February 24, 2010

Meet the New Scapegoat

As Republicans attempt to do their best impression of Gandalf facing the Balrog at the mines of Moria in a last stand against health care, there are other issues that face the country with implications for how voters will see the two parties come November 2010.

Obviously the public has money on its mind - more specifically government out-of-control spending. It's a big part of the health care debate. Set aside the not so small liberty and competition and tort reform issues for the time being and money is only remaining factor. But it may still be the biggest factor. If the government had a $12 trillion surplus do you have the slightest doubt Democrats would be slam dunking the health care debate? Would public opposition be as widespread as it is now? As strident? Yes. As widespread? No.

As the old saying goes, follow the money, which finally brings me to my point. As Ben Bernanke today testifies about the Fed's exit strategy on the stimulus money pumped into the system, with all it's perilous implications, the political picture, unlike the financial future actually becomes a little clearer.

Bernanke may be able to pull off a miraculous exit strategy, but the odds are against him. As a caretaker of the government's monetary matters, Bernanke is like an accountant for someone who refuses to stop spending. The best he can hope to do is to minimize the impact during the decline and hope to prolong the eventually bankruptcy for as long as possible. If the spending continues, in the long run his best efforts will ultimately be to no avail.

The likelihood is that the U.S. economy is heading into some choppy waters as Bernanke figures out how to turn off the taps on spending without causing a recessionary dip, or allowing inflation to creep in, or both. The political machinations for Democrats are undoubtedly underway already. Should Bernanke pull of the improbable, they will of course take fiscal credit for his monetary wizardry – ‘the stimulus saved us’, they will claim. But should he be unable to thread the needle back into normalcy, they’ve got their scapegoat. They will claim they did what they could on the fiscal side to keep the economy humming, but we were let down by bad monetary advice from the Fed. Maybe Bernanke wasn’t the guy we thought he was when we reconfirmed him as Chairman of the Federal Reserve Board.

It wouldn’t be the first person the White House or Democrats have been willing to throw under the bus. Democrats have practically turned that into a sport. It's not new for them and it wouldn't be their first run at Bernanke.  (click each of these unique blame links if you want proof). If they can pull that off and further, tie Bernanke to Bush (not an impossible task, despite re-confirming him), the blame Bush meme by extension becomes the blame Bernanke meme. Meet the new scapegoat – same as the old scapegoat. That's a lot of blame they've been throwing around.  Unscrupulous, yes, but I certainly wouldn’t put it past the Democrats.

And yes, for those who care, I intend on being fully 'geek chic' and not explaining the earlier Gandalf reference.

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