Republicans Must Seek Answers

A day of reckoning approaches for the Republican Party. In three weeks time it will have to come to grips with what it stands for. If John McCain loses his bid for the presidency, as seems likely, it will involve a great deal of soul-searching. If he wins, introspection will necessarily stay on the back burner while he and a Democratic congress grapple with economic, fiscal and financial crises. But in this case it is likely to be the congressional Republicans who are fractured. What shall they decide they believe in?

It was the gospel of unregulated markets and unregulated transactions that put us in our current predicament. If there had been requirements that borrowers actually prove they had the wherewithal to repay, and if there had been more incentives for collecting the payments than making the original sale we wouldn't be in the mess we are. The principle of non-intervention in the marketplace let this disastrous situation develop. That principle has been a cardinal tenet of Republican orthodoxy for quite some time.

When recession became aparent the Bush White House pushed for a "stimulus package," a classic Keynesian liberal solution, though in the form of a tax rebate. Once the true depth of the banking situation became clear the Treasury under Paulson and the Fed under Bernanke tried piecemeal interventions which did little. They finally turned to a more comprehensive $700 billion federally-based rescue plan. It is easy to see in these approaches a more-than-tacit admission that their ostensible reverence for a self-correcting market evaporates very quickly when the chips are down.

Republicans find themselves stuck in a "Have you stopped beating your wife?" paradox. Do they admit their laissez-faire and even crony outlook caused the problem, or that their laissez-faire doctrines are incapable of solving it?

They will, after November 4, have to re-examine a whole host of assumptions they have taken as gospel ever since the Reagan nomination. These are the kinds of assumptions that facts have proven wrong again and again, yet they have continued to assert them with ever-worsening results. These include such loopy ideas as that reducing taxes increases revenues, that spending does not have to be paid for, that increasing military and reducing social and developmental spending is good for society or the economy, that removing oversight from huge corporations makes them more honest and responsible and that granting massive tax breaks to the wealthiest few somehow helps society as a whole.

These doctrines have been ridiculous from their inception, but it is only now under the pressure of events that this has become apparent to most in American society. There are many in the party who will be unable to separate themselves from these fantasy-based exercises in wish-fulfillment. They will have to consider whether it may have been the sensible level of regulation and tax burden instituted by FDR in the New Deal that served to keep American capitalism on track for so long. How Republicans come to grips with this will determine their viability and even relevance in the future.