Although it’s probably obvious to readers of this blog that the economy is going to become a bigger and bigger issue as the election approaches, campaign strategies often are not as responsive to changes on the ground as one might imagine. Perhaps the most stunning example was a comment in the Financial Times on Friday by Grover Norquist, “How America’s right will be roused into action“:
The election is Tuesday, November 4, still four months away, and the case for a Republican resurgence is strong, if unseen by the establishment media….Taxpayers want lower taxes. Businesses want low taxes and less regulation. Investors and owners of 401ks want low taxes on their retirement portfolios. Second Amendment voters – the 4m members of the National Rifle Association and 20m hunters – want their guns left alone. Home-schoolers wish to be left alone to educate their children. Social conservatives – the so-called religious right – are a parents’ rights movement that wishes to be left alone with their faith and families. They organised in the late 1970s when the government threatened Christian radio stations and Christian schools with new regulations.
Norquist thus thinks that the formula that worked in 1994 will succeed today. But somehow, I don’t think Republicans plan to shrink government, since that means shrinking the military, nor do I have any faith that they’d leave us alone by dismantling the post 9/11 security and surveillance apparatus. Indeed, the Christian right is abandoning the GOP precisely because they’ve learned they don’t walk their talk. While Norquist may not represent the Republican mainstream, his article struck me as wildly out of touch.
Thomas Friedman’s reading in his New York Times op-ed, “Anxious in America,” seems much closer to the mark. But it is still an open question as to whether and how the candidates will respond to deteriorating economic conditions.
From the New York Times;
Just a few months ago, the consensus view was that Barack Obama would need to choose a hard-core national-security type as his vice presidential running mate to compensate for his lack of foreign policy experience and that John McCain would need a running mate who was young and sprightly to compensate for his age. Come August, though, I predict both men will be looking for a financial wizard as their running mates…I do not believe nation-building in Iraq is going to be the issue come November — whether things get better there or worse. If they get better, we’ll ignore Iraq more; if they get worse, the next president will be under pressure to get out quicker. I think nation-building in America is going to be the issue.
It’s the state of America now that is the most gripping source of anxiety for Americans, not Al Qaeda or Iraq. Anyone who thinks they are going to win this election playing the Iraq or the terrorism card — one way or another — is, in my view, seriously deluded. Things have changed.
Up to now, the economic crisis we’ve been in has been largely a credit crisis in the capital markets, while consumer spending has kept reasonably steady, as have manufacturing and exports. But with banks still reluctant to lend even to healthy businesses, fuel and food prices soaring and home prices declining, this is starting to affect consumers, shrinking their wallets and crimping spending. Unemployment is already creeping up and manufacturing creeping down.
The straws in the wind are hard to ignore: If you visit any car dealership in America today you will see row after row of unsold S.U.V.’s. And if you own a gas guzzler already, good luck. On Thursday, The Palm Beach Post ran an article on your S.U.V. options: “Continue to spend upward of $100 for a fill-up. Sell or trade in the vehicle for a fraction of the original cost. Or hold out and park the truck in the driveway for occasional use in hopes the market will turn around.” Just be glad you don’t own a bus. Montgomery County, Md., where I live, just announced that more children were going to have to walk to school next year to save money on bus fuel.
On top of it all, our bank crisis is not over. Two weeks ago, Goldman Sachs analysts said that U.S. banks may need another $65 billion to cover more write-downs of bad mortgage-related instruments and potential new losses if consumer loans start to buckle. Since President Bush came to office, our national savings have gone from 6 percent of gross domestic product to 1 percent, and consumer debt has climbed from $8 trillion to $14 trillion.
My fellow Americans: We are a country in debt and in decline — not terminal, not irreversible, but in decline. Our political system seems incapable of producing long-range answers to big problems or big opportunities. We are the ones who need a better-functioning democracy — more than the Iraqis and Afghans. We are the ones in need of nation-building. It is our political system that is not working.
I continue to be appalled at the gap between what is clearly going to be the next great global industry — renewable energy and clean power — and the inability of Congress and the administration to put in place the bold policies we need to ensure that America leads that industry.
“America and its political leaders, after two decades of failing to come together to solve big problems, seem to have lost faith in their ability to do so,” Wall Street Journal columnist Gerald Seib noted last week. “A political system that expects failure doesn’t try very hard to produce anything else.”
We used to try harder and do better. After Sputnik, we came together as a nation and responded with a technology, infrastructure and education surge, notes Robert Hormats, vice chairman of Goldman Sachs International. After the 1973 oil crisis, we came together and made dramatic improvements in energy efficiency. After Social Security became imperiled in the early 1980s, we came together and fixed it for that moment. “But today,” added Hormats, “the political system seems incapable of producing a critical mass to support any kind of serious long-term reform.”
If the old saying — that “as General Motors goes, so goes America” — is true, then folks, we’re in a lot of trouble. General Motors’s stock-market value now stands at just $6.47 billion, compared with Toyota’s $162.6 billion. On top of it, G.M. shares sank to a 34-year low last week.
That’s us. We’re at a 34-year low. And digging out of this hole is what the next election has to be about and is going to be about — even if it is interrupted by a terrorist attack or an outbreak of war or peace in Iraq. We need nation-building at home, and we cannot wait another year to get started. Vote for the candidate who you think will do that best. Nothing else matters.
Personally, I find the “nation-building at home” slogan to be a bit much, but Friedman is correct to highlight how disfunctional our political system has become.
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On top of it, G.M. shares sank to a 34-year low last week.
Actually they sank to a 53-year low.