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The challenge to global capitalism is more relevant now than before September 11.

Enron's power project in India demonstrates who benefits from globalization.

(With apologies to Stephen Foster)

The Enron hearings stretch ahead,
Doo-dah, doo-dah,
Until the final soundbite's said.
Oh, doo-dah day.

Pols will posture night,
Pols will posture day.
They'll show the voters just how tough they are,
Browbeating some CPA.

They'll talk of all the laws they'll make,
Doo-dah, doo-dah.
And meanwhile they're still on the take.
Oh, doo-dah day.

Pols will posture day,
Pols will posture night.
The guy who's shmeered them for a dozen years
Now is the guy they'd indict.

George W. Bush must be feeling an acute sense of déjà vu these days, as the dubious dealings of the accounting firm Arthur Andersen, LLP take center stage in the Enron scandal.

What would Jesus do? It's a no-brainer; he would leave the Christian Coalition, take a consulting job with Enron and then use his divine power to make George W. Bush president.

To the economy, September 11 now appears to have been a transient shock. Sales, confidence and the stock market plunged, but then returned. As the dead cat bounced, optimists declared recovery to be near. The so-called stimulus package died. And so we now face a classic test of the predominant economics: Either recovery will happen, or it won't.

I'm betting against it. For the aftermath of September 11 also boosted the economy in several equally transient ways. Lower interest rates spurred mortgage refinancing. The tax rebates added to personal income and savings. Oil prices fell sharply. Good weather extended the building season. And the automakers took heroic losses to clear their inventories, as did retailers at Christmas. All of this, so to say, fanned the embers. None of it provided new fuel.

Meanwhile, larger depressive forces remain in place. Investment continues to fall; unused capacity continues to rise. The automakers are shutting down and laying off. Consumer spending has slowed. Exports slump as recession deepens around the world. Enormous deficits are opening in state and local budgets, with spending cuts or tax increases already estimated at nearly $100 billion for next year. About 8 million Americans are jobless now, 2.5 million more than a year ago.

Last year's tax cut was supposed to keep America growing. It failed. The Republican goal remains, naturally, to get another tax cut. This is not really economic policy, merely another tactical variation on a permanent agenda. Call it ripoff as a philosophy. Enron writ large.

Democratic strategy has been to help the wounded and hope for the best. Extended unemployment insurance and healthcare would be useful. But they're not enough. Democrats are having trouble leaving their illusions--budget surpluses, debt reduction, "fiscal responsibility." In truth, budget deficits are normal. Right now large budget deficits are necessary. The job is to end the recession, to restore full employment, to recreate conditions for growth. If small steps won't achieve this, large ones are demanded.

Alan Greenspan, meanwhile, has lost relevance. He may cut interest rates some more. It won't hurt, but it won't give us recovery. "Pushing on a string," they used to call it. Business investment won't return until profits do, and that won't happen until consumers have paid down some of their debt. That will take time--maybe a lot of time.

What, then, are the choices? Just two. Temporary, progressive tax cuts may still be considered. One might extend the earned-income tax credit or roll back payroll taxes for three years--meanwhile freezing the 2001 tax cut at present levels in order to reimburse the Social Security trust fund. That would be useful, but the effect would be limited by the need of households to raise their savings and reduce their debts. Half of last year's rebates were saved, not spent. Even good tax cuts would now face the same problem. The egregious 2001 tax cut, meanwhile, should be frozen at current levels, partly to reimburse the Social Security trust fund.

The other choice is: Increase public spending. All now agree that spending, in general, is needed. It follows that if households won't, government must. We need spending not just to provide a temporary boost but to sustain activity until the private sector is ready to spend again. This is the time for schools, transportation systems, housing, the environment, a real energy policy based on conservation and mass transit to cut our dependence on oil, and prescription drug benefits. Why not a new home-health-aide program for seniors? There's work to do. There are people to work. Bring them together!

The most immediate crisis, deserving attention before any other, is in the states and cities. State and local budgets should not be cut. But how to prevent this? By recreating a revenue sharing program for the states, with a pass-through to cities, on a scale sufficient to plug the budget gaps. How much? Let's say $100 billion in the first year. Pass it with very few strings, as a block grant, and get past the Washington gridlock. Revenue sharing has Republican lineage; it ought to be a bipartisan cause today. The federal government should also make it easier for states to borrow in support of their capital programs.

This slump may well get much worse before it gets any better. Accordingly, we must save ourselves. There is no danger in doing too much. This is not a moment for caution. It is not a moment for faith. It is a moment, surely, for action.

The Supreme Court has made a decision that is wrongheaded, and wrong.

Blogs

Vermont senator finishes remarkable protest by urging Americans to "stand up and say, 'that we can do better than this, that we don’t need to drive up the national debt by giving tax breaks to millionaires and billionaires.'"

December 10, 2010

Republican activist Grover Norquist once famously declared that he'd like to shrink the federal government to the point where he could drown it in a bathtub—but a little-noticed provision in the "tax cut compromise" might well drain the states' sinks first.

December 10, 2010

House Democrats can and should focus on getting rid of the massive estate-tax exemption agreed to by President Obama and Senate Republicans. Speaker Pelosi has the arguments—and Thomas Jefferson's warning against allowing "an artificial aristocracy founded on wealth and birth."

December 9, 2010

The Democratic Caucus has rejected the agreement between White House and Republicans.

December 9, 2010

Senator says: "Not only is this bad public policy—driving up the deficit, increasing the growing gap between the rich and everybody else—I think it is bad politics."

December 7, 2010

The president's commission did not get the support needed to force Congressional votes on a proposal to cut Social Security and Medicare. Now is the time for progressives to push Jan Schakowsy's smart alternative.

December 3, 2010

WikiLeaks may be the biggest information explosion this week, but Wednesday's mammoth release of documents pertaining to the Fed's bank bailout program could well spark the most outrage—at least among those not fortunate enough to head a firm on Wall Street.

December 2, 2010

Audit reveals the scope of "emergency" loans. Bernie Sanders wants to know if  "secret Fed loans turned out to be direct corporate welfare to big banks." It's time to expand this investigation—and to conbsider Robert Pollin's proposal to put at least some of this money to work for the US economy.

December 2, 2010

Bank of America shares fell 3 percent on Tuesday after Julian Assange hinted that he had as much as 5 GB worth of their documents revealing some shady behavior.

December 1, 2010

As jobless benefits expire for 800,000 American families, Congressman Jim McDermott says that instead of negotiating with Republicans, Obama and the Democrats should recognize that as far as the GOP is concerned "there’s nothing on the table except ‘Take care of the rich.'"

December 1, 2010