03 MAR 08 / "Recession"

Fashion and hair styles have returned to the 1970s and it appears the American economy may be headed back to the decade of stagflation. GDP growth in the last quarter of last year was a less than anemic 1 percent, and was recently revised downward. The growth of the American economy is slowing to a snail's pace.

The current forces pressuring the American economy are not merely cyclical. In this instance all the chickens are coming home to roost: high oil prices, declining home values, rising inflation, deteriorating credit markets, decreasing levels of employment, and a currency that has dropped 40 percent against the Euro in five years.

The Democratic presidential candidates characteristically have been making promises they can't keep. The problem is that government got us in this mess and further government involvement can only make it worse. Tax rebates for individuals and tax cuts for businesses can't help us. Neither can further rate cuts by the Federal Reserve when holding steady on interest rates might finally serve to buoy the dollar against foreign currencies. Easing monetary policy has the dual negative effect of devaluing the dollar and being inflationary. Reducing interest rates to stave off inflation may not be the medicine we need in this circumstance.

However, the federal government can increase the domestic production of oil by drilling offshore and in ANWAR and building new gasoline refineries. Inflation is largely due to the rising cost of energy and food. The Federal Reserve can keep the discount rate at 3 percent to stop the free fall of the dollar. And

Republicans may not have a quick solution to our newfound economic troubles, but we understand that government involvement can only exacerbate them. Politicians in Washington, DC want to demonstrate to voters that they are doing something to alleviate their suffering, even if what they're doing is causing more harm. The is not the prescription the American economy needs.

Instead it needs across the board tax cuts, increased domestic oil production, and less government regulation and spending.

If the United States is in recession, the majority of industrialized countries of the world are likely to flollow suit. The United States is responsible for 25 percent of the world's gross domestic product.

If the United States is to continue to compete with the emerging economies of China, India, Vietnam, and Brazil, we must adopt the free market principles that led to our growth in the first place.

The average American consumer is beset with credit card debt and unable to pull the economy out of its tailspin. Consumer spending accounts for nearly 70 percent of gross domestic product.

The nation lost jobs in January.