Blight at the end of the tunnel

Two points this week.

The first is that you may have heard some howling by politicians about the economy. Last week the government told us the economy had slowed. To its slowest pace in four years or so.

And so various pols flung this news into the air and jabbed a finger in its direction. ďYísee! The economy is hurting. This presidentís policies are whacking the economy.Ē

Just a tiny point to make here. The slowdown is supposed to happen. It was scheduled. Just like the latest episode of the Sopranos. The Federal Reserve called for it, planned it and achieved it.

The Fed reckoned our economy was overheating. The Fed peered ahead and saw a blight at the end of the tunnel. The blight of inflation. Canít have that, it told us. And so it ratcheted up interest rates every few months for a couple of years. Remember that? The whining politicians donít. I take that back. They do. But they donít want you to.

The problem was that the Bush tax cuts worked so well the economy not only grew. But grew too quickly. The Fed had to slow down the economy. When it slows us down it threatens to push us into a recession. This is the nature of the beast. The beast being that the Fed tries to perform delicate surgery on the economy. But its only instruments are cudgels. Forceps please. Machete please.



The second point is that if the campaigning politicians badmouth this economy they should be ashamed. If they tell us we need higher taxes to improve the economy they should wash their mouths out with lye.

Now an economy cannot be perfect for all. Because all of us do not have the same needs or desires. But an economy deserves a pat on the back when it serves most of the people well.

What do most people want? Most want to have a job when they are of working age. Well, this economy has poured out jobs. It has created millions of jobs off the record for the illegals who are off the record. It has created millions of legal jobs for legal workers.

And donít feed us that line about these being hamburger flipping jobs. The data do not back you up. The economy has created unusually large numbers of good-paying jobs.

Most people want to see our budget deficit go down, not up. It has shrunk. It continues to shrink. By the end of the year it will likely be down to 1 percent or less of our gross domestic product. Remarkable.

Most people want to be able to buy a house. Well, we have seen record numbers buying houses, owning houses. Will some of them lose their houses now? Because they got stupid and unrealistic with their mortgages? Yes. But those folks are relatively small in number. And most of them have learned lessons that will serve them well in years to come.

Most people want to see stocks and bonds go up. Because rising markets build their nest eggs for retirement. Well, markets have been pretty generous toward those nest eggs. Since the Bush tax cuts began, the Dow is up over 50 percent, the S&P by 60 percent and the Nasdaq by nearly 70 percent.

Most people want to see their incomes increase. Last year the wages of non-management workers rose at twice the rate of inflation. Pretty remarkable when you consider they have to compete with Chinese making a pittance.

Most people want government to have the money to fund the ten zillion programs it does. The money pours into Washington. And into state capitals. It has become a torrent. That is how healthy this economy is. With so many extra bucks to play with, Congress has ramped up spending of every program that ever existed.

Most people want our economy to grow. Since the Bush tax cuts took effect our economy has grown by nearly $3 trillion.

So, let Žem rant about healthcare. Let Žem rage about the Iraq War. Let Žem blather over global warming. But if they start kicking this economy in the shins... If they lambast the tax cuts that fired up this economy...I will dismiss them as demagogues.

From Tom ... as in Morgan.

For more columns and for Tomís radio shows (and to write to Tom): tomasinmorgan.com.

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