Political strategist Karl Rove was one of the keynote speakers at the National Cattlemen’s Beef Association (NCBA) on Thursday. While nobody would be surprised by his political leanings as the electoral mastermind behind the two presidential terms of George W. Bush, he didn’t spend a lot of time talking about the political side of things.

In fact, part of his message was that while we can’t afford to be dogmatic and we will have to cooperate with all parties to accomplish our goals, we must stand up for our key principles and values. He made the case that with the significant issues we face as a country and as an industry we must be involved in the process – both with our dollars and our time.

When he got to discussing the issues and challenges we face as an industry, he painted a pretty daunting scenario. He talked about the trillion-dollar federal stimulus that didn’t stimulate. According to the claims made at the time of passage, it was argued that every $1 in stimulus money would create $1.55 in economic growth. The absurdity of the federal government borrowing money and spending it to create growth, he says, is undermined by the fact that if the government actually believed taking money from people – or borrowing it from China – and spending it would produce that kind of return, why would they stop at $1 trillion. Why not 10 trillion?

The average of the economic studies that have looked at government spending indicate that the number is for every dollar spent you get $.84 in economic impact. On top of the trillion-dollar stimulus bill, we increased spending another $1 trillion beyond that. For perspective, Rove pointed to the Clinton and Bush administrations when spending constituted about 19% of GDP; today that figure is 25%.

“In two short years, we have gone from government consuming $1 of every $5 produced to 1 in 4,” he says.

The trifecta came with health care, which is projected to add another $1 trillion to the deficit.

For additional perspective, he says the national debt as a percentage of GDP was about 35% (high, but manageable) under the administration of Ronald Reagan. It rose to 43% under George Herbert Walker Bush, to 45% under Bill Clinton, and dropped to 36% under George W. Bush. Today, the debt figure is 62% of GDP, with projections for it to rise to 87% of GDP. That level is similar to Greece, he says, “but there’s no European Union to bail us out.” The result, he says will be sustained periods of reduced or no growth, and higher taxes.

Rove made a pretty convincing case that it was time to act.
-- Troy Marshall