Time to End Economic Groundhog Day
In the movie Groundhog Day, actor Bill Murray relives the same day over and over, much as Americans have seemed to wake up to the same dreary economic headlines documenting years of this sluggish economy. And despite their repeated efforts, lawmakers seem unable to do the right thing to revive the job market, reduce debt, and get back to vibrant growth.
This year, we are entering a time of great fragility, arguably the most challenging time since Great Depression. Politicians keep fighting. The deficit looms large. The debt spiraling out of control, at a total of $15 trillion and averaged out to $135,000 per taxpayer. The situation in Europe and the global economy are bad and don’t seem to be changing.
With this backdrop, it’s clear that policymakers need to seek solutions that allow us to all wake up to a new day with a brighter economic outlook.
How do we stop the same economic malaise day from recycling itself again and again? Perhaps GOP presidential candidate Mitt Romney said it best when he described the presidential nomination process not as a sprint, but a marathon.
So when it comes to economic recovery, we must fully grasp and respect the calendar ahead if we wish to begin solving our problems.
First and foremost is the presidential election, when candidates from both parties will make the case to be elected or re-elected. However, if they want to see a fruitful tomorrow, they must think beyond election strategy and look ahead to a strategy for governing.
They must build a mandate that is based on reasonable expectations, not one of simple instant gratification like Obama’s “Hope and Change” or George Bush’s mistaken promise of “Read my Lips.”
To win a mandate one must be honest and forthright with the electorate, much like Margaret Thatcher, who didn’t believe in sugar coating and spoke bluntly with the people. Thatcher and successful U.S. presidents like Ronald Reagan and FDR were all elected not simply because they were the right candidate but because they were candid without being glum, they had the right policy and they had a game plan to see it into law.
When the new president and the 113th congress are elected they will face a trifecta of events. If history repeats itself, will politicians once again playing a dangerous game of “chicken” with our economy?
There will be another fight over another debt ceiling hike. We’ve been there and done that, but it’s like a pothole full of ice water we can’t seem to avoid. While ensuring the nation’s ability to borrow and pay its debts responsibly, we must get debt under control.
There will be discussion of the looming expiration of the Bush tax cuts including the tax treatment of capital gains and dividends, which are important to our long-term economic health. Tax increases in a likely still weak economy would be devastating.
It’s entirely plausible there will be another short-term extension to boot the issue beyond yet another election period. Talk about deja vu!
Equally important are the mandated severe across-the-board cuts, which will be triggered because of the failure of the Super Committee, in popular defense and domestic spending programs starting January 1, 2013.
Given all of this, it is important now for the presidential candidates and their advisors to think about and plan for the next “first 100 days” of a presidency. Remember that the election is not just about the “talent” – the man or woman elected – it’s about the policy platform.
The first 100 days of any new presidential administration are critical. It sets the tone, pace, and ability to meet expectations. A credible new economic policy must be proposed and political capital expended – getting it through congress and courageously issuing executive orders. The package must include development of a credible and palatable deficit reduction plan, including a hard look at cuts into popular entitlements.
Tax reform that puts the economy on a pro-growth path must also be set in motion. Long-term pro-growth energy policy must at long last become reality. Better regulatory frameworks where benefits are juxtaposed with cost are going to be critical to an overall better business climate and a faster economic recovery.
Of course our coming president and Congress are also competing with another ticking alarm clock – when our system of government can no longer stand the strains of debt and spending placed upon it. When that bell rings, markets and the economy will react and change will be forced on us whether we want it or not and that is a new day none of us want to see.
Whether the newly elected President and Congress are able to set the stage for its first 100 days will decide whether it will be a continuation of a living in the past Bill Murray, “I’ll give you a winter prediction: It’s gonna be cold, it’s gonna be grey, and it’s gonna last you for the rest of your life” or an enthusiastic forward-thinking Bill Murray, “Winter, slumbering in the open air, wears on its smiling face a dream… of spring. Ciao.”