Coming up from the morning read of the papers it is hard not to feel more than a little worried about the country these days.
We are five years into Iraq, trillions spent, tens of thousands of casualities, the region is more troubled than before and there is no clear and easy end in sight. Warnings about the impact of climate change are growing more urgent, and scary. Oil and gas prices are breaking all sorts of records, and there is no prospect of these price gains being substantially reversed. Global prosperity is driving up commodity and food prices across the world, making the task of moving struggling societies and people into a better place ever more difficult. Important Olympic athletes announce they are skipping the Beijing Olympics due to the dangerous levels of pollution there. More evidence comes to light each week it seems of systemic and almost unthinkable violations of the civil liberties of Americans in the Bush era. The President reaffirms for all the world to see his committment to rip apart the Geneva Conventions. A new and extraordinary Congressional GOP scandal explodes across Washington. The GOP returns to their failed, and racist, efforts to blame the nation's problems on Hispanic immigrants, and a terrible "enforcement-only" bill stumbles closer to passage in the House. The Administation announces they plan on bringing the Columbia Free Trade Agreement to a vote even though it will not pass, will damage the standing of one of our most important allies in Latin America and set back our efforts to rebuild a bi-partisan consensus on global economic policy. The career of a very promising young governor from New York ends spectacularly. The Republican Presidental candidate seems to have been transported into today's election from a bygone era of American politics. The Democrats can't make up their mind on who their next leader will be, and are not even sure how they are going to make up their mind.
Democrats are finding solace in that the nation's anger about the state of our union is being directed, properly, at the Republicans. From today's Post:
"It's no mystery," said Rep. Thomas M. Davis III (R-Va.). "You have a very unhappy electorate, which is no surprise, with oil at $108 a barrel, stocks down a few thousand points, a war in Iraq with no end in sight and a president who is still very, very unpopular. He's just killed the Republican brand."
As we've been writing for years now the governing failures of the Bush era have been historic, and have done grave damage to the "American brand." Few believe that in this last year in office this failed President, perhaps the worst in US history, has the capacity to lead and meet even simple challenges. But each passing day the ongoing revelations about the weakening of our financial system suggests we could be facing a crisis of historic porportions, one that will require far-sighted and sure-footed leadership from the President, the Administration and from Congress, from Republican and Democrat alike. A front-page article in the Times today raises serious questions about the Federal Reserves effectiveness in managing the growing crisis so far. And an editorial in the Times today about a speech the President gave on Friday should leave all of us very worried about the capacity of this President to even understand - let alone take appropriate action to deal with - our growing economic and financial challenges.
I am taking the unusual step of posting the whole editorial, for given the gravity of our emerging financial crisis, this excellent essay needs to be read and considered in its entirety:
President Bush admitted on Friday that times are tough. So much for the straight talk.
Mr. Bush went on to paint a false picture of the economy. He dismissed virtually every proposal Congress is working on to alleviate the mortgage crisis, sticking to his administration's inadequate ideas. And despite the rush of serious problems - frozen credit markets, millions of impending mortgage defaults, solvency issues at banks, a plunging dollar - he said that a major source of uncertainty today is whether his tax cuts, scheduled to expire in 2010, would be extended.
This was too far afield of reality to be dismissed as simple cheerleading. It points to the pressing need for a coherent plan to steer through what some economists are now predicting could be a severe downturn. Mr. Bush's denial of the economic truth underscores the need for Congress to push forward with solutions to the mortgage crisis - especially bankruptcy reform to help defaulting homeowners. Lawmakers also must prepare to execute, in case it is needed, a government rescue of people whose homes are now worth less than they borrowed to buy them.
Mr. Bush said he was optimistic because the economy's "foundation is solid" as measured by employment, wages, productivity, exports and the federal deficit. He was wrong on every count. On some, he has been wrong for quite a while.
Mr. Bush boasted about 52 consecutive months of job growth during his presidency. What matters is the magnitude of growth, not ticks on a calendar. The economic expansion under Mr. Bush - which it is safe to assume is now over - produced job growth of 4.2 percent. That is the worst performance over a business cycle since the government started keeping track in 1945.
Mr. Bush also talked approvingly of the recent unemployment rate of 4.8 percent. A low rate is good news when it indicates a robust job market. The unemployment rate ticked down last month because hundreds of thousands of people dropped out of the work force altogether. Worse, long-term unemployment, of six months or more, hit 17.5 percent. We'd expect that in the depths of a recession. It is unprecedented at the onset of one.
Mr. Bush was wrong to say wages are rising. On Friday morning, the day he spoke, the government reported that wages failed to outpace inflation in February, for the fifth straight month. Productivity growth has also weakened markedly in the past two years, a harbinger of a lower overall standard of living for Americans.
Exports have surged of late, but largely on the back of a falling dollar. The weaker dollar makes American exports cheaper, but it also pushes up oil prices. Potentially far more serious, a weakening dollar also reduces the Federal Reserve's flexibility to steady the economy.
Finally, Mr. Bush's focus on the size of the federal budget deficit ignores that annual government borrowing comes on top of existing debt. Publicly held federal debt will be up by a stunning 76 percent by the end of his presidency. Paying back the money means less to spend on everything else for a very long time.
The fiscal stimulus passed by Congress, and touted by Mr. Bush on Friday, could juice growth for a quarter or two later this year. But the economy's fundamental weaknesses indicate that Americans are ill-prepared for hard times. That makes the need for clear-eyed policies all the more urgent. We need them from the president, Congress and the contenders for the White House.
Meeting the deep array of daunting challenges the nation faces today will require bold, resolute and visionary leadership from all quarters in the years ahead. My hope is that the President will attempt to do more than prepare for his disgraced retirement in his remaining days in office. And at the very least if he cannot and will not lead, he should do everything he can to get out of the way of those who want to help our great nation clean up the incredible mess he is leaving behind. Democrats may be delighting in the collapse of their opposition but with Congress in their control and the Presidency likely to be in their hands next year, these problems will very soon become theirs to solve.
Sunday night update: The NYTimes lede on its site tells it all: Federal Reserve Acts to Rescue U.S. Financial Markets
For two years we've been wondering out loud if Bush was this century's Hoover. In the past few days I worry that this analogy has become truer than we should all desire.
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