The Republican Redistricting Nightmare

The Republican Party is all tangled up in a pickle of its own making: redistricting. And this pickle doesn't taste very good.

Redistricting is the re-drawing of the borders of Congressional districts.  It often happens after a decennial census, when the results show significant population change.  In most states, redistricting is done by state legislatures, sometimes subject to the approval of the governor.  The potential for political shenanigans is obvious, and the federal courts have presided over many cases alleging gerrymandering.  But stacking the deck in your favor isn't always unconstitutional, depending on how you do it, and there are many districts resembling Rorschach tests for ghouls that are legally tilted in favor of one party or the other. 

The Republicans have been very successful at redistricting.  In recent decades, they have used political successes at the state level to string together districts that look like they were inspired by Jackson Pollock but vote reliably Republican.  They got what they wished for.

Then came the Tea Party.  A problem with democracy is the little people can't always be kept in line.  They can sometimes be unruly and demanding.  When riled up enough, they may even assert control.  The doyens of the Republican Party found this out the hard way in 2009 and 2010, when malcontents of many kinds coalesced into the Tea Party movement.  Although Tea Partiers counted some Independents and even a few lapsed Democrats within their ranks, the movement as a whole gravitated toward the Republican Party and pushed it ideologically rightward.  To make things worse, the erstwhile 2008 Republican Vice Presidential nominee, Sarah Palin, went rogue on the party's leadership and helped many radical right Tea Partiers win primary elections in 2010 over mainstream Republicans.  Thus, in 2010, a number of Tea Party and other seriously right wing candidates won elections in reliably Republican districts.

Now, the Republican leadership is stuck with these Tea Party legislators.  Perched in districts well-drawn to protect incumbency, these birds ain't going nowhere.  They'll keep the Republican agenda firmly anchored to starboard, even though the route to an electoral majority veers to port.  The Republican chieftains can't sponsor centrist candidates or advance a more moderate iteration of the vision thing without alienating their base, now ensconced in Republican cocoons.  

Political segregation prevents the Republican Party from evolving.  For those that are creationists, this is probably okay.  But others in the GOP may realize that they've been too clever by half, and that they helped to make the Democratic strategy of political integration a winner.

The Great Anxiety

The Great Recession has morphed into the Great Anxiety.  Economic growth is tepid, enough so that it inspires little confidence.  Unemployment, still high, is falling, but so slowly that consumers' animal spirits remain tame.  Individual investors, confronted by three year highs in the stock market, celebrate by fleeing.  The members of Congress devote their energies to calling each other finks, rat finks, double rat finks, and triple rat finks, while the nation veers toward a fiscal vortex.  Both candidates for the Presidency, although individually quite intelligent and accomplished, swap lies about how the other is lying and inspire little more than resigned sighs from their supporters.  The Federal Reserve is operating the only show in town, and its program consists of printing money, printing money while riding a bicycle sitting backwards, printing money while juggling eight balls and printing money while doing double somersaults on a trapeze.  But the Fed can't do much to resolve the problems in Europe, which is now sliding into recession even as the sovereign debt crisis gets kicked farther down the road.

If the Federal Reserve Board is correct in believing that public confidence is crucial to economic growth, then we are a long way from healthy, sustainable growth.  By all current indications, whichever candidate for President wins won't inspire much confidence.  Congress appears likely to remain divided between a Republican House and a Democratic Senate.  Gridlock isn't that big a problem when the economy is strong.  But it is deadly when the economy is moribund.  For better or for worse, a somnolent economy needs a decisive government, and we probably won't have one. Can kicking isn't a sound federal economic policy.  Both Japan, and more recently, the European Union, have vigorously kicked the can numerous times.  The problem, though, is that business people and consumers all know that the can is still there, and can bite them in the butt big time.  So they don't make big commitments; they don't go exuberant.  Can kicking virtually guarantees stagnation.  Yet can kicking has been the order of the day in Washington.

In a time when lukewarm coffee is all that you can hope for, invest cautiously.  It's not a bad idea to hold some risk assets.  But limit your exposure, and avoid the riskiest.  Hold a good dollop of stable assets, and don't stretch for yield.  One important way to give your net worth a boost is to save more.  Remember that the thriftiest squirrels have the best chance of surviving winter--and the coming winter could be cold indeed.