Over the weekend two events happened that we believe signal a subtle yet important change in direction for the United States.
First, much to relief of people around the world, the U.S., Russia, and Syria reached an agreement on Syria's chemical weapons. That pact is a crucial step, and while tentative, effectively nullifies the threat of U.S. military involvement in Syria for the foreseeable future, and once again proves that diplomacy is a far more effective foreign policy tool than 'Shock n' Awe' ever was.
Second, and in some ways, even more important, was Lawrence Summers withdrawing his name for consideration to be the next Chairman of the Federal Reserve. Summers - one of the men responsible for the massive deregulation which led to the Great Recession - already had received the public opposition of several key Democrats and at least one Republican, along with what appeared to be a solid rebuke by Sen. Elizabeth Warren. So it seems almost fitting that as the season of summer ends, so too does the chance for Larry Summers to destroy the economy again.
With both of the above items firmly in mind, we thought it might be a great time to look at exactly where America is on the five year anniversary of the collapse of Wall Street and the beginning of the Great Recession. Sadly, as we noted in Friday's expanded edition, America already appears to be in a new "Gilded Age' with the gap between the richest 1% and the rest of America deeper turning into a yawning chasm that's effectively swallowed the American middle class.
President Obama's political team obviously agrees with our idea, as they're set to focus on the subject of his economic successes this week, and compare them to where America was five years ago, on the eve of the collapse. Mr. Obama and his economic team have accomplished some fairly amazing economic feats these last five years, in spite of the suicide caucus of the GOP - the group who will likely kill their own party in their feckless attempts to take down President Obama.
Consider the TARP program, the rescue of Wall Street, the stimulus, and the auto bailout that Obama took over from G.W. Bush. President Obama and his economic team were able to use all of these to stop the hemorrhaging of Wall Street, and the near-collapse of the U.S. auto industry, and turn economy in a positive direction, all with the least possible support of Congress. Chrysler is already making steps to become a public company again.
Even with all that success, most of America - except the richest of the rich - have yet to recover from the devastating gambling of Wall Street's worst. Neil Irwin and Brad Plumer of Wonkblog on Friday published a devastating series of charts that prove what most Americans already know.
For the top 1% of Americans, the recession is already over. For the rest of America - for MOST of America - the recovery has only barely begun.
It's with glee then that we note Janet Yellen, now the likely nominee to chair the Fed, has a long list of qualifications, some of which Ezra Klein pointed out Sunday evening, including her work at the Fed since 2004. Ms. Yellen also wants the Fed to concentrate on the one thing Americans now need in our financial sector more than any other: Someone at the top more concerned with putting more people back to work at honest wage levels than with protecting the interest rates of trust fund babies and corporate cronies.
President Clinton once talked about "building a bridge to the 21st Century," and as he left office, that bridge had been begun to be built, as the middle class enjoyed prosperity in equal or better measure than at anytime since the end of World War II. As we all now know, that bridge was blown up by the hubris and greed of the Wall Street barons, and the two wars of the Bush/Cheney neo-con chicken hawks. Instead of a bridge, there's a massive gap where responsibile governing and support of the American middle class should have been.
If President Obama truly wants to make the next three years his legacy, he could do nothing more important than rebuilding that bridge to the future for the middle class, over the income inequality gap we now all face.
