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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

Tea Party–backed House freshmen pocket hundreds of thousands of dollars from the same Wall Street firms they once railed against.

May 26, 2011

Wisconsin Republicans, in their rush to strip workers of collective bargaining rights, violated the state’s Open Meetings law and disregarding a tradition of governmental transparency. That has tripped them up, for now.

May 26, 2011

The Senate rejected Ryan's Medicare-cutting budget 57-40, as five Republicans voted “no."

May 25, 2011

The clear message for Obama and Democrats is don't mess with Medicare, Medicaid and Social Security. Run against Ryan's extremism and win.

May 25, 2011

New York Republicans moved to prevent certification of the winner of the hotly contested New York special election for a traditionally “safe” Republican seat.

May 24, 2011

At a testy hearing on Capitol Hill, Republicans intensifed their effort to undermine Elizabeth Warren and the Consumer Financial Protection Bureau.

May 24, 2011

By appointing Warren during a Senate recess, Obama can name the leader best qualified to head the agency and prove he’s willing to stand up to Wall Street.

May 24, 2011

Now that Mitch Daniels is out of the running, the DC-based defenders of budget-busting corporate giveaways have found a new candidate for the GOP nomination: Paul Ryan.

May 24, 2011

Several thousand people turned out this weekend in Michigan as part of an effort to recall the state's controversial governor.

May 23, 2011

The AFL-CIO president, inspired by developments in Wisconsin and other states fighting battles over labor rights and cuts in public services, wants to change the way labor practices politics.

May 20, 2011