Elections are right around the corner and the frenzy has all of us in a complete tizzy. Depending on who you listen to, you will get two completely opposing views of our country. The right is screaming for fiscal austerity and prevention of a “nanny state” and believes that unless we cut government spending and stop spending beyond our means, we are not going to rise as a nation. The left, including its most famous rock star, Bill Clinton, is trying to convince us that fiscal austerity is exactly the wrong prescription right now and we need to embark on a government spending spree by printing more money and raising taxes, thereby jump starting the economy.
The economic issues are and should truly be in the forefront of voters’ minds. Instead, social conversations and style points have taken precedence over true debate about the pressing economic crisis that we face as a nation today.
President Obama’s stance on many of the economic issues has been confusing, to say the least. The right calls him a left-wing socialist and non-pragmatic, while the ideological left blames him for not being principled enough.
The two greatest Presidents in recent memory have been Ronald Reagan and Bill Clinton. Measurable progress was made during their terms, in areas ranging from the end of the cold war to economic prosperity and welfare reform. During 12 of the 16 years of the Reagan and Clinton administrations, Congress was controlled by the opposing party. Despite the tremendous legislative hurdles, both Presidents accomplished groundbreaking reforms.
President Obama had a clear mandate during the first two years. He chose to spend all of his political capital passing healthcare reform (the Patient Protection & Affordable Care Act) and financial reform (Dodd-Frank). For the next two years, when Republicans controlled the House, nothing was accomplished besides an extension of Bush tax cuts for two years and a small payroll tax cut. When the President submitted his 2013 budget proposal to Congress in February of this year, the House voted 414-0 against it.
How should we rank the President on the pragmatism scale? If we measure based on what has been accomplished with Republican support, the President would get a C-. He has continued to blame the Republicans for non-cooperation. A strong pragmatic leader like Clinton was able to reach out to then-Speaker of the House Newt Gingrich and pass landmark bipartisan legislation that led to eliminating the gross excesses of the welfare system.
On the economic front, Obama should be a follower of Keynesian economic principles, which promulgate the idea that government spending is the answer to get this economy out of recession and create jobs. Since Obama took office, the federal government has added more than $5 trillion to our national debt by engaging in fiscal and monetary stimulus measures. Nobel Prize winning liberal economists Paul Krugman and Joseph Stiglitz both fault Obama for not borrowing and spending enough. They contend that America must borrow more by printing more money and increase tax rates on the rich in order to reduce deficits. Stiglitz, who served as Clinton’s chief economic advisor, advocates a maximum tax rate of 70% in his latest book.
Income inequality is a big concern for liberal thinkers. They cite that the rich have been getting richer, while the poor and middle classes have been converging downwards. Stiglitz argues that corporate greed and “rent seeking” behavior has corrupted our nation’s economy and is the primary cause of the financial crisis. Therefore, higher taxes on the top earners and substantially more government spending to help the poor and the middle class through various government programs, is the primary prescription to fix America.
Obama continues to repeat the liberal mantra of government spending but has continued to support monetary stimulus (i.e. printing money) to reduce interest rates. Even the liberal economists disagree with this approach. In fact, a new study from the Bank of England suggests that Britain’s quantitative easing program over the last year actually helped the super-rich because they were the actual owners of most financial assets, which naturally appreciated after a reduction in rates. As we all know, the low interest rates can only be good if we can actually qualify to refinance our debts.
If Obama was a true liberal ideologue, he would have engaged in a massive fiscal stimulus program by pumping cash into state and local governments so that they didn’t have to make stiff budget cuts in order to balance their budgets. If he was a true ideologue, he would have created a United States Bank and refinanced the entire nation at today’s low rates. If he was a true ideologue, he would have raised taxes, printed more money and raised the inflation target to achieve a sustainable growth trajectory.
None of this happened. Instead, he spent his first two years implementing healthcare reform that many think will actually drive up healthcare costs and reduce quality of care for all Americans. The Dodd- Frank legislation is hampering banks’ ability to lend money to individuals and businesses alike. In the meantime, billionaires are taking advantage of the credit crunch and snapping up assets at 30 cents to a dollar. A President who claims to understand the pain of ordinary Americans does not seem to understand that the poor and middle class are actually hurting from the current policies.
We stand a month away from the election and the current polls show Obama leading Romney in all the key swing states. Besides the ideological talking points heard on their favorite ideological TV stations, voters seem to have no clue what he might do in his second term. Will he become more pragmatic like Clinton and Reagan, and actually respect the Republican party for having at least some good ideas? Will he rework kinks in the Affordable Care Act and start a new effort with Republicans to craft a more meaningful law? Will he loosen Dodd-Frank restrictions on banks to allow them to lend toAmerica’s businesses? Will he go the Stiglitz and Krugman route and add another $10 trillion to our national debt by engaging in massive government programs designed to stimulate our moribund economy? Will he actually attempt to pay for the new debt with much higher taxes on the nation’s rich?
The American people have not demanded answers to these questions. But they have the right to know. The dialogue has been dictated to us by the pundits, and like robots, we keep on discussing only those ideas that are brainwashed into our minds. The bulk of political debate focuses on who said what and to whom and who appears to care more from a stylistic perspective. This is the wrong way to choose a President and I hope this November all of us vote for our candidate, knowing full well the answers to the important economic questions that can determine the future of our great nation.
Amol Nirgudkar, CPA is the managing partner of Reliance Consulting LLC (www.reliancecpa.com). He can be reached at (813) 931-7258 or via email at email@example.com. He was also an Obama supporter in 2008.