Conservatives are very much opposed to “rule by the mob” and the “tyranny of the majority.”  We conservatives don’t believe that democracy is an unconditionally a positive influence on society since democracy is basically “two wolves and a lamb voting on what is for dinner.”  A 50 percent plus one majority should not be able to take away our basic rights.  

But theory sometimes clashes dramatically with reality, at least in some cases.  Conservatives currently look at the transplanted Wisconsin and Indiana legislators with a combination of dismay and anger.  A Wisconsin Republican or Indiana Republican could justifiably say, “We won the 2010 election.  But we can’t pass our agenda without minimal cooperation from Democrats.  If winning elections isn’t enough for us Republicans to pass our agenda, when will be able to enact our agenda?”

Also, we could look back to the middle portion of the George W. Bush administration.  In the 2003-2004 Senate, the Democrats only had a minority of 49 Senate seats.  Yet, these Democrats were able to use the Senate filibuster rule, which requires 3/5ths of all US Senators “chosen and sworn” to end debate, to defeat 10 conservative nominees for the US federal court of appeals.  In the 2004 elections, not only did President Bush get reelected; the GOP also gained a net of 4 US Senate seats, obtaining a 55 to 45 seat majority.  Yet still, there was concern among Republicans that the Democrat Senators would continue their filibustering ways against conservative judicial nominees, since the Democrats still had more than the 41 Senators needed to block any judicial nominee from receiving a confirmation floor vote.  To accurately recount the GOP position on the filibuster, however, most Republicans wanted to retain the filibuster rule for legislative items while eliminating the judicial filibuster option. 

When the Republicans lost control over the US Senate and the US House in the 2006 elections, and especially after Obama was elected president in 2008, Republicans looked at the filibuster as the one tool they could use to prevent the United States from becoming Argentina.  The filibuster rule didn’t prevent the enactment of the stimulus plan and the confirmation of Sotomayor and Kagan.  Nor did the filibuster rule prevent the enactment of Obamacare.  This is partially due to the party switch of Senator Arlen Specter, which gave the Democrats 60 Senate seats. 

Yet as we watch Democrat legislators crossing state lines in order to stop the Republican agenda, it is time we examined the whole issue of the minority veto and supermajority requirements.  Is it a good idea to require “bi-partisanship” by requiring supermajorities in order to conduct legislative business?  Or would our country be better off if both the Republican and Democrat parties were able to enact their agenda without the consent of the other political party?  Should the GOP be required to receive the consent of the Barbara Boxers of the world in order to enact the conservative agenda?  Should the Democrats be required to receive the consent of the Jim DeMints of the world in order to enact the socialist agenda? 

This is an important issue because if the GOP wins big in 2012, we can expect the Democrats do use every minority veto tool they can lay their hands on to block the conservative agenda.

We have seen this movie so many times before. Yet, somehow the script maintains the capability of keeping us in suspense. A long serving dictator seems to be a rock of stability. Experts and analysts of the nation claim that the dictatorship is in no serious danger. But then protesters begin to appear on the streets complain of grievances ranging from high food prices to the jailing of democracy activists to the lack of freedom.

We know how dictators are supposed to react to such provocations. They are supposed to use their powers of murder, torture and prison as a means of clamping down on the protesters and making the people fall into line. However, dictators rarely do the killings and torture themselves. They rely on their henchmen, their secret police and their security forces. The dictator becomes vulnerable when the henchmen, the secret police and the security forces decide to disobey the dictator’s orders. Suddenly the dictator has no clothes. The people feel empowered and emboldened.

This is the current situation we see in Egypt today. But this situation also describes many other nations not many years ago, including Spain, Poland, East Germany and South Korea to name just a few. Recently Daniel Korski interviewed former US Deputy Defense Secretary Paul Wolfowitz in which they discussed the situation in Egypt.

Daniel Korski: The Middle East seems to have been taken over by a democratic spirit not seen before, with Tunisia’s Ben Ali forced from power and now Hosni Mubarak looking increasingly vulnerable. But it has obviously put the West in a bit of a bind, as it fears what the new kinds of regimes will bring. Should the West be worried? In many countries, after all, the voice of opposition is the Muslim Brotherhood – and they may take advantage of the events, even if they did not inaugurate and control them initially. Is the price of the Muslim Brotherhood in power worth accepting to set people free?

Paul Wolfowitz: Let’s be clear. We didn’t set the Tunisian people free. They did it for themselves. We should consider ourselves lucky that the Islamists can’t claim any of the credit, but neither can the Western democracies. And the Islamists are certainly hurrying to get into the game. The question now is whether the West can recover from its past inaction in order to be able to have a positive influence on the outcome.

A somewhat similar situation is developing in Egypt, although the Muslim Brotherhood is much stronger there, so the risk of a bad outcome is greater. But there, too, the strength of popular feeling seems to have taken them by surprise and the predominant sentiment in the streets is not strongly Islamist.

Daniel Korski: President Obama (but also the British government) has been hesitant in his reaction to the events in the Middle East. One Foreign Office minister even said the key for the UK was stability. In your view, should Western governments stand on the sidelines or offer more encouragement to the protesters and their demand for freedom?

Paul Wolfowitz: With so much at stake, it is a mistake to be sitting on the sidelines. Western governments can be a positive force on behalf of genuine freedom and against attempts to impose a new kind of tyranny of the Islamist variety. But we can’t do that if we are seen as propping up a hated tyrant, or worse, encouraging the kind of bloody crackdown that could at best produce an artificial “stability” for a relatively short period of time. The possibility of a bad outcome is very real, particularly because we did nothing to encourage more evolutionary change earlier, but I believe we have a better chance of a good outcome if we support positive change than if we support the status quo.

Daniel Korski: A few years ago you talked about “the power of the democratic idea”. Since your time in office, however, US support for democracy-promotion has been on the wane, both rhetorically and financially, while many worry that the West cannot afford to talk so loudly about its values, as we’ve become reliant on non-democratic regimes such as China. What place do you think democracy-promotion should take – in our foreign policy and aid programmes – and how do we deal with the power that non-democratic but powerful investors like China have e.g. in Sub-Saharan Africa?

Paul Wolfowitz: I’ve been involved with democratic transitions for several decades, going back to the remarkable changes that took place in East Asia in the 1980’s – in the Philippines, South Korea and Taiwan – followed by the incredible changes in Central and Eastern Europe and even, for a time, in Ukraine and Russia itself. That period also saw the demise of most of the right-wing military dictatorships in Latin America. Then came another wave in places as different as South Africa and Indonesia and Serbia. Few of these countries would qualify as Westminster-style democracies, but most are far better off as a result of these democratic transitions, and so are we. Even though we often have to do business with undemocratic regimes – and even though some of those regimes do deliver economic progress for their people – it is a mistake to retreat from supporting democratic reform.

There are some conservative commentators such as Tony Blankley who believe the United States should continue to support Mubarak’s regime in order to prevent a Muslim Brotherhood takeover of Egypt. The problem with this suggestion is that dictatorships are inherently unstable because they do rely on the henchmen, the secret police and the security forces to maintain their rule. Once the “enforcers” of the dictatorship no longer see the dictator as a legitimate source of power, once they are no longer willing to kill and torture in the name of the dictator, the dictatorship will soon collapse. It is only a question of when.

But this transitional period is important for the United States. This is when the United States should make it possible for the least radical, the least extreme Egyptians get a chance to participate in the formation of the new government. This can’t be done if the United States is encouraging the dictatorship to put any and all protesters in jail or in the grave.

The Senate Democrats are currently discussing changes to the Senate rules with respect to when it is necessary to file a cloture motion in order to cutoff debate and a few other related issues.  This leads us to the question of not only the arguments in favor and against the proposed rule changes, but also to a discussion regarding the procedures by which Senate rules may be changed.  A review of Senate rulemaking history is appropriate.  In 1975, the US Senate made a significant change in the Senate rules, changing the percentage required to invoke cloture, and thereby bring a filibuster to an end, from two-thirds of all Senators present and voting to three-fifths of all Senators chosen and sworn.  It was actually a simple majority of US Senators, not a supermajority of Senators, that forced the Senate to change its rules.

On Pages 252 to 260 of “The Constitutional Option to Change Senate Rules and Procedures: A Majoritarian Means to Over Come the Filibuster,” Martin B. Gold and Dimple Gupta explain  how this major rule change was made.  I will quote just a portion of these 9 pages.  But I would recommend to anyone who is interested in learning about how Senate rules can be changed that they click on the above link and at least read pages 252 to 260 (the article starts on page 206).  Even better, read the entire 68 page article. Let’s start on January 14, 1975, when Senators Walter Mondale (D-MN) and James Pearson (R-KS) are confronted with a dilemma. They want to change the Senate rule from two-thirds of all Senators present and voting to invoke cloture (end debate and defeat a filibuster) to three-fifths. But they don’t have the support of two-thirds of the Senate. So how do they avoid the two-thirds supermajority requirement to end debate on their proposed rule change?

On January 14, 1975, Senators Walter Mondale (D-MN) and James Pearson (R-KS) attempted to resolve this dilemma. They announced that they were invoking the constitutional option and were not acquiescing to the prior Standing Rules, irrespective of any Senate action under those rules:

[Mondale:] I wish to state, as has been traditional at the commencement of efforts to amend rule XXII, that, by operating under the Standing Rules of the Senate the supporters of this resolution do not acquiesce to the applicability of certain of those rules to the effort to amend rule XXII; nor do they waive any rights which they may obtain under the Constitution, the practice of this body, or certain rulings by previous Vice Presidents to amend rule XXII, uninhibited in effect by rules in effect during previous Congresses.

Majority Leader Mike Mansfield (D-MT) raised a point of order that Pearson’s motion violated rules XXII and XXXII. He explained that he favored reducing the cloture requirement to three-fifths, not to a simple majority. He stated that because Pearson’s motion would “invoke cloture by a simple majority vote” and disregard the Standing Rules, he opposed it. Vice President Nelson Rockefeller referred Mansfield’s point of order to the Senate body, ruling that “the question of the continuation of the rules of the Senate from one Congress to the next and, more particularly, the procedure by which those rules may be amended, has been considered a constitutional question” and thus one for the full Senate to decide.

This leads to an important event in Senate history with respect to Senate rule changes. The full Senate voted on Manfield’s point of order and indirectly voted on the legitimacy of the Constitutional option, the legitimacy of the Senate changing its rules on a simple majority vote.

The Senate tabled Mansfield’s point of order 51-42. This would mark the first of three times in 1975 that the Senate would go on record supporting the constitutional option.

This vote, however, did not immediately end the controversy. The opponents of changing the Senate rules engaged in additional dilatory tactics to prevent a vote on the Mondale-Pearson rule change. Eventually, however, a compromise was reached.

On March 7, the Senate voted 56-27 to amend rule XXII to provide for cloture by three-fifths of Senators duly chosen and sworn.

The bottom line is this. If a simple majority of US Senators want to change the rules of the Senate, there is nothing that stands in their way of doing so. Also, if you read the entire Gold/Gupta article, you will notice that another option the Senate majority has it simple ignoring the Standing Rules of the Senate and creating a new Senate Precedent. This is what Majority Leader Robert Byrd did several times. The Senate does not always follow its Standing Rules. It often follows its Senate Precedents, which are often in conflict with one or more of the Standing Rules. It is important that grass roots conservatives become knowledgable regarding Senate Rules and Procedures because the interpretation and application of rules and procedures can determine important policy outcomes, including who sits on the federal court of appeals and who sits on the US Supreme Court.

During this long tortuous health care debate, many conservatives have voiced strong defenses of the Senate filibuster, a procedural tactic whereby a minority of US Senators can prevent legislation from receiving an up or down vote on the senate floor. Given how destructive the health care legislation currently being considered in Congress would be to our nation, it is understandable that conservatives would encourage the Senate Republicans to use any procedure to stop these legislative proposals from becoming law.

But it is also important to remember that, not too long ago, it was Senate Democrats who were praising the filibuster as an important check on the power of an out of control majority party and it was Senate Republicans who complained of its use. It is also worth remembering that the filibuster is not quite like those “checks and balances” explicitly written into the US Constitution, such as the Presidential veto power, the division of Congress into two distinct legislative chambers and a judicial branch not directly accountable to the voters.

The filibuster isn’t a hard coded check and balance

The reason why 41 US Senators have the capability of preventing legislation from coming to a vote on the floor of the US Senate is because Senate Rule 22 states the following:

“Is it the sense of the Senate that the debate shall be brought to a close?” And if that question shall be decided in the affirmative by three-fifths of the Senators duly chosen and sworn — except on a measure or motion to amend the Senate rules, in which case the necessary affirmative vote shall be two-thirds of the Senators present and voting — then said measure, motion, or other matter pending before the Senate, or the unfinished business, shall be the unfinished business to the exclusion of all other business until disposed of.

But this portion of Senate Rule 22 is a result of a battle that lasted several weeks over thirty years ago.

On March 7, 1975 the Senate voted 56 to 27 to change Senate Rule 22 from the two-thirds of all Senators present and voting requirement to a requirement of three-fifths of all Senators chosen and sworn. In other words, while in 1974 it might have been necessary to gather as many as 67 votes in order to bring that an item of Senate business to a conclusive up or down vote on the Senate floor, after the March 7, 1975 rule change only 60 votes would be required to obtain an up or down vote on an item of Senate business.

It would seem that one-third of the Senate plus one Senator could block any change in Senate rules, since a two-thirds vote of Senators present and voting is required to enforce cloture on a Senate Rules change. But the change from a two-thirds cloture requirement to a three-fifths cloture requirement on most items of Senate business was initially supported on a straight up or down vote of the Senate. Here’s how it happened.

On February 24, 1975, Senator Walter Mondale of Minnesota moved that the Senate take an immediate vote on his cloture procedure with no intervening debate, motions, or amendments, and upon adoption of his cloture procedure, the Senate take an immediate vote on whether to proceed to consideration of the underlying proposal for three-fifths cloture reform. Senator Mike Mansfield of Montana raised a point of order. Mondale moved to table Mansfield’s point of order and Mansfield’s point of order was tabled on a 48 to 40 vote.

Eventually a compromise was reached and on March 7, 1975 the Senate voted to change the Senate rules by a 56 to 27 vote. Since 56/27 is greater than or equal to 2, 56 to 27 meets the two-thirds requirement and some have argued that a simple majority can not change Senate rules, that only a two-thirds vote of the Senate can. But the record shows that it was the 48 to 40 vote that forced the minority to compromise, knowing that they would lose the battle and wanting to preserve the appearance of a two-thirds requirement for Senate rule changes.

But there have also been times when the Senate has changed its procedures without formally changing its rules. In March 1980, Senate Majority Leader Robert Byrd of West Virginia moved that the Senate go into executive session to begin consideration of Robert E. White as Ambassador to El Salvador. This contradicted existing Senate rules and Senator Jesse Helms of North Carolina raised a point of order against Senator Byrd’s motion:

The Senator can move to go into executive session but he cannot under the rules specify what we shall consider. The Senate determines its order of business in executive session only after going into executive session. It is not in order to determine the order of executive business while in legislative session.

The Presiding Officer of the Senate sustained Senator Helms’ point of order, but Senate Majority Leader Byrd appealed the ruling of the Presideing Officer, which forced an immediate up or down vote by the full Senate. The Senate voted to reject the Presiding Officer’s ruling on Senator Helms’ point of order by a 54 to 38 vote, mostly on party lines where Democrat Senators voted with Majority Leader Byrd and Republican Senators voted with Senator Helms. As a result of the precedent set by that 54 to 38 vote, motions to proceed to consider a specific nomination in executive session are not debatable and therefore can not be filibustered, even though the Senate Rules state otherwise.

This proves that if a majority of US Senators want to change the way the Senate operates, the majority can do so. The majority can ignore the two-thirds requirement to end debate on rules changes as the 1975 Senate did, led by Senator Mondale and the majority can ignore the three-fifths requirement to end debate on Senate business that is normally debatable (and therefore filibuster-able) as the 1980 Senate did, led by Senate Majority Leader Robert Byrd.

The filibuster, therefore, is only available to the Senate minority as long as the Senate majority allows it to be available to the minority. The filibuster isn’t a hard coded check and balance in the way that the Presidential veto power is, in the way that the division of Congress into two separate legislative chambers is, the way that the independent judiciary is. Thus, a simple majority of Congress can not waive Senate and House rules in order to override a Presidential veto nor can Congress pass legislation by making up for a 10 vote defeat of that legislation in the US Senate by winning a 11 vote victory of that legislation in the US House of Representatives. Strong supporters of the filibuster should support making the filibuster a hard coded check and balance against mob rule by proposing an amendment to the US Constitution. This would preclude a Senate majority doing an end run around existing Senate rules.

Cheney, correctly, opposed the Democrats’ judicial filibustering in 2005

When the Republicans took over the US Senate as a result of the 2002 elections, conservatives were hoping that Bush’s judicial nominees, previously prevented from receiving an up or down vote by Senate Majority Leader Tom Daschle of South Dakota, would finally get a chance to be voted on and confirmed. Conservatives saw the 2003 Senate, with its 51 to 49 Republican majority, as a way to put some balance back onto the federal court of appeals. Miguel Estrada was nominated by President to be the first Hispanic on the Washington DC court of appeals. The Republicans surest way to obtain cloture on the Estrada nomination was to have all 51 Republican Senators and a minimum of 9 Democrat Senators vote for cloture. Since most Democrats refused to vote for cloture, the Estrada nomination never came to a vote. Miguel Estrada withdrew his nomination. The Democrat minority of 49 had defeated the Republican majority of 51.

In 2004 the Republicans achieved a net gain of 4 US Senate seats, reaching a 55 to 45 seat majority. The Republicans didn’t have a filibuster proof, 60 seat majority. But anticipating a continuation of the Democrats’ judicial filibustering from the previous Senate, Republican Senate leaders began openly talking about using the Constitutional Option to bypass judicial filibusters. Vice President Dick Cheney announced that he would use his power as Presiding Officer of the US Senate to assist the Senate majority in providing Bush’s judicial nominees an up or down vote, overriding Senate Rule 22.

Cheney Jumps Into Filibuster Fray

Vice President Dick Cheney warned Democrats Friday that he will cast the tie-breaking vote to ban filibusters of President Bush’s judicial nominees if the Senate deadlocks on the question.

Republicans are moving the Senate toward a final confrontation with Democrats over judicial nominations. Internal GOP polling shows that most Americans don’t support Senate Majority Leader Bill Frist’s plan to ban judicial filibusters — a tactic in which opponents can prevent a vote on a nomination with just 41 votes in the 100-member Senate.

“There is no justification for allowing the blocking of nominees who are well qualified and broadly supported,” Cheney told the Republican National Lawyers Association. “The tactics of the last few years, I believe, are inexcusable.”

“Let me emphasize, the decision about how to proceed will be made by the Republican leadership in the Senate,” Cheney said. “But if the Senate majority decides to move forward and if the issue is presented to me in my elected office as president of the Senate and presiding officer, I will support bringing those nominations to the floor for an up or down vote.”

Sen. Charles Schumer, D-N.Y., said the White House “has stepped over the line by interfering with the Senate to reduce checks and balances.”

“The White House has always wanted to reduce the Senate’s power and the fact that Vice President Cheney is encouraging this abuse of power should strengthen the Senate’s resolve to resist,” Schumer said.

In my opinion, the Republican Senate leadership of 2003-2006 was correct in supporting a change in Senate procedure so that 41 US Senators could not defeat a judicial nominee by refusing to support cloture and, thus, denying an up or down vote on that nominee. I also believe that dissenting Republicans, such as Senator John McCain of Arizona, who said that the judicial filibuster should be retained so that conservatives could someday filibuster a liberal nominee was misleading. John McCain, for example, did not filibuster any of President Clinton’s judicial nominees, not even the most radical, activist nominees. In fact, McCain voted to confirm Ruth Bader Ginsberg and Stephen Breyer to the US Supreme Court, even though most Democrats had, only a few years earlier, refused to vote to confirm Robert Bork and Clarence Thomas to the High Court. Bork was defeated 58 to 42 in 1987. Clarence Thomas was confirmed 52 to 48 in 1991.

Republicans should use the Senate Rules to there advantage, until they change them to their advantage

Republicans need to avoid being in a “heads the Democrats win; tails the Republicans lose” situation with respect to the filibuster. Sometimes Senators will argue that, although they do not support the specific item of Senate business (a nomination or a piece of legislation), they will vote for cloture so that the item of Senate business can be voted on. Clearly, this is not how the Democrats’ behaved with respect to the nomination of Miguel Estrada and a host of other Bush nominees to the federal court of appeals. Therefore, I would encourage the Republicans to use the filibuster frequently and relentlessly while they are in the minority. But I would also encourage them to bypass, ignore or change these rules/procedures once they regain the majority.

For example, if the Republicans were to end up with a 56 to 44 seat majority in the US Senate by 2013 and were to win the Presidency, Republicans would have the opportunity to fill several seats on the federal court of appeals and perhaps the US Supreme Court. It is likely that under those circumstances, the Democrat Senate minority would filibuster conservative judicial nominees as they did from 2003 through 2004. If that were to happen, Republicans should use the tactics used by Senator Mondale in 1975 and Senate Majority Leader in 1980 to either change Senate procedure or change Senate rules in order to get conservatives confirmed to the federal courts.

Some say that majority rule is mob rule and that the minority must be able to prevent the majority from abusing power. But there is only one thing worse that rule by the majority and that is rule by the minority. Also, there are sufficient checks and balances in the US Constitution that exist even in the absence of a 60 vote cloture requirement. Congress has two legislative chambers. The President has a veto power. The judicial branch is an independent branch of government. All of these features, built directly into the US Constitution, represent checks and balances. If conservatives believe that the 60 vote cloture requirement is an important check and balance against majority rule, they should (a) consider proposing such as a Constitutional Amendment and (b) should consider how difficult it might be to reform Social Security, Medicare and Medicaid if 60 Senate votes are required, in addition to a majority of the US House and a Presidential signature. Social Security, Medicare and Medicaid will turn the United States into a socialist country unless these programs are reformed. Do we really want 41 Senate Democrats to be able to block that reform? Do we really want 41 Senate Democrats to be able to defeat conservative judicial nominees?

My answer is no.

Many conservatives have responded to the election returns by saying, “It’s a good thing that the Gang of 14 preserved the filibuster. Now that we are in the minority, the senate filibuster might be the only thing preventing national health care, Union card check, higher taxes and ultra-left judges on the federal courts.” But this represents, for the most part, a misunderstanding of both the history of the senate filibuster and the current senate rules that make filibusters possible by a minority of US Senators.

Let’s take the issue of tax increases first. Some conservatives think that the Republicans will be able to filibuster proposed tax increases by the Democrats.

This is mostly wrong because of the 1974 Budget Act, which limits debate on budget reconciliation bills to 50 hours of debate. Here’s a Harvard law review of the senate filibuster rule

A third method to curtail debate is found in certain rulemaking statutes. The 1974 Budget Act, for example, includes procedures that operate akin to a unanimous consent agreement to limit debate on matters specified by the Budget Act.

In 1993 the Senate Democrats passed the Clinton tax increase by a single vote, the tie-breaking vote of Vice President Al Gore. This is because the tax increase was part of the 1993 budget reconciliation bill and could not be filibustered by a minority of the US Senate.

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Indiana’s 7th congressional district is currently represented by Democrat Andre Carson. He’s the grandson of this seat’s previous occupant, Julia Carson. He won a special election earlier this year and won again in November. He seems to have a safe seat.

District 7 seems designed to contain as few Republicans as possible within the Indianapolis metro area. It contains most of Indianapolis. But the wealthier, Republican, neighborhoods are in district 4, represented by Republican Steve Buyer and district 5, represented by Republican Dan Burton.

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For too long the Republicans in the Senate have clung to the senority system. This is the kind of system that results in giving people like Ted Stevens of Alaska the chairmanship of the Senate Approrpriations Committee and Arlen Specter the chairmanship of the Senate Judiciary Committee. Thankfully, Senator Jim DeMint, one of the most fiscally conservative US Senators, is asking Mitch McConnell for a seat on the Senate Finance Committee based on merit, not senority.

There are lots of Senate traditions that obstruct the nation’s ability to meet its responsibilities. The attitude among many Republicans, unfortunately, is that “we’ve always done it this way.” Given the problems that have resulted from doing things this way, we need some change we can believe in.

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Don’t let the title of this diary fool you. I think the Republican Senate minority should use the filibuster whenever they believe the Democrat majority is on the brink of passing legislation that would be bad for the country, which is likely to be a large majority of the time.

However, stepping back for a moment from the results of last week’s election results, I believe that the 60 vote requirement for cloture (end of debate and commencement of voting on legislation or a presidential nominee) has hurt the cause of conservatism.

Spiral’s Definition of a Filibuster: (Using the Senate’s 60 vote cloture rule to prevent legislation from getting a vote or to prevent a president’s nominee from receiving a confirmation vote.)

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The voters surprised a lot of people one evening in November of 1994 when they elected the first Republican Congress in 40 years. The GOP gained over 50 seats in the US House of Representatives and 8 seats in the US Senate. They would soon gain 2 additional US Senators when Richard Shelby from Alabama and Ben Nighthorse Campbell from Colorado switched their party affiliations from Democrat to Republican.

In 1995, after this new GOP Congress was sworn in, they made up for lost time. They decided that “the next generation” was “more important than the next election” and attempted to reduce the rate of growth in the Medicare entitlement program. Since they believed they had a clear mandate from the voters, they attempted to force President Clinton to sign their budget. US House Speaker Newt Gingrich told a radio talk show host and his audience that he would shut the government down if President Clinton did not “accept a reasonable budget agreement.”

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When I moved to Indiana this summer, I knew I was moving to a deep Red State, a state where Bush stomped Kerry by 20 points in the 2004 presidential election, winning all but 4 counties. In fact, since 1940, when the Republicans nominated the Hoosier Wendle Wilkie for president, Indiana had only voted for a Democrat presidential candidate once, in 1964, until last week.

I admit that when I read the polls showing that Indiana was considered a “battleground state,” I shrugged it off, remembering how some pollsters in the closing days of the 2004 presidential election believed that the Bush-Cheney ticket might win Hawaii. Cheney even made a trip to the Aloha state. I also figured that if McCain failed to win a state like Indiana, he would lose in a landslide in any case.

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In 2005, the Republicans had just seen their President reelected and the majority in the US Senate increased to a 55-45 seat majority. It looked like the judicial filibusters that the Democrats had used to stop conservative judicial nominees from being confirmed in the 2003-2004 Senate might get fair up-or-down votes.

But then came a reluctance on the part of some Republican Senators to use the Byrd option (some call it the Constitutional option or the Nuclear option). So we ended up with the deal called “Gang of 14.”

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A long time ago, when you wanted to buy a house you would go to a local bank and ask them for a home mortgage loan. The bank would usually ask that you put 20 percent down, look into your credit history, income and assets. The bank would appraise the property to be purchased and mortgaged. If they loaned you the money, they would service the mortgage themselves, receiving that monthly mortgage payment from you.

We can see why this mortgage would be worth more money to the originating bank than another bank as we watch this credit crisis unfold before us. If the originating bank believes it is going to hold on to the mortgage and receive the monthly payments, it is going to make sure that (a) the property is worth what the borrow is paying, since the mortgage value is tied to the property value (b) the borrower does have a good credit history, income and is bringing his or her own assets to the closing. If the originator of the mortgage is going to immediately sell this mortgage to another financial institution, there is an incentive to have the property appraised at a value higher than market value. There is also an incentive to accept claims of income and assets without verifiction.

The FDIC actually encourages banks to hold mortgage backed securities backed by mortgages originated by other financial institutions rather than originate its own mortgages. This is done by the way the FDIC assigns a risk score to an FDIC member bank’s assets. As amazing as it sounds, a mortgage with a 20 percent down payment orignated by the bank holding the mortgage is considered an asset of higher risk than a mortgage backed security backed by mortgages made to borrowers who put less than 10 percent downpayments on their purchases.

Like Fannie Mae and Freddie Mac, the FDIC provides a system where risk is placed on the taxpayer while profits are enjoyed by private investors. Should a seriers of bank loans go bad, resulting in a series of bank failures, the federal taxpayer has to pick up the tab if the FDIC reserve is not sufficient to pay depositors. Socialization of risk, privitization of profit.

A superior system would be as follows:

(a) FDIC bank membership would be voluntary. Banks could choose to be FDIC memmbers or choose not to be FDIC members.

(b) FDIC bank membership would require that 80 percent of bank deposits be invested in short term federal debt, among the lowest risk debt instruments available. This would protect the federal taxpayer and minimize the federal government’s subsidization of risk in the financial markets.

(c) Banks that choose not to be members of the FDIC would not have their deposits insured by the federal government. These banks would be required to notify all of their depositors upon opening an account that their deposits are subject to market risk, similar to the risk of investing in the stock market. Also, non FDIC banks would have inform their depositors of the riskiness of their deposits on a semi-annual basis.

(d) Non FDIC member banks would be allowed to lend their deposits with limited regulation by the federal government.

Other important reforms would include the privatization of Fannie Mae and Freddie Mac and a reduction, if not outright elimination, of Federally insured mortgages. The purpose of these reforms would, again, be to limit the exposure of the federal taxpayer for delinquent mortgage loans.

Secretary Henry Paulson responded to criticisms regarding the 700 billion dollar bailout by saying, “The taxpayer is already on the hook.” This is true and this is the fundamental problem. The federal taxpayer should not be liable for investments that do not turn out the way the investor/bank hoped.

These reforms would probably put an end to the industry of secrutizing mortgages. Instead, we would probably see mortgages serviced by the originating bank.

The fact of the matter is that mortgage securitization would never have become such a large part of our financial structure if the government had not heavily subsidized mortgage securitization through Fannie Mae, Freddie Mac and FDIC’s “risk scoring” of mortgage assets.

We sometimes wonder how we inherited a financial system that is fundamentally unsound and often in need of taxpayer cash to keep it operating. Now we know.

The Republican party held a majority in both the US House and the US Senate from January 2003 through December 2006. During that time the stock market (as reflected by the S & P 500) rose by 72 percent. The Democrat party has held a majority in both the US House and the US Senate from January 2007 through present today (4 October 2008). During that time the stock market has declined by 18 percent. When the Republicans handed Congress over to the Democrats in January 2007, the national unemployment rate was under 5 percent. Today it stands at just over 6 percent.

But how hard has the McCain-Palin campaign and the Republican National Committee tried to get this message out? Congress is arguably more powerful in terms of its influence over the economy than the President is.

Commuinicating this message to the American people about the difference in performance might make people think differently about the “change” issue. The American people would still desire change, but they might decide that changing the party that holds Congress is the way to go, rather than changing the party that holds the White House.

Democrats often say that the economy and the stock market performed well under President Clinton. But they usually leave out the fact that during 6 of Clinton’s 8 years as president America had a Republican controlled Congress.

The people will not learn this information from the mainstream media. It’s up to McCain-Palin and the RNC to get the message out.