On the economy, staying focused on the big picture and struggling American families

David Leonhardt of the Times today has an excellent piece today comparing the 1992 Bush Recession to what might be end up being called the 2008 Bush Recession. As he notes what makes this coming slowdown/recession different from 1992 is that in the Bush era the middle class was already in what might be called a recession despite record GDP and productivity growth and very strong corporate profits and a soaring stock market. Even before this slowdown the typical family's income had dropped by over a $1,000 after gaining more than $7,000 in the Clinton era; wages have been flat; and the number of those in poverty, without health insurance and struggling with high levels of debt had increased.

At NDN we agree with the sentiment of some in the piece that the critical thing for policymakers is to focus on offering a new economic agenda that makes this new age of globalization work for all Americans. The most important impact of a stimulus will be to show the American people that their government, after 7 years of ignoring their increasing struggle, is watching their backs, and working to help them and their families once again prosper. But it would be unfortunate if the stimulus debate ended up distracting our political leaders from focusing on the much larger and more difficult challenge of restroring broad-based prosperity in our new economic age.

It is also important for our leaders to realize that the American people's concerns about the economy was sky high long before this recent downturn. As this analysis of the 2006 exit polls shows, there is a strong argument that concerns about the economy drove the outcome of the 2006 Congressional elections much more than the Iraq War. Political and economic elites have been very slow to recognize these pre-slowdown economic realities because for those on the upper end have had a remarkable decade. Their incomes increased, their assets soared, their taxes were significantly reduced. I know from my travels that few American elites were intuitively sympathetic to the middle class struggle of the Bush era because for them things were getting better, much better. And now that the economy is slowing, and their friends on Wall Street are getting fearful of the future, it is essential that the governing class in the United States not accept a $100 billion stimulus as an adequate response the economic challenges of our day. Much more must be done. And offering this new economic strategy that makes globalization work for all Americans is what our Globalization Initiative has been focusing on for the past several years.