Modest Proposal

With the nation days away from what President Obama called ‘Economic Armageddon,’ the sides negotiating a solution seem destined to raise the debt ceiling and ‘kick the can down the road’ until after the 2012 election. It appears his request that we ‘eat our peas’ might not happen. (Of course, as the NFL proved yesterday, hard deadlines tend to inspire quick resolutions to challenging disagreements… so stay tuned.)

During a coaching session this morning, a client asked for my thoughts on the deadlock among House Republicans, Senate Democrats and the White House. “It’s sad we’ve come to this point,” I said. “You would think there would be a sense of statesmanship for finding common ground, giving on some positions and resolving differences.” His reply made me think.

“It’s the fable of the scorpion and the frog playing out,” he said. “Our elected leaders are willing to stand on ideological ground – even if it means catastrophe – then shrug their shoulders and say, ‘What did you expect? You knew we were politicians when you elected us.'”

I believe there is a solution to change that attitude: term limits. Six years for the president, eight years for a senator, four years for a representative. No reelection campaigns. No additional fundraising. Work everyday you’re in office to make things better… and go get a job afterward. That’s how it works for Boards in the charitable world; do your time and move on for fresh ideas and new energy. (Key: Stagger the first few years so everyone doesn’t leave at once, then keep it in place for, say, a few centuries.)

While I’m not a Constitutional Law expert, I’m guessing Congress would have to pass this bill and the president would need to sign it. There’s probably a better chance of them agreeing to tax hikes and deficit reduction in the next seven days than that happening. Of course, every sweeping change throughout history started with someone asking, “Why does it have to be this way?”

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Not So Fast

Fed Chairman Ben Bernake said last week, “the prospects for a return to growth in the near term appear good.” Before making big investments in the stock market or big plans for your sales to take off, a little historical perspective might be good to consider. Here are comments from leaders the last time the U.S. faced such challenging economic turmoil (courtesy of Lance Roberts – www.streettalklive.com):

“I see nothing in the present situation that is either menacing or warrants pessimism… I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress.” – Andrew W. Mellon, U.S. Secretary of the Treasury, December 1929

“I am convinced that through these measures we have reestablished confidence.” – Herbert Hoover, December 1929

“[1930 will be] a splendid employment year.” – U.S. Dept. of Labor, New Year’s Forecast, December 1929

“For the immediate future, at least, the outlook (stocks) is bright.” – Irving Fisher, Ph.D. in Economics, in early 1930

“…there are indications that the severest phase of the recession is over…” – Harvard Economic Society,  January 1930

“There is nothing in the situation to be disturbed about.” – Secretary of the Treasury Andrew Mellon, February 1930

“The spring of 1930 marks the end of a period of grave concern…American business is steadily coming back to a normal level of prosperity.” – Julius Barnes, head of Hoover’s National Business Survey Conference, March 1930

“While the crash only took place six months ago, I am convinced we have now passed through the worst — and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us.” – President Herbert Hoover, May 1930

“Gentleman, you have come sixty days too late. The depression is over.” – President Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930

“… the present depression has about spent its force…” – Harvard Economic Society, August 1930

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