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,
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,
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.
It was a mistake--and a beaut--in Matt Bivens's piece "The Enron Box" where he confused the Houston Astros and the Texas Rangers. It is hereby duly acknowledged and regretted. But what really astonished us was the way it unleashed a slick triple play by the Right-Wing Conspirators (a Class C club that plays the Washington-New York corridor). You've heard of Tinker to Evers to Chance? Well, this was Wall Street Journal to The Weekly Standard to Fox News's Brit Hume. The WSJ caught Bivens's blooper; then The Weekly Standard grabbed amd waved it long enough to say "Nyah, nyah" before Brit (Mr. Inside) Hume gobbled up the ball and hinted darkly of cover-up (or something) on Fox News. This dazzling play illustrates how the opposing team will seize on a minor miscue and use it to clear George W. Bush of any involvement in the Enron scandal. OK, we admit the error shows we are sometimes sports-challenged; next time we'll check with a baseball expert like George Will. Lest the real issues be lost out in right field, however, we bring you a comment on Bush and baseball posted by the witty sportswriter Charles Pierce, a commentator on NPRs Only a Game and the author of Sports Guy: In Search of Corkball, Warroad Hockey, Hooters Golf, Tiger Woods, and the Big, Big Game. He posted it on Jim Romenesko's Media News (www.poynter.org):
"As to The Nation's unfortunate collision with the national pastime--the passage ought to read:
'When George Bush co-owned the Texas Rangers with a bunch of businessmen who had all the real money, construction began on The Ballpark At Arlington, after the ownership group finagled the eminent domain laws in order to swindle some property owners out of the market price for some valuable land. The property owners sued and won, but The Ballpark arose anyway, enabling Mr. Bush to cash out his original investment several times over without ever having done any actual work. This helped launch the successful portion of his political career, culminating in his becoming President of the United States, a job from which he took an evening off last spring in order to be the guest of Kenneth Lay for the opening of Enron Field in Houston. Mr. Lay was CEO of Enron and a well-known political supporter of the president who, these days, of course, would not recognize him from a box of turnips.'
"The Nation, I am sure, regrets the error."
Indeed we do.