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From economics to elections, looking back and looking ahead

Tim Penny
Tim Penny

History is replete with surprise events and developments that were unforeseen and unpredicted at the start of a new year. But recent trends do give some indication of what the coming year may bring. As I reflect on 2011, I have invented several words to describe the year past — and I predict these words will also define the year to come.

Econundrum: Our economy struggles to revive — as both economists and politicians struggle to understand what (if anything) can be done about it. Job creation is meager. While averaging over 100,000 jobs per month, the economy is not generating enough job growth to appreciably reduce the historically high unemployment rate (now 8.6 percent). Consumers seem mostly focused on restoring their own balance sheet — which is good for them and the economy long-term, but is slowing the near-term recovery. Housing values are depressed, housing starts are nearly nonexistent, and millions of homeowners are "underwater," owing more than the current value of their homes. In all, it is hard to find any good economic news. President Barack Obama’s stimulus and subsequent tax cuts may have made the economic downturn "less bad" — though that assertion is, naturally, disputed by Republicans. However, these stimulus measures have greatly increased our national debt. This escalating debt — also fueled by the retirement costs of the baby boom generation — could result in another economic crisis. A conundrum? To be sure. And it is one that will dominate public discourse in the coming election year.

Romnot: There is an apparent "anybody but Romney" attitude within Republican ranks. It has been on display in recent months as dubious Republicans lurched from Rep. Michele Bachmann to Gov. Rick Perry to Herman Cain to Newt Gingrich in search of a candidate more reliably conservative than Mitt Romney. As we approach the Iowa caucus and begin the 2012 election cycle, Romney, so far, seems to have survived each insurgency. The question "if not Romney, then who?" may lead Republican voters to settle for the former Massachusetts governor. Once he secures the Republican nomination, can Romney unite and then excite the Republican base? More important, can he simultaneously reach out to undecided and independent voters who ultimately determine elections? In order to do so, Romney will clearly need to convince voters that he (and not President Obama) has the leadership skill and the right prescription to cure our econundrum.

Eurosfear: The risk to Europe's (and the world's) financial structure posed by the PIIGS (Portugal, Italy, Ireland, Greece and Spain) is "clear and present." The debt in these countries is at or beyond 100 percent of their respective economies. Painful restructuring is required. The United States can marginally influence, but not control, what our European allies will do to address the growing debt crisis on the continent. With or without bold action, many economists now predict that Europe will fall into recession in 2012 — and the U.S. economy will feel the effects.

Arabellion: A series of revolts against authoritarian rule in the Arab world gives hope, while at the same time posing the challenge of instituting democratic reforms. From Tunisia to Libya to Yemen and Egypt — change is under way. Elections throughout the region may not — in the near-term — produce governments committed to personal and economic freedom. The relationship of the United States with the newly installed governments may, in fact, be more tenuous and uncertain than with the predecessor governments. Over the long haul, driven by the aspirations of a younger generation, democratic reforms will ultimately prevail.  But regional unrest will continue into 2012 and beyond. Oh, did I forget to mention Iraq, Afghanistan, Syria and Iran?

Politicks: It is increasingly obvious that interest-group politics (on both the right and the left) is sucking the life blood (like parasitic ticks) out of our democracy. Special interests are a central cause of the polarization and gridlock that permeate our political system. Interest groups dominate the political process either through activist pressures or money or both. They are narrowing the political debate, punishing political moderates, and driving both of the major parties further away from the mainstream. These groups view compromise as a dirty word. Unfortunately, they will be emboldened this election year by the Citizens United Supreme Court ruling, which now enables unions and corporations to spend freely to influence our politics. And, sadly, most of those expenditures will be ugly and nasty — further dividing our nation at a time when we need to come together to address serious challenges both at home and abroad.

Econumdrum, Romnot, Eurosfear, Arabellion, Politicks. In my view, these are the terms and factors that describe the world we lived through in 2011 and must look forward to — with a combination of apprehension and determination — in 2012. Happy New Year?    

Former U.S. Rep. Tim Penny is the president and CEO of the Southern Minnesota Initiative Foundation.

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