If the Republicans prevail tomorrow we will see the solidification of an entirely different America. Quantitative Easing by the Federal Reserve (fancy talk for printing money and giving it free to rich people) will pump still more trillions of cash into corporate coffers and the vaults of Wall Street banks. And if you use Japan’s recent history as a model, that’s where it will sit and not fueling economic recovery.
Of course history rarely follows exactly the same path, so-called turning points are usually marked by great leadership, good or evil, FDR or Hitler. If Obama and the majority Democrats (oops) were to resurrect the New Deal then QE could work if coupled with trade and manufacturing policies to rebuild America. There is an incredible pent up demand, it could easily be boom times again.
Speaker Boner however will never allow any such thing to happen. Slashing the budget and demands for austerity for the middle-class will result in Obama accepting crusts of bread as the New Normal for America. Even if the Republicans were to give in on the Bush tax cuts for the rich it won’t begin to make up for the damage Reaganomics has done and the country will continue to decline.
2011 will be the year of municipal bankruptcies and the elimination of public sector unions and their pensions. This will push down local tax revenue and property values still further and put more retirees onto welfare even as public assistance programs are de-funded. This will also push the unemployment rate still higher even as the millions already unemployed will lose benefits under Speaker Boner and the Republicans.
There is one remaining revenue source that was created during the Bush Administration and this will be put into high gear in the new austere America, the wholesale privatization of the commons. Those trillions in QE that Wall Street is sitting on will be translated into budget windfalls for state and municipal governments.
In the long run of course the public works that are sold for pennies on the dollar will need to rented back again from the new slum lords at what ever rate the corporate monopoly deems appropriate. The concept of the company town is going to take on a whole new meaning.