Policy in Practice

Many outlets have begun to report that President Obama is looking to appoint a third Republican to his cabinet–Senator Judd Gregg of New Hampshire–to the post of Commerce Secretary, a move that would allow the state’s Democratic governor to appoint a replacement, thereby giving the Democrats a 60-person bloc in the Senate, creating a supermajority in Congress.

Earlier this week, Mr. Gregg was quoted praising the president as “a tour de force.” Asked Thursday about his interest in the commerce job, Mr. Gregg said he would not discuss it.

“I can’t tell you anything,” said Mr. Gregg, the ranking Republican on the Budget Committee. “I have no comment.”

Mr. Gregg is nearing the end of his third term in the Senate, and faces re-election in 2010.

Commentators across the nation have gone to great lengths over the past few months to draw parallels between the United States’ current economic storm and the one that embroiled it during the Great Depression.

Such descriptions have plenty of merit, but in making such comparisons, one consideration has been absent: the Great Depression was a threat not only to our nation’s prosperity, but to the prospect of peace at home and abroad. And why? Because as America’s economy goes, so goes the world’s.

This point has been lost in the deliberations over whether or not to support the stimulus package passed moments ago in the House. But the peacekeeping and peacemaking impact of a healthy American economy cannot be overstated, nor can the converse: the unsettling impact of a sputtering U.S. economic engine.

Such desperate times lead to desperate people, the combination of which is fertile for acts of desperation. History has borne this out, with perhaps no starker example than the relationship between the Great Depression and the rise of Nazism in Germany.

When most Americans think of the rise of Adolf Hitler, they rightly attribute it to the Treaty of Versailles, which helped to create a power vacuum in which radical ideas could fester in a slowly-recuperating Germany dependent on foreign resources. Hitler’s initial attempt to seize power in this environment was through the use of force, and he failed miserably, as did the Nazi Party, which only claimed 100,000 members in a nation of 60-plus million through the 1920s.

The Great Depression, however, provided the spark that lit the cauldron for Nazism. America’s economic malaise crippled Germany, reliant as it was on U.S. output. This resulted in a meltdown of society, and as Germany’s democratic government struggled to help its people, Hitler’s odious message became more persuasive. In time, his distorted logic made sense to the desperate masses, starving for a solution to their ails, no matter how destructive.

The ripple effect generated by a churning American economy has long been evident, as developing nations have been able to thrive and develop into peaceful partners. But the vortex stirred by a tumbling U.S. economy is just as influential. As such, our economy’s current struggles are sure to hinder the development of nations reliant upon the resources we have long been able to generate for them, directly and indirectly.

Consider this excerpt from a recent Washington Post article on this very subject:

Civil unrest [has] occurred in recent weeks across the periphery of Europe, where the global financial crisis has buffeted smaller countries with fewer resources to defend their economies. Especially in Eastern Europe, the turmoil reflects surging political discontent and threatens to topple shaky governments that have been the focus of popular resentment over corruption for years.

Europeans have compared the unrest to events of the 1960s and even the 1930s, when the Great Depression fueled political upheaval across the continent and gave rise to isolationism and fascism. But no ideology has tapped into public anger and challenged the basic dominance of free-market economics and democratic politics in these countries. Instead, protesters appear united primarily by dashed economic hopes and hostility against the ruling authorities.

Because the international balance of power is anything but stable, our ability to maintain equilibrium with our soft power has been crucial to minimizing threats across the world. If our economy continues to wimper, however, we will no longer be able to cultivate peace through prosperity, and peace-in the short and long-term-will be much harder to retain as a result.

NPR reports:

President Obama and his advisers worked through the weekend trying to convince lawmakers to support his economic stimulus plan. The president wants to see the $825 billion package on his desk by the middle of next month, but the proposal faces a rocky ride on Capitol Hill.

Continuing the Obama administration’s public relations blitz touting the stimulus package on Sunday, top adviser Lawrence Summers ticked off positives about the recovery plan in an appearance on NBC’s Meet the Press. First, he said, President Obama’s proposal had bipartisan input from Democrats and Republicans.

“Frankly, some of them think the stimulus should be larger, some of them think the stimulus should be smaller. The president balanced different views,” he said.

The $825 billion package focuses two-thirds on new government spending and the rest on tax cuts. Summers says the government can afford to spend the money to revive a faltering economy.

“It’s balanced between very substantial new investments that I referred to — between very important investments to prevent teachers and cops from being laid off. And also — this is a very important part of the package — tax cuts,” he said.

But tax cuts are a point of concern for both parties. House Speaker Nancy Pelosi (D-CA) told ABC’s This Week that spending, historically, does more to stimulate the economy than tax cuts.

“Economists have told us from right to left there is more bang for the buck — the term they use — by investing in food stamps and unemployment insurance than in tax cuts. Nonetheless, we are committed to the tax cuts.”

Republican Sen. John McCain disagrees with the Obama administration’s plan to allow tax cuts for the wealthy passed under former President George W. Bush to expire, telling Fox News Sunday, “We need to make tax cuts permanent. We need to make a commitment there will be no new taxes. We need to cut payroll taxes. We need to cut business taxes.”

McCain and House Republican leader John Boehner of Ohio say their party isn’t likely to support the plan without major revisions. Boehner told Meet the Press he has issues with some of the spending contained in the bill.

“Two hundred million dollars to fix up the National Mall, $21 million for sod, over $200 million for contraceptives — how is this going to fix an ailing economy?”

Boehner says he cannot support the bill as it stands today.

“Right now — given the concerns we have over the size of this package and all of the spending in this package — we don’t think it’s going to work.”

President Obama will make the case himself when he visits Capitol Hill this week.

Politico reports that after a record-breaking haul, Democrats expect the well to run a little dry:

There is “concern,” but not panic, among fundraising pros as the economic slowdown takes hold; small donors, like those who fueled Obama’s White House run, are likely to be affected more than big donors; and Republicans will get hit worse, possibly far worse, than Democrats.

A Democratic insider, speaking on the condition of anonymity, said direct-mail fundraising for Democratic congressional candidates started to “sharply decline” in September and October as “donor fatigue” and the extent of the Wall Street collapse became apparent — but that the drop-off was masked by Obama’s continued success in raising online funds.

The Washington Post reports:

On a frigid evening this month, more than 10,000 people gathered outside a 13th-century cathedral in this Baltic capital to protest the government’s handling of Latvia’s economic crisis and demand early elections. The demonstration was one of the largest here since the mass rallies against Soviet rule in the late 1980s, and a sign of both the public’s frustration and its faith in the political system.

But at the end of the night, as the crowd dispersed, the protest turned into a riot. Hundreds of angry young people, many drunk and recently unemployed, rampaged through the historic Old Town, smashing shop windows, throwing rocks and eggs at police, even prying cobblestones from the streets to lob at the Parliament building.

Similar outbursts of civil unrest have occurred in recent weeks across the periphery of Europe, where the global financial crisis has buffeted smaller countries with fewer resources to defend their economies. Especially in Eastern Europe, the turmoil reflects surging political discontent and threatens to topple shaky governments that have been the focus of popular resentment over corruption for years.