As America tumbles toward recession, the election has turned from Iraq to the economy. Homes are in foreclosure, banks are in trouble, the dollar is in the toilet, and inflation and unemployment are soaring.
Voters want the candidates to do something. But so far, they’ve gotten mostly populist schlock. It’s not that the candidates don’t have “ideas.” It’s just that their “ideas” won’t do anything but help the candidates get elected.
Clinton wants to appeal to the “Beer Track”–working class folk in the Rust Belt and Appalachia who have been hurt most by globalization and outsourcing. So instead of acknowledging that free trade, though painful, lowers the cost of living and doing business, Clinton has suggested that NAFTA be “renegotiated.” Nevermind that it was her husband’s administration that did the NAFTA negotiating in the first place.
A more sensible approach would be to accept the inevitable. Globalization and trade are insescapable, and retreating into protectionism means wasting resources in the vain attempt to protect jobs that would be better done elsewhere. Instead, we should focus on job retraining programs that can equip workers to be competitive in a 21st century economy.
John McCain, once known for his “straight talk,” is now stumping for a holiday from the gas tax. What will the temporary repeal of the 18 cents-a-gallon tax achieve, besides increasing the trade deficit, and deepening our dependence on foreign oil? Zippo. (Well, OK, it might help him get elected). Solving our energy crisis means moving away from oil, not bingeing on it. McCain’s holiday from the gas tax is a holiday from common sense. If McCain is serious about reducing energy prices, he could get behind the dollar. The current administration’s weak-dollar policy is responsible for a substantial portion of the oil price increase.
Barack Obama is a card-carrying member of the Hillary Clinton anti-trade club, but he has his own lousy ideas, too. Obama wants to raise the capital gains tax. Apart from hobbling the capital markets, raising the capital gains tax would arguably cause government revenues to decline. When Bill Clinton cut the capital gains rate in 1997, meanwhile, revenue tripled. So it is unclear what Obama thinks he will achieve with this scheme, other than, perhaps, get elected.