Free enterprise on trial? How about government intervention instead?
In his 1981 inaugural address, President Ronald Reagan famously said, “In this present crisis, government isn’t the solution to our problems, government is the problem.”
I recall that phrase amid the Bain Capital controversy, which has injected some much-needed life into the Republican presidential primary.
Press coverage of this family feud has produced a few clues as to how the fall campaign might take shape. One of the revelations is that President Obama might use Bain Capital, not only to attack likely GOP nominee Mitt Romney, but to put free enterprise “on trial.”
Granted, the President has not used that phrase, but Republicans would be wise to conduct a trial of their own: “Job Seekers versus the Government of the United States.”
There are many witnesses to explain what really brought the American economy to its knees in 2008, and what continues to dog it today.
I call to the stand author Peter Schweizer, whose 2009 book, titled Architects of Ruin, spells it out. It’s a long, sordid story, one that took several decades to unfold, but the gist is that a cabal of liberal activists and later liberal politicians forced banks to make more than $4 trillion in bad loans to people with poor credit.
I can’t blame them for being angry. For decades, economically disadvantaged people were discriminated against by a practice known as “redlining.” Unfortunately, the “cure” proved to be as problematic as the disease, and that’s how trillions of dollars in toxic debt got built up over time.
Ultimately, the crisis was the fault of the federal government, whose spending now is so out of control that we’re headed toward a European-style debt crisis. According to the Obama administration’s own projections, 10 years from now we will be $26 trillion in debt (we just reached the $15.3 trillion mark), and our gross domestic product will be only about $20 trillion.
Can you say unsustainable?
That would represent a debt-to-GDP ratio of 128%, which is about where Greece was when Dr. Draconian showed up at the door.
In the United States, the solutions are still relatively painless, but the longer we wait, the more painful they will become. At that point, when Dr. Draconian comes calling here, the spendthrifts will really have something to complain about. Won’t we all?
The sluggish recovery that followed the recession isn’t producing enough tax revenue to take a big chunk out of the annual deficit, which brings me to my next point. Almost all the business people I speak to, especially small business people, say they are not hiring more (which would produce more tax revenue) because they are not sure what costly tax or government regulation is coming at them next.
No doubt some of the regulations related to the new health care law and other legislation are more worthwhile than others, but the government isn’t exactly falling over itself to provide helpful guidance.
I think it’s remarkable that we’re creating even 100,000 new jobs each month, not counting the 200,000 created in December. For my sake and yours, I hope that latter data point has legs, but even the modest job creation in preceding months tells me that despite what government throws at employers, there are still animal spirits driving American business.
As for Ronald Reagan’s 1981 observation, most people agree with that statement even today. If the Republican Party is on its game, which is a big if, that phrase will be repeated during the fall campaign.