A mini-depression

To Republicans in Congress, please hear me out, and consider working with Democrats for urgent economic action. Even if the lame-duck session must be extended.

President Bush said recently that he was warned by advisers that there was recently a danger of an economic collapse worse than the Great Depression. Think about it: worse than the hardships, collapse and devastation of a decade-long depression.

I don’t know if the danger is that potentially devastating, but I do know this: It could be. America stands on the brink of a mini-depression that would be worse than any recession since the 1930s, could be more prolonged than any recession since then, in uncharted waters that none of us fully understand, downside risks that could be more damaging than we can imagine.

We are playing with economic fire. We are facing cascading calamity with business as usual. We must put ideology and politics aside. We are in this together. The tide is sinking all boats. Understand the magnitude of the danger and the imperative for action.

Revisit the column I wrote in this paper exactly a year ago warning of a cascading crisis that would rampage throughout the economy. That has happened. It is still happening today. It will be happening tomorrow. Until strong action is taken.

To Republicans, the best partisan outcome for Democrats is they try, you obstruct, nothing happens, the collapse worsens, and you get blamed. Again.

That would be partisan, clever, great for Democrats but immoral, unpatriotic and tragically wrong. You might not like what the Speaker and Senate majority leader are proposing, but they are not taking the partisan route. Please, work with them, and Mr. Leader and Madam Speaker, please reach out as well. All of you, act as though we were living one hour after Pearl Harbor. Economically, we are.

Enact a cash bonus for all military families with a household member who served in combat after Sept. 11, 2001. This is right — and stimulative.

Enact some form of middle-class tax cut or rebate, now. Both parties favor this. Do it. Add some infrastructure spending and add unemployment extension and food stamps.

Make this deal: Take up the offer of Sen. John McCain (R-Ariz.) and President-elect Barack Obama. Create a bipartisan task force to find spending cuts to implement early next year. For those who want spending cuts, McCain will deliver. Obama will work with him. Make the deal and open the door to more action now.  Don’t let the auto industry go bankrupt. This would be catastrophic. A wave of bankruptcies would cascade through the auto industry, suppliers and beyond. This could be the Smoot-Hawley of our age, equal in impact to the protectionism that precipitated the Great Depression.

To Republicans who are skeptical: I agree with you. Times 10. Endless bailouts are wrong. Give bridge money but demand a true reconstruction.

The president-elect has called for this. Republicans should do it. No more piecemeal, mini-bailouts. Do it right. Begin it now. Force aggressive terms for industry revival and reconstruction to be on the president’s desk by Jan. 20. Enforce them. But do not let this industry go bankrupt.

Members of Congress, there is a clear and present danger of mini-depression, or worse. The risk is enormous. The situation is precarious. Confidence is shattered. None of us fully understands the complexities. Act together. Act now.

Budowsky was an aide to former Sen. Lloyd Bentsen and Bill Alexander, then chief deputy majority whip of the House. He can be reached at brentbbi@webtv.net and read on The Hill Pundits Blog .