Saturday, August 25, 2007

Getting In Front of the Economic Elephant in the Room

It has often been said that intelligence is the ability to learn from one's mistakes and not repeat them. If we take this postulate as a given, it would appear that most congressional Democrats suffer from an epidemic of intelligence deficit disorder.

Time after time, the majority of Democrats fall into a familiar pattern:

1) Watch as Republicans start to push or do something disastrous, shortsighted, and/or evil;

2) Say nothing for fear of being called unpatriotic or inadequately optimistic;

3) Observe in stunned silence the inevitable rotor-driven fecal storm;

4) Express feigned indignation after the fact at the callousness and shortsightedness of Republican policy--thereby prompting actually intelligent observers to ask where said Democrat had been before the worst repercussions of Republican policy took place.

We saw this pattern in the lead up to the invasion and occupation of Iraq, as Democrats cowered before Bush Almighty, failed to exert oversight of any meaningful nature, and then finally began to take the Administration to task about three years too late--well after their opportunity to take a morally consistent and meaningful stand had long since passed.

We saw this pattern in the authorization of the Patriot Act and its spawn, as Democrats too afraid to vote against anything with the word "patriot" in it stood by in tacit approval so long that their credibility in denouncing its obvious excesses was utterly shot.

We saw this patten with FISA (can't be seen as coddling terrorists!); with tax cuts (can't be seen as tax-and-spend liberals!); with trade (can't be seen as protectionists!); the list goes on and on. It's almost enough to make one question, as an aside, whom our "leadership" is hiring as their communications directors--and how much they are getting paid to internalize GOP talking points without pushback.

And yet, we see this happening yet again right in front of our eyes--and on an issue that is likely to be the most important focus of any campaign in 2008. If, as has often been said, the biggest difference between human and machine intelligence today is a wide gap in pattern recognition, then it would appear that many elected Democrats--or at least their communications directors--have the brains of an Etch-a-Sketch.

While I don't pretend to be an economist, it is a near certainty that the American economy is headed into some pretty rough times in the near future. While the Fed's extroardinary efforts to quell immediate investor panic and sustain credit flow, combined with recent surprisingly strong growth (albeit misleading) have led to the veneer of temporary stability in the marketplace, the overall trends for the next 12-18 months are not good. There isn't enough money to service debts; the indebted and overworked American consumer is in a historically poor position to withstand an economic downturn; and real estate numbers are expected to fall for at least the next six months. Consumer comfort has decreased sharply. As Henry Paulson and even our own bonddad are quick to remind all of us, the American economy has proven very resilient--but fundamentals are still fundamentals, and it is conventional wisdom even among bullish investors that the American economy is due for a correction.

Not, of course, that the majority of regular Americans have enjoyed the fruits of Wall Street's recent ride of prosperity. Average incomes have fallen over the last five years as productivity has risen and the incomes of the wealthiest 1% have increased dramatically. But it is the unfortunate fate of those of average and below-average incomes that while Wall Street gains may not help them, Wall Street losses will certainly hurt them as corporations eager to maintain their ridiculous profit margins begin to cut jobs in an environment of weakened consumer spending.

Whether the economic turbulence is contained to a credit crunch leading to rough patches over the short term (less likely) or instead leads to broader economic recession over the upcoming three to four quarters or more (more likely), the fact is that the state of the economy is going to be a major campaign issue as we approach the November 2008 elections.

Yet Democrats are silent. Democrats are silent even though many of these economic difficulties can be laid directly at the feet of the Republicans. It is, after all, Republican policies that have:
  • managed the economy over the last six years or more
  • aided and abetted the inflation of one asset bubble to the next
  • precipitated an historic upward redistribution of income from the middle class to the wealthy, weakening the structural supports of the economy
  • plunged the United States into record budget and trade deficits through suicidal tax and trade policies
  • aided and abetted the destruction of manufacturing jobs in the United States while failing to invest in education, broadband access, or alternative energy jobs--all of which are necessary to survive as a service-sector economy in a globalized world
  • embedded the United States in a military quagmire in Iraq, preventing the United States from even taking the immoral route of warring itself out of an economic slump

Most of all, Republicans knew that this was coming: that's why they were so eager to pass the Bankruptcy "Reform" bill. They needed to make sure that the over-leveraged consumers with negative savings rates and no ability to earn extra income would not be able to escape their debts to the bloated bottom lines of corporate America. And where were the Democrats when the Republicans were making these preparations? Nowhere to be seen until it was far too late.

And why are Democrats silent? They are silent because, as with Iraq, the Patriot Act, FISA, tax cuts and all the other examples of Democratic fear of the negative, Democrats do not want to be seen as contributing to an economic downturn by blaming Republicans for what everybody knows is the coming economic downturn.

The time has come to end that silence and--for perhaps the first time--to get in front of the elephant in the room for a change. It is time for Democrats running for election from every office from the presidency to the local mayor's race to hammer Republicans for scandalous mismanagement of the American economy--before things go really sour. The time has come for Democrats to cease being afraid of Republican accusations of insufficient optimism, and instead go on the attack. The time has come to learn from our previous mistakes and claim the policy high ground in advance. If our candidates position themselves correctly, they will be able to do much more than say, "see what the Republicans have done?" They will instead be able to say, "See? Didn't I say this would happen?"

And that could make the difference in 2008 between a year of Democratic victory, and the sort of landslide we need to turn this country back around and get it on its feet again.


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