If the economy is
the fundamental issue in the presidential campaign, Obama has a critical ace in
the hole which has not yet been played.
All of the negative campaign ads and Republican convention rhetoric
about what is wrong with the economy belies an important fact that is
impossible to deny. The United States
economy is healthier and doing better than anywhere else in the World.
This fact tends to
be buried in the “economist speak” and technical indicators which the average
voter and sound bite media would prefer not to investigate. Those who would take the time would discover
that the most recent Purchasing Management Index (PMI), maintained by the
Institute for Supply Management (ISM) (among other studies) clearly shows our
country outperforming every other developed economy in the world. (China fell
to a nine month low; Germany is in contraction, the U.S. expanded) Expect to hear this message at the Democratic
convention and in the presidential debates.
Coming out of the
worst economic disaster since the great depression, Obama’s policies, despite a
dysfunctional Neanderthal Congress have left us in the sweet spot. His unwillingness to succumb to the global
austerity wave (championed by the Republicans and presently destroying Europe)
and a wise Fed have permitted a monetary and fiscal policy that has kept us out
of a double dip recession. If
necessary, Bernanke will provide
additional stimulus in the coming months and the governments and wealthy of the
world will buy more treasuries at zero interest, to insure our economy stays on
top of the industrialized world.
The United States
is somewhat insulated from the most recent economic slowdown by its size and
unlike the BRICS (Brazil, Russia, India and China) is not as tied to exports. Germany’s economy is slowing down due to the
euro crisis. The slow but steady
unwinding of our broken housing bubble has taken the necessary time to heal and
is coming back to health. Lastly,
despite the Republican rants of over regulation and unfriendly business
practices, our country is still considered by the international community as
the best place in the world for investment and doing business.
Unfortunately, the
middle class and working poor have gained little in economic standing over the
past five years. Voters should listen to the experts to learn
why this is the case, which has little to do with Obama or Fed policy. Many economists have referred to the “new
normal” following the recession of 2008.
This structural rewiring of the economic landscape includes higher
unemployment, lower inflation and wage growth, lower housing values, lower
investment rates for retirement accounts and the need for restructuring of
entitlements such as Medicare and Social Security. The factors making up the new normal cannot
be switched on or off by an election or new political party in the White House. No single act or politician caused the new
normal. It is simply a worldwide fact of
economic life following a disastrous recession. Because of Obama’s well conceived policies, the
United States is doing better than any other country to avoid the worst
consequences of the new normal. Better
to crest the wave of the new normal with adept programs and stimulus than to
wipe out and be one of the austerity competitors strewn across the beach.
My view is that the Administration that has
kept our economy on top of the industrialized world throughout the storm
deserves the opportunity to fix the boat over the next four years as its
policies begin to show tangible results.
Those who look to history will discover that Republicans have never been
invested in or successful at providing the leadership necessary for such
economic challenges. Conservatives will
simply throw the new normal into the same garbage bin with climate change,
Darwinism and the Rise of China and claim it does not exist.
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