(July 11, 2005) — What's shaping up to be the hot economic issue in the 2006 midterm elections?
At this point, there doesn't seem to be too much of particular interest to the business community on the front burner.
In the 2004 election, it seemed that the candidates spent far too much time talking about nonsense issues, like their Vietnam War records, and not enough time on any issues of specific importance to the economy.
That made it all the more surprising when, after President Bush was re-elected, he suddenly decided that Social Security reform was a major issue. What does that have to do with swift boat veterans and the Texas National Guard?
Nothing against Social Security reform — it's obviously an important issue that the U.S. government will have to deal with eventually. But the fact that it moved to the limelight just after the election, and then was swept backstage just as fast, shows that the business community has not really rallied behind any specific plan to bring the economy out of the doldrums.
Maybe that's for the best. After all, is there anything concrete that Washington can do that will make things better?
Put it this way: Raise your hand if you think Washington has any real control over the global economy.
It's nice to think that someone can fix an economy that's broken, or generate the right conditions for a sustained economic boom. But common sense tells us that the best we can hope for are leaders who won't mess things up — or make a bad situation worse.
After all, if making the economy run smoothly was easy, wouldn't we be a lot more successful at it by this point?
Still, the prescription for success looks fairly easy:
* Keep taxes low.
* Invest in programs that help the economy grow. Transportation projects are a good example, but that's just one of many.
* Do your best to balance the budget. Sustained deficits aren't good in the long run.
* Pursue policies that keep interest rates and inflation low.
* Encourage predictability. Drastic changes might be exciting, but investors prefer stability.
Some things aren't predictable, and are largely beyond the control of political leaders. Energy prices, for example. Or decisions by large multinational corporations to move their manufacturing plants. Or decisions by the leaders of other countries that reverberate around the world, like currency devaluations. Or, as the world again saw July 7, terrorist attacks.
The United States right now is in that awkward period between presidential election years, and without any solid front-runner in either party, it looks like things are going to be this way for quite some time. There will be more arguing about Supreme Court candidates than debate over a sensible energy policy.
Some ideas that generate a little bit of enthusiasm in the business community aren't likely to fly: a flat tax, an end to the capital gains tax or a long-term end to inheritance taxes.
Perhaps the plastics industry — and the business community as a whole — would be better off if Washington would just continue to ignore economic issues for a few more years and concentrate on security issues.