I have written on this blog and in commentaries over the past month that, despite the Bush and Obama administrations making nearly every possible wrong economic move, there are are lots of signs the recovery is around the corner. But every hint of recovery could be crushed easily. The House cap and trade bill, the current version of the healthcare bill, the end of the Bush tax cuts, a second stimulus—any of those could change the direction of the economy.
Not only has the White House been pushing all of those detrimental policies, there is a lack of willingness to make the right moves to speed up the recovery process. Cuts in spending and taxes aside, Treasury could work faster with the Fed to end the various facilities holding up Wall Street. And further more, the president could urge Congress to move forward on more free trade deals.
The Wall Street Journal has a Review and Outlook on a new free trade deal about to be reached between the EU and South Korea… and the lack of similar American activity. It is paragraphs like this one that suck away any hope I develop for a sustained recovery in the near future:
South Korea has made negotiating trade deals a centerpiece of its foreign and economic policy. The U.S. FTA, signed in 2007 but still not ratified, is one example. Negotiations are planned or under way with a long list of countries, including India, Canada and Australia. On the EU side, the Commission is vigorously defending the pact against domestic critics, including the European auto industry. EU approval isn’t a sure thing, but Swedish Prime Minister Fredrik Reinfeldt is aiming to finish it by December.
When Sweden (currently head of the EU rotating presidency) understands the value of free trade better than America does, then there is a problem. Do we want budget solvency or economic complacency?