Never underestimate a Republican’s ability to mess something up.
The GOP is taking back the Senate and House in roughly five months. The damage is done, and there’s nothing the Democrats can do to stave off the change in leadership. But, what the GOP decides to do with their power is what matters. And, how will Biden respond? America, as it pertains to DC, is heading into a very precarious stretch.
The GOP is winning a culture war right now. This was proven with the Virginia election results back in November of 2021, and seen with polling in Florida when you examine policies DeSantis has been initiating. While a culture war may result in the party regaining Congress, it’s not what will keep them in control. Why? It’s the economy, stupid.
The US will descend into a recession sooner rather than later. Within a year of writing this piece, it’s all but a guarantee the country will have a contracting economy. Inflation remains hot, but today, consumer demand to spend is strong. Why is that? The American consumer hasn’t been able to travel for two years, and despite rising costs, they’re going on their summer vacations. This will drain the American savings rate, and subsequently take what’s left of that stimulus money out of the economy. The good news is, this’ll begin to reduce portions of inflation. The bad news is, it won’t reduce all of it.
America is going to be in a tough spot once the recession hits, because while some prices will fall due to dwindling demand because consumers will run out of cash, other prices will remain high. These are food, energy, and products heavily reliant on global supply chains, such as cars, and technology devices. Why is that? The lingering war has caused the food and energy crisis, and those problems don’t correct themselves overnight when or if the war ends.
Food is a long process requiring preparation for months. The world has lost a large chunk of food due to the inability to plant this year. Fertilizer costs are high, and supply chains are fragmented. Even so, if the war is over by this time next year, yields from planted crops will remain low in 2023. This is because the cost of fertilizer and the ability to access it will remain problematic.
Energy is the same concept, but even worse. You can’t magically begin to drill, and even if you could, you can’t easily refine and then distribute the finished product. The industry has gone through tremendous whiplash. First, they were told not to drill during the Obama years. Then, drill during Trump. Then, don’t drill during the first year of Biden. Now, kind of drill. Don’t forget an entire drop-off of demand in 2020 (remember negative priced barrels of crude) due to the lockdowns which seriously damaged their profitability. The process to drill, refine, and distribute is costly, and requires a tremendous amount of infrastructure. And, we’re still sorting out what Europe will ultimately do regarding their reliance on Russian oil. All of this will keep oil prices high and continue to be a drag on consumers in America. Keep in mind, elevated prices of gasoline don’t simply hurt consumers at the pump. 72% of goods are transported via trucks that rely on fuel as well. That cost is passed on to the consumer.
Lastly, global supply chains have not improved since the disastrous lockdowns. And, just when they were beginning to turn a corner a few months back, China got dealt the Omicron virus, maintained their zero Covid policy, which shut down ports and manufacturing in many of their main hubs. Consider this, right now one in five container ships are aimlessly waiting off the coast of China. This will reduce production for most products Americans are heavily (and too) reliant on. The reduction, combined with new bottlenecks at the ports will slow the ability of products to make it to America, and yet again keep prices elevated because of scarcity. Now, consumer demand will be lower this time around because of reduced savings since the stimulus funds are all but gone, but nonetheless this will add another wrench into reducing prices.
The Fed is in a very tough spot now. You see, a lot of things are not working in the direction they are supposed to. We just highlighted how consumer demand will fall, but prices of many products will not. This means that rising interest rates will not magically quell inflation, and inducing a recession won’t either. It also highlights how dangerous a spot the Fed is in. Raise the rates too far and too fast, and shock the system. This could put tremendous strain on corporations via their balance sheets as they’ve grown accustomed to acquiring cash at historically low rates for over a decade. The Fed could also raise the rates slowly, but this could keep reckless spending going and therefore only exacerbate the inflation pressures. They’ll need to be cautious in finding the equilibrium of what’s just right.
All of this takes us back to the Republican Party and their newly acquired control of Congress within five months. Americans will be in need of help. And, that help will be in the form of fixing the economy. They’ll want to appease their base by doing things they’ve campaigned on. This is largely going to be culture war issues. You’ve heard the talking points. Anti-CRT (critical race theory / the 1619 Project) in schools, laws opposing transgender teaching, or biological male athletes competing in female sports. Abortion issues (heartbeat bills), like laws passed in Texas, Florida, Mississippi, and Oklahoma. While these issues can help carry them to victory locally, they’re not issues that the whole country needs our federally-elected leaders spending time on. Especially in these tough economic times.
Then, you’ll have the other side of GOP issues they’ll want to obsess over in DC. This will be the investigations. In particular, investigating Fauci and the CDC regarding the origins of Covid and decisions pertaining to the failed lockdowns, mask mandates, and rapid approvals of vaccines. There will also be fallout from the results of the Durham investigation which seems to be on track to prove Hillary and her campaign knowingly made up the Steele Dossier to blatantly force a lie on the American people that Trump colluded with Russia, subsequently sending our country down a two-year rabbit hole to find nothing. And finally, the GOP will want to investigate the Hunter Biden laptop further, especially since the state of Delaware and Department of Justice appear eager to indict the President’s son. All three of these investigations are issues the loudest in the GOP want done, but does any of this help America get out of her economic drudgery? No.
Knowing all of this, what should the GOP focus their attention on when they assume power? The economy and immigration. They need to help advance initiatives that make America less reliant on global supply chains, and more dependent on the resources she has to offer domestically. We’ve seen back-to-back crises in that of Covid and a war stress the need to do this. We have the ability to harvest our own food. We have the ability to become a net exporter of energy. And, we have the ability to produce technologically-advanced products here. We simply need to make this our top priority. The GOP needs to have this be part of their agenda, and stress the importance of this.
Finally, a bill to fix immigration was on the table back in 2017 prior to Trump’s shit hole countries gaffe. The bill was an equal opportunity offender meaning the majority of America loved it, but the diehard folks on the left and right despised it. That means the bill is great. The blowhards on the left couldn’t fathom a border with modernized laws, and an inability to come across illegally, while the blowhards on the right couldn’t fathom providing amnesty to those who are already here. The vast majority of Americans entirely agree and want this to happen as it’s the most rational way out of this crisis. The GOP would be wise to reintroduce this bill and send it to Biden for signing.
America is in a tough spot today, and she’s only going to be in a more difficult position months from now. We are in need of leaders. The country is going to give the Republican Party a chance to do just that. The party would be wise to listen to the large chunk of Democrat and Independent voters that’ll vote for them in November, rather than the base that was voting for them regardless. An endless swarm of investigations resulting in no action will be a devastating waste of two years at a time when Americans are most in need of economic leadership. This a remarkable chance for American politicians to lead and transform our country into the best version of herself. The GOP and Biden have a great possibility awaiting them in only a few short months to do just that. We can only hope they’ll do what they’ve been elected to do. Make the lives of all Americans better.
Phil Your Day 