W.W.R.D.

Right-wing conservative talk show hosts like Laura Ingraham and Shawn Hannity have a bad habit of referring to President Obama as "The Messiah". It's a tongue-in-cheek reference to how Liberals believe Barack to be their savior. Then, usually in the same segment, they will make a reference to "What Would Reagan Do?" ala the popular Christian phrase "What Would Jesus Do?". I guess the message is it's O.K. to associate Jesus with a Republican, but not a Democrat. So, since the Reps believe their Messiah has all the answers, I thought it might be worth our time to look into "What Reagan Would Do?"

According to the Messiah Reagan, the quickest route out of our financial mess is tax cuts for the wealthy, lower prime interest rates and less regulation on Big Business. Apparently, all we have to do is allow Wall Street to create even more false assets and financial bubbles and POOF! all our troubles will be over. This is a tried and true solution in their eyes. Obama's consumer-sided economics therefore seems to them to be doomed to failure.

I have a slightly different take.

First of all, I believe that economic downturns are cyclic in nature and will turn around pretty much by themselves. The Republicans have simply been taking credit for something that would have happened anyway. It's human nature to overspend when we believe times are good (because we believe they will never end), and to panic and shed all our luxuries when times are bad. This is also true in the corporate world. Most successful corporations believe that they will continue to prosper and therefore spends more than they should, hires more than they should and expands more than they should. When times are hard, they withdraw to survive. They shed those extra employees, cut back on those luxuries, stop that planned expansion and become a leaner running machine. The leaner machine makes less profit, but it needs less money to make that profit. Soon the profit is enough to take back some of the luxuries and the process starts over.

Now, I know I've been a tad negative about our economy lately. And for damn good reason. However, there are some silver-linings to consider. Since the last major recession was in the waning years of Jimmy Carter and supposedly cured by the Holy Ronald Reagan in the early 1980's, I thought it would do us some good to look back and see if there were any lessons to be learned.

The recession of the late 1970's to early '80's was the worst times I have ever personally seen in our economy. When it started I was a young carpenter who was making a good wage and on the path to becoming a full-fledged union journeyman carpenter. Journeyman carpenters made big bucks, lived in big houses and usually ended up being well-off contractors who sat on their fat-asses barking out commands to little wannabes like me. I hoped to end up one of them. Within two years of Jimmy Carter taking office, I had lost my job and was working at Burger King. By the end off Jimmy's term, I was on welfare. Carter's price controls, inflation controls and his attempts to control lending through the Federal Reserve lead to stagflation, a deadly combination of rising unemployment, interest rates and inflation. At the climax of this recession in 1982, inflation was at 13.5%, unemployment was at 10.8% and the prime interest rate was at 21%. Compare these numbers to our current numbers of; prime rate=0% to .25%, inflation for 2008=3.85% and unemployment at 7.6%. It's pretty easy to see that things aren't nearly as bad.

So let's look at the Reagan solutions and see if they can be effectively applied.

First off, there is nothing we can do to the prime interest rate to help. The rate set by the Feds for lending money to banks and other lending institutions is at an all-time low and short of paying institutions to take our money, there's nothing left to do. This is especially disturbing since controlling the prime interest rate is one of the major tools we have used effectively to lessen the impact of past recessions. Secondly, I doubt there is a single person of any consequence in the U.S. ballsy enough to say at this moment in history that we need less regulation when it's the dismantling of regulation that got us into this mess to begin with. This is a prime example of one of my two chief complaints about our two main political parties. Democrats trust despots and dictators too much and Republicans trust CEO's and Wall Street too much. Thirdly, Tax cuts. On this one I'll agree with the WWRD crowd. Putting money back in the pockets of the people is the surest way to stimulate the economy. However, I think it's time we tried middle class tax cuts instead of upper class tax cuts. President Obama has the right idea but he didn't put enough bite in it. In his effort to be exactly the kind of Democrat that drove me out of the party the first time, Barack and his fellow Dems have loaded the Stimulus Package with all kinds of Progressive Ideology and hand-outs to the poorest among us. Morally, I have no problem, but this is handing money to charity and ideology while your in danger of losing your house. To be effective, this Stimulus needed bigger tax cuts than the predicted $8 a week. Green technology subsidies, hand-outs to States, funding for liberal causes, and all kinds of throw-ins have reduced the effectiveness of the tax cuts to almost nill.

In short, take heart, people. I believe that the economy will turn around even if we did nothing. The question is how long and how bad. Some of the ideas that Barack has thrown out there have some merit. I'm very happy that it looks like any additional handouts to the financial institutions have come to an end. Obama's right to direct his attention to the core problem of house valuation and foreclosure although I promise a scorching article if he follows through with his plan to bail out those in default on the backs of those who made sound and rational financial decisions. Rewarding bad behavior is wrong on Wall Street and wrong on Main Street. In the end I have to admit I'm not sure if any of these stimulus packages are going to do any good, but you can rest assured both sides will try to take the credit when the turnaround comes. As for "What Would Reagan Do?", after realizing two of his main tactics for saving an economy are shot, I'm guessing he would scream "Tax Cuts!" but probably not for you and me. H.C.