your scenario is the most likely if we're facing a "regular" recession. but the numbers we're seeing these days are just so out there that i'm really beginning to wonder how on earth the u.s. officials can come to terms with it.
Well, this is the problem, the United States has always maintained its balance by having one system of government with two parties that helped to avoid one party having absolute power and becoming a hegemony -- the cycle has always been: Republican gets elected, pushes the economic advantages towards the right, which equates into the growth of small businesses, as well as the evolution of small businesses into major enterprises, then a Democrat would come along and push the economy back to the left, raising taxes on corporations and the wealthy for the betterment of the lower and middle-class, while investing more taxpayer dollars in education and social programs, with the difference between a good and a bad Democrat being that, a good Democrat (Bill Clinton) essentially recognizes that capitalism/corporate America is a necessary evil, a bad Democrat (Jimmy Carter) failing to comprehend this and feeling that the government could just tax these major corporations without penalizing the consumer, just further complicates the situation.
This has been the cycle for quite sometime, but the problem is the Bush Administration has spent more money than any Democratic president could ever have fathomed spending, the difference being that taxpayer money hasn't been spent domestically, but rather on maintaining military forces in Iraq and the like, this goes without mention of the tax cuts which don't expire until 2010 that only benefit a relatively small percentage of the wealthiest Americans (the logic here is that the wealthy will spend more money as consumers if they have more of it at their disposal, as opposed to merely investing it) so what we have here is a Republican president that taxes like a conservative, spends like a big government liberal all the while promoting ideals which are typically associated with the Republican party, i.e; military funding, national security, ecc. ecc.
I'm not going to delegate the blame exclusively to President Bush, but let's just say that at this point unemployment is growing, inflation is worsening by the day, people are getting killed at the pump and the foreclosure crisis is here -- a phenomenon from which even the wealthy haven't been exempt and businesses are failing because obviously people have no money to spend, it's an ultimatum between feeding your kids and having gas in your tank or going out for a steak and lobster dinner -- which would you choose ?
All of this leads up to my point which is essentially that neither big government nor small government is the answer, as you can't increase taxes (capital gains for example) because in this economic environment it'd be disastrous, but at the same time you can't extend tax cuts for the wealthy, because the fact of the matter is someone has to pay for this war and if we're going to rely on loans from other countries and average joes, then the situation will only worsen.
When Obama says, I'm going to get in office and tax the wealthy to the moon, that's irresponsible, but when McCain says that he's going to extend the tax cuts which he initially opposed, that's also irresponsible. It's really quite a dilemma and the next president is going to have to cut out the partisan nonsense and step on a few toes to improve the state of the American economy.
What we need, is someone that is an authentic centrist, we have to forget ideology -- meaning no crying about global warming and abortion and focus strictly on the economy, but this of course easier said than done, as voters focus much more on social issues than economic issues, yet at the same time it must be understood that our economy must be allowed to breathe; we cannot fix or set prices in a free market, we can only further enable our economy to succeed by cutting spending and balancing our budget -- if what you're anticipating is the word surplus being used within the next decade -- you're going to be very disappointed.