Higher oil prices. A declining dollar. Rising interest rates. The real estate bubble. Spiraling healthcare costs. And the Bush budget deficit.
Many pundits believe these market factors will lead our country into a round of inflation unseen since President Carter was in office. Most interesting is the growing belief in the Ivory Towers of the academic world and in liberal – now known as “progressive” - publications that President’s Bush’s tax cuts and deficit spending are leading the way to inflation. I do not agree.
Certainly rising oil prices caused by the current world economic boom – especially in China and the United States – will have a latent effect in causing rising prices as businesses seek to recoup their added energy costs. Those higher oil prices will, however, provide the usual cyclical incentives for domestic oil producers and alternative fuel suppliers to ramp up their explorations and efforts until market equilibrium is reached and bearish oil market speculation again drives down the price of oil to a sustainable level. And if Congress finally has the foresight to pass President Bush’s energy plan, I believe those energy costs will stabilize at a faster pace.
Recent minute increases in interest rates have been made by the Federal Reserve to begin slowing down our economy to address its fast growth and the resulting higher demand for products and services which historically and theoretically do cause rising prices and inflation. However, I have confidence that Alan Greenspan - who has been involved in economic policy making since the early days of President Nixon’s efforts to control the inflation present in the early ‘70s - and the rest of the Bush economic team will not allow inflation to have a negative impact on our economy and way of life.
As for the Bush tax cuts and the current budget deficit, I frankly blame Congress more for their out of control spending then I do President Bush for his lack of courage and leadership in reining in their pork barrel spending. My respect for him would grow immensely if he would spend his widely publicized “political capital” on getting “line item veto” legislation passed in Congress. And certainly nobody can understate the impact on the federal budget deficit from the increased costs of homeland security as we fight the war on terrorism in the United States and around the world.
Do I like the current budget deficits? Absolutely not. Would I be in favor of taking more of the people’s money to close that budget gap? Absolutely not. I believe our nation’s strong economy which has been stimulated, in part, by President Bush’s commendable tax cuts, will eventually generate the tax receipts in the years to come to balance the budget and possibly create a surplus similar to what is happening here in Florida thanks to Governor Bush’s economic plan which has included tax cuts for all and wise use of our state’s tax revenues.
Frankly, I believe that liberals would really rather run a budget deficit and fund their many social and welfare projects then allow a budget surplus to grow enough to eventually be given back to the tax payers with additional tax cuts. Just look at the choices made in California over the past ten years from the added tax revenues which resulted from the stock market bubble. Instead of returning those surplus dollars to their taxpayers, that state increased their social program spending and now cannot follow the lead of their Governor in trimming those expenditures to bring fiscal sanity back to their state. Let’s hope that President Bush makes sure that Congress does not make the same mistake on the federal level in continuing to grow its expenditures while the deficit exists.
