[mukto-mona] The perilous U.S. economy and its impact on November 4 election

The perilous U.S. economy and its impact on November 4 election

 

A.H. Jaffor Ullah

 

The U.S. economy is probably in a recession going into the summer months of 2008.  No economists worth his salt could predict how long this downturn in economy would last.  But one thing is for sure.  The recession would put many workers out of job and this would bring dissension among many voters.  The voting records of Americans indicate that the party which is in power in an election year when downturn in economy takes place normally loses the election.  Therefore, Senator John McCain, the presumptive Republican candidate, will have an uphill battle to say the least.  The odds are stacking up against him.  The Americans normally consider the "pocketbook issue" as a major deciding factor when choosing their leader.  This year won't be a different one, I believe.

 

American economy was in a robust state when George W. Bush assumed the leadership in late January 2001.  Contrary to popular belief, the Democratic leaders, Bill Clinton and Al Gore, were very successful in their role as the stewards of this great nation.  The computer industries flourished allover the West in the late 1980s and we saw how the "Information Highway," which used to be a buzzword for Internet, was established in America in the beginning of Clinton years.  The productivity of American workers increased many-folds; consequently, the economy flourished throughout Clinton years. 

 

President George W. Bush therefore inherited a healthy economy.  But sadly, in the last seven and a half years the economy soured because of Bush-Cheney's stewardship that lead to shrinking of economy.  Thanks to America's involvement in Iraq War, which persistently drained a huge amount of dollars.  Also, both the energy cost and the price of the ordinary foodstuffs had skyrocketed making many Americans vulnerable to this downturn in economy. 

 

We have witnessed how George W. Bush's popularity had gone down in the last two years.  Even John McCain is maintaining a safe distance from him.  Excepting a fund raising event to benefit Republican candidates who will be contesting on November 4, 2008 election I am yet to see George W. Bush campaigning for Senator McCain.  The Republican strategists know for sure in which direction the political wind is blowing allover America.  Therefore, it is a safer bet not to allow George W. Bush come anywhere near Senator McCain; never mind his campaigning for the Republican candidate for the White House or the Congress.  Whatever little chance Senator McCain has to win the election, it will be reduced considerably, if either Bush or Cheney becomes active and starts campaigning for Senator McCain.  On the contrary, if the economy was robust, we would have seen the McCain campaign using Bush and Cheney in the battleground states such as Colorado, Missouri, Virginia, Michigan, Ohio, etc., to spread McCain's messages, which are essentially inline with the Republican Party.

 

How bad is the economy?  For a quick answer you may have to watch the evening news or visit financial channels such CNN's money segment, MSCNBC, or Nightly Business News (Public Broadcasting System's financial program).  One may also read the Wall Street Journal, the defender of America's capitalistic system.  The liberal newspaper establishments those that are great critics of the Bush Administration such as New York Times and Washington Post are also printing news stories delineating the economic malaise confronting America and how these are impacting ordinary households all across this great republic.

 

Some pundits will be much eager to point out that the housing booms that was started when the technology stocks once the darling of the Wall Street in the late 1990s was plummeted in early 2000s when Bush and Cheney was elected to man the nation and its economy. 

 

Come to think of it, Bush's much vaunted the building of "Ownership Society" in America was the leading cause of the boom in housing prices.  Many critics of Dr. Alan Greenspan, who was the chairman of Federal Reserve for too long are willing to point out that the easy monetary policy of the Federal Reserve was the root cause of the housing boom in America, which led to sub-prime lending that did enormous harm to the banking sector.  The banks became too greedy while they lent money to millions of Americans who would not qualify to borrow money in ordinary times.  But mind you, under Bush-Cheney's stewardship of U.S. economy, the housing market took for a wild ride.  The housing prices in many coastal cities especially in California, New York City, Boston, etc., were increasing at 5-10% clip every year in the last decade but only to see the valuation plummeted when the economy headed south in the last 2 years.

 

Add to this malaise the inflationary pressure both the everyday agricultural commodities and fuel prices are exerting on ordinary Americans who are surely feeling the pinch.  The global economy is also feeling the pressure due to inflation in petroleum products and agro-commodities.  The price of crude petroleum had risen from $ 50-60 to $ 147 in the last three years.  The price of corn also rose sharply along with rice and wheat.  Some economists think that the U.S. corn producers are demanding higher prices because of the increased demand coming from bio-fuel industries that are using corn to make alcohols to be used in blending gasoline for U.S. domestic market.  These days, it is not uncommon to see the petrol pump (gasoline outlet in the U.S.) selling gas-o-hol (10% alcohol blended gasoline or petrol) at the pump to cut down the gasoline price.  This diversion of corn production away from traditional crop production from food is applying inflationary pressure on staple prices.

 

The ordinary Americans are tightening their belt too as the economy is souring fast.  For a change the housing market is heading south.  The number of unsold house is increasing, which is exacerbating the problem of falling housing prices due to excess inventory.  There is no sign that housing market is becoming healthy anytime soon. 

 

These days Americans are not buying merchandises as they used to; therefore, the global economy will follow in the footsteps of America.  One look at the economy of China will illustrate the global nature of world economy.  One more personal observation is that the malls of America are less crowded now.  In the third week of July 2008, I was visiting San Diego, an affluent coastal city that is home to many young professionals.  There too, I did not see bustling malls.  I read in financial press that as the nation is experiencing recession,; consequently, many Americans are defaulting on credit cards payment.  This is a harbinger for more bad news to come.

 

Many Americans are angry knowing that the economy is souring, rapidly.  This severe economic downturn would surely impact the fresh college graduates.  In a booming economy, the new graduates normally get an offer from prospective employer.  But the situation will be worse in coming months. 

 

Taken all the bad news on economic front this much could be said that economic issues will be in the forefront of presidential campaign.  I read this morning that both Senator Obama and Senator McCain have turned their focus on economy.  The Republican presidential hopeful, Senator McCain, is now changing his position on payroll taxes for Social Security, which drew a sharp rebuke Monday (July 28, 2008) from conservatives after he signaled an openness to a higher payroll tax, contrary to previous vows not to raise taxes of any kind.  Democratic presidential hopeful Senator Obama on the same day blamed "irresponsible decisions" by the Bush administration and Wall Street for the country's economic woes as the White House said the budget deficit would soar to stratospheric heights next year.  Therefore, we could see how the two leading candidates are positioning themselves to address the malaise that confronts ordinary Americans.

 

The November election for the White House is shaping up nicely and it is for sure the economic issues will dominate the campaign.  In both 2000 and 2004, the economy was in sound footing; therefore, the candidates did not fight over pocketbook issues. In 2004 when Senator Kerry lost the election to George W. Bush, the issue that dominated the campaign was national security.  But this year, the national security issue took the backseat.  It is the economy that took the center stage.  Will the Americans consider Senator Obama a good steward of the economy?  Or is it Senator Obama?  

 

Tighten your seatbelt.  There will be a lot more coming in the next three months.  The election is barely less then 100 days from now.  There is no telling how the public opinions may shape up as economy sours precipitously.

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A.H. Jaffor Ullah, a researcher and a columnist, writes from New Orleans, USA

 

      

 

             

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