The price of oil broke an inflation-adjusted all-time record of $103.95 on Monday. The dollar sank to a 35-year-low against a basket of foreign currencies. Gas prices hit record highs in several California markets. General Motors reported a 13 percent drop in February car sales; Ford, 6.6 percent. A measure of manufacturing output dropped to its lowest point in five years. The commercial real estate sector is now beginning to display some of the same financial woes that crippled the residential housing market. Foreclosures outnumber home sales in some U.S. states. Fallout from the credit crunch, predict a crew of blue chip economists, will likely cause around $900 billion dollars worth of damage to "Main Street."
All this news today, and the Dow Jones industrial average ended the day down only seven points. Perhaps investors were heartened by the detailed look the Wall Street Journal took Monday at the economic platform (such that there is) of John McCain. One lifeline thrown out by the Senator from Arizona to struggling Americans: He might have "a couple of fireside chats with the American people because of what we see in the [consumer] confidence barometers."
No, wait -- there's more. Congress and the White House may have rushed to pass an economic stimulus plan, and the Democratic candidates for president are pushing a variety of middle class tax cuts and foreclosure moratoriums and other quick fixes, but for McCain, reports the Journal, "the most potent economic stimulus would be to assure Americans that taxes won't go up in the future."
"In the shorter term," said McCain, "if you somehow told American businesses and families, 'Look, you're not going to experience a tax increase in 2010,' I think that's a pretty good short-term measure."
So making permanent tax cuts that McCain originally voted against because he thought, correctly, that they were an unconscionable, budget-busting giveaway to the richest Americans, will now provide a short-term stimulus to the poor and working class as the economy goes into the tank.
I guess that's the kind of thinking on economic matters we should expect from someone whose chief economic adviser is Kevin Hassett, co-author of "Dow 36,000."
The Journal's account of its McCain interview is freely accessible to all.