A year ago on Labor Day, the nightmare scenario described in the headline above was still a real possibility. Labor and its allies went on to make sure that something quite different unfolded, but what if it had actually happened the way the headline says it did?
What would the economy look like now?
To answer that question, look at what has happened this year.
A $787 billion economic stimulus package was passed by the majority Democratic Congress and signed by President Obama early this year.
There was almost unanimous opposition from the Republicans. Only three GOP senators voted for it, and they weakened the package as the price of their support.
Since then, Republicans have kept up a drumbeat of opposition to the stimulus, claiming it isn’t working.
Republican House Minority Whip Eric Cantor said yesterday the stimulus should be cancelled and the $400 billion not yet spent should be applied, instead, toward paying off the national debt. He said this even as the Wall Street Journal published an editorial saying that without the president’s stimulus package things would be much worse than they are.
The only solution the Republicans have offered is their usual formula of tax cuts for businesses and the wealthy. Just to get the stimulus through the Senate, Obama had to allot two-thirds of its tax cuts (which were just under a third of the bill) to business. It was the only way to get the three Republican votes so necessary to avoid a filibuster.
The Republicans have also opposed every other rescue mission for the economy.
Based on their performance, we can safely say that had McCain won the election there would have been no stimulus package, no extensions of jobless benefits, no help for the Detroit-based auto companies, no first moves toward creating green jobs and even no “cash for clunkers” program.
Workers on federally funded construction sites would still be making minimum wage rather than prevailing union wages and it would still be legal for companies to practice wage discrimination against women if they can do it for 180 days without anyone noticing.
Government agencies designed to protect workers would still be run by people who favor bosses, and agencies designed to protect health and the environment would still be controlled by folks who profit from sickness and pollution.
Interestingly, some people connected to major sections of big business offer a hint of what a McCain victory would have done to the economy.
Federal Reserve Chairman Ben Bernanke, who made his living as an economic historian at Princeton University before he took over the Federal Reserve, says things would have been a lot worse.
Bernanke put forward that opinion Aug. 21 in a speech in Jackson Hole, Wyo., where he talked about the economy as it has unfolded over the past 12 months.
“The world has been through the most severe financial crisis since the Great Depression,” he said. “The crisis in turn sparked a deep global recession, from which we are only now beginning to emerge. As severe as the economic impact has been, however, the outcome could have been decidedly worse.”
Bernanke criticized what he called “passive” approaches, similar to what today’s Republicans are advocating, and said of the stimulus package and the Obama administration’s other moves:
“Without these speedy and forceful actions, last October’s panic would likely have continued to intensify, more major financial firms would have failed, and the entire global financial system would have been at serious risk. We cannot know for sure what the economic effects of these events would have been, but what we know about the effects of financial crises suggests the resulting global downturn could have been extraordinarily deep and protracted.
“Although we have avoided the worst, difficult challenges still lie ahead. We must work together to build on the gains already made to secure a sustained economic recovery, as well as to build a new financial regulatory framework that will reflect the lessons of this crisis and prevent a recurrence of the events of the past two years.”
Recent remarks by Mark Zandi, chief economist at Moody’s Inc. and a top McCain campaign adviser, also show how far off-base McCain and the rest of the GOP are right now.
Zandi provides figures we can use in answering that “what if McCain had won” question.
He writes on the Moody’s web site: “To date, the stimulus has mainly helped by forestalling bigger job and program cuts by state and local governments. Increased aid to unemployed workers is contributing to the recent firming in consumer confidence and helping to stabilize retail sales.
“It may be hard to tell when hundreds of thousands of jobs are vanishing each month, but without the stimulus, job losses would be measurably worse. Take the 1.3 million jobs lost in the second quarter: Without the stimulus, the economy would have instead lost an estimated 1.8 million jobs. Unemployment in July would be at 9.8 percent instead of 9.5 percent.”
The former McCain adviser continued his praise for Obama’s policies, all of which were opposed this year by McCain and the GOP:
“Benefits of lower payroll taxes, increased checks to Social Security recipients, and more infrastructure spending have yet to be seen – but they will be starting this summer. The housing market should also receive a boost in the next few months through the federal housing tax credit for first time homebuyers, also in the stimulus.”
Zandi, the former McCain adviser, takes a direct swipe at McCain and his GOP cohorts: “Those who see the recession continuing and conclude the stimulus is a failure are mistaken. The stimulus is performing close to expectations, at least so far. If it continues as expected, U.S. employment will shrink by approximately 750,000 jobs in the third quarter and by 400,000 in the fourth quarter, but the job losses will abate by the spring of 2010. Unemployment will rise as high as 10.5 percent by next summer, but without the stimulus, unemployment would peak near 12.5 percent in early 2011.”
In other words, let’s breathe a sigh of relief that “McCain wins White House” is a “pretend” headline.
jwojcik @ pww.org
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