Reversal of Fortunes

Just as Congress threatens to stop and un-fund the federal government in a political battle of wills between newly-elected representatives – most whom who truly believe that their one true mandate is austerity and slashing government spending – vs. an incumbency that sees the economy slipping away again, the economy is in fact getting worse. The numbers support that incumbent view… as the latest government-published growth rates that were supposed to come closer to 3.2% annualized increases dropped to a very poor 2.8%. One of the great fallacies in elections where campaigners make a clear statement and get elected is that their victory is always tied to that message, no matter what changes might subsequently occur. Sometimes, a “sweeping waive” of political change is nothing more than a voter statement of general discontent with the status quo and not really an endorsement of a specific message, or simply a momentary “feeling” whose popularity soon falls.

President Obama, who is sashaying to the center as fast as his legs can carry him, seems to have learned that lesson from his erroneous “mandate” assumptions that drove the first two years of his campaign. When that mid-term election took place, state and local governments hadn’t really begun to furlough and remove workers at the levels we are seeing today. There hadn’t been a wave of violent insurrection throughout the oil-producing Middle East that is sending prices at the pump to levels that we haven’t seen since that 2008 spike. New home sales were beginning to rise, but have plunged in all the recent report with real estate values still dropping in the majority of U.S. cities. And the unemployment statistic was still filled with workers who now aren’t counted at all because they have been out of a job so long they fall completely outside the unemployment numbers. Yet still, the fervor of cutting the federal budget even if it means stopping the government seems to have overridden a common-sense examination of the massive changes that have occurred since the mid-terms. Funny in this democracy, we have opportunities to elect leaders, but we seem only to able elect representatives… or at least people who harbor an illusion that they are representatives. When a political wind seems to be blowing, candidates loft their sails even for the most fleeting of breezes.

Slogans and simple “cures” for horrifically complex socio-economic variables have never worked in recent American history. To liberals who believe that solving social problems always trumps deficit responsibility comes the harsh lesson of the generally debilitating impact of rampant inflation on everybody. Deficit responsibility is always a factor, but remember that the last time we had a budgetary surplus was in the pre-9/11 catastrophe era under a Democratic President who did not have a war budget to contend with. Likewise, conservatives might want to remember that when consumer spending has fallen to unsustainable lows, and state and local governments are seemingly paralyzed from deficits generated from a combination of eroded tax revenues and past committed generosity to their public employees’ retirement plans, the only significant source of spending is the federal government.

Managing an economy is much like driving a car; there isn’t one uniform speed – with no braking or stopping or turning – at which a vehicle can be set for all time. Balance, reactive and proactive change are essential. This is why doctrinaire and static political philosophies, uniformly applied, have not and cannot succeed in a modern era; life just doesn’t work that way.

The problem is, of course, that politics is always seeking the magic bullet, and otherwise reasonably intelligent people can easily succumb to the mantra of political simplicity. Once one of these “simple solutions” is implemented, the long-term damage to the system may require and more drastic economic reversal of policy at some time in the not-too-distant-future.

Ask yourself, for example, what the consequences might be to the United States if we really do cut our education budgets, increase class size and un-fund public colleges and universities, as many “austerity” politicians insist? Will the United States continue to dominate the global economic markets with second rate value-added workers? Will we really generate enough money to pay off that massive deficit when our employment base simply cannot generate the necessary value? And remember, Wall Street does not have to deploy its capital in the United States; its money will float to the area of highest return even if that clearly is not in the best interests of the country.

What will happen if these austerity measures actually tank our economy and restart the recession? 2012 awaits. And exactly why is it when society demands sacrifice, it so often falls on the backs of the very young: soldiers, still boys and girls barely beyond puberty, dying for the machinations of their elderly politicians, and children trying read tattered textbooks, straining to hear teachers at the back of packed classrooms... and the very old, wondering what will become of their pensions and healthcare?

I’m Peter Dekom, and somewhere, somehow, Americans really do need to learn how to “keep it real.”