one, right?  And all that shoring up of our nation's most important financial institutions was completely unnecessary, as the "Free Market" would have solved everything. . . you know, like it did in 1929, 1930, 1931, well, you get the picture.

But then what do you expect from the party that claims that Global Warming is an illusion, America has the best health care system in the world, escalating military involvement is the answer for all foreign policy dilemmas, Fred Flintstone and the dinosaurs actually lived together, and Sarah Palin is a great American.  Too bad President Obama put his country ahead of his politics back in 2008.  If only he'd acted like Franklin Roosevelt and allowed our finacial system to collapse.  Yeah, that is what we needed, the good old days of the Grapes of Wrath.  Now if only he would come to his senses in foreign policy too and start dropping nuclear bombs on Iran. . . you know, like Cheney suggested.