The 2010 Double Whammy and the Incredible Shrinking Obama

Sun, 01/24/2010 - 21:37 — dlindorff

The Democratic Party’s embarrassing electoral disaster in Massachusetts, losing a seat held for 46 years by the late Sen. Ted Kennedy, provided a clear warning that the party, and President Obama’s presidency, are headed for an epic trouncing this November, when all members of the House and a third of the Senate face re-election.

But all the frantic strategizing within the sclerotic Democratic Party leadership ignores the bigger crisis yet to come for this party that once brought the nation Social Security, unemployment compensation, public jobs programs and Medicare. That crisis is the economy, which is now showing signs of falling off a second cliff instead of beginning to recover.

Thanks to the abject failure of President Obama to boldly order up a massive jobs program and a full-blown economic stimulus program of public investment at the beginning of his term last spring, and to his failure to attack the entrenched banking interests by smashing apart the meg-investment banks that had turned banking into a casino game, the economy has been left to stagnate for a year.

Unemployment has continued to rise, with the latest reports showing that layoffs have begun to re-accelerate. Unemployment rose in 43 states, including some of the biggest, in December and fell in only four. And we are only seeing the beginning of this new drive into the ditch. The most ominous, and totally predictable, trend is layoffs by the public sector--by towns, counties, states, and public bodies such as public universities, school districts, public hospitals and transit companies. These layoffs which could ultimately number in the millions and which will have a knock-on effect on all kinds of other jobs, were deferred because of aid provided last year by the federal government, but no more federal aid is likely to be forthcoming and the money already provided runs out this summer. Look for official unemployment this year to move past the 11 percent record set in 1982. Meanwhile, real unemployment, which includes people who have given up looking for work, and those who have managed to get part-time work, is approaching 20%, and could eventually top 25%--a rate reminiscent of the Great Depression.

At the same time, the foreclosure crisis, and the related decline in home values which has put one-fourth of all homes “underwater,â€