The collapse of leading Wall Street firms. $1 trillion lost in the stock market in one day. $2 trillion lost in housing values. Congress hands the Treasury Secretary $700 billion in a panicked vote and heads out of town. This isn't the failure of one firm, or one industry. This is the collapse of a failed ideology--what the famed investor George Soros calls "market fundamentalism," the belief that markets are always perfect and government should deregulate, cut taxes and get out of the way.
We now have learned once more--as we did in the last Great Depression--that that road leads off a cliff. Tax cuts lead to massive deficits, sustained because foreign countries like China were happy to buy our dollars so they could sell us goods. And Wall Street, liberated from the regulations created during the last Depression, went on a binge. It invented exotic new products that no one understood, and then borrowed heavily--30-40 in debt for every dollar of capital--to gamble on their rise. They had the party, and now we are paying to clean up the mess--and to deal with what is likely to be a terrible and long hangover.
Yet, as Sarah Palin showed in the debate last week, and as John McCain shows every week on the campaign trail, the Wall Street implosion hasn't blown up the bad ideas. Palin and McCain still call for "government to get out of the way" to let markets work. McCain still champions another $3 trillion in tax cuts for corporations and the wealthy to get the economy going. Their model for the economy has just exploded--and they have learned nothing.
They are not alone. Look at the bailout plan passed by the Congress. It is aimed at buying some of the trash debts of the Wall Street banks and investment houses in the hope of getting the financial system moving again. It does nothing for the real economy in which people work and live. Nothing on housing. Nothing to get the real economy moving--even has it is shedding jobs at an increasing level.
This is like bailing out the Pilot's cabin of a boat, when the boat is taking on water through the hull. It won't work. The real economy is going into a downturn. People are losing jobs, working hours are getting cut back, small businesses are hurting. States and localities will start cuts of teachers, and police and construction projects. Restaurants and bars will lose business; many won't last. Retail stores will face their worst Christmas ever.
But Congress, still believing that government needs to get out of the way and that helping those at the top will somehow trickle down to those in the bottom, throws $700 billion to help clean up the mess that banks made in the past, and nothing to get the economy going in the future. Bad ideas have a steely grip.
In the week before the Wall Street vote, Republicans in the Senate threatened a filibuster to kill even a vote on a small -- $50 billion--stimulus package that passed the house. On the day of the Wall Street vote, they blocked even consideration of a measure to extend unemployment benefits to the hundreds of thousands now unemployed that are having a hard time getting jobs.
Ideology is blinding these folks to reality. You can see that in John McCain's insistence on corporate tax cuts as the path to recovery. (Corporations taking losses aren't worried about taxes; they are worried about who will buy their products). You can see it in the Congress' belief that nothing need be done for the real economy.
We need, right now, a plan to kick start the economy. That would include measures to stem the flood of foreclosures that are driving down the prices of homes across the country. That would include revenue sharing with state and local governments in exchange for a promise to sustain current employment levels. It would include major investments in renewable energy and conservation, putting people to work while reducing our dependence on foreign oil. It would include rebuilding our infrastructure, everything from bridges to mass transit to sewers -that is falling apart after years of neglect.
We are headed into a troubled time. We need to act now. We can't wait another year before those so blinded by their ideology wake up and see what is going on around them.
Reverend Jackson can be contacted by email at