A Really Depressing Prospect

I have been allowing my imagination to run wild imagining all the horrors that might occur if the Republicans win in 2012. How much will they shred the safety net? How far will they go to starve the beast? Will they actually succeed in repealing the New Deal or returning us to the Guilded Age?

I know some commentators believe that the economy will finally take off in 2013 and that whoever is in power will get credit. I confess to being skeptical. If the Republicans are serious in wanting massive fiscal and monetary tightening I am inclined to believe the 2013 economy will be frail enough that they will derail recovery. But now I see two articles suggesting that such a tightening is coming our way anyhow. One is about Ben Bernanke. It suggests that as soon as he was appointed Chairman of the Fed, he gave way to conventional economic wisdom and lost his willingness to take genuinely forceful measures to revive the economy. And, the author remarks:

This is pretty remarkable stuff and raises a frightening question: if this is what happens to someone who used to espouse aggressive monetary policy, what will happen to someone more timid? It is highly unlike (sic) that a President Romney will reappoint Bernanke and its not clear Obama would either. How likely is it that the next Fed Chairman will be more likely to prematurely raise interest rates, no matter who controls the White House?

Even more alarming is this article about the "fiscal cliff" we are headed towards. At the end of 2012, the Bush tax cuts expire, automatic spending reductions kick in, unemployment benefits expire, and the debt ceiling is again reached. If these issues are not addressed we will automatically hit a massive fiscal contraction that will crash the economy. As the article wisely remarks, none of these issues are likely to be addressed before the election. That leaves the lame duck session to take care of them or at least make some sort of stop-gap measure until the next Congress is sworn in.

But here is the thing. If Obama is reelected, the Congressional Republicans will have exactly zero to avert such a disaster. We now know that no sooner had Obama been inaugurated, than Republicans were meeting to figure out how to wreck his presidency.  They considered this a much higher priority than addressing the worst economic crisis in nearly 80 years.  So, if they refuse to stop the economy from going over the fiscal cliff, and perhaps default on the national debt and block any new chairman of the Fed, or at least insist on one who will massively tighten, they should be able to bring on a sufficient economic crisis to deliver the next election to them by a landslide.