I’ve got news for the Republicans. And the Democrats should pay attention as well.
The big issue in November’s mid-term congressional elections will be the economy. The economy! The economy!
I’ll say it as many times as you want. But all the other issues that are supposed to be of great importance to voters are nonsense.
I know this might sound obvious to you, as it does to me and anyone else who exists in the real world of joblessness, rising costs and bills stacked to the ceiling. But the economy is the only thing that matters.
Same as the last election, and the one before that and the one before that and — I think you get the idea.
Those guys and gals in Washington, regardless of which team jersey they are wearing, always seem to get distracted by other things that only they care about.
For instance, the Republicans think the botched rollout of ObamaCare will be a major issue in November.
Well, it may be on voters’ minds. But those newsworthy failures will be a shopworn jingle compared to the full-orchestra disaster that is the sixth year of a sluggish national economy.
The Republicans recently caved on the issue of raising the national debt limit because they supposedly didn’t want it to be big election issue. Well, you know what? It will be an issue, but mainly in the context of the effect our country’s debt is having on the economy.
Voters are going to ask: Why isn’t America doing better with Washington spending all that damn money? The national debt is now $17.27 trillion. By November, it’ll likely be nearing $18 trillion.
And if we can’t even maintain our current moderate pace of growth, tax revenues will decline and our debt will worsen.
What’s more, as I’ve argued in this space, we’ll really be in a pickle if tax revenues this year come up short, as a logical byproduct of Congress’ fiscal cliff nonsense and tax hikes at the end of 2012.
So why do our politicians continue to deceive themselves? Why do they believe other issues will be more important than the pocketbook ones? Why do they think anything will be more important eight months from now than the economy?
Because both parties have messed up so badly that neither has the high ground on money issues. Both the Republicans and the Democrats need to make us believe other things are way more important to us than they really are.
What do I think will happen with the economy? Nothing much.
In fact, America is destined for a “nothing much” generation unless economic growth miraculously occurs and our leaders use that expansion as an opportunity to fix our extensive problems.
Back in December, the gurus who investigate the health of the economy thought things were getting better. I didn’t agree.
I dedicated my first column of 2014 to the pessimistic but realistic idea that our economy might not be fixable. “We might have to admit something we don’t want to admit,” I wrote at the time. “The US economy is broken, not just bent.”
Now it looks like other peoples’ optimism in December was ill-conceived. In fact it looks like the only good thing that happened at the end of last year was the manipulation of the stock market higher by Wall Street pros who wanted to deliver good news to their clients.
Since December we’ve had two miserable employment reports. And more recently both national retail sales and industrial production figures have had to be revised downward.
None of that could be explained away by Wall Street’s favorite excuse: the weather. Although it might be hard to believe given how horrible the past two months have been, November and December weren’t particularly intemperate or snowy.
For the record, the fiscal impact of the weather-related slowdown is beginning to emerge. For example, this week the government reported housing starts suffered the biggest decline in three years.
All of this, of course, is making the Federal Reserve nervous. In the minutes of its January meeting, released this week, the Fed’s policy-making committee said it would continue to taper its disastrous quantitative easing program.
The message, however, sounded timid. Some members indicated they might want to wait awhile before doing that. But can they?
Here’s a development that deserved more play: China, which is America’s biggest creditor, sold $48 billion worth of US Treasury securities in December, the biggest drop in that nation’s holdings in years.
It still owns $1.27 trillion worth of US securities, but if Beijing decides to keep selling in the months ahead, interest rates in this country will have to rise.
Let me put that another way. If China stops purchasing bonds or starts to step up selling what they already own, we’re screwed.
I think it’s impolite to harp on problems without at least suggesting solutions.
What I said in my Jan. 2 column bears repeating: Let’s change the restrictions on personal-retirement accounts so that some of the $15 trillion stashed for our Golden Years can be used today to make the economy better before it gets a whole lot worse.