The past week was one of the most amazing weeks in U. S. economic history. Yet the stock index closed higher at the end of the week than it was at the beginning, reminding us of how volatile the market can be in such times of upheaval. For many of you these events may seem immediately irrelevant, but the failure of investment banks and insurance giants impacts all of us in one way or the other. The Congress will now be asked to pass a government program to correct this crisis, a program that none of us knows what the long term consequences of it all will really be.
It appears to me that Congress would be wise to pass this short bill. And President Bush, who gets credit for almost nothing positive, was wise to let Secretary Paulson handle this crisis, especially since the people who know trust his judgment. In this case Bush led best by staying behind the scenes and listening to his most capable advisor.
Meanwhile the presidential candidates sought to identify the problems and make their points by offering solutions. Both failed miserably so far as I can see. McCain seemed confused and changed his response several times as the week unfolded. Having admitted, months ago, that the economy was not his strong point, Senator McCain opposed the bailout of AIG and then reversed his ground a day later. In addition, his position on business regulation is confusing to most ordinary people. His most memorable line was “the fundamentals of our economy are strong.” Obama used this line in ads and the campaign stump to great effect. McCain then said that what he meant was that “the fundamentals are hardworking Americans.” McCain also admitted “these are very, very difficult times” and then tried to show how he differed from President Bush. Polls say that he is having a hard time winning on this issue.
While McCain was stumbling about for responses and sounding out of touch with real solutions, Obama was still promoting a dubious tax increase on the wealthy which would re-distribute money to those in lower income brackets. This part of his plan is clearly the most controversial. It gains him the ignominious label of “socialist.” I have read Obama’s tax plan from many different angles. He says that he will only raise taxes on those making over $250, 000. This sounds pretty good to most people but it really is nothing more than “old school” Democrat rhetoric and money redistribution. The devil is in the details. It will surely win him votes, especially from people making less than $50,000. (No one making less than $40,000 pays any federal tax, so under Obama’s plan they would get money back, thus the charge that wealth would be redistributed.) The rub is what happens to small businesses that pay taxes on their business through payroll tax? Almost every small business owner I know has deep fears about the Obama plan, and most tell me they would cut staff. This would increase the jobless rate which would have a huge impact on the overall economy. Many, though surely not all, economists believe the last thing that our economy needs right now is a tax increase on anyone, including the wealthy.
In the end, both candidates didn’t sound all that great this week as we road out a huge economic roller coaster. I am reminded, as I have been almost every week during this campaign, that these men do not have the answers. Sometimes I am not sure they even understand what the most important questions are about economics. Neither Barack Obama or John McCain will fix our problems, that much I am sure about. And neither candidate will radically alter the overall direction of our culture. The church would do well to invest far more time, and earnest prayer, in being the church rather than in promoting another election as the major answer to our greatest problems.