Let's Hear it for the Status Quo! Woot!

Below is a letter to the editor that appeared recently in The Cincinnati Enquirer:


ENOUGH OF THIS KIND OF CHANGE
"The theme this year seems to be change. I remember two years ago the Democrats took control of the House and Senate on the same theme.
Let's see what kind of change we got. Gas and fuel prices have doubled. Unemployment has risen. Food prices have soared. We have a housing crisis. Home prices have declined. We have no energy policy, no Social Security fix and no health care solution. But, they are busy questioning athletes about steroid use, the CEOs about making too much money, the oil companies about making too much money and why horses die on race tracks.
Please, no more change. I don't think we can handle much more."





That was an interesting letter, don't you think? In the letter, the author suggests that many of the problems with our economy are the direct result of a Democrat controlled Congress. I respectfully disagree with this and would like briefly to touch upon some of the arguments he made in his letter.

1) “Gas and fuel prices have doubled.”--No doubt gas prices are far too high. In 2006, the last year of the Republican controlled Congress, the national average was $2.58 (www.eia.doe.gov/steo). Currently, our national average is $3.98 (Associated Press). While it is true that the price of gas has gone up 54.3% in the last two years (not actually doubled) it is also true that Exxon Mobil reported an $11.7 billion profit for the last quarter of 2007; the highest quarterly profit earned by ANY United States company EVER in history. Exxon finished 2007 making a profit of $40.61 billion(cnn.com). First quarter of 2008 was their second most profitable quarter in history at $10.9(nytimes.com). Later in the letter, the author suggests that Congress is wasting time “questioning the oil companies about making too much money.” I’m curious as to why the author seems to think that there is absolutely no correlation between record gas prices and record oil company profits. That might be why the Democrats are exploring it. By the way, the soaring food costs mentioned by this author are also a result of rising gas prices. See, if it costs more to transport the food, it is going to cost more to purchase the food. I'm no economist, so I'm going to send Alan Greenspan a quick IM to see if he can confirm that statement. Let's wait one second to see if he responds.
Hmmm...I seem to have received an away message: "Despite decades of expansion, I still dig my wife's supply curve." I don't get it. Moving on.

2) “We have a housing crisis.”--Very true. It makes me very glad that I decided to rent for another year to save money for a down payment! I’m not entirely sure how the blame for this can be laid at the feet of any politician, regardless of party affiliation. The housing crisis is a result of the boom of sub-prime lending (the practice of extending credit to borrowers with credit characteristics that disqualify them from loans at the prime rate). In 2006, approximately 20% of all mortgages were sub-prime. With sub-prime rates generally come adjustable rates. Naturally, the higher the interest rate goes, the higher the payment becomes. Many people become unable to make the payments. Some blame the lenders. Some blame the borrowers. In reality, most analysts see it as a market failure; things were going so well for so long, many lenders tended to approve risky, high-rate adjustable mortgages. Regardless, Democrats and some Republicans in Congress have been working together to try to fix it, but are met with opposition from some fiscal conservatives who believe that the government should not interfere with the problem.

3) “Unemployment has risen”--So far in 2008, the year to date average is 5.1% . It averaged 4.6% in 2007. However, if you take a look back, you’ll find that the last five years we had a Republican controlled Congress (2001-2006) the mean unemployment rate was 5.28%, peaking at 6.3% (June, 2003). If you break down the mean unemployment rate by year, you'll see how this comment is misleading:

2000: 4.0% (Clinton's last year in office)
2001: 4.7%
2002: 5.3%
2003: 5.9%
2004: 5.5%
2005: 5.0%
2006: 4.6%
2007: 4.6% (first year of a Democrat controlled Congress)
2008: 5.1% (thus far)

So, yes, unemployment has risen 1/2 of a percent since the 2006. However, during Bush's first term, during which we still had a Republican controlled Congress, we saw unemployment jump nearly 2%. In fact, if you look at a break down by month, you'll see that our unemployment rate starting growing during Bush's first month in office. In January of 2001, the country had an unemployment rate of 4.2% by December of the same year, it was up to 5.7%. Check out the stats at http://data.bls.gov.

4) “But, they are busy questioning…why horses die on racetracks.”--OK, I was almost ready to concede this as a loss. While the welfare of animals is extremely important, I can understand why some may feel it needs to take a backseat to the economy, the 4,000+ dead soldiers in Iraq, health care, etc. However, I did a little more research on this and I found out that this questioning is being led by both, Rep. Bobby Rush (D. IL) and Rep. Ed Whitfield (R. KY). A Democrat and a Republican. Hmmm…bipartisanship. Let's blame the Democrats anyway. I’ll consider this a draw rather than a loss.

5) “No health care solution.” Remember SCHIP? This would have provided health care to millions of children. What a great start that would have been. Vetoed by Bush. The override failed due to Democrats. And, by Democrats I mean Republicans. Just making sure you were still reading!

6) “No energy policy” --House Resolution 6, Energy Independence and Security Act of 2007. An "Act to move the United States toward greater energy independence and security, to increase the production of clean renewable fuels, to protect consumers, to increase the efficiency of products, buildings, and vehicles, to promote research on and deploy greenhouse gas capture and storage options, and to improve the energy performance of the Federal Government, and for other purpose." It was sponsored by Nick Rahall (D. WV) and cosponsored by 198 other members of Congress, a majority of whom are Democrats. H.R. 6 was introduced on January 12, 2007, passed the House on January 18, 2007 (264-163), passed the Senate June 21, 2007 (65-27), and was signed by the President on December 19, 2007, thus creating...an energy policy. Of course, many Republicans think an energy policy should consist of three words: "Drill, drill, drill."

Allright, perhaps that was not as brief as I had intended. It is very clear that we are approaching an extremely important election. I strongly urge everyone to become familiar with the issues. Too often, we are all too quick to accept what we are told or what we hear. Many people who read letters like this from the newspaper, or watch cable news shows, or listen to talk radio take everything they hear at face value. Liberal and Conservative. This is a horrible tragedy.
We need to perform our patriotic duty as citizens of this great nation and research the candidates and the issues(REALLY research, not just listen to sound bytes and read chain e-mails).

Remember, our future as a country is far too important to trust others to give us the information we need to make this important decision.

-J.D.H.