Patterson: 2012 election last chance for fiscal turnaround - East Valley Tribune: Ahwatukee Foothills

Patterson: 2012 election last chance for fiscal turnaround

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East Valley resident Tom Patterson (pattersontomc@cox.net) is a retired physician and former state senator.

Posted: Sunday, February 12, 2012 7:00 am | Updated: 1:45 pm, Tue Sep 30, 2014.

I'll admit it. My heart sank when I read recently that unemployment fell to 8.3 percent. Yes, long-term unemployment and climbing poverty rates are devastating too many families. But we can't afford a cyclical uptick just now if it would mean that Barack Obama might be president for four more years.

It turns out that the new unemployment figures were less about people finding work than about people dropping out of the workforce. As millions of Americans give up looking for work, people formerly considered unemployed just disappear statistically. It's not real progress, but it's seized as a talking point by an administration desperate to convince Americans that their policies haven't been an abject failure.

President Obama still claims that the magnitude of the problems he inherited from George W. Bush was so great that we need more time to dig ourselves out. Late-night comedians are poking fun at his obsession with a predecessor who has been gone over three years now. But the serious point is that he's just wrong.

Based on historical precedent, we should have recovered from this economic downturn some time ago. The wrong-headed policies of this administration have needlessly prolonged the misery and plunged us deeply into debt to boot.

Former Sen. Phil Gramm and an associate pointed out in the Wall Street Journal that the 1981-82 recession was initially deeper than today's and unemployment was higher. That recovery was further handicapped by a restrictionary monetary policy necessary to combat inflation and American businesses were struggling to remain competitive globally. Yet President Reagan's policies ignited a turnaround so powerful that if it had been repeated this time, our per capita GDP would be $5,694 higher (almost $23,000 for a family of four) and 16.9 million more Americans would have jobs!

Historically, the Reagan recovery is more typical than the Obama stallout. Never since World War II have per capita GDP and unemployment been lower four years after a recession started. Until now. America also experienced massive recessions in 1907 and 1920. In each case, the private sector led robust recoveries. Two years after the Panic of 1907, GDP was 7 percent higher than at the beginning.

The longest lasting economic downturn, the Great Depression, was prolonged by policy prescriptions remarkably similar to Obama's. Then-President Franklin Roosevelt increased spending by 3.6 percent from 1932 to 1936. Obama's increase is 4.6 percent so far, mostly because he couldn't get the "obstructionist" Congress to go along for even more. Federal debt was up 150 percent by 1938, while it will have doubled by this year under Obama's watch.

The top tax rates rose sharply during the Depression. The highest marginal income tax rates are poised to increase by 21 percent today. Both presidents loved bashing successful businesses. FDR's attacks on the "malefactors of great wealth" are echoed today in Obama's demagoguery against "millionaires and billionaires" and the infamous "one percent."

Tax, spend and regulate didn't work then and it isn't working now. Still, some day this recession will be over. When it is, we will be left with a nasty legacy: a smoldering pile of unsustainable debt.

Barack Obama not only doesn't have a plan to stop mortgaging our future, he doesn't show a shred of interest in fiscal discipline. Visions of bullet trains, green energy subsidies and costly regulatory schemes dance in his head.

Our only hope of getting out of this mess is a strategy combining spending reductions with economic growth. Entitlements must be reformed and cut. Obamacare has to go. Taxes should be made more simple and tax policies should not discourage economic growth. The feds must ease up regulations. Most importantly, businesses should operate in a stable, predictable environment.

There is no chance that our leftist president would pursue such a course. Instead, he will do everything possible to improve short-term conditions by November. The economy will be goosed by measures like excusing workers from making their full contributions to the underfunded Medicare and Social Security programs. All hard decisions will be deferred.

Keep your eye on the ball, folks. The 2012 election may well be our last chance for a fiscal turnaround before it is too late.

• East Valley resident Tom Patterson (pattersontomc@cox.net) is a retired physician and former state senator.

 

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