Big Government Ahead
By DAVID BROOKS
NYT
We’re in the middle of a financial crisis, but most economists say there is a broader economic crisis still to come. The unemployment rate will shoot upward. Companies will go bankrupt. Commercial real estate values will decline. Credit card defaults will rise. The nonprofit sector will be hammered.
By the time the recession is in full force, Democrats will probably be running the government. Barack Obama will probably be in the White House. Democrats will have a comfortable majority in the House and will control between 56 and 60 seats in the Senate.
The party will inherit big deficits. David Leonhardt, my colleague at The Times, estimates that the deficit will sit at around $750 billion next year, or five percent of G.D.P. Democrats had promised to pay for new spending with compensatory cuts, but the economic crisis will dissolve pay-as-you-go vows. New federal spending will come in four streams.
First, there will be the bailouts. Once upon a time, there were concerns about moral hazard. But resistance to corporate bailouts is gone. If Bear Stearns and A.I.G. can get bailouts, then so can car companies, airlines and other corporations with direct links to Main Street.
(Continued here.)
NYT
We’re in the middle of a financial crisis, but most economists say there is a broader economic crisis still to come. The unemployment rate will shoot upward. Companies will go bankrupt. Commercial real estate values will decline. Credit card defaults will rise. The nonprofit sector will be hammered.
By the time the recession is in full force, Democrats will probably be running the government. Barack Obama will probably be in the White House. Democrats will have a comfortable majority in the House and will control between 56 and 60 seats in the Senate.
The party will inherit big deficits. David Leonhardt, my colleague at The Times, estimates that the deficit will sit at around $750 billion next year, or five percent of G.D.P. Democrats had promised to pay for new spending with compensatory cuts, but the economic crisis will dissolve pay-as-you-go vows. New federal spending will come in four streams.
First, there will be the bailouts. Once upon a time, there were concerns about moral hazard. But resistance to corporate bailouts is gone. If Bear Stearns and A.I.G. can get bailouts, then so can car companies, airlines and other corporations with direct links to Main Street.
(Continued here.)
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