Published – Idaho State Journal, 04/06/08
A call for change makes an appealing slogan in the context of American politics. Especially when articulated with the benefit of modern teleprompter technology. Regardless of the grandiloquence of the speech and the rhetorical skills of the candidate, logic demands a step back from the polemics to analyze such pleas.
For example, about the time of the 2006 election, the Dow Industrial Average was near an all-time high and employees’ 401(k)’s had recovered dramatically from the 2002 lows. Unemployment was hovering near all-time lows at the 4.5% level.
Taxes were at 20 year lows, which led to record tax receipts at levels not seen even following the tax cuts of the Reagan era. That cash flow into the treasury precipitated by the Bush tax-cuts led to a reduction of the Federal deficit by more than 50% over predictions from just a year earlier.
Home valuations were up sharply, over 200% in some areas of the country in just about five years. And in spite of such dramatic real estate appreciation, inflation was hovering at near 20 year lows at under 2%.
At that time, consumer confidence stood at a multi-year high, and unleaded gasoline sold for an average of $2.19 per gallon.
The war on terror continued to protect the homeland. Who could have guessed after the attacks of 9/11 that we would not have had another major attack on American soil? Meanwhile, the incredible American military, with assistance from our intelligence agencies, has eliminated or taken into custody 95% of Al Queda’s global leadership, and several major terrorist attacks have been thwarted, including a planned attack involving 10 jumbo jets being exploded in mid-air over major American cities.
“Ground Zero” in the war on terror, Iraq, continued to draw jihadists from their hiding places throughout the Muslim world only to face extermination at the hands of Marines, rather than leaving them free to board planes and come to the states to wage war on us here.
Regrettably, since the 2006 mid-terms, we have already witnessed a great deal of “change.” Since that time consumer confidence has plummeted, the cost of gasoline has soared to over $3.00 per gallon, unemployment has spiked 10%, back up to 5%, American households have seen nearly $2 trillion in home equity and stock and mutual fund valuations evaporate,
What is often forgotten is the fact that Congress controls the purse strings of the country by establishing fiscal policy. The President makes suggestions, but the Congress has complete control over what’s approved and what is not. And the changes we’ve witnessed since the Democratic Congress reestablished control in 2006 have not been favorable.
Proposals by the two remaining Democratic candidates for President can only be expected to exacerbate an already deteriorating economic picture. Some of the deterioration we observe currently is due to cyclical factors, but some are structural due to the fiscal policy adopted by Congress.
Much of the increase in fuel costs is directly attributable to increased global demand, yet Congress still proves itself to be a lapdog of the environmental lobby that won’t allow us to access oil reserves on or near our own soil.
The tax cuts that spurred the economy over the past six years are being allowed by Congress to expire, which will add an additional tax burden of over $3,000 to the average American household.
Meanwhile the dollar has dropped another 10% against global currencies in part due to increased Federal spending by our profligate Congress.
There’s still no viable proposal by Congress to address the real cause of sub-prime mortgage meltdown, the seeds of which were planted in 1977 by President Carter’s Community Reinvestment Act. Those provisions were strengthened by the Clinton administration in 1996 which were intended to prevent a nefarious lending practice known as “redlining,” but created the undesirable effect of encouraging banks to make loans to riskier customers. The sharp appreciation of real estate values simply created an environment ripe with potential abuse of liberal credit policy.
Consumer confidence will not likely rebound anytime soon as long as the economy is slowing. That will only be exacerbated further if tax-cuts are allowed to expire, more taxes are levied, more regulation implemented, and proposed nationalization of some sectors like health care find footing.
The Bush approach to the war on terror has not been pretty, but has succeeded thus far in protecting us. That is likely to deteriorate as well, as evidenced by Speaker Pelosi’s refusal to consider legislation extending our ability to track conversations between terrorists. Proposals for premature withdrawal from Iraq will only make our future security that much more precarious.
We’ve already experienced “change” since the 2006 mid-term elections, and it isn’t good. That type of change can be perpetuated and accelerated in November. Let’s hope the nation has enough sense to realize we don’t need any more of that kind of “change.”