Tuesday, November 4, 2008

Are You Better Off Now Than You Were Eight Years Ago?

Democrats (taking a line from Reagan) are asking us, as we head off to the polls, if we are better off than we were eight years ago.

I've thought a lot about how I would answer this question and how other Americans would answer.

The answer for me is "Yes!"

Since Bush took office in 2001 I have increased my gross salary by 130%. I have been able to learn to some new skills and sharpen existing ones thanks to the opportunities in the job market. I now own an affordable home with a decent interest rate (the affordable part was a challenge). My non-mortgage debt is paid off (car, credit card) and I no longer use consumer credit.

But for other Americans, I know the answer is much different.

Looking back, many have already forgotten the challenges that President Bush was presented as soon as taking office (dot com bust and 9/11). We are quick to judge the President on the last year but overlook the crisis he handled in 2001 and 2002.

Bush's economic policy consistently did two things; kept interest rates low and kept taxes low (across the board). These two things gave Americans and American businesses an opportunity to grow and create wealth. Instead many Americans used cheap credit to overspend and American businesses used low taxes and low rates to increase their margins instead of investing in their businesses (Wall St and mortgage industry, for example).

I think history will show that President Bush's biggest fault, in the economy, was trusting the American people to use low tax rates and low interest rates wisely. In other words, the President was wrong for trusting America.

This same flaw was demonstrated in July when Bush got cornered by a reporter in a testy press conference on rising gas prices. The President was asked what the American people should do in response to $4/gallon gas. The response...

"They're smart enough to figure out whether they're going to drive less or not. "

The President had an opportunity to tell people what to do, but instead trusted that Americans would make the right decision given the choice. On gas he might have been right, we did cut back on our driving, on credit and taxes he was dead wrong.

So here we are in the 2008 election and I fear many Americans will conclude that they are not better off than they were eight years ago. They will not look at the decisions they made that got them to this point, but at Bush economic policy. Policies which, ironically, gave them the opportunity to make good or bad decisions.

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