Suddenly, the economic consensus seems to be that the implosion of the housing market will indeed push the U.S. economy into a recession, and that it's quite possible that we're already in one. As a result, over the next few weeks we'll be hearing a lot about plans for economic stimulus.
Since this is an election year, the debate over how to stimulate the economy is inevitably tied up with politics. And here's a modest suggestion for political reporters. Instead of trying to divine the candidates' characters by scrutinizing their tone of voice and facial expressions, why not pay attention to what they say about economic policy?
In fact, recent statements by the candidates and their surrogates about the economy are quite revealing.
Take, for example, John McCain's admission that economics isn't his thing. "The issue of economics is not something I've understood as well as I should," he says. "I've got Greenspan's book."
His self-deprecating humor is attractive, as always. But shouldn't we worry about a candidate who's so out of touch that he regards Mr. Bubble, the man who refused to regulate subprime lending and assured us that there was at most some "froth" in the housing market, as a source of sage advice?
Meanwhile, Rudy Giuliani wants us to go for broke, literally: his answer to the economy's short-run problems is a huge permanent tax cut, which he claims would pay for itself. It wouldn't.
About Mike Huckabee - well, what can you say about a candidate who talks populist while proposing to raise taxes on the middle class and cut them for the rich?
And then there's the curious case of Mitt Romney. I'm told that he actually does know a fair bit about economics, and he has some big-name Republican economists supporting his campaign. Fears of recession might have offered him a chance to distinguish himself from the G.O.P. field, by offering an economic proposal that actually responded to the gathering economic storm.
I mean, even the Bush administration seems to be coming around to the view that lobbying for long-term tax cuts isn't enough, that the economy needs some immediate help. "Time is of the essence," declared Henry Paulson, the Treasury secretary, last week.
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But Mr. Romney, who really needs to take chances at this point, apparently can't break the habit of telling Republicans only what he thinks they want to hear. He's still offering nothing but standard-issue G.O.P. pablum about low taxes and a pro-business environment.
On the Democratic side, John Edwards, although never the front-runner, has been driving his party's policy agenda. He's done it again on economic stimulus: last month, before the economic consensus turned as negative as it now has, he proposed a stimulus package including aid to unemployed workers, aid to cash-strapped state and local governments, public investment in alternative energy, and other measures.
Last week Hillary Clinton offered a broadly similar but somewhat larger proposal. (It also includes aid to families having trouble paying heating bills, which seems like a clever way to put cash in the hands of people likely to spend it.) The Edwards and Clinton proposals both contain provisions for bigger stimulus if the economy worsens.
And you have to say that Mrs. Clinton seems comfortable with and knowledgeable about economic policy. I'm sure the Hillary-haters will find some reason that's a bad thing, but there's something to be said for presidents who know what they're talking about.
The Obama campaign's initial response to the latest wave of bad economic news was, I'm sorry to say, disreputable: Mr. Obama's top economic adviser claimed that the long-term tax-cut plan the candidate announced months ago is just what we need to keep the slump from "morphing into a drastic decline in consumer spending." Hmm: claiming that the candidate is all-seeing, and that a tax cut originally proposed for other reasons is also a recession-fighting measure - doesn't that sound familiar?
Anyway, on Sunday Mr. Obama came out with a real stimulus plan. As was the case with his health care plan, which fell short of universal coverage, his stimulus proposal is similar to those of the other Democratic candidates, but tilted to the right.
For example, the Obama plan appears to contain none of the alternative energy initiatives that are in both the Edwards and Clinton proposals, and emphasizes across-the-board tax cuts over both aid to the hardest-hit families and help for state and local governments. I know that Mr. Obama's supporters hate to hear this, but he really is less progressive than his rivals on matters of domestic policy.
In short, the stimulus debate offers a pretty good portrait of the men and woman who would be president. And I haven't said a word about their hairstyles.
Paul Krugman is Professor of Economics at Princeton University and a regular New York Times columnist. His most recent book is The Conscience of a Liberal.
Copyright 2008 The New York Times Company