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In tight basketball games, there comes a point towards the end of the game when all is decided. A decisive play, confidence soars on one team and wanes on the other, momentum swings. In crunch time, stars show their stuff. They step up when others are reluctant to have the ball. They take their shot; they try to make the play. How they fare pretty much determines the outcome.
Well, it's crunch time for the US--indeed the global--economy. The financial crisis has now engulfed the real economy. The fallout from the spectacularly irresponsible speculation on Wall Street that inflated the housing bubble until it burst is still spreading. Over $10 trillion in assets have been lost in the collapse of housing prices and the stock market. Seniors have seen their life savings decimated. Homeowners have seen their dreams evaporate. Banks aren't lending; consumers aren't borrowing. So auto, steel, retail stores--all are headed over the cliff. It's crunch time. If nothing is done quickly, the fall could be unimaginable.
The Bush administration has office but not power. No one listens to President Bush who isn't exactly credible on the economy in any case. Treasury Secretary Paulson looks increasingly like he's been shattered by the scope of the crisis. Continually behind the curve, he's jerked back and forth, trying one thing, then another, announcing plans then abandoning them--all in the name of building the confidence that his own actions undermine.
The Congress remains inert. They adjourned from their special session without even considering passage of an immediate stimulus. They did nothing on mortgage relief. They scorned the auto industry--and much of industrial America--without even a vote.
It's crunch time, and nobody wants the ball. Except the student of basketball, president-elect Barack Obama. He realizes he can't wait til January. So Monday, he announced his economic team, and rolled out his commitment to a major recovery program--said to be $700 billion over two years or more. He says he'll invest in new green jobs in retrofitting buildings and modernizing the electric grid, in rebuilding our roads, bridges and mass transit and put people--2.5 million in his estimates--back to work. He chose experienced pros--former Treasury Secretary Lawrence Summers and current head of the New York Federal Reserve Bank Tim Geithner to head his economic team. He's announced that he will hit the ground running in January. Stock markets across the world responded. The star player stood up, demanded the ball, and said he'd try to make the play.
That's half the battle, but only half. Just as in basketball, demanding the ball isn't enough. You've got to make the shot, or make the assist to others can make it. The question now is whether Obama's plans will score--whether they are big enough to meet the challenge that we face.
Consider the auto industry. Obama has called for coming to the industry's aid, but has said that any help must come with conditions. "We want a bridge loan to somewhere, not a bridge loan to nowhere." Part of those conditions will surely include accelerating the move to hybrid and electric vehicles, part of a major drive to reduce our dependence on foreign oil while dealing with the threat of global warming.
But to be competitive, the automakers need more than a bridge loan. In the US, they spend more per car on health care than they do on steel. Foreign competitors don't have the burden. As a Senator, Obama introduced a bill suggesting that the US government take over at least the costs of health care for the retired in exchange for greater movement on gas mileage efficiency.
In this context, he should go further. Provide the auto companies with bridge financing in exchange for accelerating the move to high mileage cars. Combine this with the first steps on health care reform: guarantee health care for every child under 18 under the children's health care plan and for every worker over 55 under Medicare. Covering children costs the least, and saves massively by getting kids early treatment. Covering those over 55 costs the most, but relieves the companies of the largest burdens on their balance sheets.
We're not going to get out of this recession without a major transformation of this economy--and without a leader who, like Roosevelt, wants the ball and is prepared to take the lead in crunch time. And that leadership will require bold moves, experimentation, innovation, creativity. That's why Americans elected Barack Obama this fall. And now, the ball is in his hands.