Independence Day is a time to celebrate who and what we are, to enjoy some good company, a parade or a ball game, and maybe even a hot dog and something cool to go with it.
It is also a time to recognize our debt to those 56 courageous men who signed the Declaration of Independence and pledg
ed their lives, their fortunes and their sacred honor to forge this country. They had confidence: in themselves, in each other and in what this country would be.
Our economy is built on confidence, too — the belief that fundamental economic relationships will remain unchanged. Individuals an
d businesses build their lives and work on the belief that contracts will be fulfilled or enforced, ownership rights will be respected, debts will be paid, promises will be kept and money will not gain or lose its value overnight.
The collapse of our financial institutions that began in 2007 shook public confidence. And while the federal government’s bailout of these institutions mended their balance sheets, it didn’t do much to restore our confidence. The numbers were just too big, too intimidating and ultimately too unreal.
To a lot of people the numbers remain unreal, and the country’s financial structure looks as fragile now as it was before the thud. But since we can’t really do much about it, life goes on. And with life’s demands and the passage of time, bit by bit our confidence gradually returns — in a process encouraged by two of nature’s survival mechanisms: our attention spans and general inability to remember pain.
We are seeing glimmers of renewed confidence in the surprisingly consistent demand for automobiles and, most recently, even a modest uptick in housing sales.
The housing uptick seen in the May data was barely a glimmer, weaker than last spring’s increase and limited in scope — some major markets like Miami and Chicago are still seeking to touch bottom — but it was the first plus sign we’d seen in the numbers in eight months.
Some economists are predicting an improvement in economic growth for the second half of this year and that is encouraging. We should add to that forecast, though, “if the federal government doesn’t undermine our confidence.”
The work of the Congress doesn’t provide much hope on that score, though. If the members feel any sense of urgency about the deficit-debt problem they have managed to conceal it well.
What they can’t agree upon is a plan to get the deficit under control before it destroys our economy and our country. Supposedly they are close to some sort of deal, but there is little evidence to support that rumor.
There have been some leaks about the direction of the proposed agreement, and if they are at all accurate, we can kiss public confidence goodbye.
Gamblers, police investigators and body language analysts are always looking for what they call a “tell,” an eye movement, a gesture, that indicates whether the speaker is telling the truth, lying, or hiding something.
Body language can be important in interpreting the moves of Congress, but most of us who don’t lurk around Washington, D.C. are mostly limited to interpreting the words they use.
Some Congressional key words have long been known as “tells.” When the word, “bipartisan” is used to promote some legislation, for example, experience has taught us that it really means “Hold on to your wallets.”
Congressional budgets have their own vocabulary and their own “tells.” When a budget or some financial plan, is presented, for example, we often hear the words, “over ten years,” attached to cost reductions. Experience has taught us that it really means that the difficult part will never happen and has been hidden by pushing it out into the future where it can’t hurt anyone politically.
Since the information leaked about the budget deficit agreement so far contained both the “bipartisan” and the “over ten years” language, we are right to be concerned.
Our continued deficit spending keeps adding to the pile of accumulated debt. And the interest it costs to maintain it will devour our budget, our freedom, our confidence and our economy.
It very possibly will devour our country, too. America and the American economy were both built on the same foundation of optimism and confidence that exists nowhere else on this planet. If we deliberately destroy that confidence we risk losing not simply our credit rating but our country itself — something that no attacker has been able to do in 235 years.
We should celebrate this Fourth of July fully and draw some optimism from it. In the past, when things got tough our country has pulled itself together and done the right thing. We haven’t changed all that much.
James McCusker is a Bothell economist, educator and consultant. He also writes a monthly column for the Snohomish County Business Journal.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
