WHAT IF?December 28, 2012
At year’s end, the United States faces interesting questions. What if our economy really is improving? What if the naysayers are wrong about the President’s position on taxes and spending cuts? And what if Washington responds accordingly? I’m not wearing rose-colored glasses, but a level of optimism may be justified. Here’s why…
First-time unemployment claims dropped to 350,000 for the week ending Dec. 20. The current four-week moving average stands at 356,750—the lowest since March 2008. Some economists tagged 400,000 as the milestone for stopping job loss and 350,000 as the target for meaningful job growth. We’re getting close. Oh, and in October (the most recent date for figures), single-family home prices rose for the ninth month in a row. Meanwhile in November, contracts for home resales hit a 2-1/2 year high.
Good news about the Treasury, too. It recently sold the last of its shares in the insurance giant, AIG. The $182 billion bailout rankled some people—particularly Tea Partiers—but America’s financial system was on the brink. And while the matter should never be considered a business opportunity for Washington, the Treasury cleared a $22.7 billion profit.
The government also is getting out of General Motors. Steven Rattner (The New York Times, Dec. 19) wrote that Washington should recover all but $14 billion of the $82 billion in TARP funds invested in Detroit (Chrysler also needed assistance; Ford made it through on its own). Auto sales have increased from 10.4 million in 2009 to a projected 15 million-plus for 2012. Moreover, Rattner reports, as many as 250,000 workers have been added.
Just as encouraging, American manufacturing may be coming back. In the Dec. 2012 Atlantic, Charles Fishman writes about General Electric bringing appliance manufacturing onshore from China. Why? Product designers, production specialists and marketers can all work face to face. GE is lowering manufacturing costs while eliminating shipping costs from Asia. In the same edition, James Fallows writes about small start-up companies designing and manufacturing products here (San Francisco is on the cutting edge) to respond faster to market demand. We won’t re-capture all our lost jobs, and new jobs will require more education. But the future offers exciting new opportunities.
Add to that, the U.S. may be heading towards energy self-sufficiency and more. Roger Cohen pointed out in the Times (Dec. 14) that the U.S. National Intelligence Council (NIC) sees the nation being a major energy exporter as soon as 2020. This will result from new technologies enabling dramatic increases in the production of shale oil and natural gas. There are risks, yes. But risks can be overcome. Improved mileage standards will help, too. Cohen cites the NIC study: “The prospect of significantly lower energy prices will have significant positive ripple effects for the U.S. economy, encouraging companies to take advantage of lower energy prices to locate or relocate to the U.S.”
I’ve always believed in American ingenuity and flexibility. What if Congress—particularly Speaker John Boehner—demonstrates enough ingenuity and flexibility to believe in our nation’s strengths and turn away from the Fiscal Cliff lying in wait? What if they got out of the way and actually put America first?
May the New Year be a good one for you!
Responding is simple. Click on “comments” above then go to the bottom of the article.
Read the first three chapters of David’s new novel, SAN CAFÉ at davidperlstein.com. SAN CAFÉ is available at iUniverse.com, Amazon.com and bn.com.
Boehner, it seems to me, has a clear choice: he can cut a deal with Obama that will have enough bipartisan support to clear the House or he can hold with the intransigent extreme right and ensure gridlock. Oddly, the former move might cost him the Speakership and the latter would probably insure his current position. I do note that his “Plan B” (which would cut taxes on all making less than 1 million) was a move in the right direction, but unsupportable by the House majority.
Then again, he might consider investing in caffuel — a clean and abundant energy source. Jobs for all!
Well, we are going to find out soon enough one way or the other. Boehner will most probably make the move that ensures his own job & status.
David,
In principle I agree and I certainly hope that you are correct. While I recognize the possible political outcomes, I believe the concerns of most of us, is what will happen on Tuesday and Wednesday next week and the weeks that follow.
I am certainly not an economist but if there is no agreement between the White House and Congress, do we not go off the so-called “fiscal cliff?” If we do, based on my calculations, my combined federal and state income taxes will increase by about $4,000. That may not be a lot, but it “ain’t chopped liver” either. Repeat this for tens of millions of middle-income taxpayers and there will certainly be a decline in consumer spending. I believe that such a decline could contribute to another recession. How deep of a recession and at what rate no one knows.
As a plain ol’ citizen, I am shocked and embarrassed that our representatives and leaders no longer consider compromise a political tool. I may not like the idea of political quid pro quo, pork barrel spending, jawboning, etc. but it certainly is better than what’s happening now.
Lastly, about “energy independence,” someone needs to explain to me how it works. Based on everything I’ve read, the oil that will flow down the Keystone Pipeline and the gas derived from “fracking” will be sold to the highest bidders on the commodity exchanges. Thus, if petroleum companies believe that they can get better revenues in India, China, etc., won’t the fuel go there? Or, is the concept that overall supply will increase and therefore the prices I pay for electricity, and gas for my car and home will decrease (i.e. per Eco 101)?
Perhaps I’m naive but shouldn’t our goals be to find a common ground on the budget, limits on the type of weapons available, medical choices, the environment, etc.? Or, are there other objectives here that I’m not understanding?
Happy New Year — I hope.
Jon
Jon: Tax increases for most Americans represent a serious concern. As to energy independence, I’m commenting on Roger Cohen’s column. And yes, journalists and “experts” have been commenting on this. As I mentioned, fracking and other means of securing more oil or gas come with risks. The key is to use our ingenuity to solve problems—certainly not to “drill, baby, drill” at any cost. As to common ground—we’re on common ground!