It may be by a very narrow margin which I am not sure they can sustain for the entire 118th Congress, but currently the Republicans control one chamber of Congress and that is enough to gum up the works if they stick together. To date, and admittedly it’s early, they have shown signs of doing so except in “inside the family” disputes. The one big thing they are united on is making Joe Biden and the Democrats look bad at any cost.
The most effective way to achieve their goal is to screw it all up. Their theory is to create as much chaos and mayhem as possible hoping the majority of the electorate lays the blame on Biden and his party. Regardless of political leaning most average Americans want their government to provide security via peace and prosperity. In particular the House Republicans appear to be working to prevent that. (And they appear to have an ally in that endeavor. More on that below.)
Days into the 118th the threat of a federal government shutdown and/or a debt default are very much clean and present dangers. I won’t belabor the point but neither is good and both are expensive. (If you remember I called on the lame duck 117th to eliminate the debt ceiling which would have removed an arrow from the Republicans’ quiver. Was I the only one smart enough to foresee the future or did the Democrats allow the debt ceiling to live on hoping to use it as an extortion tool in the future? I think we all know and equally dislike the answer.)
Assuming a shutdown and default can be avoided the Republicans and their mythology machine will continue to hammer away on inflation and interest rates. Inflation is real but vastly overstated! If you look at leading, not lagging, indicators inflation is at about 2.1%. The normal Fed goal (and more about them below) is 2%. If you compare America with similar large advanced capitalist countries, we actually have a lower inflation rate. The problem is both global and systemic stemming primarily from the pandemic and Putin’s invasion of Ukraine.
Interest rates are also closely aligned. They are too high in my opinion and are beginning to hurt the economy. If they continue to rise a recession is almost inevitable. The Fed appears to be an ally, albeit an accidental one, of the Republicans. The Fed keeps raising interest rates despite leading economic data that proves the raises both unnecessary and imprudent.
The current unemployment rate is 3.5%. Economists have long considered 5% unemployment as full employment. In other words, most Americans who want a job have one. That will not be the case if the Republicans and their (I think unwitting) ally put us in a recession.
The biggest thing markets dislike is uncertainty. If the looming possibility of a government shutdown, let alone default, weren’t enough how about the political instability of a land war in Europe where the bad guys suddenly appeared to be winning? The Republicans are showing signs of wanting to lessen aid to Ukraine. Without the Biden-led western aid Russia will win the war in Ukraine and if you think Putin is stopping there you haven’t studied 20th century history. Currently continued strong western aid to Ukraine is not a sure bet. If America lessens its contribution other economically weaker western nations will quickly follow suit and Ukraine simply cannot defend democracy on its own.
The GOP wants to defeat Biden and the Democrats at any cost even if it means destroying America in the process. It is really that simple.
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