Monday, February 21, 2000

Week of 02/21/2000

It’s Still The Economy!
- by David Matthews 2

"It’s the economy, stupid!"

Those were the words that were the bane of President George Bush in 1992.

"It’s the economy, stupid!"

Those were the words that helped promote a slick career politician from Arkansas to beat President Bush in the 1992 presidential elections.

"It’s the economy, stupid!"

Back then, America was in the midst of a recession. The businesses that were on marathon merger sprees in the 1980’s were paying the bills for those mergers by laying off people and streamlining their services. In fact, the serious layoffs started around 1988 under President Reagan’s watch. The banking institutions were still recovering from the Savings and Loan failures. The "mother of all military overkill" - otherwise known as the Gulf War - was a great PR campaign for the power of the armed forces, but it didn’t produce the economic recovery so desperately needed. And rather than staying at home to encourage businesses to invest in the American workforce again, President Bush started his "New World Order Tour" to show the world just how proactive America could be.

"It’s the economy, stupid!"

So President Bush took the heat for America’s economic recession (which largely were from factors that started before he became president), simply because he choose to focus on his worldly neighbors instead of his own political lawn. That let Slick Bill Clinton sweet-talk his way into the White House with the four words that stood as the unofficial banner of his campaign.

"It’s the economy, stupid!"

Presidents, it seems, are forever linked to the winds of the economy. Franklin Roosevelt’s career was forged as the man who would get America through the Great Depression. Jimmy Carter was hit by both bad foreign policy and a bad economy, which made it easy for someone like Ronald Reagan to win in 1980.

By the way did you notice how all the talk about the economy disappeared once Clinton took office? Oh, he had this BIG meeting with business leaders even before his inauguration, but basically very little came from it. Business leaders told him that was how things were, and government can’t do anything to change it. But that really didn’t matter to Clinton. He had his big meeting - problem fixed!

Those four words, though, have continued to pop up occasionally.

"It’s the economy, stupid" was one of the reasons behind people believing that Clinton should stay in office in 1996. The economy is doing great, the Clinton evangelists told us, so let’s keep him in office, or else it will all go to pot.

"It’s the economy, stupid" was the exact same reason given by Clinton to urge he not be voted out of office in 1999 at his impeachment trial. It was also the same reason that so-called political "experts" gave to explain why there wasn’t as much of a public calling for his ouster. It didn’t matter that we rate lying to Congress the same as Congress does in lying to the American people. It didn’t matter that we thought Clinton should’ve been impeached for more than lying about a dalliance with an intern. According to those experts, we just didn’t want to disrupt the economy.

And true, the economy has been strong in recent years. A whole new source of wealth has been found in the electronics and information market. Prices have been low, the stock market has been on a winning streak, and people have been feeling good about themselves.

But now here’s something that people don’t want to hear.. and certainly something that either the President or any of the presidential contenders want you to hear: The good times are coming to an end.

Now let’s get brutally honest here… I’m not a financial expert, nor do I pretend to ever be one. I’m just a regular guy, like the rest of you, who are working their butts off trying to make ends meet. But just like a farmer who can work the land and forecast the weather a little bit better than a meteorologist, sometimes regular people can have a better feel of the economy than so-called financial experts; and what I’m getting a feel of is an economy whose successful climb is at an end, and the decent is about to begin.

How do I know? Well just like the experts, one has to look at the signs.

For starters, there’s the amount of government being brought into our lives. Like any cheap hustler looking for a quick buck, politicians are eager to use the good times as an excuse for more government programs, more government regulations, and more taxes to pay for them all. After all, we’re told, we can afford them. And this year’s financial wish list from President Clinton, otherwise known as the Federal Budget for fiscal year 2001, is perhaps the best demonstration of that political largesse.

Of course, our politicians would be ever so quick to say that any tax increases would be foisted on those "evil, filthy, rich corporations" and not on the average, hard-working American. But even if that was the case, we would still get screwed. Businesses simply transfer that additional cost to their customers in terms of higher prices. It’s called "overhead", and it’s something that businesses can do, but the average, hard-working American cannot.

The second sign that we’re about to hit an economic downturn is in job layoffs. And there have been some serious layoffs announced in the past year by major corporations. However, unlike previous downturns, these announcements were not to take effect for several more months, which gave economists the time to simply wave their hands like Marie Antoinette and say "oh, the job market can handle it.."

Maybe the job market CAN handle it, but with what? Temporary and seasonal work, which are plentiful, but does not bring the kind of financial stability that allows people to do things like take out a loan for a new car or home. Temporary work means people will have some spending money to keep their current bills paid and put food on the table, but that’s pretty much it. As one who has worked the temporary job market, I know that it is very difficult to plan for your future for things like college for your kids or your retirement if you don’t know how long your current job will last. That’s one reality that so-called financial experts have little comprehension of.

The next sign is in the price of services. The OPEC nations have once again taken control of oil production, and as a result, oil prices are over $30 a barrel for the first time in almost a decade. Gasoline prices at the pump have soared. This price increase has already led to higher airline prices. Other such transportation prices will soon follow. That will lead to higher prices for other services because businesses will have to absorb the cost in their overhead.

Then there is the one other activity that the federal government can control - and that’s federal interest rates. Federal Reserve Chairman Alan Greenspan has raised interest rates over a point in the past year alone, on the pretense that this would slow the economy down and offset inflation. That would be nice if the economy was still on a roller-coaster climb, but not now, when the economy is at the peak and about to plunge.

Increased interest rates for things such as loans mean additional costs on consumers and businesses. That means businesses will have to pass that additional cost - the overhead - to the consumer. Consumers will have to pay more money for their loans, which means less money they can have to spend on other things.

Chairman Greenspan hasn’t stopped inflation, he’s fanning it like a fire.

So now here’s the $64,000 question… why aren’t you being told this from the so-called "experts"?

Remember what I said before.. presidents are linked to the winds of the economy. Bill Clinton doesn’t want to be remembered for causing the next recession any more than President Reagan would want to be remembered for causing the recession of 1989. And certainly the current crop of presidential wannabes do not what to be the president who inherits this coming economic downturn. Can you imagine the headlines should Texas Governor George Bush become president and he inherits this? Four words come to mind: like father, like son!

Of course, there is a way to change that. Most people didn’t realize that we were into a recession in 1982, partly because of what the federal government did back then, and that was to cut taxes and start cutting down on the level of government. But given that even the most conservative of our politicians don’t want to do that, it’s very likely that we will have to ride through these coming days of famine without them.

So the next time our political leaders come by to talk about how things are and ask how they can help us, perhaps we can remind them of the four little words that once put a slick politician in office. The four words that matter more to us than ethical politicians. The four words that matter more to us than foreign aid. The four words that matter to us more than South Carolina’s flag or Elian Gonzales or Braves pitcher John Rocker’s comments in Sports Illustrated. The four words that sum up all of our concerns for the future.

It’s the economy, stupid!

No comments: