Posted on 02/25/2004 1:46:53 AM PST by kattracks
FINALLY. After three years of raising money for his reelection campaign, President Bush kicked off that campaign on Monday. And he did it with a style, humor and poignancy that spells trouble for John Kerry.In the midst of a relentless assault from Kerry, other Democrats, and every left-wing activist group there is, a little show of temper might have been expected from any President. But Bush’s good humor, his seemingly indefatigable optimism, gave the speech an unexpectedly happy flavor. He said he looks forward to this campaign, and he obviously meant it.
“The other party’s nomination battle is still playing out,” Bush said. “The candidates are an interesting group, with diverse opinions: For tax cuts, and against them. For NAFTA, and against NAFTA. For the Patriot Act, and against the Patriot Act. In favor of liberating Iraq, and opposed to it. And that’s just one senator from Massachusetts.”
With lines like that in Bush’s quiver, John Kerry had better see if Al Franken is looking for work, because he’s going to need the help.
Bush also said: “Great events will turn on this election. The man who sits in the Oval Office will set the course of the War on Terror, and the direction of our economy. The security and prosperity of America are at stake.” And this is while Kerry identifies himself as a jobs and education candidate.
President Bush has engaged in the contest for the White House in a more promising way than even many of his supporters expected. Suddenly it’s a real fight, and one that looks to be more entertaining than any other in the past two decades.
Before he was inaugurated he started warning of resession, and urging Congress to cut tax rates. The Democratic Party in general (and John Kerry in particular, beyond peradventure) opposed and delayed that action, and insisted on sunset provision in it. The Democrats' policy is simultaneously to compare Bush to Hoover for the gross number of manufacturing jobs that have been lost and, at the that very moment, to advocate Hoover-Roosevelt policy of burdening the economy with tax increases and futile regulations.
There wasn't a dime's worth of difference between Hoover and Roosevelt, except for the placebo effect of Roosevelt's rhetoric blaming all the trouble on Hoover. That was initially a fair assessment--but if FDR had been a Ronald Reagan the Great Depression would be remembered as the Bad Recession. In fact FDR had no more idea of how to get the country going again than Herbert Hoover did, and since he was bogged down on domestic issues he did not have the clout to oppose Hitler the way he wanted to in foreign policy.
Too late??? Nine months till the election, buddy.
He's got to address this problem a bit more directly.
Your #5 is an exceptionally insightful set of thoughts and is something not addressed that directly much of anywhere else.
The economy is the single most important issue in the election campaign. Sure, if the terrorists are able to attack the domestic United States with the force employed on 9/11, national defense is a serious issue. But we have the capacity to do something about that problem--we can mount a far more effective direct response than we have to date; and administration policy has been sufficient to avoid a repeat performance so far. If the enemy is able to effectively mount another 9/11 scale attack, it might affect the election outcome but absent such an attack, the election will be resolved on the economy.
There is also no doubt that the recession started in the fourth quarter of 1999, over a year before Bush became President.
The comparison between Bush and Hoover is inescapable. The second half of Hoover's term was occupied with Hoover and his minions telling everyone how great the economy was and about an impending expansion in economic activity and employment when everyone on the margin knew it was not so. Bad news was buried. You are absolutely correct--Roosevelt knew much less that Hoover's people about the economy; about what caused the problem; or about what to do about it; he not only had no effective plan for what to do, the policies he implemented made the depression worse and extended the pain.
You are also correct, Kerry (and Edwards for that matter) are worse--they have no proposals and neither of them have any idea about what to do that would improve economic conditions.
Guess what--Roosevelt won; and won reelection three times because although he was hopelessly ineffective, the voters were convinced he was trying to turn things around. What else? The Dems are going to win the presidency this time also unless Bush acknowledges the problem and mounts an effective response.
The tax cut was not very much; most of the relief was backended; and taxes are way too high, imposing an insurmountable burden on most domestic job creation and an unreasonable burden on actual employment. The economy is in bad shape; deteriorating; and the hundreds of thousands of new jobs Bush is promising every month are not there this month and won't be there next month or the month after either.
Unemployment is much higher than the "official" numbers which are not real data in the first place. Unemployment numbers are just a telephone survey number--no one has any idea whether or not they have any relationship to reality and the evidence they don't is everywhere. The layoff data; the help wanted ads; the Challanger survey; employment tax receipt numbers--you name it. The unemployment compensation application numbers and receipt numbers don't give much indication of the true picture because for much of the work force, benefits have expired, and workers have given up looking for work in the on the books economy.
One piece of good news. The 11.8% unemployment number floating around the Internet probably overstates actual unemployment. Because many of the "unemployed" are working in the off the books cash economy in the construction industry. The on the books economy charges workers 20% tax on gross compensation (FICA, Med etc.--employer pays half but it comes out of compensation); plus 15-31% income tax (state and federal). More jobs are available for cash that do not withhold and charge these amounts.
The government refused to release the PPI (Producer Price Index) numbers last week and now says they just are not going to tell us what those numbers are at all. In a democratic society? The government won't give us normal economic data? Why not? Because the number shows a very large increase in Producer Prices which can be expected to work its way through to the consumer in the near future.
Now we don't see that PPI number as that great a threat. There are a number of reasons why raw material, agricultural, energy and other components are up that do not result from structural problems in the economy. But the idea that the government is going to withhold data that paints a bad picture is just like something Hoover did--and it is just another indication that Bush is headed down the same road.
The real problem is debt--same problem Hoover had. In the 1920's, the fed created excess money supply through the stock market margin process. When it became clear underlying stock did not have sufficient value to support the debt in 1929, the burden of retiring the debt through other sources of liquidity and through the foreclosure process was so great, no one had liquidity to spend on future consumption or investment and the economy collapsed.
Greenspan and Rubin did the same thing in the 1990's to support Clinton's political objectives; Bush is dealing with the consequences by denying them just as Hoover did. Wrong strategy.
The economy is going to continue to deteriorate until we stop trying to deal with debt service requirements by creating more debt. There is a finite limit to how much more debt can be created. When we reach it, we will then deal with the same events Hoover experienced in 1931 and 1932--no one can pay and there will be defaults.
What is wrong in a nut shell is that our economic policy is unworkable. The only way our monetary system works (the fed) is to create new money by creating debt. Too much money and our money value becomes suspect (where we are today); people can't pay the debt. And our taxes are way way too high.
Both very difficult problems to address. The next President, like Roosevelt, is going to deal with the resulting problems. In the 1930's, the American ethic was much different than it is today. I expect that one of the responses will be that people not only won't pay their debts, they won't participate in the realization process either. In the 1930's the legal system was somewhat overloaded--in some states, 1931 or 1932 was a tax holiday year because no one paid.
The problem is much worse today--because unlike 1929 when most of the problem debt was created in the stock market margin process, today, everybody has excess debt in every element of our society. Consumer credit card debt; government debt; real estate debt; stock margin debt; and business debt. No where is there liquidity flow to service existing debt, even at today's cheap interest rates. The legal system does not have the resources to enforce creditor's rights--there are not enough courts and not enough lawyers to enforce every security interest in America.
The real property asset value bubble is one of the principal sustaining elements of the current problem. Interesting paper several weeks ago about market prices. CPI includes housing costs as a number reflecting the rental value of the property occupied; thus the CPI number is going down because rents are going down in an environment where market prices are going up. Vacancy rates are now around 10%; estimated to be about another 10% of the housing stock vacant because it is on the market, not occupied by the owners.
So where is the real demand for additional housing stock coming from? Speculators who are betting prices will continue to go up. How much longer do we want to bet that will continue.
At the moment, our view of the consequences are not the political news. The political news is that participants in the American economy know that the administration message--the economy is good and getting better; is not true just as they knew it was not so when Hoover said it. Unless Bush addresses reality, the consequences to Bush will be the same as the consequences to Hoover.
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