Debate on Economy Grows More Urgent
Richard Moore
assumption: the only imperative is that banks
collect all their debts. Everything else must be
determined toward that end. If the nation falls
apart, so be it, as long as the big banks retain
ownership of whatever's left. That's what we're
living for, that's the matrix we're in, that's
what controls our lives, and that's what's
destroying the Earth.
-rkm
http://www.washingtonpost.com/wp-dyn/content/article/2008/03/07/AR2008030701255.html
Debate on Economy Grows More Urgent
Job-Loss Report Is Worst in 5 Years
By Peter Baker
Washington Post Staff Writer
Saturday, March 8, 2008; A01
A surprisingly bleak employment report sent
tremors through Washington and roiled the
presidential campaign yesterday, infusing new
urgency into the debate over how to reverse an
accelerating economic slide and fueling a
political contest over who to blame for it.
The nation shed 63,000 jobs in February, the
worst job loss in five years, the Labor
Department reported, and another sign that the
economy may have slipped into a recession that
could prove to be the defining challenge for
President Bush and Congress through the rest of
his administration.
Responding quickly to the report, Bush asked for
patience to let an economic stimulus package he
signed last month start to work. Democrats on the
campaign trail just as quickly faulted the
president's economic policies, and congressional
leaders pressed for a new economic package to
pump money into unemployment benefits, as well as
road construction and other job-creating
infrastructure projects.
"Losing a job is painful, and I know Americans
are concerned about our economy," Bush told
reporters at the White House. "So am I. It's
clear our economy has slowed, but the good news
is we anticipated this and took decisive action
to bolster the economy." Last month's $152
billion package of tax breaks for workers and
businesses, Bush added, "provided the economy
with a booster shot" whose impact will be felt
"over the coming months."
While placing faith in the stimulus plan, White
House officials said they are also considering
other measures, including a pay-down program in
which the federal government would offer
low-interest loans to financially pressed
homeowners to bring down their mortgage costs and
forestall defaults. Bush's economic advisers said
they have downgraded their short-term forecast
and now expect the first quarter to be the
"weakest," but they expect stronger growth by
summer.
The economic troubles stem from a crisis in debt
markets that developed last August and touched
off a wave of home foreclosures. Despite efforts
by the Federal Reserve to cut interest rates,
credit has continued to tighten, making it harder
for businesses to raise capital to expand
operations and for Americans to pay off credit
cards and buy homes or cars.
Although the unemployment rate edged down from
4.9 percent to 4.8 percent in February, the jobs
report alarmed policymakers in Washington because
the losses proved worse than Wall Street
predictions. The Labor Department said the
economy lost 52,000 manufacturing jobs and 39,000
construction jobs last month, continuing deep
losses over the past year. The only reason the
overall report was not worse was the addition of
38,000 government jobs.
"The short-term discussion ought to be what does
this mean for economic policies, what kind of
anti-recessionary policies do we need to start
crafting, what is the impact of the policies
we've crafted so far?" said Jared Bernstein, a
scholar at the liberal Economic Policy Institute.
The long-term issue, he said, may be "to what
extent is our current situation a result of
Bushonomics? That's really going to be fodder for
the campaign."
Rea S. Hederman, an economist at the conservative
Heritage Foundation, said the report may not
signal the need for additional government action
because it will take time for the stimulus
package to have an impact. "We've already
diagnosed the problem," he said. "We've already
tried one remedy. Let's at least see if that
works."
Rising economic anxiety dominated the day on the
campaign trail. Sen. Hillary Rodham Clinton
(D-N.Y.), who won the Ohio presidential primary
this week in part on the strength of support from
voters worried about the economy, took aim at
both Bush and her rival, Sen. Barack Obama
(D-Ill.).
The numbers "are painful reminders that we need a
president who is ready to be a steward of our
economy starting on Day One," she said. And
referring to Bush, though not by name, she said,
"It's going to take more than tax rebates to
avoid a deep economic downturn." Clinton renewed
her call to extend unemployment insurance, invest
to create jobs, and impose a 90-day moratorium on
foreclosures and a five-year freeze on subprime
mortgage interest rates.
For his part, Obama cited the everyday Americans
he meets on the campaign trail while lumping
Clinton in with the Republicans as part of the
problem. "They can't afford John McCain's promise
of four more years of the very same failed Bush
economic policies that have failed us for the
last eight," Obama said, "and they can't afford
another politician who promises solutions but
won't change the divisive, lobbyist-driven
politics in Washington."
McCain, a senator from Arizona and the
presumptive Republican nominee, said that "many
American families are hurting very badly." He
called for cutting corporate taxes, repealing the
alternative minimum tax and making Bush's tax
cuts permanent. Although he once said that "I
still need to be educated" about economics,
McCain defended his experience, saying he has
been involved in such issues for 25 years.
Campaigning in Atlanta, he said, "It's pretty
obvious the economy is on most people's minds now
and is clearly the greatest challenge that we
face" -- an acknowledgment of how the issue has
transformed a race once expected to center on
Iraq, terrorism and national security, all issues
on which McCain would rather debate his eventual
Democratic opponent.
Just 19 percent of Americans consider the economy
in good shape, the most negative the public has
been in 15 years, according to the latest
Washington Post-ABC News poll. Thirty-nine
percent named the economy the top issue, nearly
four times as many as in September.
Bush aides dismissed the Democratic criticism as
predictable campaign-trail rhetoric that ignores
the president's record of 52 straight months of
job creation, ending in December. "Two candidates
for president who are duking it out in the
Democratic primary are no doubt going to make
charges against this president, even if they
don't ring true," said White House press
secretary Dana Perino.
White House economists continued to resist the
recession label but said this will be "the worst
time," until tax rebate checks of $600 for most
workers go out in May. "We have definitely
downgraded our forecast for this quarter," said
Edward Lazear, chairman of the White House
Council of Economic Advisers. "I'm still not
saying that there is a recession. There is no
denying that when you get negative job numbers,
realistically the economy is less strong than we
had hoped it would be."
Polling analyst Jennifer Agiesta contributed to this report.
© 2008 The Washington Post Company
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