A sobering question

Can Obama make Democrats face up to economic reality?
By EDITORIAL  |  July 30, 2008


With every passing week the nation’s already-screwed-up economy becomes even more distressed.

Consider just two trends: food and fuel prices are rising faster than at any time in recent memory. Housing prices, meanwhile, have suffered their biggest decline in 21 years.

This means that average citizens will be paying more to put food on their tables, to drive to and from work, and to heat their homes this winter. While the nation’s average Joes and Josephines are dedicating a higher portion of their take-home pay just to get by, they also are helplessly watching the value of their homes — their principal and most basic investment — decline in value.

As for sending their kids to college, that, too, has gotten more difficult. Nationwide, more than 50 education-loan providers have discontinued offering both private and federal money. In Massachusetts, some 40,000 students will similarly go without loans because the state agency charged with helping low- and middle-income students could not secure funds due to distressed capital markets.

Will things get better? Sure, but not any time soon.

One factor that will keep the economy bollixed is runaway federal spending and borrowing. President Bush is going to saddle either Republican John McCain or Democrat Barack Obama with a record deficit of nearly $500 billion, once the cost of the wars in Iraq and Afghanistan are factored in.

It is a fact of life — though most Republicans do not want to recognize it — that Bush squandered the surplus his presidential predecessor, Bill Clinton, left the nation. The Bush tax cuts, which favored the wealthy and the well-off, helped to wipe away the Clinton surpluses. These days, the United States borrows about one-third of its operating expenses (excluding Social Security) just to keep the government going.

Simply put, the national government is in even worse shape than the average American family. If that is not a sobering thought, then what is?

While Bush is certainly the poster boy for reckless handling of the economy, he is not the only culprit. Every president since (and including) Democrat Jimmy Carter has contributed to the sorry economic state in which we find ourselves. Republicans Ronald Reagan and George H. W. Bush helped dig the hole. And Clinton shoveled more than is commonly realized.

With the assent of Congress and the connivance of the Federal Reserve Board, the White House, for more than 30 years, allowed the financial industry — the banks, insurance companies, and brokerage businesses — to relax or abandon meaningful standards of regulation.

The record levels of personal and corporate debt are just part of the sorry picture that resulted. The mania for mergers and takeovers, which concentrated more and more economic might in fewer and fewer hands, was part and parcel of this trend. So was the boom and bust in the real-estate market, the ensuing credit crunch, and the ongoing crisis on Wall Street.

It would be convenient to be able to say that booting the Republicans out of the White House will fix all of this. It is, for sure, a good first step. But in and of itself, it is not a solution. The party of Obama shares almost as much blame as the party of McCain. While the American voter was obsessed with the culture wars, big business bought Washington.

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