More Evidence of Republican Malfeasance and the Crumbling Economy

More Evidence of Republican Malfeasance and the Crumbling Economy

 

In its AP Impact series, the Associated Press illustrates that the Bush administration, against the advice of reputable economists and regulators, relaxed regulations and rules on mortgage loans in 2005, allowing the current economic crisis to start. The article can be found here: http://news.yahoo.com/s/ap/20081201/ap_on_bi_ge/meltdown_ignored_warnings;_ylt=Ao01gt3K.7mp.j9OJOOqBuSs0NUE

The article correctly points out the warnings from regulators and economists as well as the pressure brought to bear by lobbyists for the mortgage industry and the Bush administration’s compliance with the interests of the mortgage lenders.

 

This did not happen in a vacuum; the administration of George W. Bush was helped along in its decision making by Party pundits and members of Congress who shared the now proven foolish belief in absolute free markets and deregulation. The article by the Associated Press makes the attempt to place all of the blame on lobbyists first and the administration second, thereby relegating all responsibility to now fading from the scene actors. This is misleading, and consistent with the demonstrated Associated Press bias towards the current administration and “centrist” Republican/conservative policy supporters, including a former Presidential candidate and a current Kentucky Senator. The article skirts the issues of responsibility and refuses to point to the true “smoking gun” of Republican economic theory.

 

However, the article by the Associated Press is more than gentle on our Republican legislators who all but unanimously backed the easing of restrictions on high risk loans. Republican Senators and Congressmen, in lockstep at the end of their control of both Houses of Congress, equally lobbied the administration to show favoritism for their mortgage industry “friends”, in a push for the fruits of the Republican economic policies of deregulation and “free” markets. AZ Senator John McCain and KY Senator Mitch McConnell were at the early head of the list for supporting these deregulation measures which ultimately proved fatal for an already troubled economy.

 

It is important to remember that “free” markets and deregulation always lead to domination by the greedy who have no interest other than short term profiteering. Monopolies and workplace hazards, as well as ultimate crushing of the thing sought to invigorate are the end result of Wilsonian Economics, the driving market ideology of the Republican Party and the cause of the Great Depression. It is regrettable that the Republican party has, twice in a century, proven itself short-sighted on economic matters. The Republican Party sells its economic theory to the masses talking about how their ideology is good for business, especially small business. This, while curiously believed by many who are the policies’ victims, is simply not true. Republican business favoritism is not beneficial for the greatest number of business owners, just as Republican tax policy is not beneficial for the greatest number of tax payers. Republican business, economic, and tax policy is beneficial only for the greatest amount of money in these areas, which, still remains in the hands of a very few. Whether on Wall Street or Main Street, regulation helps to ameliorate the abuses of power that seem to naturally coincide with the accumulation of wealth.

 

While no one should begrudge the wealthy the entitlement to the fruits of their labors, it is reprehensible to suggest, as the Republican Party usually does, that the fruits of those labors should entitle pre-emptive right to the fruits of the labor of others. Wilsonian Economics, again, the economic theory of the Republican Party, through its trickle down mechanism does exactly that: the poor and middle class are taxed at effectively higher rates than the rich, and the money is then re-distributed to the rich. The costs associated with Medicare, Medicaid, Social Security, and welfare pale in comparison to the amount of federal (our) money put into the hands of the already wealthy. This is in part explanation for why so many small businesses and farms fail during normaleconomic times while it requires a fiscal catastrophe to fell the industrial-economic behemoths.

 

What has really been at the root of our current economic meltdown has been the steady, Republican policy-fueled, decline of the middle class. In Wilsonian Economic theory, trickle down predicts that money fed into the upper branches will “trickle down” to the roots. Unfortunately, the theory doesn’t work in practice and the roots wither. The money and profits enjoyed by those at the top of the economic stratum has not “trickled down” to the bottom or even the middle. This money has mostly remained at the top, where there is, in truth, a very limited consumer base. These policies have steadily eroded the ability of the consumer base, where most of the goods purchasing takes place, to participate in the market. In a consumer-driven economy, any policy which reduces the consumers’ ability to consume is pure foolishness. With no one in the lower economic strata able to purchase goods because of the concentration of wealth at the top, eventually the supply of money for the top will also slow and eventually fail. Unregulated greed has its own reward, and that reward is failure, as current events have shown. The economic crisis at the top has been predicated by the long ignored economic crisis at the bottom, which in turn, was caused by the Republican/conservative economic policies which favored the top.