Candidate McCain and Economic Straight-Talk
By Jeff Lukens (02/10/08)
Talking tough on terrorism will not be enough for Senator John McCain to sustain his candidacy. McCain fashions himself as a maverick, or should we say liberal, on many issues. Liberals, however, long ago relinquished the intellectual agenda to the Right. Now they frequently react to conservative ideas on the economy, the military, the role of religion, and how big the federal government should be. Mitt Romney is a better-suited candidate to address economic issues, but for better or for worse, John McCain is now our nominee. As such, McCain should take the lead in advocating policies for the economic well being of our country.
For starters, we could use some straight-talk that Social Security, Medicare, and Medicaid require an overhaul. The gap between the entitlements promised to baby boomers and the tax revenue to pay for them is estimated in trillions of dollars. Providing the full benefits will probably be impossible.
The grievance and nanny-state programs Democrats have cultivated the past fifty years is beyond old but is still being sold to us in many variations. Universal healthcare is the latest twist. But it is all bunk. Only low taxes, spending discipline and market solutions unhindered by Washington red tape can provide the answers to the economic problems we face. The dynamics of free enterprise by American people will do the rest.
The United States is basically a conservative nation, especially when compared with those in Western Europe. Over the years, the rugged individualism of the American people has fueled unparalleled growth. We were conceived as a conservative culture some 230 years ago, and changed to one that experimented with socialist ideas from the 1930s through the 1970s. With much of the civil rights agenda and the large-scale expansion of the federal government under LBJ complete, liberalism ran out of steam.
The impact of budget deficits, inflation, and high taxes had taken their toll in the 1970s. The growth of the federal government was the main reason the US economy stalled. By 1979, Senator Pat Moynihan, Democrat from New York, said that conservatives had won the war of ideas. The next year, Ronald Reagan was elected president, and ever since the political winds of our country have been shifting rightward.
Now more than ever, we need low taxes and spending discipline in government. Not only are we unable to pay for entitlements, the 2003 tax cuts will expire soon, which will inhibit further growth. The stimulus relief package soon to become law will only widen the deficit, not reduce it. To his credit, McCain has opposed wasteful congressional earmarks for a long time.
We need a sound strategy for energy independence as well. We export our dollars overseas to import oil that we refuse to drill for ourselves. Conservation is always a good thing, but economic growth requires fuel that, at present, only oil provides. Alternative energy sources will take decades to become economically viable. For now, we need to drill in ANWR, in the Gulf, and on the continental shelf.
McCain has opposed energy independence measures every step of the way and has bought into the junk-science hoax of global warming. On this score, he is 180 degrees out of phase with what we need to grow the economy. It seems that drinking the environmental Kool-Aid on this matter is more important to him than supporting the needs of the American people.
As the trade deficit grows, the value of our currency is reduced. Moreover, the trade deficit produces excess US Dollars in the hands of ever more Chinese, Saudis and other foreigners. US debt in the hands of foreign governments is now about 25% of the total. Currently, China holds over $1 trillion in dollar denominated assets (of which $330 billion are US Treasury notes). As the Fed lowers rates to keep our economy going, the return for those foreign investors is lowered as well. Eventually they will look elsewhere for higher returns.
Once foreign investors start shunning our T-notes, the Fed may then have to raise rates again and stall the economy to keep them form divesting US debt. A financial crisis could be upon us. The only way out of this mess is by balanced trade, balanced budgets, and more productivity by our workforce.
On many fronts, we are literally in a race for our financial lives. The high-tech age is requiring ever more people to have a high degree of skill in some technical vocation. Gone is the time when folks could make a good living as unskilled laborers. Lacking such skills, economic conditions for many people will get even worse, especially for the poorly educated underclass.
The next president must dare to be honest about the new economic world order. In a flat-world economy, he or she must advocate ways to generate wealth for working people. Economic reality has moved beyond class struggle and race relations in America. Does anyone think the Chinese and other Asian countries are standing still while our country falls further behind in the productivity race? The loss in jobs and lowered standard of living for many people is already reflecting it.
The economy will likely be the biggest challenge faced by the next president. As can be expected, Democrats have been totally void of substance so far in the campaign, except for advocating more socialism. The way ahead does not lie in nostalgia for more Great Society programs. If the next president is John McCain, he will need to give this extremely complex issue the attention it deserves.
We must never lose sight that conservative principles have been the reason for America's exceptionalism. While Republican prospects are uncertain for November, we must still define the party in a way that reflects conservatism and sound economics. John McCain is the leader of our party, and whether we win or lose, we need him to promote low taxes, balanced budgets and pro-growth solutions that will unleash the productivity of the American people.
Jeff Lukens
http://www.jefflukens.com/
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