Among the good takes on this theme today are these from Kevin Drum and Ezra Klein:
Watching the world slide slowly back into recession without a fight, even though we know perfectly well how to prevent it, is just depressing beyond words. Our descendents will view the grasping politicians and cowardly bankers responsible for this about as uncomprehendingly as we now view the world leaders who cavalierly allowed World War I to unfold even though they could have stopped it at any time.
Over the last month, the Dow has lost more than 1,500 points. That’s, well, a lot. And it’s not because a hedge fund blew up or an earthquake cracked California off into the Pacific or because esoteric trading algorithms went haywire. The stock market has suffered big losses because of real fears about the real economy: concerns that growth is grinding to a halt and that the American political system isn’t trustworthy and that the Europeans can’t get their act together and that austerity is going to start too soon and that the unemployed are simply going to remain that way. Concerns that we’re facing, in Morgan Stanley’s elegant phrase, a “policy-induced slowdown.”
So there is plenty for Congress to do, and plenty that has happened in recent months to shock them into action. But they are not acting. There is no evidence that slowing growth, stagnant joblessness, or market turmoil has moved anyone on the Hill into thinking the economy needs even a whisper of added support. If anything, positions are hardening. House Majority Leader Eric Cantor sent his members a memo arguing they could help end policy uncertainty by “stopping the discussions of new stimulus spending.” This is what Morgan Stanley was worrying about when it worried that America might tip back into recession because of “an automatic tightening fiscal policy if, as our US team currently assumes, this year’s fiscal stimulus measures will expire.”
What should happen next is not that hard: Congress should pass legislation greatly increasing support for the economy now and reducing the deficit by about $4 trillion over the next 10 years ($3 trillion once you include the discretionary cuts in the debt deal). It’s not rocket science, and it shouldn’t be partisan. Ask ex-Reagan adviser Martin Feldstein, or ex-Bush Treasury Secretary Henry Paulson — or read Jackie Calmes asking them — and you’ll hear the same thing. This is just standard economic theory. But Republicans in Washington are not going to apply it.
If this isn’t driving you to despair, you’re not paying attention. . . .