Friday, October 10, 2008
Financially, our country isn’t all that different from its individuals and families, like you and me. If we spend beyond our disposable income on a sustained basis, the burden of the debt we are carrying eventually becomes overwhelming and our personal financial world collapses. We do our best to put off the tough choices we need to make, tap dancing our way from paycheck to paycheck, but the underlying problem – too much spending for too little income – doesn’t go away, does it? Without adequate savings, any major problem – loss of job, serious illness, whatever – only forces the inevitable.
For companies, as for individuals, we have taken for granted the availability of credit which, in many cases should never have been forthcoming. The thing is, credit is no substitute for savings or retained earnings.
As a nation, we have hugely over-spent, incurring untenable levels of national debt in the process, and now we’re in trouble. Our economy is in crisis, its financial sector in particular, and all our government can think to do is spend more billions, and probably trillions if nothing happens to change the same mindset which has brought us down this road to nowhere. Yes, we’re in deep trouble, but it’s not specifically because of subprime mortgages that never should have been financed. That’s a problem, to be sure. More importantly, it is the outgrowth of a national psychology, a mentality that has too long believed in excessive, reckless consumption by our people and their government. Well, time’s up.
As soon as possible over the next, let’s say 10 to 25 years, our people need to change their habits and start saving. Savings, in the absence of higher incomes will reduce consumption, and that’s going to be a real problem for our economy overall. It won’t be pretty, but we’ll have to deal with it. We need to generate new jobs in emerging sectors and subsectors of our economy, improve productivity, and make our workforce and technologies competitive by the highest international standards. Easier said than done, I know.
More to the point of his piece, our government has got to stop living beyond its means. We need to balance the budget and to eventually generate surpluses made possible by a healthy, competitive, growing economy with realistic levels of personal and corporate taxes, and then use those surpluses to pay down our national debt – starting with the international portions of it – and lower the costs of servicing those obligations. In the process, we need to dramatically reduce, at least for the time being, the scope and extent of what we expect our federal government to do for us. Our government simply cannot afford to sustain anywhere near the level of services in now attempts to provide.
(If I’m saying anything with which any of you disagree, please speak up. This is a blog. You know what to do.)
The question we need to resolve in the next three weeks is simple: Which candidate is more likely to understand this problem I’m describing, and manage our way through it, with less reliance upon our government, by encouraging our economy’s natural facility for recovery and growth? The answer is clearly John McCain. He’s not my first choice of people I would want to be President, but clearly the better of the two alternatives in front of us for the following reasons related to this one, really big problem I need the President to address:
Senator Obama has no experience, period. Unbelievable that I’m about to say this, but Goveror Palin has at least had to work with a state budget. She has management experience. Senator Obama, on the other hand, is a professional candidate for President. Between the two of them, and I know they’re not running for the same office, she’s the more qualified to be President given the current economic problems we’re facing. (To quote Long John Silver, “Shiver me timbers.” It gives me chills to say it, but it’s true.)
Senator Obama is a text book liberal who has promised everything to everyone. Either he’s pandering to the electorate, and knows he can’t possibly do all this – and lower taxes – or he’s has no idea what he’s talking about. I suspect it’s some of both.
Democrats, in general, believe in more government. Republicans, as parties go, believe in greater dependence upon the private sector. (President Bush is not… well, an example of anything, and needs to be left out of this debate altogether.)
Last point… The Democrats, and Senator Obama in particular who is so, so anxious to become President, love pointing to the current Administration as the cause of our problems. That’s nonsense, and everyone of you – even the most ardent Obama supporters – knows it. Our root problems have been festering for decades. More recently, the Democrats have controlled Congress for the past few years during which Senator Obama has been in office, and did nothing substantive to head off the mess we’re in today. He’s all talk, in a time when we are in desperate need of management.
Back to work.