Alfonse D'Amato

Our economy: If it’s gonna break, don’t wait to fix it

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It’s easy to get complacent about our nation’s economy right now. We’re in the longest modern-day recovery from a recession. The stock market has soared past 22,000. Unemployment is low. Inflation is at bay, held down largely by low energy prices. Nothing to worry about, right?
Wrong.
Underlying these rosy economic numbers are ominous signs that our leaders in Washington better take note of now, before the country slips into a recession that could be even worse than the last one. Let’s start with the stock market. Maybe, like me, you’ve watched your retirement accounts puff up with comfortable gains, riding the crest of the market upsurge. But dig deeper and the bull market looks like the bears are in hot pursuit.
Let’s take just one example. The Tesla electric-car company is a darling of American investors. On paper, according to its stock, it is the richest car company in America. It briefly surpassed General Motors this year with over $50 billion in stock value, despite the fact that Tesla lost $674 million last year on the 76,000 vehicles it turned out, while GM made a profit of $9.4 billion on the 10 million vehicles it sold in 2016.
Tesla is placing all bets on a midsized, $35,000 electric car that is just now limping into production. But it will compete with GM’s electric Chevy (the Bolt), which will cost less and go farther on a single charge.

How gullible can investors be? Pretty gullible, it turns out. The supposed whiz behind Tesla, Elon Musk, is stretched to the breaking point with debt, not just with his car business, but with his SolarCity solar-panel business, which is also bleeding cash. There’s a nearly $1 billion SolarCity plant sitting practically idle in Buffalo, waiting for a rush of orders to help create a promised 1,400 permanent manufacturing jobs.
The problem is, much cheaper, heavily subsidized, foreign-made solar panels are flooding the U.S. market, and U.S. manufacturers are struggling to compete with the unfair advantage of artificially cheaper imports. Unless the Trump administration can make good on its pledge to level the playing field of such foreign subsidy-distorted import markets, SolarCity could face almost impossible odds of success.
So when supposed gold-plated investments like Tesla and SolarCity start to sound too good to be true, you really have to wonder if we aren’t caught up in a market bubble fueled by what Alan Greenspan once called “irrational exuberance.” Or maybe suicidal exuberance.
In addition, despite the overheated stock market, our economy simply isn’t growing fast enough to lift the prospects of hard-working middle-class Americans, many of whom are struggling at the economic margins with two jobs, heavy loads of credit card debt, crushing student loan payments, soaring health insurance premiums, and few opportunities for better jobs.
So what’s the best prescription for anticipating and dealing with the approaching “market correction” and the suffering it could pile on American workers and their families? Maybe it’s time for our leaders to think ahead for a change, and not wait for the roof to fall in before they act to shore up the economy.
Some very targeted tax reductions and reforms could be just the shot of adrenaline the economy needs to dodge dangerous cardiac arrest. These tax cuts should not be aimed at the wealthiest Americans. I say that as a proudly conservative Republican. Instead, we should laser-focus tax relief on job creation, lowering the business tax load, encouraging repatriation of $1 trillion in potential corporate taxes stranded overseas, to be used for much-needed, labor-intensive infrastructure improvements. And if there are to be any income tax cuts, let’s aim them at working middle-class families who would spend the money to put other Americans back to work.
Congress has a very narrow window to do anything meaningful on these measures to pump life into our economy before it runs out of breath. There are signs of hope, with my old friend and former colleague Orin Hatch, chairman of the Senate Finance Committee, reaching out to senators on both sides of the aisle to try to reach a consensus on tax reforms and reductions.
He needs President Trump to step up to the plate, too. Finger-pointing over health care, hand-wringing over far-off Korea, and knee-jerking over everything that comes up in the news should give way to some spine-stiffening, some nose-to-the-grindstone, maybe even some arm-twisting, to get something done. Because when it comes to the economy, as Yogi Berra might have said, “If it’s gonna break, don’t wait to fix it.”

Al D’Amato, a former U.S. senator from New York, is the founder of Park Strategies LLC, a public policy and business development firm. Comments about this column? ADAmato@liherald.com.