Depending on which economist or market pundit one follows in the Wall Street Journal or on MSNBC, you’ll get a 24x7 takeout deli menu’s worth of economic prognoses: strong and resilient, showing strains, weathering a recession and so forth. Few acknowledge that they believe our economy is currently in a recession, and certainly not any member of the Bush Administration, their allies on the Hill and Federal Reserve Chairman Ben Bernanke.
I don’t profess to have a crystal ball-- but will join the debate with my point of view:
Here’s what scares me about our economy. The facts are pretty clear cut: the collapse in the mortgage/ derivative securities market has begun rippling through the economy. Only $50 billion of the estimated $400 billion in losses sustained by investors in exotic mortgage/derivative securities have been accounted for. Our largest financial institutions have been weakened. Given the rapid decline in the value of the dollar during the Bush Administration’s unchecked stewardship of our economy, there is a very real concern that the Euro may displace the dollar as the gold standard held by investors and central banks worldwide. Should that happen, the dollar would weaken even further and, to put it simply, our economic strength would be undermined dramatically.
What does this all mean for the average American? For one, it means that at least 2 million middle-class Americans are going to lose their homes to foreclosure. It means that consumer spending, the engine that drives our economy, is going to significantly tighten, slowing our economy and putting people out of work. It means that homeowners will face continued depreciation in the value of their homes. It means that those same homeowners won’t be able to tap the equity they once had in their homes as an ATM.
American consumers have been spending 10% more than they earn, making up the balance by borrowing against their homes and racking up charges on credit cards. A great many of them do so to supplement escalating health care expenditures and gasoline/fuel costs and to put their kids through school. They aren’t going to be able to do that any longer since home equity has evaporated and banks are tightening lending.
The worst part about what is happening is that the overwhelming majority of Americans, all but those wealthiest, will be hardest hit. Warren Buffett put it aptly last month: the middle class is on a treadmill while the wealthy are on a spaceship. Since the overwhelming majority of us aren’t amongst those few percent compromising the wealthy, it’s not a stretch to say flat-out that if we aren’t worried then we are in denial.
Many factors combined have contributed to the enormous challenges we face, but none more so that the out-of-touch, inside-the-Beltway impotency of the Bush Administration. For the past 6 years, their single-minded focus on fighting the war on terror has left our economic security in the hands of special interest forces and the market economy.
When markets go through periods of shock and realignment, the last line of defense for middle class Americans at risk should be their elected representatives in Washington. That’s not the case today. Much of Washington has lost touch and isn’t listening to the people that sent them there.
I have some thoughts about what Washington should be doing.
- Expand the scope, local participation and lending limits of the SBA’s new and innovative Micro-Loan program. Creating, building, and supporting local companies and entrepreneurs engenders what I like to call home-grown wealth. The money stays home and translates into higher tax revenues, consumer spending, sustainable local jobs, and economic opportunities for working and middle-class families.
- Invest in alternative sources of energy (wind, solar, geo-thermal), making the U.S. a global leader in the creation and development of alternative energy technology, reducing energy costs, and the creation of sustainable jobs. By repealing the tax breaks we dole out to big oil and investing in alternative energy sources, not only will our economy improve, but our national and environmental security will as well. Economic and social innovation builds stronger communities.
- Universal Health Care for every man, woman, and child in America. Quality, affordable health care should be a right and not a privilege. In crafting a Universal Health Care program, incentives must be set for the delivery of health care, not sick care. We simply must drive the numbers down across the board: patient expenditures, provision of services, prescription drug prices, health care insurance and a simplified Medicare system. The real problem, however, isn’t health care providers, drug companies and insurances companies. They are the culprits—but the blame rests squarely with politicians who have not forced change. I understand that in order to change, you must do things differently.
- Invest in Education by restoring Pell Grant funding, reforming and funding NCLB, and wide ranging investment to attract our youth to public service, especially public school teachers, through financial incentives and loan payback programs.
These steps aren’t going to be easy. We need to have serious discussions in this country about our priorities. The principal body which is elected to initiate these discussions and forge solutions is the House of Representatives and the Senate. It is time that we, the taxpaying public, hold our elected officials to a higher standard of accountability. It is time for us, the voting public, to expect our elected officials accomplish what we sent them to Washington to do. Americans need and deserve measurable and tangible results, because the status quo isn’t working.
I am running for U.S. Senate, because I believe that a Beltway outsider is exactly what we need in Congress. I believe that we need statesmen who dare to speak the truth and take a stand on principle instead of politicians seeking power for their own ambitions. I believe that together we can reach our maximum potential as a nation.
I hope you will join me. I hope you take the time to visit my website and offer your insight, your labor, and your financial support: http://jimnealforsenate.com. Please join me. Please contribute. Please participate.
Thank you,
Jim Neal
Candidate for U.S. Senate in North Carolina