The Recovery - I was

The Recovery - I was talking with a friend of mine last night. He spent about five months out of work last year - ending right about the time my own out-of-work stretch started. The current economy is a big topic for both of us.

He wondered out loud when we were going to start seeing a serious, strong recovery - the kind that creates new jobs and gets things moving again.

I started digging for parallels. The only two downturns I really remember are the huge recession after the Oil Embargo, which mired the nation in years of stagflation, and the one in the early nineties (which actually began earlier in the Twin Cities, with the big post-cold-war cuts in defense spending).

By the time Ronald Reagan pulled off his big tax cuts in the early eighties, the nation seemed to have nowhere to go but up. But Reagan had a mandate - a huge victory at the polls - to buttress his radical prescription for the economy. By the time the economy bounced back, fueled by the tax cuts, I think (as I recall it) that there was so much pent-up desire to get back working, there'd have been no way to hold it back.

I remember more about the '91 recession. I was a working adult with two kids by that point, and very underemployed. The economy did quickly and clearly bounce back, and indeed launch into the big Bubble, fairly quickly. But the economy had one huge advantage back then - the "Peace Dividend." The US was drawing down its military even before the Berlin Wall fell, but by the time Boris Yeltsin rubbed out the Moscow Coup of '91, the world knew the Cold War was over - and the economy showed it.

The situation today is nearly the opposite of '91. We aren't ending a war, we're just beginning one, one that started as our economy was starting to slide into recession. The economy is digesting that and the fallout from the Clinton Bubble, simultaneously, without the benefit of either a Peace Dividend or a Reagan-like mandate to take drastic economic measures to fix things.

What could happen? Worst case; The economy dips again, and we get bad news in the War on Terrorism (or, more likely, the media spins all news to look bad). Bush loses - or perhaps ekes out a thin victory over a divisive Democrat candidate. Either way - at the hands of any of the Nine Dwarves (except perhaps Joe Lieberman, whose political stock seems to be in the doldrums at the moment) or a George W. Bush weakened by a rough election and with no mandate, and forced to continue his pseudo-liberal triangulation for four more years - the doldrums continue. Continued efforts to fix the economy through interest rates raise the spectre of deflation. The Democrats respond by trying to tax and spend our way to prosperity. We flirt with Depression by the end of the decade.

Best case: Good news somehow eludes the New York Times Good War News Destruction Patrol, and the economy generates enough new jobs in the next 18 months to make enough people happy enough to preserve some of the President's approval rating. The Democrats nominate Howard Dean after a corrosive primary battle, playing to their base, and losing much of Middle America. In a rerun of 1972, Dean is crushed in a huge landslide, carrying California and New York and not much else. Even Minnesota votes Bush. The Senate becomes more strongly Republican, and the House picks up a few Red votes.

Bush is able to act like the conservative that he's had to repress for the last two years, given the divided Congress and his edgy initial election. He reinforces his tax cuts, and leverages the benefits of his aggressive action in the Middle East (which is slowly calming down by this time). Buoyed by a clear election and a slowly-but-perceptively stabilizing world situation, the economy perks up, and by the middle of the decade the economy is again bubbling along at mid-nineties growth levels.

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