Politics and the economy

By A.J. DiCintio

The first thing to say about the topic of politics and today's economy is that instead of educating the public about the nation's fundamental economic problems, the bottom-line-obsessed major media devotes the lion's share of its time to endless speculation about the coming election.

But despite the apparent complexity created by that torrent of words, the probabilities regarding what's going to happen next November are simply these:

If the economy remains as it is or improves only slightly, Barack Obama is highly likely to lose to his Republican opponent. If the economy gets worse, he is virtually certain to be defeated, indeed, in a landslide if his opponent runs an effective campaign.

Yes, except during times of war or internal threats to social order, elections, ultimately, are about the economy.

Problem is, however, today's economy is not "your father's economy," a profound fact that will explode the hopes of any leader whose face is turned to a politics-as-usual past.

Here, then, are the hard, if, to most politicians, inconvenient, truths about the nation's economic condition, the first and overarching one being this:

After borrowing trillions over the past 70 years to create growth and construct a social safety net, the U.S. (as well as much of Western Europe) has entered an era in which deleveraging will cause significant economic pain.

In Plain English. . .

Just as there is no free lunch in love or physics, there is no free lunch in economics; and the time has now come for a selfish, profligate America to pay the piper with money that won't be used for activities that create robust economic growth.

To be totally honest about the debt binge that got us here, it must be said that shamelessly expedient politicians who would throw their mothers under the bus for a bit of short term gain have long been using borrowed money not just to fuel a false prosperity but, along with cheap, inferior imported goods and low cost immigrant labor, to hide the reality of declining GDP growth and its pernicious effects on the middle class.

Here is how the researchers at the Economic Cycle Research Institute characterize the nation's slow but steady economic deterioration:

". . . at least since the 1970's, the pace of U.S. growth, especially in GDP and jobs, has been stair-stepping down in successive economic expansions." (businesscycle.com)

If we add to the treachery just mentioned the continuing crisis laid on the nation by the unholy alliance that exists between Washington's arrogant politicians and the greedy hypocrites who run the nation's largest financial institutions, we'll understand why investment expert John Mauldin praises "This Time It's Different," by Ken Rogoff and Carmine Reinhart, as "the most important book of the last decade."

We'll understand, as well, why Mauldin is right on the mark when he say this:

". . . the United States is no different than Greece or Ireland or Italy or Japan or any other country in history. Highly indebted governments, banks, or corporations can seem to be merrily rolling along for an extended period, when bang! confidence collapses, lenders disappear, and a crisis hits." (frontlinethoughts.com)

Of course, the sum of these profound economic realities doesn't mean anything to "What, Me, Worry?" Democrats so madly devoted to their tax and spend statist ideology that, with respect to Social Security, they insist a dollar can be spent twice.

Neither to "Not To Worry" Republicans who preach a religion wherein economic salvation is achieved by faith in the god of outlandish growth projections; minuscule, "future" spending reductions; insidious resistance to a fair tax system; opposition to creating a sound banking regime; and love of the oxymorons called free trade and open borders.

Nor to the country's Alinskyites, whose current demonstrations reveal only the disgusting nature of their hypocrisy, contradiction, and contempt for liberty.

America's economic realities, however, are being grasped by the citizens of Middle America, who, for example, aren't surprised that as part of the ugly New Normal, the nation will, over the coming year, experience either GDP growth of 1% or less or a fall into recession, the latter the prediction of the previously mentioned ECRI, whose track record in such matters is uncanny in its accuracy.

This public awareness explains why political prospects look so poor for the current resident of the White House, a man mildly criticized by his most ardent supporters for simply having "missed opportunities" but, in reality, a man so devoted to the threadbare ideologies of the left that he was as destined to fail utterly in speaking honestly to the nation about its economic problems as he was in proposing tough-minded, innovative, free market based solutions to them.

It also explains why Republican politicians had better reject the GOP's Old Order if they hope to earn the trust of a nation suffering the pains caused by enormous debt and deficits; a tax system beloved only by an oligarchy of crony capitalists; frightening healthcare inflation; free trade and open borders with nations that literally steal our jobs, our inventions, our technology, and our sovereignty; an unsustainably burgeoning, rapaciously power sucking federal government; and, finally, dangerously large, continuously growing, FDIC insured, too big to fail banks still gambling trillions in derivatives, not in the light of day on an open exchange but in the corrupt darkness of their private casinos.

© A.J. DiCintio