GOP Candidates: Sharpening the Knife

When Ronald Reagan ran for President in 1980, it was said of him that he was not the “sharpest knife in the drawer.” The old joke went that in his role in the 1951 role in Bedtime for Bonzo, the chimp that played Bonzo was smarter than the presidential hopeful.

It’s true that President Reagan, for all his charm, may not have been a rocket scientist. However, what he did have – and what many politicians today lack – were defined morals, principles, and ethics. More importantly, he relied on those assets to guide him through many troubling times as President.

In 1981 when Reagan took office this country was in dire straits economically. Stagflation that resulted from Jimmy Carter’s pursuit of altruistic ideals had led to high unemployment, an energy crisis that culminated in gas lines, and awful prospects for future economic growth. Sound familiar?

Among Reagan’s actions as President that re-energized this country economically were tax cuts, deregulation, and interest rate hikes to kill inflation. All things considered, these policies worked phenomenally well, and the US entered a 20-year period of growth led by a manufacturing resurgence.



Many of those same policy shifts would go a long way to correct today’s economic climate, but do not seem to be the mantra of the Obama White House – which is beginning to look more and more like Jimmy_Carter2.0.

Today there are a number of additional policies that could be instituted to create some real economic growth in this country and get more Americans back to work. For instance, the Federal Reserve ought to stop paying interest on excess bank reserves held in the Federal Reserve System. As things stand now, banks can borrow money from the Fed, deposit that money back with the Fed, and actually make money on the spread.

Come to think of it, the Fed shouldn’t only stop paying interest on excess reserves, but charge a holding fee on those same excess reserves. If banks aren’t going to lend money to fuel growth, they obviously don’t need to borrow it in the first place.

Want to see a real political shift in this country? Let’s make it illegal for anything to be withheld from an employee’s paycheck – that means taxes, employee contributions to health benefits, even union dues. Imagine how quickly union membership would fall off, which would encourage manufacturing. Think further about the uproar that would result over taxes if Americans were forced to actively adhere to the onerous cost of financing America’s public sector. Government spending would be cut in half in a matter of weeks.

These are just a few examples of policies that would go a long way to right this country’s course. There are certainly more ideas floating around, some of which are undoubtedly valuable.

However, it’s important for Republican candidates – and voting Americans – to understand that it isn’t necessary for elected officials to know all of this. What IS important is that those officials have strong morals and values. Those who do will tend to surround themselves with the right people; people who have similar principles and DO understand economics, foreign policy, or other areas that fall within the President’s purview.

Conversely, those candidates whose principles are defined by pollsters tend to have infinitely less intestinal fortitude when it comes to decision making. Obama is a fine example of someone who has surrounded himself with all the wrong people.

Consider the debt ceiling debate currently facing Washington. This is a surprisingly simple issue. When the government takes on debt there are only two ways to resolve it: pay it off, or default. Though a startlingly simple problem, it has become convoluted by talking heads in Washington who speak in circles, making every possible effort to confuse Americans.

This and other issues have made it clear that while Obama may be one of the least intelligent people in whatever room he enters, he lacks the humility to admit his ignorance. Instead he favors his image as god-king; a transgression that has served only to worsen the plight of the American people, but a lesson that should be learned by every Republican hopeful in 2012.

Dock David Treece is a discretionary money manager with Treece Investment Advisory Corp (www.TreeceInvestments.com) and is licensed with FINRA through Treece Financial Services Corp. He has appeared on CNBC and numerous radio programs, and also serves as editor of financial news site Green Faucet (www.GreenFaucet.com). The above information is the express opinion of Dock David Treece and should not be construed as investment advice or used without outside verification.

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