Uncertainty? Count on it

“Uncertainty” is the buzzword of this election season. Here are some examples from The Spokesman-Review’s election guide:

“First of all we need to create some economic certainty; the biggest concern I hear right now is uncertainty. (Business owners say) they are not expanding, not investing, because of uncertainty over federal spending and the concern of how we’re going to pay for things like health care reform, cap and trade.” – U.S. Rep. Cathy McMorris Rodgers

“… (C)apital is sitting on the sidelines because of uncertainty over taxes, health care and fiscal policy.” – U.S. Senate candidate Paul Akers

“It’s the degree of uncertainty from the federal level that’s bothering business owners.” – U.S. Senate candidate Dino Rossi

It is astonishing how cataclysmic events can throttle the economy and then quickly be discarded as causes of lingering fear. In April 2008, the unemployment rate was 4.8 percent; eight months later it was 7.2 percent. On May, 2, 2008, the Dow Jones industrial average hit 13,058; on Oct. 15 of that year it had plunged to 8,577.

What happened? Did President George W. Bush announce plans to overhaul the nation’s health care system? Was he pushing a cap-and-trade bill to deal with global warming? Did Congress reform financial rules for Wall Street and banks (if only)? Did federal spending suddenly rise?

No, to all of the above.

The era of easy credit and cowboy investment strategies came crashing down, causing panic on Wall Street and throughout the world. The nation stood on the precipice of an economic depression. When it was over, trillions of dollars exited the economy.

You remember that, right? Well, guess what? It caused uncertainty. Still does.

A recent survey by the National Federation of Independent Businesses shows that the chief concern of business owners, by a large margin, is declining sales. Oddly, campaigning politicians can’t seem to find the business owners who said they need their former customers to return. What’s keeping them away isn’t the passage of the health care law or cap-and-trade debates or the financial regulations imposed on formerly high-flying bankers.

Shoppers need money. Those who have it are uncertain that spending it is wise. Those are very real economic concerns.

The revisionism of election campaigns pins most of the blame for the current malaise on the government’s response to that calamity. Add the subsequent political agenda of the Democrats to the mix and – voila! – there are your uncertainty villains.

Does this sound right? Think of another calamity. On Sept. 11, 2001, terrorists attacked America, putting the economy into a tailspin. In the aftermath, no significant “anti-business” regulations were passed. The first round of Bush tax cuts kicked in.

Uncertainty arose anyway. Despite the president’s cheerleading, shopping waned. Business investment declined and was slow to recover. The jobless rate rose for two years. At the end of 2002, the Dow Jones average was still below its pre-attack level. All of this occurred despite the fact that most business leaders had the president and the Congress they wanted.

Democracy in action. The expiration of the Bush tax cuts is also being painted as a source of uncertainty. It’s quite a trick to blame this on those who want to stick to the deal. The architects of the tax cuts affixed an expiration date because of valid concerns about future deficits, so proponents of an extension can’t claim to be surprised. Perhaps they were certain that the cuts would be extended and the deficit ignored. OK, but any uncertainty is self-inflicted.

It’s the same with cap-and-trade legislation or any other solution that puts a price on greenhouse gas emissions. Politicians can fight that, but it only causes more uncertainty about what to do about global warming. Kicking the problem down the road, which is what has happened this year, doesn’t produce certitude. Those who don’t think there is a problem to begin with are also injecting uncertainty and delaying the inevitable changes.

With health care, many rules remain to be written and the law doesn’t take full effect until 2014. But lawsuits over its constitutionality or talk of outright or partial repeal create even more confusion.

In a representative democracy, power moves back and forth. Taxes, laws and regulations are in a constant state of flux. Politicians can promise certainty, but they’ll never deliver it.