I woke up this morning to read this in my Sunday Times. It is written by an Independent Conservative and it is the most common sense I have read on the economy and articulates many of the points I have been trying to make on here. Very interesting article.


http://www.timesonline.co.uk/tol/comment/columnists/andrew_sullivan/article4793410.ece



[center]A choice of Tweedledum or Tweedledumber[/center]
[center]by Andrew Sullivan[/center]

[center]The US economy is in crisis but neither presidential candidate has a credible solution[/center]


If you had decided to spend the past month on Mars and missed the slick Democratic convention and the surreal Republican riposte, you could look at the polls right now and wonder if you’d missed anything at all.

Vice-presidential nominees Joe Biden and Sarah Palin, the stunning barrage of lies and smears of the McCain campaign, the cautious conventionality of the Obama machine, the lingering bitterness of the Clinton cultists, the invasion of Georgia: none of it seems to have made much of a difference. The national polling reveals a classic consecutive convention bounce for both parties - something so obvious and boring it could have been predicted a year ago. And by the middle of last week the race was back to roughly where it started.

With one addition. The past few days have seen a marked surge in the polls for the Democrat. The fascination with the mendacious (see my blog, andrewsullivan. com, for the details) religious fanatic from Alaska has faded somewhat. Sarah Palin’s favourables went from +17 to +1 in six days as voters realised there was less than nothing behind the marketing and the cynicism of this sinister and philistine Manchurian candidate. But Americans have discovered that their economy is in what could be the biggest crisis since the Great Depression. They knew they were in trouble before. Now, however, they cannot deny the massive mess they and their leaders have put themselves in.

The reasons for this are well known. Since the mid1970s, most American incomes - with the marked exception of the very big - have stagnated as even growth in productivity has been swamped by far fiercer global competition and freer trade. Americans, resistant to the idea that their incomes cannot keep growing at the free-lunch pace of the 1940s to the 1970s, decided to get rich the easy way. They borrowed to reflate in the 1980s, played the stock market in the 1990s and gambled on the real-estate boom in the first decade of the 21st century.

The shrewd ones succeeded in gaining and then selling before it came crashing down. Most, as usual, didn’t. The greed that led many ordinary Americans to take out loans they had no way of repaying and the recklessness with which banks and mortgage companies satisfied that hunger are, in retrospect, staggering. Both the banks and the borrowers deserve their comeuppance. And a truly conservative, free-market administration would be happy to let them fail.

But Bush Republicanism is not and has never been anything like conservatism. Its government takeover of firm after firm this year outdoes the statism of the 1970s. Bush Republicanism has cut taxes regardless of fiscal reality and boosted domestic spending at a pace not seen since the Franklin Roosevelt era.

The president has never told Americans they cannot have it all; and, indeed, this trust-fund baby who never had to balance a personal budget led the way. In his term of office, he has added a staggering $32 trillion to the unfunded government liabilities future generations of Americans will have to bear. And he has borrowed and borrowed from the Chinese to ensure that the consequences of his fiscal madness will never come back to punish him.

But he failed in this, as in every other part of his disgraceful record. Just as his Iraq incompetence came back to haunt him, so his surreal economics has finally returned the favour. Watching the feckless Bush administration now is an almost perfect coda to the surreally anticonservative policies it has pursued from the beginning.

As the financial historian Ron Chernow told The New York Times last week: “We have the irony of a free-market administration doing things that the most liberal Democratic administration would never have been doing in its wildest dreams.” That has been the story for eight years: spend, spend, spend, borrow, borrow, borrow, lie, lie, lie. The one liberal policy the Bush administration did not follow was any serious regulation or oversight of the banking and lending industries. And so they did not merely make the American government bankrupt, but they enabled the private sector to head directly off that cliff as well.

Of the two candidates, one might hope that John McCain, who was once a fiscal conservative, scourge of excessive spending and believer in tight money, might have something to say. He opposed the Bush tax cuts in the first place as something Americans could not afford. And he voted against the budget-busting Medicare prescription-drug entitlement, the biggest expansion of the welfare state since Lyndon Johnson.

However, as he jettisoned every principle he ever held to appeal to the increasingly unhinged religious base of the Republican party, he abandoned fiscal conservatism as well. He now pledges not to change a jot or tittle of the Bush tax cuts, even as debt soars. He will not reform entitlements. He absurdly argues that the budget can be balanced by trimming a fraction of pork-barrel spending. And he still insists that the basics of the economy are sound.

And his response to the current crisis? At first, back in the primaries, he denied there was any such crisis. Then he turned populist. Last week he was railing against the greed of Wall Street. If markets need a steady hand in the next president, they should avoid McCain as the distracted, impulsive cynic he has revealed himself to be in this campaign.

Barack Obama is only slightly less disappointing. Instead of telling Americans in no uncertain terms that their recklessness has consequences, he too is peddling populist blather. He too will spend money the government doesn’t have to protect small-time borrowers from the consequences of their folly. He too blames companies that operated within the rules as dictated by Congress for maximising their profits by irresponsible lending. He is fiscally more responsible than McCain – and his economic proposals would add less to US debt. But he will not cut spending and is not the fiscal conservative the economy needs. And he is playing a conventional game of economic demagoguery to win votes.

I suspect he will be successful. The truth is: however hard McCain tries to change personality and policy to meet the next news cycle and polling, he cannot escape the simple fact of his Republicanism. He cannot play the maverick now – after abandoning his previous common sense to embrace the Bush-Cheney economic madness of the past eight years. If he had stuck to his principles of 2000, he might have had a chance as these Bush chickens came home to pelt the Republicans with droppings six weeks before election day.

McCain sold his soul a long time ago; in the past few weeks he has been auctioning it on eBay. He deserves to lose. On the economy, though, Obama is not exactly demonstrating that he deserves to win either.