Monday, April 21, 2008

Better Off?

I've seen some of the "younger than McCain" ads, and while those are entertaining, they need to be making the point that *this* commercial makes: McCain is seriously out of touch with the economic realities of the average American, and has earned his nickname McSame for some very good reasons.


karuna said...

Wow...i heard about this ad. It's completely wrong in pretty much every way.

First of all John McCain has acknowledged OVER AND OVER again that we are in a recession.

Secondly, over the course of the last 8 years, unemployment has remained at about 4.4-4.6%. That is LOWER than it was in the 1990s. We are currently at a 5.3% unemployment rate (I believe that was the March release). It is expected to reach 5.5% by the end of 2008. But really that's NOT that much higher than the 1990s where the unemployment rate hovered around 5%.

Beyond that, gas prices are up. But they aren't up because of the President or because of a political issue. Most economists would tell you that they aren't even up because of the war in Iraq. They are up because frankly we have two rapidly growing economies- China and India- which are consuming gas at a very very high rate. Don't get me wrong, the United States still is the largest consumer of energy in the world. But China and India consume energy in highly inefficient manners and they are the primary causes of a sustained energy crisis. The war in Iraq, in the immediate stage caused a spike in energy prices which came back down. (Something similar happened with the hurricane in 2005).

The home forclosures rate, i would attribute, to the policies of the 1990s. I don't blame this on Clinton, actually. I put it on Greenspan to a certain extent. Economists long predicted that there would a "housing bubble bust." In the 1990s, the Fed drove the interest rate down to record levels. People started purchasing homes through subprime loans because frankly it was cheap. And have the disaster we have now. I don't think Greenspan really could have predicted that lenders and borrowers would be so reckless either.

Inflation is actually RIDICULOUSLY low in a historic analysis. Inflation is hovering at about 2.5%. Most of inflation right now is attributed to energy prices (covered above) and more importantly food prices. Why are food prices so high? Well they are high because we have something called agricultural subsidies, driving up the cost of corn. This is because Congress has decided that it is in America's best interest to utilize ethanol. Well, so increased prices of corn are pushing up prices of food across the board since so much of our livestock and dairy industry relies heavily on corn. As I have said before, I disagree with coating the pockets of big ag with tax dollars. One of the bravest moves that John McCain made this election season was to say IN IOWA that he disagrees with agricultural subsidies for big agriculture. He said that in Iowa during one of the first Republican debates. That takes courage..he probably lost some votes for that. This goes to show that unlike a lot of politicians who get many many millions of dollars from big ag lobbyists, John McCain basically doesn't take that money. He is one of the very few politicians in Washington who didn't bring a single earmark back to his state. But honestly, that is what is driving inflation.

I could talk for hours about this. What people have to realize is that in reality, in a market economy, there is actually very little the President himself can do about an economic down turn. Congress can cut taxes. The Fed can lower the interest rate. Maybe Congress can extend unemployment insurance (as they usually do during a recession). Even this rebate they are sending out to Americans probably won't do much. The best way to encourage economic growth is to lower certain burdens upon American businesses. But other than that, the President has very little to do with the sway and turn of investors, especially in a global economy where so much depends on the rest of the world.

Anyway, sorry to rant...but honestly that ad really pissed me off because it made it seem like 1) McCain think that our economy is in peachy condition right now which from his comments after that, it's pretty obvious he DOESN'T think that and 2) that President Bush somehow has the power to ensure that we are in a golden economic state, which he really Doesn't!

Becky said...

Yeah: but this shows that he resisted admitting that for quite a while, rather than seeing/understanding the facts and admitting them (both of which qualities I would appreciate in a president).

One thing bothers me about this energy crisis though and the sudden rise in the price of oil: a president with a vision (like Gore) COULD have done something before it was too late, and could have done it in a way that expanded our economy and energy independence instead of enmeshing us in a war in Iraq. This simply isn't an issue that was inevitably going to end this way: we could have used some political will to bring the country together and make us less dependent on the Middle East. It required leadership, and we got Bush instead of Gore (who I still think would have had a far more successful 4 or 8 years, which isn't saying much considering that most historians think Bush will go down as the worst or one of the worst presidents ever). Like investing in alternative energy technology, and instead of bowing to industry's laziness, raising the mileage requirements in domestic vehicles, so that we could have been the country exporting Priuses, instead of the one importing them.

We could have been a nation working toward energy independence after 9/11, instead of getting a president who told us to "keep shopping" and pretend there was a link between Sadaam and Osama bin Laden.

karuna said...

First of all, the unemployment rate over 2007 was 4.6% (that's called the natural rate of unemployment in economic-speak...meaning that it's EXTREMELY LOW). It was advantageous for Democrats to bring up any issues in the economy in 2007. I don't blame them for doing this because its common for the party NOT IN POWER to bring up everything they want to change. We didn't KNOW we were in a recession until probably January of 2008 (I know this because I did the forecasting on consumption patterns). Keep in mind we aren't even technically IN a recession yet. We have to see two quarters of negative growth to have a recession. Currently we have 1 quarter of negative growth. So I wouldn't fault McCain for saying that things were ok in 2007. Things were sorta ok in 2007. Also for him to comment on an overarching trend, Americans were better off over Bush's 8 years...again lower unemployment, lower inflation, heightened investment leves. (basically americans were doing pretty well).

You have a point about energy. But really, the energy issues come down to supply and demand. People will invest when people feel like it will be something that they can capitalize on. Right now, we have seen only a very very marginal reduction in energy consumption in reaction to heightened prices. People will invest in alternate technologies when they see consumption taking a hit due to higher energy prices.

I am not worried AT ALL about energy because I know 1) it will get to that point when it does and capitalists will start to invest in the efficient development of alternate fuel forms and 2) frankly, OPEC doesn't want it to get to that point, so they won't keep oil prices up this high for long.

Becky said...

Yeah... but considering the subprime loan crisis, the massive borrowing to support a war, and now food riots, couldn't one foresee some problems on the horizon? I'd prefer leaders who can see the signs of the times, rather than finally admitting the reality after it's impossible to deny it. Which is also why I wouldn't trust anyone who said the Iraq war wouldn't last more than "three weeks" to make major international relation decisions in the future...

And I still don't see how simple supply/demand should define the energy crisis. What if instead of waiting for gas to hit 5-6$/gallon, and a mad scramble to develop alternatives, we *avoided* a crisis altogether? I just don't believe an invisible hand is going to solve this one without either 1) leaders getting involved or 2) major difficulty/suffering when the sh*t hits the fan, so to speak. We could have acted at a key moment in the global warming process, and perhaps avoided some of the economic hardships hitting/likely to hit the working poor with high gas prices, by a little foresight on the part of our leaders... But again, different philosophies on the role of government.