The senators will solve our problems...

I wrote this article for the BYU Political review during the primary elections. I think the ideas apply just as much today. Would it be a different race with Mitt Romney in the mix? With the economy the way it is right now, Romney could have been the Republican's remedy. Instead, he got Huckabee'd out of the nomination, and now the GOP has more McCain (than they're) Able.

In my last article for The Political Review, I criticized our generation for not caring (or, seemingly not caring) about government programs that are destined to fail when we need them the most. For the record, our Social Security funds are still on the path to insolvency, with the most recent estimates giving us until 2041 before it runs out of money. The Concord Coalition, a fiscal watchdog group, estimates a $72.3 trillion dollar Social Security and Medicare shortfall through 2080.

If observing government spending has taught me nothing more, and it certainly has, it’s this: When politicians and bureaucrats try their hand at economic programs and solutions, America (and hence, the American taxpayers), invariably end up with a mountain full of debt on molehills of promises.

In case you’ve been spending the last few months underwater, allow me to recap a few points of economic news that you may have missed. Our country is currently facing a credit crisis that threatens economic influenza. Most economists now agree that we are in a recession. Some say a recession is the least of our worries; we should be most concerned about avoiding The Great Depression II.

It turns out that risky subprime loans were just that—risky— both to investors and borrowers. Many people bet on a housing market that couldn’t substantiate the price appreciation of the past booming five years. Investment banks and hedge funds put risky (but high returning) loans on their balance sheets in the form of securitized mortgages, which, in layman’s term, is basically a “diversified” pool of mortgages— Jim Bob’s cabin in Idaho, Uncle Victor’s condo in Florida, and thousands like it—that are sliced, divided, packaged together, and sold on an exchange market.

Now millions of people are foreclosing on homes they couldn’t afford, banks are writing off billions of dollars worth of assets they shouldn’t have purchased, and the credit and housing markets have slowed to a standstill. The dollar has weakened, oil prices have skyrocketed, and Americans are turning to credit cards to meet their obligations.

What is the solution to this mess? The Democratic frontrunners would have you believe that it is more government intervention. Hillary Clinton and Barrack Obama would provide $30 billion to help buy foreclosed properties and aid financially stressed borrowers. Hillary would freeze interest rate resets on subprime loans for five years, and allow the Federal Housing Administration to buy mortgages in which the borrowers owe more than their homes are worth. Obama would give income-tax credits to middle class families, and provide $10 billion dollars to help families modify a home loan or sell a house. Obama, along with Democratic lawmakers in Congress, also wants tougher government regulation on the banking industry.

John McCain believes that tightening regulation would make the U.S. capital market less competitive in a global economy (the Sarbanes-Oxley effect—companies in an international competitive marketplace will naturally try to avoid expensive compliance procedures). He would remove tax, accounting and regulatory hurdles for banks and other companies to raise capital. McCain also believes that, philosophically, taxpayers should not be forced to bail out investors who acted irresponsibly.

So, which senator’s plan do you support? Before you answer, consider the irony that these senators are attempting to solve our economic problems that resulted from too much debt and not enough long-run financial foresight.

With a (projected) $500 billion dollar 2008 Federal Budget deficit, doomed-to-fail Social Security and Medicare programs, and little, if any, real world financial experience, are these Senators the people we want at the helm of our economic future?

Looks like we have little choice now. Let’s raise a (borrowed, most likely) glass and give toast to our future economic prospects. Mitt Romney doesn’t look so bad anymore, does he, America?