The Blame Game
My take on the real national pastime.
I wonder about the abstract reasoning capability of my fellow citizens. It seems that the bi-directional movement of markets and the ever-changing economic environment is a complete surprise to a majority of the population of the United States. Instead of trying to understand what is happening and what they can do about it to better their circumstances, it seems we are involved in a national blame storming session.
It may come as news to the network anchors, but the economy was in decline since the early part of 2000. To blame George W Bush for not being able to change the business environment is akin to being upset because you can't change the laws of physics in your home. After all, it is your house, why can't you set the rules? But America being America, we need to find a scapegoat and I don't want to disappoint. So without further ado, here is where I lay the blame.
For what it is worth, the United States economy was in a position to go nowhere but up as the 90s dawned. Despite the record deficits and the minor recession that caused George H W Bush a second term in office, the health of US businesses was robust. The consolidation and belt tightening prompted by the leveraged buyout activity the decade before as well as low inflation pressure on raw materials caused by faltering economies around the world provided lean energetic companies ready to burst out with new technology and improved productivity. The economic boom of the 90's allowed the US economy to out grow the budget deficits that had grown routine. And as the national debt shrunk in comparison to the size of the US economy, interest rates and inflation retreated.
And what did the US government do with this bounty? It spent it. During a boom economy, with record low unemployment, with a decade of prosperity, Congress and the President burned through all of the money that poured into their coffers. What did they spend it on? Good question.
The largest portion of the federal budget is structural entitlements like Social Security and Medicare. With the large amounts of tax revenue pouring in due to an economic expansion of unparalleled proportions, the basic unsustainable foundation of the US federal budget was totally ignored. With an end of prosperity coming as surely as Christmas, our shortsighted leaders grew the government instead of preparing for the inevitable ebbing of our fortunes. So if you want to blame someone, blame Bill Clinton and the Democratic and Republican congresses that pissed away the greatest windfall the world has ever seen.