When a recession turns into a depression

Ronald Reagan "got it" when it came to understanding middle-class Americans because he was one. I think the best example of this was a comment Reagan made when asked if he thought the economy was in a recession back when he was President in the '80s. His reply was "A Recession is when your next door neighbor doesn't have a job. A Depression is when YOU don't have a job."

I gotta admit, the failure in the House to pass a rescue/bailout bill to end the current credit crisis has got me in a recession, heading toward a depression. I'm afraid too many Americans don't "get it" that this isn't about Wall Street so much as it's about Main Street. If we don't stop the bleeding on Wall Street, the folks on Main Street who are calling Congress opposing the "bailout" are going to regret it.

An economic slowdown gets serious when it gets personal. This one has gotten personal with me. First, one of my credit cards, Washington Mutual Bank, went bankrupt and was purchased by a larger bank. Now Wachovia Bank is another victim of Fannie Mae and Freddie Mac. I'm not a Wachovia customer now, but I have been in the past. And Wachovia is a North Carolina-based bank. This crisis is getting personal to me and the wider it spreads the more personal it is with more and more voters.

I haven't seen my monthly 401K statement since the crisis hit, but I suspect when the next one arrives it's going to show a decline instead of the increases it's been showing previously. And if that happens, as it almost certainly will, this "banking credit crisis" get even more personal with me.

I'm a conservative Republican, but the view of some Republicans and Democrats in Congress that we should just do nothing about the current credit crisis and "let the free markets handle it" sounds pretty dangerous to me. It's not a bet I'm willing to wager with my own personal finances.

William Kristol, a noted conservative, is swimming against the flow as one of the few speaking in favor of Congress taking firm action now.

And in an op-ed in The New York Times today, Kristol urges John McCain and conservative Republicans to take this credit crisis seriously.

We face a real financial crisis. Usually the candidate of the incumbent’s party minimizes the severity of the nation’s problems. McCain should break the mold and acknowledge, even emphasize the crisis. He can explain that dealing with it requires candor and leadership of the sort he’s shown in his career. McCain can tell voters we’re almost certainly in a recession, and things will likely get worse before they get better.

And McCain can note that the financial crisis isn’t going to be solved by any one piece of legislation. There are serious economists, for example, who think we could be on the verge of a huge bank run. Congress may have to act to authorize the F.D.I.C. to provide far greater deposit insurance, and the secretary of the Treasury to protect money market funds. McCain can call for Congress to stand ready to pass such legislation. He can say more generally that in the tough times ahead, we’ll need a tough president willing to make tough decisions.

And Kristol also goes against conventional GOP wisdom in his advice to McCain on how to win this election he seems on the verge of losing.

John McCain is on course to lose the presidential election to Barack Obama. Can he turn it around, and surge to victory?

He has a chance. But only if he overrules those of his aides who are trapped by conventional wisdom, huddled in a defensive crouch and overcome by ideological timidity.

The conventional wisdom is that it was a mistake for McCain to go back to Washington last week to engage in the attempt to craft the financial rescue legislation, and that McCain has to move on to a new topic as quickly as possible. As one McCain adviser told The Washington Post, “you’ve got to get it [the financial crisis] over with and start having a normal campaign.”

Wrong.

McCain’s impetuous decision to return to Washington was right. The agreement announced early Sunday morning is better than Treasury Secretary Henry Paulson’s original proposal, and better than the deal the Democrats claimed was close on Thursday. Assuming the legislation passes soon, and assuming it reassures financial markets, McCain will be able to take some credit.

But the goal shouldn’t be to return to “a normal campaign.” For these aren’t normal times.

I'm not an economist and I don't even play one on TV. But even the economists admit they don't really understand what's going on with our economy right now and how it should be handled. In academia, economics is called "the inexact science." One thing seems abundantly clear to this bitter, backwoods redneck from North Carolina. This crisis is not fixing itself and politics as usual won't fix it either. Obama's strategy is the same he has for everything in this campaign, blame it on President Bush and the Republicans. If McCain's unprecedented move to stop campaigning and go to Washington to deal with the crisis works out, then he will have won the gratitude of the voters.

If not, the crisis will worsen and then God help us all, I fear the voters are going to put the fox in charge of the henhouse in Washington. Obama and the Democrats in Congress got us into this mess pushing "subprime loans" through Fannie Mae and Freddie Mac. And if Johnny Mac can't get us out of it, Barney Frank, Chris Dodd, Harry Reid, Nancy Pelosi and Obama are going in power and then the feathers will fly.

If most voters are like me, preferring action rather than a "wait and see" attitude, they have a clear choice between McCain and Obama on the most important issue of this election. McCain took action, while Mr. Community Organizer was "Vapid, Hesitant & Gutless" as usual. Obama hasn't even publicly said whether he opposes or supports the rescue plan. He returned to the campaign trail after Friday's debate for politics as usual and said today he had "called a few Democrats" to urge them to vote for the plan. His "encouragement by long-distance" crisis plan continues. Meanwhile, McCain left the debate and spent his weekend working in Washington to try to get a rescue plan passed.

But it you write for The New York Times or any other MSM, McCain is "impetuous" during this crisis and Obama is "measured and cerebral."

It was classic John McCain and classic Barack Obama who grappled with the $700 billion bailout plan over the last week: Mr. McCain was by turns action-oriented and impulsive as he dive-bombed targets, while Mr. Obama was measured and cerebral and inclined to work the phones behind the scenes.

Mr. McCain, who came of age in a chain-of-command culture, showed once again that he believes that individual leaders can play a catalytic role and should use the bully pulpit to push politicians. Mr. Obama, who came of age as a community organizer, showed once again that he believes several minds are better than one, and that, for all of his oratorical skill, he is wary of too much showmanship.

It's a good thing I didn't have a mouthful of coffee as I read that last line about Obama being "wary of too much showmanship" or my keyboard would have gotten a brown bath. Mr. "Citizen of the World" who triumphantly toured Europe before his nomination and made a speech in front of the Victory Column in Berlin before adoring thousands of Germans is "wary of too much showmanship"? On what planet?

Yet there is one paragraph in the NYT analysis piece that I agree with as the writer expresses "concerns" about Obama by Democrats.

For Democrats, the episode was one more reminder that Mr. Obama was more analyzer-in-chief than firebrand — though in this case, they gave him high marks for his style. Still, given concerns among Americans about the economy, Mr. Obama risked seeming too cool and slow to exert leadership.

It's a concern of Democrats that McCain has looked like a Commander-in-Chief in this crisis while Obama has been Mr. Analyzer-in-Chief and "risked seeming too cool and slow to exert leadership." Too cool and slow to exert leadership is another way of saying Obama is Vapid, Hesitant & Gutless.

Obama keeps repeating that McCain "doesn't get it" on this crisis while it seems abundantly clear that Obama is the one who don't get it.

And Kristol advises that VP Nominee Sarah Palin should use Obama's own words in Thursday's debate with Joe Biden to show how Obama "doesn't get" the middle-class values he claims to champion while saying McCain didn't use the words "middle class" in last Friday's debate.

The core case against Obama is pretty simple: he’s too liberal. A few months ago I asked one of McCain’s aides what aspect of Obama’s liberalism they thought they could most effectively exploit. He looked at me as if I were a simpleton, and patiently explained that talking about “conservatism” and “liberalism” was so old-fashioned.

Maybe. But the fact is the only Democrats to win the presidency in the past 40 years — Jimmy Carter and Bill Clinton — distanced themselves from liberal orthodoxy. Obama is, by contrast, a garden-variety liberal. He also has radical associates in his past.

The most famous of these is the Rev. Jeremiah Wright, and I wonder if Obama may have inadvertently set the stage for the McCain team to reintroduce him to the American public. On Saturday, Obama criticized McCain for never using in the debate Friday night the words “middle class.” The Obama campaign even released an advertisement trumpeting McCain’s omission.

The McCain campaign might consider responding by calling attention to Chapter 14 of Obama’s eloquent memoir, “Dreams From My Father.” There Obama quotes from the brochure of Reverend Wright’s church — a passage entitled “A Disavowal of the Pursuit of Middleclassness.”

So when Biden goes on about the middle class on Thursday, Palin might ask Biden when Obama flip-flopped on Middleclassness.

Another classic case of Obama's convenient change of convictions from left-wing liberal to "middle class" values just in time for the election.

Jennifer Rubin at Pajamas Media frames the fight over passage of a bipartisan rescue/bailout bill as both sides claim credit for an expected victory and neither accepts any blame for the defeat today.

Now the race to grab credit for the bipartisan bill is clearly on. The Democrats will claim that they prevailed despite the “disruptive” involvement of John McCain who rushed back to the Capitol and briefly suspended his campaign last week. The problem with that: it doesn’t mesh with the facts. It was Harry Reid and Hank Paulson who had summoned McCain to Washington. And it was McCain who surmised that the House GOP was definitely not on board — a requirement which Pelosi herself had set for a successful deal. McCain will also argue that the principles he laid down last week — greater transparency and oversight and limits on executive compensation — were in fact achieved.

Barack Obama played no role, it appears, in the deal making. But he may well benefit in the short and long term from the refocusing of the race on our economic woes. Certainly his standing in the polls has improved since the crisis began. The counterargument — that the Democrats and he specifically contributed to the crisis by averting their eyes and indeed blocking needed reforms of Fannie Mae and Freddie Mac – has not yet penetrated to average voters.

I sincerely hope and pray a majority of voters aren't fooled by Obama, Frank, Dodd, Pelosi, Reid & Co. But I said the same thing about Bill Clinton and I was wrong. Twice for eight long years. It seems most voters still aren't even convinced the credit crisis is real. God help us all.