On the plane ride home from my recent spring training baseball trip, and while discussing the prospective presidential candidacy of Republican contender Mitt Romney, my baseball loving, left-leaning travel companion noted wryly, “I am concerned about his compassion.” As he said it, I recalled that just a few weeks earlier, another friend who is also a self-styled and proud liberal democrat made a similar proclamation – “I don’t trust the republicans to be compassionate” (she has access to these blogs and will recognize this). These observations may not be without merit for Romney as it relates to the interpretation given to one of his campaign trail comments about liking to be able to fire people who provide services to him that do not meet his expectations (does he like firing people or does he like knowing that he has a choice of firing those who do not fulfill his expectations?). Is this an appropriate generalization to apply to all Republican candidates? In like regard, should Republicans try to paint all Democratic candidates with the same derogatory, broad brush phrase, “tax and spend liberals?”
Back to our conversation, I said to my friend, “Would you agree that Jimmy Carter was one of the most ‘visibly compassionate’ of presidents in our generation?” He agreed. I then said, “Wasn’t he also one of the most inept?” Again, he agreed (he receives my blogs also, and if he contests any recollection of our conversation, I will publish his comments).
Before going any further, and also recognizing that this is a highly charged, emotional topic that will certainly stir passions in readers, I want to point out why this is important in investment circles. This country is going to have a “referendum vote” in November of this year with a choice as to how the country’s intractable budget deficit is going to be resolved. The solution is going to involve some combination of higher taxes and reduced spending, but the degree of each is going to be decided by who is elected president. The choice will have repercussions on capital markets, so it is important to follow developments.
Going back to Jimmy Carter, it is worth noting that this country suffered materially during his term in office from an economic standpoint. The so called misery index, a combination of inflation and unemployment, hit all-time highs during his presidency. Did his “compassion” therefore serve his constituents well? You be the judge.
On the other hand, democratic President Bill Clinton, “ended welfare as we know it” when he fulfilled his 1992 campaign process by signing the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. Interestingly, if this decidedly non-compassionate reform objective was raised today by a republican candidate, he or she would be vilified by the press for the clear lack of “compassion.” Just consider Wisconsin Republican Representative Paul Ryan’s recent attempt to reform Medicare (which was supported by a key democrat congressman) and the derision with which his efforts were met with in the popular press.
The upshot? It is time to put rhetoric and codespeak aside and begin thinking clearly about the problems that confront our country and the solutions best suited to have the most positive and long lasting contributions to fiscal stability and prosperity. The capital markets will swiftly judge the actions.
All comments and questions are welcomed.
Robert M. Bilkie Jr., CFA