The recent spate of smears from Chris Matthews and Joe Scarborough aren't to protect the Republican Party. Certainly they are directed at Democrats, but the real threat to Bush doesn't come from the Democrats, but from John McCain, who is now on cruise control to be the next President of the United States. With Hillary having the nomination of the Democratic Party all but wrapped up - and with McCain towering over anyone who would be allowed near the Republican nomination, the Bushites have a big problem, or rather, several big problems.
This is why the top down media is eagerly doing bin Laden's work, and sowing acrimony within the American body politic - because they are almost out of time, and out of any other options. When the turbluent moment of the economy hits - and it is very soon that it will, either they hold all the power, or they will find themselves on the receiving end of a massive political shock.
The first big problem is the economy - the borrow and squander binge is almost over. There is, you see, a contradiction in our economic policy. Remember that eras don't come to an end when they have a problem - managing problems is the job of corporate and political leadership. It is when they have two problems, one of which breaks the other. Our problem is that we are pumping out debt at a rate that is pushing energy and commodity prices through the roof. Which means that we are going to either pay more for that debt, that's called "higher interest rates" - or we are going to see inflation explode - the leading indicator of general inflation is now flashing loudly, with energy inflation running ahead of core inflation. Raise interest rates, and it splatters the buidling boom, keep them low, and it will take one hundred BushBucks to buy a barrel of Saudi sour.
So what would a President McCain do if he took the White House, with the stock market on a slide, gas at $4/gallon on a good day, and a budget deficit that has to be slashed? He's going to blame someone. He won't be able to blame Clinton, either of them, or bin Laden. He's going to have to blame the previous corrupt Republican Congress - Republicans are masters of blaming themselves. He's also going to have to blame Bush in order to cut the defense department enough.
He has no choice, and frankly, he will enjoy the work.
Which is why Bush is striking now, not just at the Obama bin Laden meme - that is Democrats are in leauge with the international Islamic Conspiracy - but as a warning to anyone in his own party that would be thinking of leaving the ranch on Iraq, now or at any time in the future. Treasonization is the attack mode, not just win 2006, but to keep control of the Republican Party apparatus, which is increasingly slipping out of Bush's grasp. The Republican back benchers, should they revolt more visibly, could cause Bush more problems.
The current problem is NSAgate - which even the Republican caucus wants to hold hearings on. Bush needs this to be another white wash like the 911 hearings - with no blame pointed at an executive. Instead, they want it to be a show case of "Opposition to Torture is Treason" as a campaign theme. They need it to convince the American people that only terrorists were involved, and create a stream of fumes that obscure corruption.
In 2004 Bush benefitted from the "Eisenhower Effect". In essence, in modern politics, a President can be reëlected with a weak economy, if he seems strong on national security. Of the Presidents with weak or questionable economies who secured another term - Truman in 1948, Eisenhower in 1956, Reagan in 1984 - all played the card that they were in charge, and had a plan. Foreign policy success was crucial to this equation.
But the Bushites now has the same problem that Reagan's machine had in 1986 - with economic uncertainties mounting, and prosecutable offenses that needed to be buried, it was important to make sure that he placed his hand picked successor in office, and prevented anyone from being tempted to use these internal problems for their own purposes.
So what should the response be?
In such circumstances, it is important to keep one's eye on the ball. The Republican core of 33% of the population will eat this up. The party of dead end darwin deniers, crank head porn monkeys, corruption addicted base bunnies and paranoid maniacs isn't about to leave the surreality community any time soon.
No, the people who have to be targettted are the independents. The independents who have a severe case of schizophrenia. On one hand they want fiscal responsibility, peace, prosperity, universal health care, education and bi-partisanship. On the other hand, they want to hold on to the ill gotten gains of the last 8 years' worth of asset inflation - and are lusting for John McCain, who will continue every single policy they hate. One one hand they want the ocean of pork to come flowing into their distant districts, on the other hand, they don't want ear marks. The result will be a more powerful president - becaue it will be the president who directs the pork.
In short, Americans are gravitating to 6:5 single deck, because they think it offers better odds, when in fact they are getting hammered. The deal is to squeeze the screw into the sound bite.
The indepedants need to be hit with the realization they have one foot on the boat, and one foot on the dock. That they can't be reactionary liberals, or conserviatve progressives, bipartisan Republicans, or honestly corrupt. This is the single political project that the Democratic Party needs to engage in, and do so with force, and not feelings, as the cutting edge.
The first step is to return fire on the Republican treasonization - by leveling the same charge right back. State simply "Matthews is doing bin Laden's work, by stirring up internal hatreds." From there the "house divided" rhetoric writes itself.
The second step is to get infront of the Republican curve. For the next year, the Republicans are going to run against the Democratic Congress - the one that hasn't existed since 1994. For many people in the military and extraction world, the early 1990's were so bad, that anything that raises the specter of its return is red meat. Treasonization is, in part, code for "the democrats will cut defense." Turn over a rock in Peru, you will find milipedes. Turn over a rock in the distant reaches of America, you will find milipork. This means that the core vulnerabilities are going to be protected with soundbite band aids. Only by being in front can one be the party of "real reform".
The third step is to hit the Republicans with treasonization a second time - "they have squandered America's credit, America's military, and America's advantage - leaving us in debt to communist China and monarchist Saudi Arabia." Right flank. Right flank. Right flank. Right flank.
These steps need to be repeated - throw charges back, get in front, ambush from the right flank - all the way to the election and beyond. This isn't about an America that can do better this is about a return to that mythical standing tall America that beat Germany twice, Russia once, and depression over and over again.
The reason this is important is that we are standing on the financial precipice - at that point where our current economic arrangements are getting untenable. I know I have talked about the cyclical nature of economies over and over again, but indulge me while I do it one more time.
Aside from complete meltdowns - such as the 1980 to 1981-1982 recession, or the years running up to World War II - an economy is in greatest danger at three points in time. The first is when a recovery is just taking off, and another panic could send it into a tailspin. This is the thing Bush screwed up with his borrow and bomb policy. In 2002, just as the economy was ready to take off from the recession of 2001, Bush threw uncertainty back into the mix with Iraq. This uncertainly lead to a crash in the Dow, and condemned the US economy to a 18 month long drag behind a tank. Instead of a rebound in early 2002, it would not be until August of 2003 that we would finally see hiring and expansion take off.
The second point is the one we are reaching now - when resource inflation rears its ugly head. There are other signs of the "midpoint" of a long cycle, or near the end of a short cycle. One is the fall in profits as a percentage of GDP - this is a reliable sign that those who supply business know that there is money to be had and are about to start raising prices. The other is the end of the year long "VIX bottom". You see, the first part of an economic cycle sees a reduction in fear and uncertainty. However, when uncertainty comes back, either things start to fall apart, as money floods the bond market and commodities market, fleeing stocks - or a new kind of business is created, where people pour their money into that. In the 1990's it was at this point that the internet took off. If we had had good policy up to this point - wireless would be booming much faster than it is.
The large Dow drop yesterday was a small, very small, foreshock of what is coming - as a more turbulent environment leads to more hot money running for cover. One can see this the yield curve. What that little string of numbers is saying is that we are a mere breath away from a situation where there is no room to manuever for the fed - they will be forced to raise interest rates to cut off inflation, and send the economy into recession. How close are we? 11 basis points on the top, and 13 on the bottom. That is to say, one bad month.
These signs taken together show up as headline events - a sharp drop in the Dow as earnings disappoint, and a sharp rise in oil prices. These, collectively, mean that we have two economic problems - and fixing one, means breaking the other. As the economy gets more fragile, more and more economic actors will take the chance to push it closer to the brink. Why is Iran making loud noises about nuclear weapons? Because as the producer of 4 million barrels of high quality crude per day - no one can do anything about them. This heats up oil a bit more, and puts a bit more pressure on the world economy. Sooner or later, one of the consuming powers - China, Europe or the US - is going to have to break for control of the oil supplies. And at that point the cosy arrangement of us buying products from China while they buy our bonds, comes to an abrupt halt.
This is not an insoluable problem - that is the tragedy of Bush, all of this - jobs drought, Iraq, endless war on terrorism - is all optional pain. The place we have to get to is the "liberal economy". The liberal economy taxes inflation, and spreads the effort. This works because inflation is where more and more effort is chasing smaller and smaller returns - taxes discourage people from chasing these smaller and smaller real returns, even if it means that the economy has to adjust and find new ways of doing things. Republicans are soft money inflationists - they say "let inflation ride" and then borrow against it.
But it means that we have not come up with the substitutions - that's econospeak for "choices" - when the old way of doing things runs out. And this, more than anything else, is what the Republicans fear. They need a swarthy red peril to tell people "taxing inflation is unAmerican!"
They are hoping they can pull the Republican circle jerk one more time - stop anyone from fixing a problem, wait until it blows up to a crisis, demand absolute power to deal with it, funnel the corruption into Republican hands, and then blame the Democrats for not being strong. This works as long as you have money to borrow, but when it stops, it produces huge long term problems that simply pile up year after year. The way health care inflation piles up, and Medicare D meltsdown because of it.
Thus, we are standing at the precipice - where the Republican Party, and the Bushites in particular, are tryin to push opposition off a cliff - so that when the current financial problems meltdown, or inflation blows up, they and only they will be allowed to deal with it. In the only way they know how.
Which means that if we fail to strike back now, I would advise not getting too attached to your grand children - there is a war with their name on it.