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Picking POTUS 2012
The Debate and the Hole
Jay B. Gaskill
If on November 2, 2012 the economy looks a lot like it does today, the country will be electing President Perry or President Romney. It will not be electing Governor Christie, nor Congresswoman Bachmann or Congressman Ryan. Assuming, for the sake of argument, that former Governor Palin enters the race, it will not be her, either.
Money and organization dominate at this comparatively late stage in the process. Remember that the GOP convention takes place in Tampa, Florida on August 27th next year and that the nominee must be locked and loaded for a national campaign at the post-nomination starting gate, and should have already planned and staffed a transition team. The nation and the world are in a crisis, the depth and scope of which guarantee that the next administration must be prepared to swiftly assume executive responsibilities under very challenging circumstances.
Conventional wisdom holds that in yesterday’s debate Governor Perry, having seized center stage, just needed to avoid a major gaffe. I disagree. As the smoke settles, it will become clear that Rick Perry’s tendency to pithy and forceful rhetorical candor borders on the scary at a time that calls for bold policy changes delivered with calm reassurance. The electorate is grumpy to be sure, even angry and frustrated, but most Americans are emotionally fragile in a way that most Texans are not.
President Reagan wisely decided not to charge into the social security thicket and President Bush II, having responsibly put social security reform as a top priority for 2001, hit a brick wall on that issue even before the Twin Towers came down. That wall still stands.
Governor Perry and Governor Romney both understand that social security in its present form is a dramatically underfunded form of welfare. The term Ponzi scheme may actually fit (as in Perry’s book, Fed Up), but Governor Perry’s attention-getting rhetoric will dog him now and may cost him later in the general election, assuming he is nominated.
Whatever problems that social security funding presents this country, they are far from urgent when compared with the problem of funding day-to-day government operations during a deep and dangerous recession. This is not the optimum time to talk about the prospective bankruptcy of a program that will not become acute for a few years, not when we are facing the de facto bankruptcy of the federal government in the near term.
The deeper problem is the bankruptcy of the conventional economic wisdom that has brought us to this place. Look at the European mess. You are looking in a mirror. No one with access to the facts on either continent, in his or her right mind, seriously maintains that the entitlements enjoyed by the Greek rioters are sustainable, or that spending and benefit austerity can be avoided via monetary manipulation magic. It is too late for that in Europe and here in the USA.
We are in a trap. The way out consists of a mix of hard-headed spending adjustments coupled with a creative surge on the economic side. Mr. Obama dimly grasps this, but clings to a dead development model. The British economist John Maynard Keynes argued in the last century that the secret to continuing prosperity was a generous supply of money. He actually used the example (as a thought experiment) of an English village in the throes of high unemployment and deep depression. In his story, someone buries a treasure trove of currency in a deep hole. Full employment results when the villagers begin digging out the money.
It is actually frightening to me that someone as intelligent as Fed-head Bernanke still clings to a version of the Keynesian model. The villagers in Keynes’ example will starve unless the rest of the world feeds them, agreeing to accept the money the villagers have dug up. If everyone buries money and digs it up, over and over again , the depression never ends. One of President Obama’s pet showcased enterprises, a heavily subsidized, much publicized solar panel manufacturer has just gone bankrupt. Subsidized production fails without consumers. Subsidized consumption fails without production and a valuable currency to exchange for that production. Governments have never quite got it when it comes to commerce.
The centerpiece of the US recovery is a concerted, serious attack on the vast constellation of petty rules, unreasonable tax polices and crippling regulations that together constitute the political load on commerce. Ronald Reagan talked about that shining city on the hill. We need to be thinking about a different image. Imagine a soaring eagle. Now imagine a tethered one, hobbled at the feet, entangled in a web of failed good intentions.
You will know that someone is finally serious about getting us out of the trap when the talk gets seriously specific about how to lift the regulatory burdens on profit-making commercial activities in the USA.
As a thought experiment, imagine a country in which all of the various governmental regulatory agencies and commissions were made subject to a deregulation commission, tasked and empowered to strip away the regulations, petty tariffs and rules that curb economic development, hinder profit-making enterprises and inhibit new hiring. Imagine, if you will, that in lieu of an environmental impact report, we required only a shorter, swifter, more objective human heath and safety report. Imagine, also, a country in which new commercial and business regulations could not go into effect without first doing a commerce and jobs impact report. Protect snail darters or people’s prosperity? Suddenly the well -intentioned burdens on economic activity that have been imposed over the last three decades look a lot like luxuries we can no longer afford.
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