As many economists are now predicting a 2003 rebound of the U.S. economy, this author, who is neither an economist nor has an MBA, is predicting there will be no such economic recovery in 2003. Absent these sought-after academic honors - as former Fidelity Magellan Fund manager Peter Lynch once said about the success of a friend that never went to business school - "imagine all the lessons he never had to unlearn."
Although war is traditionally good for the U.S. economy, it won't be for this economy. What makes this economy different? The surpluses of the 1990's, once predicted to continue forever, have turned into solid deficits. The consumer is tapped out, as both consumer and corporate bankruptcies are at an all-time high. Without adequate consumer spending, American businesses won't be able to continue to increase spending on research and development to create demand for better products and future consumer spending.
Robust increases averaging in the amount of 10% businesses funneled into research and development in the 1990's are being severely limited today. Many states are now admitting to huge post-election budget deficits, and Washington won't be able to lend much of a hand since national deficits are also rising, even without calls for more tax cuts. Jim Dyer, Republican staff director of the House Appropriations Committee, says "There's no pot of gold we have to pay for all the education and social programs people want."
Even a successful war in Iraq will draw focus away from domestic needs ranging from the war on terrorism at home to Medicare, education, economic stimulus and benefits for the increasing mass of unemployed Americans. Seemingly to avoid economic embarrassment, on December 24th, the U.S. Labor Department's gift to the American people was to no longer track the mass shuttering of American manufacturing facilities.
America's policy in Iraq and Afghanistan after the seemingly inevitable war, is likely to keep the U.S. Congress and President focused on international, and not domestic, objectives. America may eventually bite off more than most Americans are willing to chew.
Republican Jim Dyer says that $34 billion in homeland security spending is in jeopardy unless eleven domestic spending bills, which many contend should have been taken care of last October, are properly addressed. Among these domestic spending bills are benefits for 800,000 jobless Americans.
Unfortunately, America will not likely see an economic rebound until congress and the president has the courage to secure the American market for the American producer, and grant preferential treatment for domestic producers rather than foreign producers, whether America is at war or at peace.