Democrats Must Be Allowed To Do More Than Clean Up Republican Failures

A few months ago, I wrote a piece about how Republican moderates, a vanishing breed, I admit, are once again asking the Democrats to clean up the mess that has been created under GOP leadership. It’s been this way for the last 40 years. Carter had to bring the country together after Watergate. Clinton had to deal with G.H.W. Bush recession and deficits created by Reagan. And Obama had to virtually save the world’s financial system after G.W. Bush and the greatest economic collapse since the Great Depression. It looks increasingly likely that Democrats will be in that same position again in the wake of Trump, perhaps having to deal with the fallout of a political scandal possibly even worse than Watergate and a recession with enormous deficits similar to the early 1990s or 2008 at the same time.

There has already been enough criminal behavior uncovered involving Trump’s emoluments and obstruction of justice to warrant impeachment. In fact, even before the midterms, some of those vanishing GOP moderates were actually demanding Democrats in the House start impeachment procedures when they regained power, as it was assumed they would, in January. Now, with the extraordinary evidence of collusion with the Russians mounting every single day, those demands will become even greater.

There was a reason that Trump devoted most of his energy to electing Republican Senators in the recent midterms. The Senate is Trump’s only hope to provide the firewall necessary to keep him from being convicted of impeachment and, based on the cult-like behavior of at least 45 Republican Senators over the last two years, acquittal of impeachment would seem the most probable outcome.

The new Democratic House looks to be faced with a choice come January. Assuming Mueller provides even more direct evidence of collusion, the pressure from the centrist institutionalists and the left to impeach will become enormous. But, unless there is a clear indication that Senate Republicans have had a massive change of heart, that process is doomed to failure. Moreover, moving on impeachment will play into Trump’s hands, creating the pitched partisan battle that he thrives on. More importantly, that process will dominate the agenda for probably the entire 2019 legislative year, sucking time, energy, and political capital from the real Democratic agenda that is intended to set the party up for the 2020 election.

Assuming Trump survives impeachment, then the 2020 election becomes yet another referendum on Trump and his Republican protectors and much of the Democratic message will be overwhelmed by that partisan battle, much as Clinton’s message was overwhelmed by Trump and EMAILS!. On the other hand, if Trump is impeached and convicted, the pressure from the professional pundit class on the 2020 Democratic nominee to “bring the country together” will be enormous. That will require “bipartisan” solutions and a more centrist point of view, once again blunting the progressive Democratic agenda. Either way, assuming a Democrat wins in 2020, a big assumption, I know, and Democrats hold the House and squeak out a slim majority in the Senate, another Republican mess will be waiting to be cleaned up, thwarting the Democratic agenda again, just as it did under Obama.

We are in the midst of the second longest period economic expansion in history, not surprising since we are coming off the greatest financial crisis since the Great Depression. And yet there are clear danger signs on the horizon, some of which are driven by Trump policies.

Non-financial corporate debt is at an all-time high as a percentage of the economy and much of that is being bundled into collateralized loan obligations (CLOs), mirroring the way lower rated mortgages were bundled into AAA rated securities before the Great Recession. New home sales, a key driver of the economy, have cratered as it looks like higher interest rates are starting to have a detrimental effect. Auto loan delinquencies are at their highest point in 6 years, since the tail end of the financial crisis. The GM layoffs may have had more to do with Americans preference for lightweight trucks than cars, but, even so, vehicle sales, another driver of the economy, have been slowly dropping since 2015. This trend is only exacerbated by Trump’s steel and aluminum tariffs but also by new tax law that actually encourages manufacturing to move overseas, in direct contrast to how the bill was sold. Similarly, Trump’s agricultural tariffs are driving increased farm bankruptcies while at the same time increasing price for consumers.

The US economy is still in decent shape, but the odds of a 2020 recession are growing. In addition, so is the US budget deficit, which is expected to be close to $1 trillion in 2019 and even higher in 2020, much of which is a result of shrinking corporate tax receipts due to the new tax bill. If a recession does come, those deficits will explode even higher, which could also push interest rates up as well.

That, again, will create problems for Democrats if they do gain control in 2020. The demands for “austerity” and “entitlement reform” in order to bring the deficit under control will be as loud as they were after 2008. The GOP mantra about the deficit will once again be front and center and the pundit class will gladly take it up again, despite at least hopefully knowing now that the GOP’s claims are in bad faith. And once again, real Democratic priorities like health care and jobs will have to take a back seat to cleaning up the Trump economic mess.

Democrats continue to live in this cycle of having to spend their hard-won political capital cleaning up after Republican failures, mitigating their ability to advance the Democratic agenda as far and as easily as they could. It has been that way for the last three Democratic presidents, Carter, Clinton, and Obama. Meanwhile, Clinton and Obama left a thriving economy and a successful presidency for their GOP successors to squander on destructive Republican policies.

Somehow, in 2020, despite all the potential obstacles, we must break out of this cycle. That will take courage and bold legislative initiatives that will be required to break the financial and corporate structures that lead us to these disasters in the first place. But that’s a post for another day. For today, it is just enough to recognize and prepare for the difficulties and opposition that lie ahead if Democrats do gain power in 2020.

Originally published at tidalsoundings.blogspot.com on November 30, 2018.