Tuesday, March 12, 2013

The rise and fall of US conservatism

Many Republicans believe a conservative revolution started in the 1980s with the election of Ronald Reagan. the conservative revolution ended in 2008 when the Us entered the Great Recession due to the failures of the GW Bush "ownership society."

The rise of the Republican party followed the passage of the Voting rights Acts in the mid-sixties. These acts ended some of the worst Jim Crow practices in the South that were used to disenfranchise African-American voters. However, these Voting Rights Acts incurred a heavy political penalty.The Democratic Party lost its Dixiecrat wing. Many former southern Democrats left the Democratic party. Others did not run for reelection.

The breakdown of this Democratic coalition let to the resurgence of the GOP in the 1980s. The old coalition of Northern liberal and Southern conservative Democrats was gone. This had kept Republicans in check since the Great Depression.

Ronald Reagan was an odd duck president. He had been a Democrat and leader of the Screen Actors Guild. However, unlike other wealthy men who made fortunes form the ownership of stocks and bonds, Reagan lived of residuals he had made from movies.
Reagan considered the income tax rate too high and cut the rate form top earners form 70 per cent to 28 per cent. This draconian cut  was one of the major causes of the huge deficit Reagan left after his second term. Reagan also had to raise taxes 8 times after he made the change to the tax table, but still could not balance the budget.

Newt Gingrich led the charge in 1999 with the1999 Gramm–Leach–Bliley Act to repeal the Glass-Stegall act of the 1930. That act had created a firewall between the commercial banks and investment firms and Senator Byron Dorgan predicted the US would suffer a financial collapse in about 10-years after the repeal of Glass-Stegall. He was right on the money.

The Great Recession latest manufactured crises that Obama referred to in a recent speech. This crises occurred because of deregulation and high risk mortgage loans that banks were making.

The collapse was also brought on by the Bush Ownership Society which encouraged banks to make high risk loans so more people could own homes. After the collapse, fewer people owned homes in the US than ever.

SEC chair Hank Paulsen also helped fuel the recession by drastically changing the reserve requirement for the five largest US banks that were making home loans. When the market crashed.the bank resolves were quickly used up. The big commercial banks came out smelling like a rose because the payout of the limited reserves had little effect on the bottom line.

Now the GOP will try to tell you that Fannie Mae and Freddy Mac cause the crash. According to Wikipedia, nether organization was a causal factor. Both organizations, did, however worsen the aftermath of the crash.

Was their a GOP revolution in the 1980s?  What really happened was the the Democratic Party was weakened by of the Voting Rights Act which fragmented the Democratic Party for 25 years. The Repblicans took advanatege of this power vacuum.
Of interest, the voting Rights Act is being challenged in the Supreme Court and court decision should be published soon.

The Democratic Party is now back, but a lot of work needs to be done to undo the damage the GOP had done to this nation since the 1980s.


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