What would Obama do about economy?
Watching the stock market tank leaves you with the queasy feeling that everything done so far to stop the financial panic has turned out to be too little too late.
The fire sale of Bear Stearns, and doesn't that seem like ancient history though it happened in March, ended up doing nothing to contain the flames of fear. As things went from bad to worse, the federal government last month bailed out Fannie Mae and Freddie Mac, but it wasn't enough to halt the rapidly spreading contagion of fiscal fear.
Then Washington ponied up $85 billion to save AIG. Now we're told the insurance giant may need billions more, this after the revelation that it just spent $440,000 to wine, dine and massage executives at a posh California spa.
The $700 billion emergency package finally approved last week by a Congress panicked by the 700-point-plunge of a panicky Wall Street was greeted by a scary 500-point drop and continued declines since. Washington's decisions this week to start federal lending directly to commercial enterprises and to cut interest rates, a move coordinated with similar action by the central banks of the major industrial nations, didn't stem the bleeding. Now Treasury Secretary Henry Paulson is talking about injecting capital directly into banks.
And it's getting more and more personal. Mortgage, college and car loans are drying up. Depressing third-quarter 401 (k) statements are showing up in millions of mailboxes and turning dreams into nightmares.
Making matters worse, the financial meltdown occurred in a political vacuum. President Bush tried to exert leadership but, as he is the lamest of ducks, neither Congress nor the public paid much attention. Various federal moves transformed Paulson and Federal Reserve Chairman Benjamin Bernacke into powerful figures, but the market response to their leadership is not reassuring. Maybe market movers recall the Fed's contribution to the crisis by pushing interest rates too low for too long and its reluctance to regulate complex financial risk-taking instruments.
No one can -- or should -- trust Congress. The key players on financial issues include the likes of Sen. Chris Dodd (D-Conn.) and Rep. Barney Frank (D-Mass.), who protected Fannie Mae and Freddie Mac from Bush administration efforts to regulate them. They encouraged irresponsible lending practices in the cause of advancing affordable housing.
Barack Obama or John McCain will be our next president, but the realities of a hotly contested political campaign have produced little leadership from them.
McCain tried, even suspending his campaign to fly to Washington, but it was portrayed by Democrats and their media chorus as political grandstanding. His idea of a federal buyout of troubled mortgages seems, whatever its flaws, to offer homeowners a helping hand like that given to Wall Street fat cats. As president, McCain says he would keep taxes low to reinvigorate the economy.
For Obama, the country's economic pain means political gain. With the blame for the crisis falling at the feet of the party holding the White House, Obama talks cautiously and wields a big stick against McCain's proposals as he coasts to Election Day on the presumption Americans will pick him to be their economic savior.
Obama boosters like Sen. Dick Durbin compare him to Depression-era President Franklin Roosevelt. The only problem is that Roosevelt didn't rescue the economy; it took World War II to end the Great Depression.
What would a President Obama do? He's talked about raising taxes and backing away from the nation's commitment to free trade. That sounds like the tax increases and trade tariffs enacted under President Herbert Hoover, and they made the 1930s economic troubles worse. Doing too little too late is bad enough. Doing the wrong thing could be catastrophic. Americans should remember that as they go to the polls Nov. 4.
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