In a topsy-turvy economic climate, the headlines remain constantly optimistic: "U.S. Poised for Robust Growth" (April 15), "Greenspan Optimistic on Economy" (July 1), and "Treasury Chief Stays Upbeat as GDP Slows" (August 14). By now the message is clear: Federal officials feel optimistic about an imminent recovery of the economy.
Unfortunately, you canít always believe everything you read. While itís laudable for policy-makers to show confidence, sheer repetition of the message has rendered it ineffective. What Corporate America, capital markets, labor markets, and the entrepreneurial sector need is action, not talk. More feel-good phrases will only produce mocking headlines such as "Pep Rally in Waco" (on the White House economic forum) and "Stock Market Swoon Backfiring."
Admittedly, the government has already played its favorite action cards. With the federal funds interest rate at 1.75 percent, the Federal Reserve canít go much lower. Further drops would provide little stimulus, especially because at these levels a change in the official rate doesnít translate into lower rates at commercial banks. On the taxation front, last yearís tax cut and a looming federal deficit donít make lower taxes likely in the near term.
But even without Fed action or tax cuts, creative economic policy-makers have options in the areas of federal procurement, research funding, urban development, and transportation construction. These arenít "make-work" projects designed to bump up a few economic indicators before the next election. They represent legitimate investments in the nationís infrastructure, resulting in improved efficiency and productivity. Moreover, if properly deployed, these actions could have an impact on inner-city neighborhoods and the minority business communities Ė two areas with high growth potential.
Instead, the federal bureaucracy continues to fixate on the war against terrorism, almost to the exclusion of comparable efforts to open opportunities in the domestic economy. Only in the areas of international trade promotion and the defense industry have officials taken the initiative.
Poll results indicate a widening disconnect between the publicís economic concerns and the governmentís terrorism emphasis. The August Gallup poll showed 32 percent of respondents thinking the economy is getting better, down from 42 percent a month earlier and 47 percent in June. A Public Opinion Strategies poll in July found that 52 percent of voters believe the country is headed in the wrong direction.
Unless the government takes prudent action Ė or the economy somehow rights itself Ė the November election could occasion some leadership turnover in Congress. I can see the headline now: "Ignored Economy Gets Even at Polls."
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