Recent trends in presidential campaigns have been dispiriting. It seems either the press or the public (I'm not sure which, maybe both) cares more about which candidate would be better to sit down and enjoy a beer with than which would best run the country.
But there are several issues of great importance that are on voters' minds. The top two -- Iraq and health care -- have major implications for the third -- government spending.
Iraq has proven a costly affair, running about $8.5 billion a month, and our government has used deficit spending to pay for it. There is no end in site (you can get up-to-date figures, to the penny, on our debt
The demand for health care reform has pushed its way into the headlines and the public eye. American companies can no longer compete with other nations because of skyrocketing costs for care. Most ideas for change include some form of universal health care whether private, public or both. Presently, 47 million Americans lack insurance, and coverage would be costly.
These two issues raise a far more serious question, which needs a serious discussion: How do we pay for all of this when we find ourselves in serious debt already -- much of it to foreign investors?
President George W. Bush was the first president ever to administer a tax cut during a time of war. He didn't stop there, however, increases spending through the creation of the Department of Homeland Security, the No Child Left Behind Act and the Medicare Prescription Modernization Act.
This reckless spending raised some eyebrows, but it seems not to have caused the same outcry over deficits as such spending did in the late 1980s and early 1990s. I checked for old articles from the 1992 presidential campaign. I found many articles that suggested that lack of discussion between Bill Clinton and former President Bush on issues like the deficit had spurred voters to choose independent candidate Ross Perot.
Why did the deficit receive significant mention by the media and voters then and not now?
Two factors help explain the discrepancy.
First, many important discussions have been overridden by the constant beating of the drum on the "War on Terror." The Bush administration has used the terror issue to get the upper hand in political debates. It proved easier to call opponents unpatriotic, rather than have a substantial discussion. This strategy won the midterm elections in 2002 and helped re-elect the president in 2004. The winds are changing, however.
The second important factor is the economy. In the early 1990s, then-
Chairman Alan Greenspan was roundly criticized for not lowering interest rates fast enough to spur economic growth. The economy was the issue. We all remember the famous words of James Carville: "It's the economy, stupid." In fact, some still say Greenspan cost former President Bush the 1992 election.
The economy has not appeared as an issue in this election cycle yet. But I believe it will. When Greenspan lowered interest rates in 2001, he averted any serious problems caused by the dot-com bubble and 9/11. (There had been seven rate cuts before the attacks.) But a fair amount of capital moved into real estate because of low interest rates.
Many fear another bubble formed in this market, and while insufficient time has not passed to determine whether or not it will have a detrimental effect on the overall economy, I believe it will. The subprime lending bubble will come back to bite us and become a campaign issue.
That is why I think it is a mistake of the media, the politicians in Washington and the presidential candidates not to give our deficit the conversation it needs. I agree with the argument made by Robert Hormats, a vice president of Goldman Sachs, in
that the funding of our government obligations will be critical to our nation's success in the future. (See his April 19 Open Book column
Our nation faces much more difficult circumstances now than it did in the early 1990s. If we choose not to pursue a sensible strategy, investors may choose it for us -- by refusing to fund our profligate spending. This scenario concerns us all.
Whether we like it or not, we will be fighting the effects of terrorism for many years The financial obligations for this struggle will prove severe even if we were to withdraw our troops from Iraq, as suggested by the bipartisan Iraq Study Group.
Furthermore, our domestic financial obligations won't disappear. Baby boomers continue to march toward retirement, which will put a strain on Medicare and Social Security for years to come.
These difficult decisions have to be debated.
Yet that debate has been lacking. The hallmark of the Bush administration has been to politicize issues rather than put forward actual policy. This played out in the debates over both Iraq and health care. The assumptions on which the administration based both of those actions have been disproved (no WMDs in Iraq and wrong calculations in the Medicare reform of 2003).
The time has come for the American people and politicians to address serious issues. We cannot continue down the road of political polarization where people on the fringes of the left and the right pull us apart.
I challenge candidates to debate serious issues affecting the future of our nation. Failure to do so could lose them the election. In fact, polarization could cause another independent to get into the race -- Michael Bloomberg.