Several decades ago at Harvard University, Russian expatriate Alexander Solzenhitsyn said, “If America does not lead the free world, the free world will not have a leader.” We all know he spoke the truth. Leadership must come from the communities as well as from Washington.
Nowhere is there a more salient leadership vacuum than in the current domain of economic leadership. If America wants to maintain its past position of world economic leadership, it’s essential to reflect on what has made our nation economically stable and prosperous in the past. “Freedom” and “choice” are the operative words – freedom to engage in work enterprise of our choice.
Economic policies being advocated and administered in Washington have come under critical scrutiny of some leading American economists. Art Laffer, godfather of supply-side economics and former President Ronald Reagan’s chief economic adviser, doubts the wisdom of Federal Reserve Chairman Ben Bernanke’s policy of continuing to print more money. Laffer and prominent economist Larry Kudlow have both expressed a lack of confidence in the policies promoted by Treasury Secretary Tim Geithner, and both believe Washington’s policies will hasten inflation. Kudlow and Laffer have said inflation represents an even greater danger to the economy than either government spending or taxation.
The basic role for government has been that government should be the problem solver of last resort. A newer idea that government should solve all problems, and do it now, is at the heart of the out-of-control government spending and the attendant regulations. Consequences are dire, with other economic systems and the International Monetary Fund now pressing to replace the dollar as the international currency. It is a long road back to a more rational approach in order to sustain American life as present and previous generations have known it.
When government spending sucks all the financial oxygen away from the private economy, uncertainty grows in the private sector. Uncertainty in investment creates a downturn in employment opportunities. A startling disclosure from the Daily Treasury Report for the month of February is cause for concern if not alarm: The federal government took in $851.47 billion in revenues in February ($63.7 billion of that in new net debt); it spent $1.009 trillion, including $585 billion to redeem maturing government securities. That amounts to a deficit of $158.5 billion for February alone. How much longer can this nation continue on this road?
The 2011 federal budget is $3.834 trillion with a $1.267 trillion deficit, according to FoxNews.com.
Those of us not specifically trained in economics (the dismal science) are compelled to learn from those who are, and those who have a successful track record in that complicated field. The history of American economics provides an excellent road map for current economic policy. Why is our history of success being ignored in favor of policies resulting in high unemployment, runaway taxes, deficit spending, regulations that stifle business and a “command and control” policy from the federal government? The command and control comes from executive orders and questionable regulations in an “end run” around Congress.
Recent Bureau of Labor statistics show nearly half the states with jobless rates over 9 percent and 10 states in double digits, including Kentucky at 10.3 percent. Our policies are not working, and Americans have reason to doubt the exuberant claims about the economy being back on track. The rate of joblessness for blacks at 15.3 percent, 11.6 percent for Hispanics and 23.9 percent for teenagers.
Yet the irrational spending
in Washington continues. Previous Democrat and Republican majorities in Congress established a pattern of uncontrolled spending, and the new GOP majority in the House seems unable or unwilling to fight to correct the course despite their campaign promises to dramatically cut spending. Recent GOP agreement to cut $4 billion from the budget in the face of a total federal debt of $14 trillion is absurd, and a cruel joke on American taxpayers.
These problems are not simply problems of abstract economic theory, but rather they are problems of real flesh and blood that cause pain and demoralize the human spirit. The 2012 election cannot be here soon enough.