THE BLOG
10/09/2016 09:06 pm ET

It's Still the Economy, Stupid!

The silence about the economy in this political season is deafening. Yes, both candidates have made broad promises related to the economy. But details are skimpy - and there seems to be very little thought about the unintended consequences of many of those promises on both sides.

It was not that many election cycles ago that James Carville coined the mantra: "It's the economy, stupid." There's no doubt that today's Presidential candidates are appealing to economic issues. But instead of offering real solutions, they seem to be engaging in a war to attract uninformed emotions instead of practical financial plans.

Here are five economic issues that the candidates should be pressured to answer - not with a broad comment, but with a recognition that their proposed "solutions" have very real consequences.

1. Social Security and Medicare. These are government "entitlements" - and the benefits have been promised and earned by today's seniors who are counting on them. But at what point do we change those expectations so the programs remain solvent for the next generation, currently paying into them?

Absent sensible reforms in either "contributions" or retirement age, or means testing, today's 34 year old workers, and those following behind them, will get only about 75 percent of what they have been promised during their working years.

How will the candidates fix that?

2. Health insurance. More Americans now have access to health insurance than ever before - a definite social benefit. Many are using it for preventive care, which should save money in the long run. But the program was based not only on government subsidies to lower income people, but on government reimbursements to insurers that kept premiums affordable. But those government subsidies to insurers haven't been enough to cover the added cost of all the new policyholders. Many money-losing insurers have dropped out of the program. Government can't force insurers to provide insured care at a loss.

How will the candidates fix that?

3. Trade and Imports. Both candidates talk as if trade were a one-way street, with jobs flowing out of America. They seem to forget that Americans benefit from cheap goods made overseas - everything from sneakers and sheets to electronics. If trade is punished with tariffs, the American cost-of-living will rise sharply. That means working people will pay more for everyday purchases - and consumer spending (the heart of the economy) will slow, causing a recession.

How will the candidates fix that?

4. Cost of College. Students have accumulated over $1 trillion of expensive college debt, so it is appealing to think that college should be free, just like a public high school education. But who really pays for a free college education? Every dollar the government spends must come from taxpayers - or else it must be "printed", devaluing the dollars of people who saved.

Even worse, what are the candidates proposing to do about the existing student loan debt? Should it be wiped away, adding to our nearly $20 trillion in national debt? What kind of lesson does that send to all those who have worked for years to pay down their debt?

How will the candidates fix that?

5. Tax Cuts and Government Spending. It's appealing to think that government can both cut taxes and spend more on everything from infrastructure to defense -- at the same time.>>. It's certainly possible that tax cuts on business would trigger more economic growth and jobs - ultimately bringing the government more tax revenues. But combining tax cuts with more immediate government spending would bring Federal budget chaos.

On the other hand, an immediate tax increase could bring in revenue for a while - until the tax lawyers and accountants figure a way around it. But a tax increase could damage the goal of future economic growth.

How will the candidates fix that?

Without a serious discussion or debate of these issues, no matter who is elected the stock market will face its most dreaded enemy - uncertainty.

As a result, when someone asks me - and they do, all the time - which candidate would be "better for the stock market," I respond in despair. I just don't know. And that's The Savage Truth.

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