The economic cloud’s silver lining

4.4 million Americans have lost their jobs since the recession started in December 2007. The American economy has shed at least 650,000 jobs in each of the past three months. According to the New York Times, that’s the worst three-month decline in percentage terms since 1975.

Ouch! — there’s a whole lot o’ hurtin’ going on out there.

“These jobs aren’t coming back,” said John E. Silvia, chief economist at Wachovia in Charlotte, N.C. “A lot of production either isn’t going to happen at all, or it’s going to happen somewhere other than the United States. There are going to be fewer stores, fewer factories, fewer financial services operations. Firms are making strategic decisions that they don’t want to be in their businesses.”

Certain questions immediately spring to mind:
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Bipartisanship, circa 1933

Franklin Delano Roosevelt became President of the United States of America on March 4, 1933. His predecessor, Herbert Hoover, had assumed office seven months before the stock market crash of 1929. Hoover’s entire presidency had been consumed by a desperate, ineffectual struggle against the Great Depression.

At the time of Roosevelt’s inauguration, the most urgent crisis concerned the banking system. More than five thousand banks had failed in the USA in the previous three years.

In the months leading up to Roosevelt’s inauguration, Roosevelt’s appointees had already begun to work alongside President Hoover’s officials — an unprecdented arrangement, much to Hoover’s credit. Then, when Roosevelt assumed office,

Hoover’s men and Roosevelt’s now began an intense eighty hours of collaboration to hammer out the details of an emergency banking measure that could be presented to the special session of Congress. […]

Roosevelt’s and Hoover’s minions “had forgotten to be Republicans or Democrats,” [Raymond] Moley [a senior advisor to President Roosevelt] commented. “We were just a bunch of men trying to save the banking system.” William Woodin, the new treasury secretary, and Ogden Mills, his predecessor, simply shifted places on either side of the secretary’s desk in the Treasury Building. Otherwise, nothing changed in the room. […]

The bill was read to the House at 1:00 P.M., while some new representatives were still trying to locate their seats. Printed copies were not ready for the members. A rolled-up newspaper symbolically served. After thirty-eight minutes of “debate,” the chamber passed the bill, sight unseen, with a unanimous shout. The Senate approved the bill with only seven dissenting votes—all from agrarian states historically suspicious of Wall Street. The president signed the legislation into law at 8:36 in the evening.

(David M. Kennedy, Freedom From Fear: The American People in Depression and War, 1929-1945 (Oxford University Press), pp. 135-36)

Last week, Senator John McCain said that President Obama has some lessons to learn about bipartisanship. Andrew Sullivan asks,

You mean Obama never went to the Congress to talk to the House GOP? That he hasn’t been relentless in including Republicans in the debate? That he didn’t urge over $300 billion in tax cuts in the bill to assuage Republican feelings in the first place?

Evidently, Senator McCain still hasn’t grasped that he lost the election. It is incumbent upon Republicans to support President Obama in carrying out the mandate he received from voters. But only three Senate Republicans voted for the stimulus package, and zero House Republicans.

Now McCain says that Obama needs some lessons on bipartisanship? Tail, meet dog.
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McCain’s position on social security

With this week’s news about the bankruptcy of Lehman Brothers (and the sale of Merrill Lynch, and the storm clouds gathering around American International Group) maybe the presidential campaign can begin to focus on real issues. The role of the media is key here. This morning’s coverage on CNN was certainly more substantive than I’ve seen for a long time.

So let’s consider a policy issue. Here are The New Republic’s comments on the Social Security program, which John McCain has called “an absolute disgrace.”

As of this morning however, there seems to be less cause to sniff at the 73-year old program. UChicago public health specialist Harold Pollack, writing at HuffPo, notes that Social Security “may be the only area of government that that’s not in fiscal crisis right now.” …

I’m no expert, but wonder what on earth would have happened had the Social Security system been privatized, as was advocated by McCain in 2004 and again as recently as March 2008. With which tools would taxpayers have decided which trusty American investment house (a Lehman, or a Bear Stearns) would get their money?

In general, conservatives are anti-government and pro-privatization, whereas liberals see government as a problem solver, looking out for the interests of private citizens. Guess what, folks:  social programs like Social Security are better entrusted to government. At a time of economic crisis, the merits of the liberal point of view become clearer.