Big oil companies are announcing their earnings for the fourth quarter of 2001, and the news is generally negative. Exxon-Mobil, Sunoco, Amerada-Hess, Kerr-McGee and others all reported losses or sharply lower earnings compared to preceding quarters.
These companies are big boys, and I’m not shedding any tears over any short-term slump they may encounter. But I am waiting to hear if anyone in my state’s congressional delegation comes out for financial assistance to these firms.
It would only be fair. You see, every time gasoline prices increase more than a few cents, Minnesota’s two senators and some Democratic House members are quick to condemn the oil companies for abusing consumers.
I recall terms such as “obscene profits,” “price gouging” and “ruthless profiteering” being thrown around less than a year ago, when gasoline prices, unadjusted for inflation, hit record highs. It’s only been months since Senator Paul Wellstone called for congressional hearings, price controls and an “excess profits” tax on oil companies.
If he and other Midwest populists are that quick to condemn oil companies when fuel prices are high, they should at least spare a little sympathy when prices drop and the oil companies post large losses instead of large gains.
Why don’t any Minnesota or North Dakota senators propose special aid to oil firms now that profits are in the doldrums?
Democrats are not the only of our elected representatives to exhibit a curious rhetorical asymmetry in their public pronouncements.
For the last several years we have all had to listen to Republicans rant about how state budget surpluses were an indication that Minnesotans were “over taxed.” But now that we face a budget shortfall, none of them seem to think that it is the result of “under taxation.” Why not?
Our president confidently stated last week that he sees nothing wrong with running a national budget deficit when the economy is in recession and when our country is in a virtual war. That is true enough, Mr. President, but then you also have to allow for budget surpluses when the economy is doing well. You seemed uncomfortable with that idea immediately after your inauguration.
We ran budget surpluses for fiscal years 1998-2001 after having run nearly 30 years of continuous deficits. Orthodox Keynesian economic theory would have indicated tax increases as the economy boomed. It certainly would not have justified a substantial tax cut, skewed toward the wealthy, that was the Bush administration’s first order of business.
That tax cut, together with increased security spending and continued growth in other programs, means that we will not run a surplus, ignoring Social Security revenues, for most of the rest of this decade, according to projections released this week by the Congressional Budget Office.
Monetary policy receives similarly asymmetric treatment.
An old hand at the Fed’s Board of Governors once told me that in his 30-plus years of experience, at least one member of Congress had criticized the Fed every time it had decided to constrict the money supply and thus raise interest rates. On one occasion in the late 1970s, more than 200 different representatives and senators had issued statements criticizing such Fed action.
There is no record, however, of any member of Congress criticizing the Fed for not raising rates. None has ever issued a stern call for tighter money.
This disparity would not be so stark if monetary policy always was overly tight. But the U.S. Consumer Price Index increased by 400 percent in the 15 years from 1967 to 1982. It was the greatest peacetime inflation in U.S. history and could only have been caused by excessive growth of the money supply.
Democrats, who usually are quicker to criticize the Fed than Republicans, generally present themselves as caring for poor and working families. Most research and experience shows that high inflation hurts low-income households more than wealthy ones. But whenever the Fed tightens, the most liberal wing of the Democratic Party is most vocal in its criticism.
It is easy to take potshots like this at our elected representatives. But it is important to remember that we elected them. Politicians will spout demagogic rhetoric as long as citizens cast votes for demagogues.
I can think of a few recent presidential candidates who avoided shallow rhetoric and told voters things they did not necessarily want to hear. They were Democrat Bill Bradley, Republican Lamar Alexander and Democrat Mike Dukakis. I am still convinced that any of these three would have made a better president than either Bill Clinton or George W. Bush. But none of the three got past the primaries.
Argentine citizens are now paying a stiff price for having succumbed to the sirens of demagogic populists for six decades. Fortunately, no U.S. government has never instituted economic policies as bad as those in Argentina.
But our continued economic well-being depends on a majority of voters being willing and able to look beyond the asymmetric rhetoric that so often wafts toward us.
© 2002 Edward Lotterman
Chanarambie Consulting, Inc.