From the pensioner in Gloucester whose Social Security checks have shrunk while the price of everything else has risen, to the small investor in Rockport whose few shares of stock have suddenly taken on the value of Monopoly money, to anyone on Cape Ann who has to pay rent or a mortgage bill or buy bread or milk or fuel oil or gasoline, more and more of us are aware that things are not going well for anyone in America. Wall Street's woes are felt on Main Street.
As congressional leaders struggle to reach agreement on a plan to avert a national financial meltdown, Massachusetts Treasurer Timothy Cahill announced that the crisis will make it difficult for the State to provide local aid to cash-strapped cities and towns. It's trickle-down economics, all right, but not the way President Bush envisaged it when he chose to enrich the already rich at the expense of the already poor.
Bush's warning Wednesday night that the entire economy is in danger of collapse unless his bailout plan is adopted has done nothing to reassure the many Americans who are aware that his policies over the past eight years have been a major cause of the present crisis.
"It's the economy, stupid!" was the mantra posted on cubicle walls in 1992 to remind Bill Clinton's campaign workers of the number one issue facing American voters. The focus on the economy was the principal reason for Clinton's election that year; his subsequent taxation and spending programs brought the country into a financial surplus for the first time since 1969.
The Bush administration managed in eight years to turn Clinton's record surplus into a record deficit. The state of the American economy, now far worse than in 1992, is the core issue of the current election, and voters will base their presidential choices this November on whether Barack Obama or John McCain can best deal with the monumental challenges the current crisis presents.
Today's economic disaster bears ominous similarities, not to 1992, but to 1929, when a virtually unregulated stock market crashed, and America was plunged into what became the Great Depression. For the next three years the Hoover administration relied principally on assurances that "prosperity is just around the corner" while banks failed, mortgages were foreclosed, and the newly dispossessed sold apples in the street and stood in breadlines for food.
Blame for the present financial crisis must be laid squarely at the doorstep of President Bush for at least four reasons:
He launched a disastrous and costly war of choice against Iraq without provocation, and sold it through a pattern of lies and exaggerations. The Congressional Budget office puts the cost of the wars in Iraq and Afghanistan at close to $3 trillion—currently $16 billion a month;
Rather than asking for personal sacrifice to help pay for the war, Bush urged American taxpayers to go shopping. With a largely unregulated housing market and almost unlimited mortgage credit available to borrowers, the home mortgage crisis was all but inevitable;
He pursued an income tax policy skewed to benefit the wealthy at the expense of the poor and middle class; "stimulus package" tax rebates, tossed to burdened taxpayers like crumbs of Marie Antoinette's cake, were a cynical and ineffective substitute for reform;
His stubborn opposition to meaningful regulation of both the financial and industrial world turned a culture of greed into a feeding frenzy that has rewarded incompetence with enormous bonuses and other financial incentives.
Bush's proposed solution to the present economic crisis — a whopping $700 billion, no-strings, my-way-or-the-highway, immediate handout to Wall Street - is both ironic and breathtakingly hypocritical: ironic, in that an administration that has touted its belief in free enterprise as the cornerstone of democracy is proposing a huge socialistic solution for the failings of unrestrained capitalism; hypocritical, in that Americans, who have been told that the country can't afford to provide good health care or quality education or repair a crumbling infrastructure or care for its poor, are being asked to bail out failing investment banks and lending institutions, at a cost to taxpayers of more than $5,000 apiece.
Leading the charge is Treasury Secretary Henry M. Paulson, Jr., who recently served as president of Goldman Sachs, one of the failing investment companies, and a leading example of industry excess: he was rewarded upon leaving the company with a $38.3 million severance package.
Congress, under pressure to adjourn for the elections, has been asked to deliver the goods immediately, without any annoying amendments or other restrictions on the funds or the affected industries. It's like being asked to buy back a car that's just been totaled, paying full price to the people who totaled it.
McCain, who last week thought the crisis could be addressed by establishing a study commission and firing the Chairman of the SEC, now equates it in importance to 9/11. He and many die-hard Republicans are bucking their own president's economic rescue plan but have not yet put forward a coherent answer of their own.
Congress may eventually give the administration at least some of what it is asking, but it's not clear if they can arrive at a formula that places meaningful restrictions on the affected industries and protects against future excesses.
2008 is beginning to look a lot like 1929, and voters are realizing that the election this November will be won by the candidate they believe will be best able to deal with the huge economic crisis now apparent to everyone.
That candidate is increasingly likely to be Barack Obama, who has been warning consistently against the excesses of an unregulated financial industry, not John McCain, who says America's economy is "basically sound" and whose financial adviser Phil Gramm calls Americans "a nation of whiners" for criticizing Bush economic policies.
A recent Los Angeles Times/Bloomberg poll found that 48 percent of registered voters thought Obama could do a better job of handling the economy while only 35 per cent picked McCain; the latest Gallup Poll shows Obama leading McCain by 52 to 35 percent. It's no surprise.
Tom Halsted is a regular Times columnist.
