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Anytime there's a landslide, political types want to spin it as a mandate for their cause.
That was certainly the case with Ronald Reagan, but I don't believe Barack Obama and the Democratic Party have been handed a mandate. Rather, I believe the electoral outcome is a function of economic pain (and overall disgust with George W. Bush and Republicans generically).
On the flip side, it was the economic "strength" created by the housing bubble -- which caused folks to feel good about their finances -- that enabled Bush to win in 2004 despite the unpopularity of his policies. As that mood started to fray, in concert with the bubble's last gasps, we saw the losses in the 2006 congressional contests. And then the dam broke Tuesday night.
As I was trying to gather my thoughts, I received an e-mail from a reader containing comments from a post-election column I'd written in 2004. I'd like to reprise them here as evidence that Tuesday's outcome was largely attributable to economic weakness and financial setbacks:
"I think the party that has won, in this case the Republicans, might want to be careful what they wish for, in that both the stock and real-estate bubbles will unwind on their watch, with them in full control of the House, the Senate, the presidency and the governorships.
"Perhaps we'll all get lucky and the Republican Party will decide to pursue a flat tax, tort reform, and term limits -- the three major areas of reform which I believe could help the country become more competitive and help extricate us from the horrible fix that I see us in. However, if they continue the pork-barrel politics of the last four years, I would think that next go-round, the Republicans will be bounced from office after people's hopes are dashed in the upcoming economic turmoil."
Legacy entwined with economy
For what it's worth, my feelings are somewhat similar now.The Democrats might want to be careful now that they have the hot potato, as I believe the economic landscape is liable to be nothing short of disastrous. They may be able to blame a fair amount of it on Bush for a while. But that might be difficult to do four years from now. Thus it's entirely possible that the pendulum which has now swung in their direction could reverse course.
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Unfortunately, but not surprisingly, the Republicans did not pursue any of the policies I felt would be beneficial. Nor do I expect the Democrats to. Nor will they force the Federal Reserve to return to the gold standard (or target money-supply growth, the next-best choice) -- which is another imperative that I would add to my prior three wishes.
The only policy option I expect they'll implement -- which could be quite important -- will be to allocate spending on infrastructure projects, though I fear mountains of money will be wasted. (We also ought to spend a serious amount of money on making our country a nuclear-power-based economy, like France.)
In my opinion, these policies would go a long way toward getting the country back on solid ground, so we could effectively deal with long-term issues such as debt levels, health care and Social Security.
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Obama's economic challengeShould job No. 1 for the president-elect be devising an economic stimulus plan? It depends on whom you ask.
Sacrifice is a hard sell
None of these ideas would be painless. Pain is unavoidable, thanks to the prior real-estate and credit bubble.Sadly, I'm afraid, there is no chance we will pursue any of these options I have suggested, as they are not politically palatable. And, since the politicians have only one goal -- keeping themselves in power -- I don't have high hopes for positive developments emanating from Washington, D.C.
Of course, there are those who believe that government is the answer to our problems. Among them is Martin Wolf, who presented his case in a Financial Times article titled "Preventing a global slump must be the priority." The sentence that I think is the most telling: "Those who view liquidation of past excesses as the solution fail to understand the risks."
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