Unwilling to take accountability for the last seven years of mismanagement over the nation’s economy, conservatives are eager to portray the current economic downturn as a momentary hiccup and a temporary drag:
John McCain: “I still believe our fundamental underpinnings of our economy are strong.”
President Bush: “I believe we can find common ground to get something done that’s big enough, effective enough so that an economy that is inherently strong gets a boost.”
Ed Lazear, Chairman of Council of Economic Advisers: “The structure of the American economy is sound.”
Such happy talk overlooks the fundamental weaknesses of the U.S. economy — a weak labor market, large budget deficits, massive trade deficits, low productivity growth, and a nationwide decline on house prices.
Since 2001, family incomes in the United States have not risen, yet the costs for important consumer items such as housing, health care, transportation, energy, and food all climbed at often breathtaking rates. To afford these basic necessities, families buried themselves in deeper and deeper debt relative to their income — “at a rate more than four times faster than that in the 1990s.”
Due in part to the Bush administration’s laissez-faire, deregulatory approach to the markets, lenders preyed off low interest rates and offered risky loans, financing them by borrowing heavily overseas. As a result, a vicious cycle of debt has resulted from the meltdown in the housing market; and the burgeoning crisis has enveloped global markets.
The fundamental weakness of the current economic structure is one reason why Fed chief Ben Bernanke is privately offering economist forecasts that are “much worse than he has admitted to publicly.”
UPDATE: McCain: “The issue of economics is not something I’ve understood as well as I should.”