The disastrous performance of this nation's political elite in Washington D.C. over the past six weeks did significant damage to the American economy. The fact that the U.S. economy has almost ground to a halt despite massive and unprecedented fiscal and monetary steroids … the fact that the Federal Reserve felt compelled to serve notice that its key interest rate would stay at essentially zero for the next two years … the fact that the stock market had four days in a row of more than 400 point swings … can all be traced in one form or another back to the enormous political vacuum that is Washington D.C.
It would have been one thing if all the sweat and tears suffered by the American people about the three D's … default, downgrade, and the deficit had resulted in a realistic and comprehensive plan to finally address this nation's unsustainable trillion dollar plus annual budget deficits for as far as the eye can see. It did not.
The plan was weak, underwhelming, and lackluster … serving to merely push the tough decisions down the road. It would be great if the 12-member "super-committee" established to identify at least $1.5 trillion in reduced government deficits over the next 10 years would actually make serious progress by November 23. Don't hold your breath.
The pressures on these six Democrats and six Republicans to toe the party line will be enormous. Still, it only takes one to support the other party's objectives to get an agreement. Getting the full Congress to then embrace recommendations of the Committee by December 23 would be another party line vote. If they fail to reach an agreement, $1.5 trillion in lesser spending will automatically be applied equally to the military budget and various domestic programs …
… what a sad way to run a country
Meanwhile, the President blames the Republican House of Representatives for its unwillingness to embrace any tax increases (whoops! … make that revenue enhancements). The Republicans blame the administration and the Democratic Senate for their unwillingness to embrace necessary reductions in future government spending growth rates on entitlement programs.
The far right and the far left media fan the flames of embitterment and dissention. The general populace of this once and still great nation — the average person on the street — wonders how we got so far off track … and can it ever be fixed.
As a somewhat conservative economist, most of my criticism is leveled at those who espouse bigger and bigger and bigger government … yes, typically the liberal Democrats. However, one statement during October 2010 by Senate Republican Minority Leader Mitch McConnell noted, "the single most important thing we want to achieve is for President Obama to be a one-term President."
What happened to focusing on other things like, Oh, I don't know … economic growth, job creation, getting a handle on government spending, helping to restore the public's confidence? It is this type of destructive dialogue coming from both sides that damages the economy. Such dialogue and childish political behavior of recent weeks led the Thomson Reuters/University of Michigan index of consumer sentiment to a 31-year low as reported last Friday … a 31-year low!
It again makes one wish we had term limits in the nation's capital — letting politicians focus on what is best for America … not just what is best for themselves and their party …
… what a concept.
Jeff Thredgold is the chief economist for Zions Bank and founder of Thredgold Economic Associates, a professional speaking and economic consulting firm. Visit www.thredgold.com.