Less than two decades ago, this phrase swept Bill Clinton into office, while Papa Bush kept checking his wristwatch to make sure he wouldn’t be late for his dinner reservations.  If there’s one thing the American public understands, it’s that they suffer mightily in a bad economy.  The American dream is about prosperity.  Not freedom, equality or justice, but economic prosperity.  Like it or not, that’s the bedrock of the American experiment.

Reading Martin Neil Baily’s Op-Ed in the  New York Times this morning, having wondered after the last Democratic debate when I waited futilely for someone to offer something beyond the rhetoric of deep concern,  I smell the disengagement of hope for economic stability from our political  reality. 

Baily is “the director of the business initiative at the Brookings Institution, was a chairman of the Council of Economic Advisers under President Bill Clinton,” as described in the Times, and is the harbinger of Democratic theory moving forward.  Does this Op-Ed reflect just Baily’s opinion, or the manipulation of public perception on behalf of the Party in anticipation of failure.  Is he creating the plausible deniablity scenario for their inability to deal with the economy, or perhaps their reluctance to anger that group of Americans who refuse to let go of the war in Iraq/Terrorism mindset developed over the past 7 years?

Why would I think this?  Baily’s Op-Ed begins by creating one of the most ridiculous strawman arguments about the relationship of the war to the economy that I’ve ever seen, and I find it impossible to believe that this man, certainly a smart and accomplished man in his own right, would write such a thing. Baily’s thesis is that the economy can’t be blamed on the war in Iraq.

The economic case for linking the two is that war has reduced the global supply of oil and pushed its price over $100 a barrel, draining consumers’ pocketbooks and adding to inflation. Flush with cash, this argument goes, the oil-producing countries have driven down global interest rates and encouraged over-borrowing in the United States. Meanwhile, Washington has borrowed money to pay for the war, adding to the budget deficit and leaving it with few options to stimulate the economy. The Federal Reserve kept interest rates too low, and for too long, as a way of trying to encourage growth.

That’s not the economic case that I am aware of.  Perhaps that’s the argument being had inside the walls of the Brookings Institution, but not at my kitchen table for sure.

Though not an economist, and never an invitee to the Brookings Institution’s water cooler discussions, I try to pay a little attention to the reasons why we are in such a dire economic slump, which reverberates throughout the economy and will touch all of us (except a handful of billion-dollar-bonus-baby hedge fund managers).  My understanding was that the trillion dollars drained and pledged to the war in Iraq, taken from the pockets of working people in America with explicit permission, has left us higher and drier than we would have been had the mission not been accomplished back in 2003.

Some argued that the fortunes spent on Iraq weren’t lost, since the monies were paid to American service people and corporations like Halliburton.  But it was further noted that the “goods and services” that are associated with the costs, the part of expenditures that expands economic benefit, were lost to America and delivered elsewhere.  Thus, while some portion of the cost is returned to our country through payments to Americans, the entire benefit of work product was lost to us. 

Think of it in this way:  Had we spent the same trillion to build roads and bridges, to teach children to read and cypher, we would not only still have the money circulating through our economy, but also the benefit of the money in better transportation and education.  Instead, we get speeches about how we have to “stay the course” and “freedom isn’t free.” 

It was also my understanding that our government’s need to fund this war was the cause of our running up huge deficits, thereby devaluing the dollar to a degree previously unimagined.  This devaluation resulted in the increasing cost of oil in America.  Baily says that “[t]he high price of oil is largely the result of strong demand, notably from China and India, pressing against a limited supply.”  But the price of oil in China and India is half of what it is here.  I must believe that he knows that, and is betting that we don’t.

So why has Baily manufactured this strawman argument to bolster his point that the war in Iraq is not to blame for our economic crisis?  The most likely reason is that the Democratic Party, and its candidates for high office, the front-runner of which is under siege for his decision not to wear an American flag pin on his lapel, has concluded that it cannot and will not bring the war to a swift conclusion, and now needs a means to argue that it’s really not that consequential to our suffering.

Since I’m no economist, and could be all wet in my views, I hope that better minds than mine will scrutinize this trend and, if I am even partially correct, put the screws to our presidential candidates and not let them create a back door to avoid addressing the real problems facing us. 

The pain of our economy is very real, and strikes me as significantly worse than any I’ve seen in my lifetime.  I doubt someone will “discover” the internet again to provide the magic bullet that will lift us out unexpectedly.  There are more problems coming down the pike that no one is talking about, such as the aging of the baby boomers (think excess housing, health care, tax loss and social security).  There a lot of problems here, more than many people have yet to realize.

Are they now pulling the war in Iraq out of the mix?