A viewer asked this question on 5/14/2000:
I am noticing that unemployment is at an all time low, house prices in CA are at a median price of $250,000. I am wondering how long until the next recession? Until house prices plummet, and job market dries up? And how will this effect politics? What party will weather the storm, Social Service Big Government Democrats or Small Government "Stay out of my business" Republicans?
JesseGordon gave this response on 5/14/2000:
My answer in terms of economics and real estate is under your similar question in the "Political elections" section at http://www1.askme.com/ViewAnswer.asp?VID=1006055 . Here I'll focus on the political effects.
Presumably the economy will stay strong until the November elections, which means there won't be an effect until we're into the next administration and the next Congress. So people's voting decisions will be made in good economic times, or perhaps anticipating a less healthy economy ahead. Basically, the Democrats benefit from that, because Clinton & Gore more or less get credit for maintaining a healthy economy (although Alan Greenspan usually gets the most credit).
But voters aren't naive, and we recognize that we should vote for Congress and the President based on how they will handle economic problems that are sure to come up in the future. In other words, many people will vote based on the candidates' plans for the future, with a less rosy economy in mind.
The issue hence becomes: What should we do with the budget surplus now, in order to prepare for a less rosy future? The answer is more or less in the terms you state it; in summary: Al Gore wants to use the budget surplus to pay off the national debt & ensure the Social Security Trust Fund. George Bush wants to use the budget surplus to cut taxes.
Bush's stance is that we should get the money out of Washington while the gettin' is good. I.e., we don't need the tax revenue this year, so cut taxes and let people decide what to do with the money. Gore says that's "irresponsible" because it spends the entire surplus without much "benefit."
Gore says the "responsible" thing to do is pay off the debt (which would decrease interest rates for everyone, and hence limit inflation in the future), and shore up Social Security and Medicare (which insures millions of people's retirements). Bush calls that "big government."
I don't think the economy will change much before November, but that difference between Gore & Bush will certainly be a major issue in the campaign, as well as in Congressional and Senate races.
As to the long-term "weathering the storm," it depends on your political beliefs (as usual!). Gore is pretty conservative when it comes to economics -- he's proposing doing what most Americans are doing anyway (paying off debt and saving for retirement while the economy is good). Bush is proposing removing those functions from government, at least in part. The net result, regardless of which of them wins, will undoubtedly be a compromise between the two stances: We'll get a smaller tax break than Bush proposes; we'll pay off some of the debt; we'll shore up some of the Trust Fund. And this debate will be continued in four years -- that's how politics works.
In other words, I don't think that either party will live or die based on the economy. If the Republican party falters, it will be because the religious right decides that the GOP is not enough of a "big tent" for their beliefs, and splits off into a new pro-life, strong-on-morality party. If the Democratic party falters, it will be because the voters are tired of the Clinton-era scandals (which will only happen if Gore's scandals become big enough to lose him the election). Barring those two extremes (both of which I think are plausible but unlikely), BOTH parties will "weather the storm", and the economic debate will go on indefinitely. And that's good for the public, because while there's a vigorous debate like that, it means we get a reasonable level of taxes and a wise use of revenue.
You can read more on the budget issues and the presidential candidates' stances at http://www.issues2000.org/Budget_&_Economy.htm
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