Most of us recall vividly that during the 1980s the fundamental problem with the economy was all of those "welfare queens" driving Cadillacs, encouraging an ostentatious lifestyle that clearly could not be sustained. Tens of thousands could be tracked cruising the drive-through windows at Popeye’s or dashing in and out of mall parking lots, conspicuous consumption and carefree living all too apparent.
Adding fuel to the excess were cultural icons such as Natalie Cole extolling the comfort and luxury of owning a "Pink Cadillac", and Michael Jordan, whose "Air Jordans" propelled Nike and its sportswear to designer status among urban youth.
It wasn’t long before middle and upper income Americans jumped on the bandwagon, with Pink Cadillacs handed out by the hundreds by cosmetic maven Mary Kay Ash, and high-priced basketball shoes de rigueur even among the most non-athletic computer nerds. The ghetto was driving GDP.
Ronald Reagan, who won the presidency in 1980, had long warned the nation of the danger of welfare queens, but the liberal Democrats refused to heed his warnings and the profligate spending continued. The day of reckoning, however, could not be postponed forever, as Americans learned when OPEC reluctantly was forced to raise its oil prices to meet the demand for oil caused by all of those Cadillacs.
The sudden spike in oil prices propelled corporate America into action, determined as it was to protect American consumers. Billions of dollars were devoted to exploring for shale oil deposits and developing technology to convert shale oil into gasoline. Throughout Texas and Colorado, tens of thousands of new jobs were created and hundreds of new office buildings constructed to accommodate the anticipated, continued growth in employment. New subdivisions began sprouting along the fringes of the cities, and scores of new trailer parks were developed in mountainous areas of Colorado and Wyoming, all financed by the hard-earned savings of the American people which had been wisely entrusted to the nation’s Savings and Loan institutions led by such exemplary corporate titans as Charles Keating.
But even corporate America’s best efforts and Reagan’s heroic vigilance couldn’t forestall disaster. Bent on destruction, liberal Democrats forced into law stringent, new C.A.F.E. standards, requiring automobile manufacturers to achieve greater fuel efficiency, with a targeted average of 27.5 miles per gallon.
Suddenly, Cadillacs, Lincolns and even Chevrolets began to shrink in size and fuel consumption dropped dramatically. This caused oil prices to plummet, forcing oil companies to abandon their shale oil projects, laying off hundreds of thousands of workers and emptying millions of square feet of office space. The stock market crashed, homes were abandoned, trailer parks vacated, and hundreds of billions of dollars in loans went into default, ultimately requiring the government to intervene by taking over the Savings and Loan industry at taxpayer expense.
Finally, in 1994, Republicans wrested control of Congress and immediately embarked upon welfare reform to ensure that poor people would no longer be in a position to drive the economy over the edge. By limiting the period of time anyone could remain on welfare to less than the normal schedule of amortization of home and car loans, the nation was put back on a track to prosperity.
Throughout the 1990s, with these constraints in place, the economy flourished and millions of new jobs were created and the government actually reported a surplus. But flush with cash and with a Democrat in the White House, the stage was set for a new disaster, which is only now beginning to unfold.
It all began, of course, with another noble attempt to encourage the poor in their quest to be a part of the ownership society. Soon, welfare families were purchasing million dollar McMansions and scarfing up vacation retreats in Florida, Arizona, Nevada and California, defrauding the banks and mortgage lenders by taking advantage of the lenders' altruistic desire to extend a helping hand.
Sadly, the lenders had been bolstered in their confidence by abstinence programs, the anti-abortion movement, and the war on contraceptives, which seemed to ensure that those welfare families would continue to have lots of children, each one providing a gigantic boost in monthly welfare payments. Loan officers merely anticipated that if a welfare family found it difficult to meet the rising monthly payment as its adjustable interest rate rose, it would simply have another baby in order to tide it over until the eligibility for welfare expired and the recipient could responsibly enter the workforce, achieving even greater prosperity.
Of course, those darned liberal policies that insist upon giving women a choice and encourage the use of contraceptives screwed up everything. Poor women avoided having more babies, which made it far more difficult for them to fulfill their mortgage responsibilities. Moreover, it reduced their ability to be active consumers, driving down demand for everything from plasma TVs and $300 sneakers to Pontiacs, Chrysler 300s, Cadillac Escalades and Lincoln Navigators.
That, as one could easily have predicted, resulted in hundreds of thousands of layoffs in the manufacturing and retail sectors, accelerating the downward spiral in the economy. Furthermore, it made it impossible for those whose welfare eligibility expired to find a job.
So once again, just like with the Savings & Loan bailout in the 1980s, the government is now forced to step in to bailout the beleaguered financial institutions because poor people have failed to live up to their responsibilities. Hopefully, this time we’ve learned the lesson that it makes much more sense to cut out the middle man (in this case the irresponsible welfare families) and just directly hand over our cash to the banking institutions which have proven to be wise stewards of our financial capital.
