Election '96: Implications for credit

Despite the political and economic calm that should persist through 1997 and into 1998, the longer-term fortunes of the US economic and financial system are rapidly declining. There are deeply rooted economic inconsistencies that increasingly threaten the future. The US is approaching the 7th year of its current expansion, compared to the average economic recovery life of only 51 months since World War II. However, this current expansion is longer but not stronger than average, which is not surprising, considering the one-half trillion dollars in tax hikes since 1990. The US could realize superior growth without inflation if only the federal, state, and local units of government would embrace the same competitive principles adopted by private sector firms that comprise their tax bases. At a minimum, this means rationalizing and downsizing government staffs and counterproductive regulations, freezing budgets, merging or consolidating overlapping governmental functions, and privatizing what should be left to the competitive market economy so that real job creation occurs.