EconomistMom.com

Today Senator Obama unveiled several new proposals to address the current economic crisis:  “A Rescue Plan for the Middle Class.”  Nothing controversial; it’s a basic deficit-financed, jump-start fiscal stimulus approach, including a job-creation tax credit and penalty-free withdrawals from retirement savings accounts.  We already knew that congressional Democrats are talking about a maybe-$150 billion fiscal stimulus package to be taken up in a lame duck session of Congress.

Now, with the Dow up about 700 points more than 900 points (updated post-close) today (a record one-day gain), some may question whether the pressure for such a fiscal stimulus will still be as strong after the election.  And it’s certainly troublesome to realize we’re likely headed for an increase in the federal debt even beyond the (at least up-front) $700 billion for the big rescue.  But if it’s still clear the economy will need more “life support” at that point, it’s at least good to hear today that Senator Obama’s new “immediate response” proposals are clearly temporary in nature.  (The jobs tax credit proposal is for 2009 and 2010, and the penalty-free withdrawals proposal is for 2008 (retroactive) and 2009.)  

Most reassuring for me was to read what Senator Obama said in today’s speech in Ohio after he got through his explanation of the immediate “life support” measures:

I won’t pretend this will be easy or come without cost. We’ll have to set priorities as never before, and stick to them. That means pursuing investments in areas such as energy, education and health care that bear directly on our economic future, while deferring other things we can afford to do without. It means scouring the federal budget, line-by-line, ending programs that we don’t need and making the ones we do work more efficiently and cost less.

It also means promoting a new ethic of responsibility. Part of the reason this crisis occurred is that everyone was living beyond their means - from Wall Street to Washington to even some on Main Street. CEOs got greedy. Politicians spent money they didn’t have. Lenders tricked people into buying home they couldn’t afford and some folks knew they couldn’t afford them and bought them anyway.

We’ve lived through an era of easy money, in which we were allowed and even encouraged to spend without limits; to borrow instead of save.

Now, I know that in an age of declining wages and skyrocketing costs, for many folks this was not a choice but a necessity. People have been forced to turn to credit cards and home equity loans to keep up, just like our government has borrowed from China and other creditors to help pay its bills.

But we now know how dangerous that can be. Once we get past the present emergency, which requires immediate new investments, we have to break that cycle of debt. Our long-term future requires that we do what’s necessary to scale down our deficits, grow wages and encourage personal savings again.

It’s a serious challenge. But we can do it if we act now, and if we act as one nation. We can bring a new era of responsibility and accountability to Wall Street and to Washington. We can put in place common-sense regulations to prevent a crisis like this from ever happening again. We can make investments in the technology and innovation that will restore prosperity and lead to new jobs and a new economy for the 21st century. We can restore a sense of fairness and balance that will give ever American a fair shot at the American dream. And above all, we can restore confidence - confidence in America, confidence in our economy, and confidence in ourselves.

This country and the dream it represents are being tested in a way that we haven’t seen in nearly a century. And future generations will judge ours by how we respond to this test… 

So, first we may need the immediate fiscal ”life support”–and we may need to put up with even more debt, temporarily.  But then we need to get back to living within, not beyond, our means.  I, personally, think Senator Obama and his economic team get that.

(PS:  I am blogging “live” from the BlogHer DC conference, during a session on “online community building for political action”… what a great day I’ve had; more later.)