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It's the economy, stupid

Fri, Sep 19th, 2008
Posted in Commentary

There are four months to go in the George Bush debacle, perhaps the worst presidency in the history of our country. At this writing, investment bank Lehman Brothers has filed for bankruptcy, Merrill Lynch has been taken over by Bank of America at discount prices and insurance giant American Insurance Group was bailed out to the tune of $85 billion by the federal government to keep it afloat. The goverment is considering additional bailouts of the banking industry that, when don, could total over a trillion dollars.

On Monday the stock market fell over 500 points and an additional 450 points on Wednedsday, before rebounding again on Thursday. Remember that over a month ago global investment bank Bear Stearns was bailed out by the feds; and a few weeks ago the federal government took over Fannie Mae and Freddy Mac with taxpayer dollars to keep it afloat to protect home mortgages.

Throw in the federal deficit which is expected to exceed $400 billion at the end of the year, the $10 billion bill we get each month for the Iraq war, the devalued dollar, the historical price of oil, and the collapse of the real estate market. More than 600,000 Americans have lost their jobs since January. The Bush presidency can't end soon enough.

John McCain's statement on Monday that the "nation's economic fundamentals are strong" is, pure and simple, crazy talk, and does little to instill confidence in his ability to understand the problem. Which fundamentals is he talking about? Banking institutions? Real estate markets? Oil prices? In fact, former federal reserve Chairman Alan Greenspan calls our predicament a "once in a century" economic crisis and some critics are saying that the economic fundamentals are, in fact, broken.

Bill Clinton ran for the presidnecy in 1992, and used the recession and economic woes of the times to unseat incumbent George Bush, Sr. - remember the slogan, "It's the economy, stupid!"

Clinton presided over the longest economic expansion in U.S. history. The Clinton economic strategy focused on debt reduction rather than cutting taxes as the best strategy for providing economic growth. And here he was successful, leaving office with, according to congressional accounting rules, a $559 billiondollar surplus. During Clinton's tenure, the unemployment rate fell to 4%, a 40 year low and the stock market grew by more than three times during his two terms.

Whether the economic successes of the Clinton years was due to the president's strategy or tight monetary policy by Greenspan at the federal reserve, or a combination of both, doesn't really matter. In general, it was a time of broad prosperity for all Americans.

McCain admits that "economics is not his strong suit" and has campaigned for making President Bush's tax cuts permanent. For the most part, McCain subscribes to the Republican tendency to deregulate markets, while Obama, who would give the Bush tax cuts to the Middle Class, claims that the economic mess we are in is due in part to lax regulation by the White House. Now McCain says he is for regulation.

In any event, we are in an economic pickle. We yearn for a time when the economy worked and the public had confidence in the marketplace.

Both candidates have 45 days to convince us they can lead us out of the quandary we are in.

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