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Reflections on the Great Recession of 2009—The Rise of Political Deals

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As the financial crisis tightens its grip on all aspects of our economy, long-term anxiety is beginning to afflict our national, state and local governments. Talking to a politician in these turbulent times is akin to chatting with the “Grinch Who Stole Christmas”—a person full of negativity and blame about the circumstances in which we now find ourselves. At times, even I find myself gazing out of my window overlooking Rodney Square wondering if a leader will emerge who will not only echo the rhetoric of our founding fathers, but who is also seasoned with the experience and financial savvy to calm a worried global financial market.

With Delawareans witnessing increasing unemployment (over 7 percent) and no coordinated strategy to restore prosperity, our state leadership is considering measures that were unthinkable (and implausible) merely months ago. Granted, a state budget deficit in excess of $700 million will test the will, character and soul of any leader. Measures such as mandatory pay cuts for our state employees are painful to bear. Such pay cuts, combined with reduced services, and increases in property, income and corporate taxes, demonstrate that the focus of government leadership at all levels has shifted from stimulating recovery to basic survival. While I applaud Governor Markell for making difficult choices and proposing necessary measures to balance our state accounts, one cannot help but yearn for a better time.  

Thomas Paine, the namesake of this column, once reflected in the darkest hour of the American Revolution that these are the times that try men’s souls. With our nation now engaged in two theaters of armed conflict and in the midst of a deep recession, Paine’s musings garner similar feelings that the very fabric of the principles of American democracy and capitalism are being tested severely today. However, I remain envious of Paine’s time—when the sound leadership of Washington, Hamilton, Jefferson, Franklin, Adams, Jay, Madison, Marshall, Knox and others was at hand. Unfortunately, in the modern era, since political deals are rewarded over sound leadership, we are unable to field a comparable team of leaders to address our economic woes—a true loss for the American electorate.

Page 2: Compromises vs. Political Deals

 

 

Like most Americans, and most Delawareans, I listen intently to the proposals and economic packages debated in Washington and Dover, longing to believe that the cure to our economic ills has somehow been injected into our ailing economy. Perhaps that has already happened at the national level, but the patient is so seriously ill that a quick recovery is impossible. Still, if one looks at the “cures,” there’s good reason to wonder about their prospects for lasting success.

First, we passed a stimulus package, the result of a political deal, infusing capital in our economy at a huge price tag (more than $700 billion) that will be paid by the next generation of Americans. Next, we passed a mortgage relief bill (while noble in its values and intentions), another result of a political deal, that seemingly encourages many overextended individuals to remain in homes that they may not be able to afford at the expense of those taxpayers who have been living within their means.

Finally, we have adopted a financial savings plan, another result of a political deal, which attempts to stabilize financial markets by guaranteeing bad debt and investments rather than allocating resources to businesses that could use the capital to fuel our economic growth. These legislative deals, coupled with the bailouts of American International Group (AIG), Freddie Mac and Fannie Mae, have caused the most ardent of optimists to question the financial solvency of our economic system.

Such political deals are prevalent not only in Washington but also in Legislative Hall in Dover. As I write this article, lawmakers, ignoring the economic realities of our state, are busily crafting a political deal that would seemingly allow our three “racinos” to maintain their state-authorized monopoly and operate sports betting parlors in return for providing the state additional funds. It is sad how reasoned economic policy can be spoiled by political deals.  

Let me make an important distinction between legislative compromises and political deals.  Legislative compromises are agreements used to create a bridge bringing together different ideas to accomplish a common goal to advance the public interest (i.e., the various compromises that created our government embodied in our Constitution). Alternatively, political deals are agreements to advance personal agendas without advancing the public interest. American prosperity is not the result of political deals; rather, it is the byproduct of a democratic people searching for the means to permit mankind to rise above its current predicament through hope, dreams, excellence and sound leadership.

By no means do I wish to slight our President, Governor or other elected leaders, as these able-bodied men and women continue to serve at the will and behalf of the public. However, at times, it seems that our economic destiny is not being guided by the cautious hands of a seasoned captain and crew navigating through a perilous tide, but rather by groups of political dealmakers who may or may not chart our ship back to safer waters.  

To be sure, Gov. Markell is sailing in dangerous waters, as it seems impossible to balance the budget without significant tax increases and significant reductions in salaries paid to state employees. And to count on additional revenues from an unproven sports betting operation as an integral part of the budget-balancing act is, well, a gamble with uncertain odds. The times call for statesmanship and compromise, not rolling the dice on a political deal.

Though I am confident that our state, nation (and world) will emerge from this recession stronger and more vibrant than ever, the current crisis highlights the need for our society to hold our leaders accountable for political deals that sacrifice our future for personal gain.

Our founding fathers were capable of achieving great feats during their lifetime, because the interest of the people remained at the forefront of each legislative compromise. Our lawmakers must emulate their behavior—which created this great nation and state, by ensuring that legislative compromises, not political deals, are used to restore our economic prosperity.  

After all, common sense must prevail.

 

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