Thursday’s Stock Market drop of more than 500 points was a shock to anyone with an investment portfolio, which includes the majority of Americans. But it may also be a blessing in disguise. It might just serve as a wake up call to those who still do not appreciate the extent of the nation’s financial predicament.
Because the unfortunate reality is that in spite of all the discussions of our dangerously soaring debt and out of control spending, a fairly large part of the populace doesn’t really comprehend the magnitude of the problem. Some don’t even know the difference between “debt” and “deficit” – they use the two words interchangeably. In addition, I talk to people everyday who had no idea that the Federal government borrows 40% of what it spends every month.
But a stock market plunge that wipes out all of the gains over the past year is likely to get the attention of anyone not living in a cave. Whether the crash is a momentary dip or the signal of a longer term trend remains to be seen, but such a dramatic drop surely indicates a lack of confidence in the economic policies of the current administration. Investors know that raising the “debt ceiling” is not the answer. Neither is printing more money – “quantitative easing” as it is called – that merely creates inflation, devaluing everyone’s dollars.
Business owners large and small are deeply concerned. Entrepreneurs see no end to the ever-growing mountain of regulations that have strangled our economy for decades. They view Obama and the Democrats as more concerned about Spotted Owls and Snail Darters than they are about the thousands of jobs that have been lost.
The EPA has been a particularly egregious violator of private property rights. It has become a virtual super-legislature, creating laws without having to bother with the pesky business of having our elected representatives actually vote on them. The recent EPA edict that CO2 is now to be considered a “pollutant” is a good example.
Carbon dioxide is not a pollutant – it is an environmental component that is vital to plant growth, and thus essential to all life on earth. But beyond that, when an unelected handful of government bureaucrats can arbitrarily regulate (and in effect, tax) a natural byproduct of virtually all energy consumption, it portends drastically higher energy prices. Which will not only lead to higher costs to heat or cool our homes and businesses, but painfully higher prices for every product we buy.
Then there are the anti-business tax policies that have been the hallmark of the Democratic Party since at least the 1960s – business owners are nervous about what to expect next. Obama has made no secret of his desire to “spread the wealth” – and anyone who owns a business, or is contemplating starting one, is hesitant to invest their money when it may be confiscated by some new tax. So they sit on the sidelines.
Private business is the engine of the American economy. We cannot survive as a nation if we continue to attack businesses with excessive regulations and high taxes. We must repeal the utterly pointless and destructive regulations that do nothing for the public while simultaneously inflating prices. We should reduce, or better yet, eliminate the capital gains tax.
Even more importantly, we simply cannot afford to continue the bloated nanny state that we have become. We can’t keep saying “yes” to every demand for a government handout – we don’t have the money. We must reduce spending, and drastically. And that means real cuts – not the almost miniscule “reductions in the rate of growth” that the recent “debt ceiling debate” produced.
We should also cut Federal income taxes, especially the top rates that affect small business owners – ideally, states would do the same. Tax cuts are the only proven way to get ourselves on a path that will allow the private sector economy to grow, and eventually pull us out of debt.
So the one silver lining in the Stock Market cloud might be that if stock prices continues to fall, or even merely stagnate, it may send a strong enough signal to both Congress and the American people that it is time to take serious, truly effective action.
Time will tell.