Traditionally the Republicans stand for smaller government and the Democrats for a system responsible for the welfare of it citizens. This means that the Republicans want more individual freedom and choice for the citizens, including the right to starve or go without proper medical care through a lack of funds. The Democrats are more socially responsible and feel a need to take care of those who cannot take care of themselves.
Perhaps one of the most ardent Republicans was President Ronald Reagan who continually talked about “government being the problem.” He voiced a desire for less government but left Washington at the end of his two terms in office with a far larger government than that with which he had begun eight years earlier.
In line with their desire to lower federal costs and weaken or do away with Obamacare, which was based upon a Republican model, the Republicans have recently won a pyrrhic victory against the 2010 law, Affordable Health Care. Around May 12, 2016 a Federal Judge, initially appointed by a Republican President, found the practice of the Federal Government of helping to subsidize premium payments for those who cannot afford to make them, illegal since it was not specifically mentioned in the law. The 38 page decision by the judge who reasoned that since the law did not specifically state this practice, the act of doing so was illegal. The judge, however, did not put her decision into immediate operation. Instead she allowed the practice to continue until after her decision is appealed. Way to go Republicans, attempting to balance the budget on the backs of the poor who may lose their medical coverage!
Watching the progress of Congress by both the Republicans and the Democrats one gets the impression that nothing ever gets done. No necessary laws ever get passed. The House of Representatives has given itself a 110 day legislating year; they are working a three day week, not including holidays. The Senate will meet for a somewhat longer period.
The two political parties began the preliminary process of choosing their presidential candidates early in 2016. In the Republican state preliminary elections and caucuses the initial debate between the possible candidates dealt with how bad the present administration is and how a Republican president would make the country great again. It’s as though nothing has happened since 2009 when Barack Obama was elected to the presidency. It would seem, according to the Republican candidates that there is no history behind the present campaign. This, of course, is not true. The history has been ignored or edited, particularly by the Republican Party.
The Great Recession, which could easily have been the Greatest Depression in our history, began under the reign of the Republican President, George W. Bush toward the end of 2008, his last year as president. He took some action but mainly left the problem for the next President, Barack Obama.
During his first two years in office, 2009 and 2010, President Obama changed a potential massive depression into a recession, restored the major banking houses in the United States and the automobile industry from bankruptcy by massive government loans and signed the Affordable Health Care Bill into law.
At the time both the House of Representatives and the Senate had Democratic majorities. In the 2010 Midterm Election a large number of Democrats did not bother to vote and the Republicans achieved a majority in the House of Representatives, actually killing any chance for further reform since the Republican philosophy of government tends to be the opposite of that of the Democrats . In addition since 2010 was a Census Year, the Republicans gerrymandered the states where they controlled the governorships and the legislatures making it easier for them to keep control of the House of Representatives. In the 2012 Presidential Election the Democrats cast a million-and-a-quarter more votes were cast for Democratic candidates than for the Republican members of the House of Representatives but the Republicans still retained control of the House. The same thing is likely to happen in the 2016 Presidential Election.
In the 2016 Primary Elections the Republicans are quite vociferous in stating what President Obama didn’t do. What they don’t state is that most of the things he is blamed for not doing are functions of Congress. Congress passes the laws in the United States. The President can sign or veto a law. If he vetoes a law Congress can still pass it with a 2/3 majority in both Houses.
Basically the current Congress, which has a Republican majority in both Houses, has done virtually nothing since they achieved a Republican majority in 2014 or since the Republicans won control of the House of Representatives in 2011. Today we have the Tea Party which is an extremely conservative section of the conservative Republican Party that is totally against Big Government and sees all economics as Micro, small economics. Unfortunately they represent a number of seats in the House and Senate.
Economists today understand depressions and recessions and how to properly deal with them. Economics exists upon two major levels: one is called Microeconomics, which deals with household finances, city, state, and business funding. The other is Macroeconomics which deals with the Federal Government, which owns the printing presses that print and issue money. They are two totally different entities. Except the Republicans do not understand or accept the concept of Macroeconomics.
Money today has nothing behind it except the word of the government that printed it. There is no gold or other precious metal that today stands behind any currency. The amount in circulation is supposed to be regulated so that there is enough to easily carry out all the business functions within the nation and between nations. Unfortunately this does not always happen and inflation or deflation can occur. In the United States the Federal Reserve controls the amount of cash in circulation. In most other nations there is generally a National Bank that does this. This process is Macroeconomics.
The National Debt, of which the Federal Government owns over 50% of its own debt and will, at times, use it to control the amount of currency in circulation. This was done recently by the former Chairman of the Federal Reserve, Ben Bernanke, for over a two year period adding 85 billion dollars a month to the National Cash Flow. It was gradually ended by the current Chairperson, Janet Yellen.
The members of the Republican Party do not appreciate or understand any of this. From statements made by various Congressional members of the Tea Party and other Republicans their understanding of economics is based upon raising a family, Microeconomics. They see everything in those terms. One has an income, taxes, and one can spend it. If an individual or country wants to spend more he has to borrow money which, in turn, has to be paid back with interest.
That seems to be the limit of their understanding. It can lead to recessions and depressions. Donald Trump has added another level to this misunderstanding. He seems to think the government can renege on part of its debt as he has done in business with three bankruptcies. Statements like that can destroy the value of the dollar, particularly if he were to be elected president.
To say that the Republicans have done nothing is to give them positive credit. Instead they were able to get through the Budget Control Act of 2011 which began on March 1, 2013. This was the sequester, automatic cuts across the board on all government programs with the exception of Social Security, Medicaid, federal pensions, and veteran’s benefits. These would cover all other military and discretionary programs every year until the year 2021. Medicare rates were reduced 2%. Sequestration also resulted in unpaid time off to many federal government workers, this was known as furloughs.
These cuts during a recession tended to shrink the economy and slow recovery. Interestingly by 2015 the military was complaining that with the sequester cuts their effectiveness was significantly decreasing. From that time on Congress tended to pass yearly bills ignoring the effects of sequestration upon the military.
Also in 2013 the House of Representatives, with hefty leadership by Senator Ted Cruz who is not even a member of the House, shut down the Federal Government from October 1st through the 16th. Government operations resumed on October 17, 2013. 800,000 government employees were indefinitely furloughed. 1.3 million other government employees were required to report for work without a known payment date. The Republican led House wanted to defund the Patient Protection and Affordable Care Act. They attached this to the Government Funding Bill. The Democratic led Senate removed it from their version of the Bill before they passed it. The Conference Committee, which consisted of representatives from both Houses of Congress, reached an impasse. The cost of this shutdown is estimated at $20 billion. So much for Republican frugalness!
It should be noted that our understanding of economics has come a long way since 1929 and the Great Depression. We understand the root causes for the economic waves that bring about these changes and we understand how to deal with them when they occur to lessen or mitigate their effects upon society. But in order to do this we need both the President and Congress acting together as a cooperating unit. This we have not had since 2011.
By 2008 the Real Estate Hedge Fund industry crashed in the United States. Properties like individual homes dropped almost overnight to a fraction of their inflated values. Millions of people, who had been encouraged by the financial institutions to use their homes like bank accounts by continually remortgaging them, were suddenly underwater on their loans, owing more on the property than it was then worth. Employment also phenomenally decreased. Most banking houses were over-extended and on the point of bankruptcy. The Bush Administration in its last year in office lent public funds to some of the banks to keep them afloat.
In 2009 and 2010 there were both a Democratic President and a Democratic Congress. The massive depression that would have been greater than that of 1929 was avoided by further public loans to the banking industry. Patient Protection and Affordable Health Care or Obamacare, which incidentally was based upon a Republican plan, came into existence. It was passed strictly on a party basis; no Republican voted for it in either House of Congress. The American auto industry was also saved from bankruptcy by public loans. Incidentally it should be noted that all these loans were eventually repaid with interest.
From 2011 on the Republicans achieved a majority in the House of Representatives. Thereafter no bill was passed by the House that would lessen what was then the Great Recession. In fact the bills passed by the House tended to exacerbate the unemployment by not only shrinking the Federal Government but also curtailing the amounts of monies that went to the individual states, forcing them to reduce some of their programs and lessoning their levels of employment.
Mitch McConnell, the then minority leader in the Senate, stated that the Republican goal was to make Barack Obama a one term president. The Republican attitude from that time on was to support absolutely nothing that President Obama supported. Economic conditions in the country became secondary next to this goal. The House Republicans did nothing that might reflect positively upon President Obama. When he proposed a bill to create jobs by improving the outdated infrastructure of the U.S. the bill never even came to the floor of the House of Representatives for consideration; it was totally ignored.
President Obama continued to attempt to work with the Republicans for the next two years with no success. By 2012, when he ran for a second term, it would seem that he understood that there was no cooperating with the Republicans.
President Obama and the Chairman of the Federal Reserve, Ben Bernanke, were able to use Creative Monetary Policy to improve economic conditions in the country. The Federal Reserve added $85 billion a month for over two years to the National Cash Flow. They did this by spending $45 billion a month buying up mortgage paper and also by purchasing back $40 billion in government bonds monthly for over two years. The program was finally reduced by 10 billion a month until it was completely withdrawn.
The effect of this action was to buy back millions of pieces of mortgages in all fifty states, each one of which had been split into hundreds of pieces. In essence these properties belonged to no one, as no one owned over 50% of the mortgages. Without this action by the Federal Reserve these properties would have been lingering throughout the economy for the next decade or more before they were sold for back property taxes by the local governments. This act gave the people who had not walked away from their underwater properties and still lived in these homes the ability to continue living in them without the possibility of foreclosure. There was no way the government could have matched up all the pieces of all the properties in all 50 states to claim ownership of any of them. Generally the money that would have been used in paying off the loans was spent in the overall economy creating more employment. It was a giveaway by the Federal Government which was probably more than returned in local, state, and federal taxes.
With the upcoming Presidential Election the Republicans are blaming President Obama and the Democrats for not doing anything to run the country properly. They seem to have forgotten the Real Estate Crash of 2008 which took off during the Reagan Administration and continued from there until the 2008 crash. They seem to have forgotten President George W. Bush’s unnecessary war with Iraq which destabilized the Middle East and began the situation which exists there at present. Actually they have forgotten everything negative that can be attributed to them. And all of these things have been blamed upon President Obama and the Democrats.
The actual Presidential Election should be interesting. If Donald Trump is elected president he has practically promised to get rid of ISIS quickly and make America Great Again. He seems to feel that he can solve all major international problems, whether he understands them or not, within the first 100 days or less.
If Hillary Clinton is elected and she has a Democratic Congress she can be expected to move successfully in the direction of solving many of America’s domestic and international problems. If, however, the House of Representatives retains its Republican majority then the country will probably experience the same gridlock it has under President Barack Obama.