Tuesday's National Economic Referendum

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Over the almost 40 years that I've been eligible to vote there have been only two elections in which economic policy has so dominated public debate that social issues disappeared from view. One such election will take place tomorrow. The other happened 30 years ago when Ronald Reagan challenged incumbent Jimmy Carter for the presidency.

I voted for Jimmy Carter - the first time - to remove the residual stink left by Richard Nixon. Yet after four years of disastrous misrule, and as smart and nice a man as Jimmy was, I just couldn't vote for him a second time. I have not been able to pull the lever for a Democrat since.

Not that I could stomach the Republican Party and its troglodyte social agenda, then or now. While challenger Ronald Reagan offered a starkly different vision for America than the malaise we had come to accept under Carter, the first and only time I ever pulled the lever for a Republican was when Scott Brown offered Massachusetts voters what turned out to be a futile chance to stop Obamacare. Only in retrospect did I come to appreciate Reagan's contribution to the decades of prosperity that ensued after he took office.

Reagan assumed the presidency just about the time I was signing my first mortgage. It was a popular 30 year fixed rate mortgage offered by the FHA carrying 18 ½ percent interest requiring 20% down and seven points paid by the seller. Hot deal, huh? What made it unusual was its negative amortization feature. At the end of every year I actually owed more in principal than the year before.

How is this possible, you ask? Inflation was running 16%, so in real dollars it was about a five percent mortgage. Those of you who haven't lived through double digit inflation have no idea what it does to an economy, though you are about to find out as those trillions of recently printed greenbacks slowly work their magic.

Back in 1980 as a young man in debt enjoying 20% raises every year, which is what it took if an employer wanted to keep you, the only way inflation touched me was that I kept climbing up through the tax brackets. Meanwhile most businesses, investors, savers, and retirees were being devastated. Between that and memories of gas rationing, which we were falsely told was necessary because the world was running out of oil, the backlash against the tax, spend, and regulate agenda inherited from Lyndon Johnson closed the chapter on the Great Society. America was ready for a change.

It took a long time to recharge our batteries, remake our battered economy into a competitive juggernaut, and defeat Communism (oh, by the way). We got so much of our mojo back that even a triangulating Democrat could end welfare as we know it, pass broad free trade agreements, and run up a surplus. Alas, Slick Willy's moral failings opened the door for a troglodyte resurgence, delivering us the worst of both worlds - a Republican who spent like a Democrat, made war like an incompetent, and slunk off stage just as the Fannie Mae toxic mortgage cesspool backed up into the rotten plumbing of a plundered banking system.

Enter Mr. Hope and Change, who could have never been elected without George Bush's help. On my office wall I have the iconic Obama "hope" poster with these words substituted - "I Am Bush's Fault." What an amazing two years it has been. The party didn't even last long enough to make the hangover worthwhile.

With accelerating velocity a whipsawed electorate runs to escape the boneheaded moves of a guy they just elected in an effort to escape the boneheaded moves of the guy they elected previously. And at the end of every election the winning party falsely claims the same mandate. "Hey, they really like us! Now we can do whatever we please!" No we don't. At this particular moment we just hate you less than the other guy. Doing what you please will only guarantee that we end up hating you more when the next election rolls around.

Tomorrow we have another chance to lay down on the tracks in front of a runaway train. Those yelling "stop" will soon be in charge of the House of Representatives while those yelling "more" will still control the rest of government.

This means we can look forward to two years of nasty gridlock, which frankly is better than having either party writing checks. If and only if a leader of real stature emerges to fight off the troglodytes are we going to have any sort of choice in 2012 when it comes time to send Obama the way of Jimmy Carter.

Until then all we can do is hunker down, buy TIPS, and try to remember that the source of our misery is a two party duopoly that makes it nearly impossible to find a fiscally conservative, socially liberal, non-professional politician to vote for that has a prayer of winning.

Bill Frezza is a fellow at the Competitive Enterprise Institute, and a Boston-based venture capitalist. You can find all of his columns, TV, and radio interviews here.  If you would like to have his weekly columns delivered to you by e-mail, click here or follow him on Twitter @BillFrezza.

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