Democrats & the Economy: History Lesson #4

Bush I Experienced a Short Economic Downturn

Bush I Experienced a Short Economic Downturn

George H. W. Bush inherited a robust economy from Reagan. He even pledged, “Read my lips: no new taxes.” If only he had stayed faithful to that pledge. He did reject new taxes from a Democratic Congress a number of times, but as part of a budget deal in 1990, he allowed some taxes to be raised. That angered his conservative base, a base he would need in the next election.

In early 1991, after the success of the Gulf War, Bush’s approval rating was at 91%. Then a downturn in the economy began to erode that approval. Now, let’s be serious here: it was just that–a downturn. It was not a recession; neither was it a depression. In the months leading up to the 1992 election, all the indicators showed an economy revived and growing again. All that had happened was a minor correction in the market, something which occurs regularly.

Yet the Democratic nominee for president turned this economic “hiccup” into the Great Depression. Clinton’s campaign slogan, “It’s the economy, stupid!” became the focal point of his bid for the presidency. He called the Bush economy the worst in America in the last 50 years. Really? This required short-term memory loss. What happened to Jimmy Carter? Did everyone simply forget the late 1970s?

“The worst economy in 50 years” was a blatant lie. But it set the tone for the entire Clinton presidency, where lying became an art form.

Clinton can be excused for this, some say, because look how well the economy functioned during his administration. He must have been a financial genius. Two factors must be recognized here: first, a president can sometimes be the beneficiary of the policies of his predecessors; second, a president does not control the entire economy–things happen without him.

Just as Reagan suffered from the Carter policies in his first two years, Clinton benefitted from Reagan’s policies that reinvigorated America. Just because Reagan left office doesn’t mean his policies and their benefits ended when he moved out of the White House. They continued through the presidencies of his successors.

Clinton also found himself in the middle of the dot.com boom. The new internet technology was just coming into its own. He was hardly responsible for that. Of course, to be fair, neither was he responsible for the dot.com bust at the end of his term.

The point being, Clinton really had very little to do with how America’s economy functioned during the 1990s. The only real economic reform during his administration was the Welfare Reform Act of 1996, for which he took credit. That was a joke. It was the Republican Congress that formulated that plan; he vetoed it at first, then signed it into law prior to the 1996 election, to bolster his reelection bid.

Clinton, therefore, had little to do with the robust economy of the decade. Yet he smugly took credit for everything.

A President at the Height of His Smugness

A President at the Height of His Smugness

There is a quote attributed to Lincoln, whether genuine or not, that I hope is not an accurate assessment of the American people today. Supposedly Lincoln commented, “You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time.”

A lot of people were fooled by Clinton. Are we going to see a repeat of that in this upcoming election? Is the electorate foolish? That sounds like a good topic for a future post.

Democrats & the Economy: History Lesson #3

Jimmy Carter: Author of Stagflation

Jimmy Carter: Author of Stagflation

The 1970s were dark years in many ways, and one cannot blame all the economic woes on one individual. OPEC kept increasing oil prices, which was a major headache for everyone. Yet presidential leadership can make a difference. That leadership was not forthcoming, however. At the beginning of the decade, we had Watergate and the Nixon resignation, followed by Ford, who failed to inspire. Both were Republicans; the economy was not strong.

When Jimmy Carter took office in 1977, it was hard to believe things could get worse–but they did. The Carter presidency gave rise to a new term: stagflation. What did it mean? Depressed productivity occurring simultaneously with high inflation. Unemployment rose to 9%, inflation topped out at over 13%, and buying a home became foolhardy. Who would want to pay double-digit interest rates? Carter tried “voluntary” wage and price controls. To save energy, he encouraged people to turn their thermostats down in the winter to 65 degrees. That’s an energy plan?

While the decade’s problems cannot be laid solely at Carter’s feet, he obviously didn’t have any idea of what to do to solve them. When Reagan took office in 1981, he inherited this terrible economy. The media loved to call it “Reaganomics.” But Reagan’s first budget and the tax cuts he initiated didn’t even start to go into effect until October 1981. What the country was experiencing was not Reagan’s fault. By the end of 1982, things were picking up, and by the time the next election came in 1984, the economy was in a constant pattern of growth. Reagan noted that after a while, the media stopped referring to the economic situation as Reaganomics–they didn’t want to give him any credit for the turnaround.

Reagan: Presidential Leadership on the Economy

Reagan: Presidential Leadership on the Economy

Genuine Presidential leadership on the economy is a rare commodity. None of the Democratic presidents I have highlighted thus far really understood how an economy works. Their basic solution for growth was government spending, which is actually a big part of the problem.

Democrats & the Economy: History Lesson #2

LBJ: The Great Society?

LBJ: The Great Society?

FDR changed the way Americans thought about the role of government by using government as the supplier of needs in a time of crisis. Lyndon Johnson, in the 1960s, took that concept a step further; one might refer to his “Great Society” program as the New Deal on steroids.

The philosophy of the Great Society was a shift from helping in a time of need to helping all the time. Whereas the New Deal was conceived as a temporary measure that would get us back where we needed to be economically, the Great Society, at least as it played out in reality, started with the assumption that a system of permanent transfers of income was necessary to achieve “fairness.” The government now became responsible on a permanent basis for everyone’s well-being.

Perhaps the greatest shift in thinking was the idea that poverty was a part of the economic system known as the free market. People were not poor as a result of their own bad decisions or bad character, but simply because the system was against them. They were not to blame; the system was.

Consequently, the government’s role was to make up for the inequities in the system. To help the “disadvantaged” (who were in that state primarily because of discrimination), LBJ, like his mentor FDR, initiated another round of government agencies and set a course for government involvement in the economy and in people’s lives that has been almost impossible to reverse.

It didn’t take long, once these new programs were enacted, to build into them automatic increases in funding every year. The result: deficit spending that has spiraled up ever since. LBJ’s “War on Poverty” was supposed to eradicate all poverty in America. As many have said, it’s time to run up the white flag of surrender in this war. How many more trillions of dollars do we have to spend before we come to the realization that the poor will always be with us. Now who said that, I wonder?

The Great Society led us into the 1970s, where we witnessed the worst economy we have experienced since the Great Depression.

The excellent British historian Paul Johnson, surveying American history in the 1960s and 1970s, declared this to be the time when America attempted suicide. I believe it is only by the grace of God that the attempt failed.

Trust the Democrats in a bad economic time? Why?

Lesson #3 tomorrow.

Democrats & the Economy: History Lesson #1

FDR: Architect of the New Deal

In the midst of the current economic jitters, I have heard more than one commentator assert that when economic times are rough, voters tend to gravitate toward the Democrats.

Why on earth would that be?

I want to provide a little history lesson on how Democrats have handled the economy over the past 70-plus years. Let’s start with Franklin D. Roosevelt.

The Great Depression hit America in 1929. Voters turned out the Republicans and looked to FDR to reverse the economic downturn. He initiated his program, which was called “The New Deal.” He became the most activist president in history up to that point, and more legislation passed Congress in a short period of time than ever before. A slew of new agencies (dubbed “Alphabet Agencies”) erupted on the national scene, all created for one ostensible purpose: bring the country out of the Great Depression.

Eight years later, no visible improvement had occurred. In fact, in 1937, when things had started to rise slightly, we suffered another recession in the middle of the Depression. I think most honest historians today have to admit that FDR’s New Deal was actually more of a stimulus for extending the depression than solving it. What got us out of it? Only all the production that was needed for WWII.

Now, people who lived through the 1930s “feel” like FDR brought us out of the Depression. He was a good communicator (his Fireside Chats on the radio) and all the activity made everyone feel like the government was busily reversing the bad situation. But, in fact, it was doing nothing of the kind.

Feelings can lead us astray. I submit that if the commentators are correct, feelings once again are poised to undermine genuine recovery.

Lesson #2 coming up soon.

The Market and Personal Responsibility

The big news last week, of course, was the near-collapse of the market, fueled by the bailout of major firms by the federal government. Leading the way were Fannie Mae and Freddie Mac, the quasi-private, quasi-government lending institutions. Now the taxpayers have the burden of guaranteeing an additional $700 billion.

Why did this happen? I’m not going to go into all the economics of it, but at the base of the problem is a spiritual issue. It has to do with personal responsibility. First, individuals were irresponsible when they sought loans for homes they could not really afford. Then, the companies were irresponsible for giving them those loans.

Further irresponsibility came from Congress, which did nothing to warn against the oncoming crisis; in fact, under Democratic leadership, the Congress refused to deal with the issue at all, primarily because of the cozy relationship between members of Congress and the leaders of the industry who were giving them money.

How many news reports pointed out that the men running Fannie Mae and Freddie Mac were staunch Democrats? I didn’t see any, did you? Instead, we are given sermonettes on the “failure” of the free-market system. That system can fail, yes–but only when character fails.

It all comes back to understanding that we are accountable for our actions, and that arrogance, greed, and selfishness (the lenders and Congress) combined with foolishness and selfishness (the buyers) has led to this debacle.

Loss of Biblical principles affects us all.

Celebrate the Constitution

This past week marked the 221st anniversary of the writing of the Constitution.

From May to September 1787, delegates from all states except Rhode Island labored over the intricacies of what makes government work. They did this in a room with the windows closed even on the hottest days to ensure that their deliberations did not leak to the public. They took a vow of silence, so to speak, in order that they might be able to discuss freely without fear of recriminations from the media of their day.

James Madison, who is often called the Father of the Constitution, took notes on what everyone said all those months. He would write in shorthand during the meetings, then turn his notes into a full account in the evenings. His transcription of the convention’s debates were finally published after the deaths of all the persons who were involved.

Some people today would probably decry this type of secrecy, but it was a wise move. The delegates were uninhibited in their discussions and were able to reach consensus on the form of government without the distracting swirl of constant criticism. Although the debates in the convention were secret, the ratification of the document was not. State conventions debated freely the contents of the proposed Constitution; the final vote in each state was the result of a frank, open discussion of the document’s merits.

The form of government set up at that convention has been the envy of many in the world. It has been copied by some, but not always with good results. The key to its workability always rests on the character of the people of a nation. Supposedly, a woman came up to Benjamin Franklin at the conclusion of the convention and inquired, “Mr. Franklin, what have you given us?” His response? “A republic, madam, if you can keep it.”

That statement is just as true today.

Principle: God the Creator

Continuing with a review of Biblical principles, I want to focus now on the truth that God is the creator of all things. If God “is,” then it is not a great logical leap to conclude that He also “does.” We don’t really grasp the concept of how astonishingly creative He is. All that we see around us began with an image in His own mind. He then transformed that image into something tangible. The universe sprang from His creativity; all the features of this earth are the result of His desire to create; the material and animal creations manifest His imagination.

Then came man. This was a unique part of His creation. Man is separated from all other created things by one key ingredient. Within man was planted the image of God. Nothing else in creation has this gift. God reasons; man can reason. God displays emotions; man possesses identical emotions. God chooses; man has a will. God knows the difference between right and wrong; man is endowed with a conscience. God is a spirit who is from everlasting to everlasting. Although man has a starting point, he also is more than a physical being; he has a spirit, and he will live forever as well. The only difference is that there are two eternal locations for that spirit, and only one is in the presence of his Creator.

Perhaps Michaelangelo expressed it best in his painting of the Sistine Chapel.

How are we handling this most wonderful creation of God? Do we reason as God reasons? Feel what He feels? Choose as He would choose? Is our conscience informed by His truth or have we instead seared our conscience to avoid the truth? This is not a game; it determines where our spirit will spend eternity.

And do we attempt to influence our culture by speaking clearly regarding this truth? Or do we hide the truth in order to be accepted by the culture? The future of the nation depends on the answer to that question.