One thing seems obvious, both in terms of media commentary and the present state of political action and debate: The economic situation in the United States and throughout the world is a mess that portends huge damage to a market system that has driven a very successful economy over the past five decades.
The party-line vote in the House on the stimulus package could have made big history. But has anyone, Democrat or Republican, danced in the street over it?
The Democrats have proceeded without an accurate definition of the problem. Without such definition, there cannot be consensus on a solution. And a consensus is an absolute necessity, if President Obama is to be successful. The current bill would spend huge sums, with probable disastrous long-term economic consequences.
The president made a mistake by not forcing the creation of a bill that properly defined the problem and provided a solution by consensus. Everyone, including Republicans, concedes that dramatic action is needed. But without a concise definition of the problem and its solution, political mayhem is the result. This ball is in the Democrats’ lap, and the House bill fails miserably.
The final House bill was a big, messy, chaotic piece of legislation. The Congressional Budget Office says only 25 percent of the money would even go out in the first year. Only 12 cents of every dollar could be called stimulus. What’s needed? Not pork, not payoffs, not political base-pleasing, group-greasing dollar outlays.
To be fair to President Obama, given the hand he has been dealt, there is no question that to accurately define the problem there must be the recognition that the economy has been long overdue for an adjustment. That adjustment is in part due to the fact that the consuming public in the United States is satiated with goods and services. Everyone, including young adults, has cars, TVs, multiple communication devices, and an unprecedented abundance of food and services. Market demand has therefore been diminished. Consequently, there is a reconciliation of many economic factors, not the least being too much debt, as exemplified by the subprime mortgage crisis and its impact on the banking and credit system, along with the apparent excesses and opportunism on Wall Street and by the agencies Fannie Mae and Freddie Mac.
Times have been so good that in the resulting economic reconciliation, some steam will go out of the forces driving the economy.
Democrats, Republicans, and all other citizens must understand that business cycles are normal fluctuations in economic activity. This fact is especially true of nations that have free business enterprises. Expansions are typically followed by general recessions.
It is during recessions that the most grievous mistakes can be made by elected officials. Wrong actions can turn a recession into a depression, an economic scenario in which confidence is exhausted and citizens desperately do not know where to turn. Without a proper definition of economic problems, no reliable solution will be obtained. Accordingly, economic judgment amounts to a loaded gun with a hair trigger. The mechanism of judgment is totally reliant on the tenuous, feeble competence of the politicians with their collective finger on the trigger. There is no going back once the trigger is pulled. Once judgment is made and implemented, the potential damage is realized. Such judgment, considering the trillion-dollar package being discussed, could bankrupt the nation.
The political implication for President Obama is devastating. In 2008, the public rejected business as usual. That rejection partly explains why he was elected. Our new president made news by going to the House to meet with Republicans. He should have stood back and concluded there must be consensus in defining the problem accurately, before establishing a knee-jerk solution that, like a grave sin, misses the mark.
All citizens want President Obama to succeed with the economy, but at this point we have a Humpy Dumpty example of “all the king’s horses and all the king’s men” bent on throwing huge sums at the problem in an expression of hope against hope. It is as though the Democrats believe that throwing money at the Titanic would have stopped it from sinking.
In considering the gravity of the problem, there’s a broad feeling that we have lived through very good times for the past half century and now the very bad times have begun, which won’t end in the near term. In other words, we’ve had it too good for too long. It’s a delusion believing the old days will continue and the old ways will prevail. But that is the president’s challenge, and smooth talk will not be the answer. Results will. He needs a real political consensus in these hard times for the nation to survive—a consensus including even the Republican minority. ∆
Otis Page has been the chief executive officer of three companies and vice president of marketing in five and was raised during the Depression. He lives in Arroyo Grande with his wife of 55 years, Allegra Love. Send comments to the editor at [email protected].