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Discussion: (3 comments)

  1. Max Planck

    And now, the subtle predictive genius of Mr. James Pethokoukis, June 16, 2008:

    1. Roger Ramjet

      I think that you’re actually Paul Krugman, kicking his dog vicariously through your posts here.

  2. Jon Murphy

    I think you do make a good point, here.

    Regardless of who gets elected in November, there will be a recession in late 2013/early 2014.

    If Romney gets elected, we will likely see cuts in government spending.

    If Obama is reelected, there will be higher taxes on everyone and more regulatory burdens on businesses.

    The private sector has been doing well, but it is not nearly strong enough to withstand the negative pressures the above actions will place on the economy. The resulting recession will be mild, as consumers and businesses alike are in better financial positions than they were in 2008.

    There is a silver lining in all this: with a 12-month heads up, you can start preparing now. Try to pay down as much debt as you can. Avoid any long-term purchases (such as a car) if possible. Begin examining your budget and see where you can make cuts (turn the thermostat down a few degrees, cut back on steak, that sort of thing).

    Now, all that being said, I do think one kind of recession is preferable to the other. I think the recession caused by Romney’s government cuts will actually be good in the long run: it will free up resources that can then be put to better use in the private sector, it will reduce government uncertianity in business which can spur hiring, and it may even allow for tax cuts which can support consumption or deleveraging.

    The Obama recession would not be as good. Higher regulatory burdens mean less hiring. The continued expansion of the government will put long-run growth in jeopardy as debt continues to pile-up. Higher taxes will depress consumer spending (thus hurting employment further) and prevent consumers from overcoming their debt.

    I do think Romney’s economic plan, while still terrible, is the lesser of the two evils in the coming election. This election could very well influence US economic growth in this decade. Whoever is elected, I feel bad for the poor sucker who is President in 2018. When the 2018 recession comes, he will be blamed for it despite the fact he (quite likely) had nothing to do with it.

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