Alex Schiff: The waiting is the hardest part

BY ALEX SCHIFF

Published March 4, 2010

I’m a shameless policy dork. I love debating the issues that are confronting our society. I’m fascinated by the ideas emanating from the brightest minds of history and the world today. I even can’t resist entering spontaneous arguments with those people on street corners demanding President Barack Obama’s impeachment because — as one passionate little fellow put it — “global warming is politician code for depopulating the world.” And to think of the good ole' ’90’s — when the president was impeached for getting blowjobs from an intern. How silly that episode looks now! I mean seriously, blowjobs? Lame. Obama’s gonna pull the plug on grandma!

But I have a long, complicated and self-abusive love-hate relationship with politics. Following politics this past year has been a lot like watching the 2009 Michigan football team. A new pool of promising players comes in (Democratic takeover of Congress and the White House = Tate Forcier and other talented freshmen), a few early successes give us hope that we can really achieve something this year (Notre Dame = passage of stimulus bill) and then everything implodes and we realize nothing has changed (ending 1-7 = liberal Massachusetts electing Republican Scott Brown to the U.S. Senate right before health care reform is about to be passed).

The legislative process has ground to a sputtering halt. Congress is approaching Michigan Student Assembly levels of impotency — and that’s where I draw the line. After a few early victories for Obama, something happened that made this country border on ungovernable. I think it was right around the time that Republicans realized that a lot of people actually believe the lies they spread about death panels and mandatory abortions. Obama put everything on hold for health care reform, and when health care reform stopped, so did the nation.

I’m not just complaining about partisan gridlock because I live in some Michigan Daily idealist fantasyland where reform is possible with the snap of Obama’s fingers. This is about uncertainty. Right or wrong, Obama has plans to reform the health care, financial and energy-related sectors of the economy that collectively make up about a third of our gross domestic product (17.3 percent, 8.3 percent and 8.8 percent, respectively) based on the 2009, 2006 and 2006 statistics (the latest data available), according to the Centers for Medicare and Medicaid Services, a study by Roubini Global Economics and the U.S. Energy Information Administration respectively. That’s an undeniably revolutionary change. But with Congress acting like a bunch of toddlers arguing over who took who’s boo bear, the outcome of these reforms and, by extension, the long-term fundamental structure of our economy remains mired in profound uncertainty. This uncertainty — not the substance of Obama’s proposals — is damaging any hope for economic recovery.

America is just emerging from an economic downturn that featured an inflation-adjusted 34.2 percent decline in investment spending, according to the Bureau of Economic Analysis. As businesses regain their footing, they are unlikely to resume investment of normal levels amid such gross uncertainty.

Pfizer won’t invest in a new cancer treatment when it doesn’t know the fate of health care reform or how it will ultimately affect the industry. J.P. Morgan won’t even think about giving out loans at a reasonable rate again until they know how financial reform will affect them, so businesses will remain starved of the credit they need to expand their operations and hire more workers. Clean energy companies won’t invest in the technologies of tomorrow when they don’t know if the energy market will continue to impose no price on pollution and greenhouse gas emission.

In short, why would anyone invest in their future when they don’t know what the rules are going to be?

Economies thrive on investment. Any economist will tell you that investment today yields higher growth for tomorrow. But with legislation that has the potential to have so much impact stuck in limbo, businesses are hesitant to invest in new projects and entrepreneurs are unlikely to embark on new initiatives — two principal sources of job growth. In the end, whether you agree with Obama’s proposals or not, markets care a lot more about certainty than they do about the substance of the policies themselves. Passing reform and alleviating the uncertainty afflicting the financial markets will be the best stimulus our economy could ever receive.

Congress, get your act together and pass the reform America voted for when it put the Democrats in control of government. If the American people truly don’t like the ideas that they have put forward, they will vote the Democrats out in favor of people that will repeal their legislation and go in the opposite direction. That’s how democracy works when it’s functioning properly.

Alex Schiff is an assistant editorial page editor. He can be reached at aschiff@umich.edu.