Nation must find economic truth
This presidential campaign has been centered on the voters determination of which candidate will best benefit the American economy over the next four years.
To that end both candidates have worked hard to both argue their credentials and discredit the credentials of the other.
Mr. Romney has argued that it is his business experience that makes him the best abled person to lead the U.S. economic recovery. Romney has also argued that President Obama has held back the economy by his decisions, by creating fiscal uncertainty, and by enacting onerous regulations on the job creators.
President Obama has argued that the recovery has been significant given the depth of the recession his administration inherited, and that the growth of the economy continues, though at a slower pace than we would like.
The president has argued that a business background has little connection to managing a national economy and job creation. Further, that the type of business experience that Mr. Romney has was more about job movement out of the US than job creation in America.
Frankly, both are seeking to define themselves and their opponent in ways that elude a frank and candid conversation about the state of the U.S. economy and the actions necessary to secure a growth economy in the years ahead.
The fundamental truth is that the U.S. economy is second only to the Canadian economy in terms of recovery from the Great Recession. Last year our economy grew by 1.7 percent. Revised projections for this year estimate a growth of 2.0 percent. 2013 projections currently forecast a growth of 2.3 percent.
In contrast most of Europe is either flat in GDP growth on has fallen into a double dip recession.
Europe’s recovery has been slowed by what has been, until recent policy shifts, an austerity approach. This month Germany, the largest and most stable European economy, acknowledged that the Euro will best recover with growth as a factor in addition to austerity. This means the use of stimulus to the economies to offset the job-costing policies of austerity.
This week the International Monetary Fund (IMF) shared its thoughts on the US economy going forward.
Christine Lagarde of the IMF suggested that the US needs to increase the debt ceiling this year, move slowly on necessary tax increases, and equally gradually on spending cuts, in order to spare the economy from sudden downsizing of jobs and investment.
Lagarde indicated the IMF is concerned that sharp spending cuts or tax increases could both harm economic growth in the US by 4 percent and impact the most other economies “with negative spillover to the rest of the world.”
The summary of these economic projections, both by American economists and the IMF is straightforward:
First, there is no “Silver Bullet”, our economy will recover slowly IF provided with thoughtful, flexible decisions by congress and the president.
But neither candidate running for president can promise or deliver more than continued paced growth.
Second, austerity alone will, as it has done in Europe, drive the economy backward into recession. Advocates of this policy have been proven wrong.
Third, those who advocate ending all the Bush tax cuts this year would risk the fragile recovery.
Fourth, those who advocate a balanced budget and severe and sudden federal spending cuts would invite a double dip recession.
Finally, if Congress uses this very fragile recovery to play political football, they alone may thrust the U.S. into recession.
For example, making the simple extension of the debt ceiling a financial crisis may well further drop the federal credit rating, cause business to withhold growth from uncertainty, and erode world equity markets.
Americans will vote for the candidate who they believe can best create jobs. That candidate should be one committed to the fiscal policies that have demonstrated effectiveness, and that cannot be an austerity only solution.
Jim Crawford is a retired educator and political enthusiast living here in the Tri-State.