Friday, December 17, 2010

The Coming Republican Civil War

by Jeffrey T. Kuhner - December 16th, 2010 - Washington Times

The greatest threat facing America is the skyrocketing debt. Everything else - the war on terror, Afghanistan, the economy, securing the border, health care, abortion, gay marriage - is insignificant if the country goes bankrupt. This is the reality of dysfunctional Third World states: Debates on issues are irrelevant because changes cannot be implemented effectively. The countries lack the capacity to do so. That's what runaway deficits eventually lead to - the destruction of national cohesion.

Washington is drowning in red ink. The bailouts under the Bush administration, Mr. Obama's trillion-dollar budget deficits, Obamacare, out-of-control entitlements and the nearly $1 trillion stimulus have put America on the path toward financial insolvency. In several years, the country will reach the tipping point: Total national debt as a percentage of gross domestic product will exceed 100 percent. That is Greece. No country has ever come back from those fiscal depths.

The different blocks within the Republican Party are starting to go after each other over this issue of fiscal restraint. It is interesting but not useful to note that there is a lot of overlap between the groups and on different issues some people are aligned with totally different people than on other issues. That does not mean that there will be a peaceful resolution of these conflicts.

Among the nine or ten wings of the the Republican Party, there are four wings with high overlap on fiscal issues supporting big government. They are still different wings in the final analysis. These are the country club wing, the Wall Street wing, the Rockefeller wing and the beltway intellectual elitist wing. All of these wings hate the Tea Party movement for its positions on fiscal discipline. A major reason is many Tea Party activists have abandoned the Republican Party in recent years over fiscal issues and their return is reopening old wounds. None of these wings of the party really have any problem with big government spending, if it is the right big government spending. Right now they are all circling the wagons for one group, Wall Street and its corporate welfare dependent on business as usual.

The primarily fiscal conservatives of the Tea Party movement are indifferent to the desire of Wall Street to have rules that allow them to make more profits than the productive corporations whose stocks they are trading as a side show. Wall Street makes most of its money dealing with the Fed on special rigged sales of money assets that others are excluded from participating in. Such corporate welfare is popular with the Wall Street wing and anathema to the Tea Party movement.

The argument in the article by Kuhner is correct. The special deals must end or America is bankrupt. Yet the beltway insiders and elitists cannot believe their special corporate welfare is going to be challenged. They have rationalized a belief that they can handle the complex monetary manipulations. Just let them finagle their way through this and everything will be okay. However they keep ignoring that future collapses like the one that happened in 2008, must NOT result in government bailouts. The Wall Street firms that bet wrong must be allowed to go bankrupt. The reality is that these corrupt manipulators still do not think it is wrong for them to depend on a government safety net based on the premise they are too big to be allowed to fail.

The world will not end if Wall Street ceases to exist. Just the opposite. There are many in the Tea Party who believe the world will end unless we destroy Wall Street and the government monetary institutions like the Fed, Fannie Mae, Freddie Mac, FHA and other government welfare programs for Wall Street. This war is going to become more vicious in the coming months. There is no simple answer that will not destroy one group or the other.

At least that is my opinion.


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