America's New Economic Reality

By the time you read this, the results of the 2010 political season will be known – at least in most cases. And I think the “experts” will have successfully predicted a major change in the political make-up of our federal government and in many state races as well. The House will have switched majorities from the Democrats to the Republicans. And although the Senate balance shifted toward the Republicans, they were unsuccessful in capturing the majority. What will these changes mean?

Given we are in the middle of a very protracted “jobless” recovery, and given that most economic indicators continue to show tremendous softness, I think America will have spoken through the exercise of their vote that they are extraordinarily dissatisfied with business or politics as usual. Some have even described the sentiment of the American voter as angry. Regardless of what you call it, once again a major shift in political direction has occurred in a very short span of time. Why?

When there have been similar economic conditions going into a campaign, the usual answer is – it’s the economy stupid. And although the slow to no recovery is probably a major driving factor, I would argue that something else is occurring. A much broader and more profound change seems underfoot. More on that later…

In 1994, the republicans took over just two years after President Clinton won his first term. He like our current President proceeded to move a very aggressive liberal agenda through the Congress. The voters responded by electing the “Contract with America” republicans who pulled the agenda back to the center. Surprisingly President Clinton working with a republican congress actually made a few accomplishments.

Fast-forward to 2000, President Bush is elected and the republicans were in full control of the federal government. Just eight years ago, economic forecasts touted robust growth and even forecasted budget surpluses at the federal level. The republicans while controlling the reins of the federal government had the opportunity of a lifetime. They could reduce the size of government, reduce spending, and move the pendulum of power back to the states and away from Washington. Did they?

Of course not… they spent money as feverishly and aggressively as their democratic brethren. President Bush never vetoed a spending bill. Increasing the federal power enjoyed by Senators and Representatives was just as intoxicating to republicans as it was to democrats.

So, I feel that this election is different. It is my opinion that the rise of the tea party and general independent voter is a direct result of voter dissatisfaction with both national parties.

If we want America to return to the prominence we once enjoyed, continuing the failed policies of the last 20 years is not an option. Just as most Americans have down-sized and cut back, government at all levels must do more with less. Entitlement programs (that should have been minimal at best) must be dealt with. Those we elect will have to make hard choices.

One of the scarier political ads that I saw over the last few weeks was not the mud-slinging typical ads that most candidates have paid to air. The scariest to me was the Chinese leader speaking to an auditorium full of young Chinese citizens and basically saying that by owning our debt, they in effect own us. I know it is dramatic and exaggerated, but in fact we are woefully indebted to China.

The recent “Great Recession” has humbled most of us. Even if we kept our jobs, we know many friends, neighbors, and even family who have lost theirs. I truly think most Americans have reset their individual economic baseline to one that is much more conservative (at least fiscally) and they now expect the same from their elected officials.

The Democrats and the Republicans need to understand that business as usual will not be accepted anymore. If you are found to be unethical, you will be held accountable. If you play political games instead of leading, you will be voted out. Although the republicans and democrats alike have tried to paint the Tea Party and its members as extremists, the voting public (especially the true independent) appreciate that their existence and growing prominence have put accountability back into the process.

So our new economic reality will have lasting effects if we truly want change for the better - not just change. If we are willing to live within our means and reward people for getting their education, going to work and working hard, and giving back to their community, we can be the America that we once were. But if we go back to living foolishly and extravagantly, think we can give handouts instead of handups - we will continue to fall further behind our global competitors.

The choice is ours…