One Year Later, a New World

Much has changed since April 26, 2007, the formal start of this presidential campaign.

And that’s the point.

Eight Democratic candidates gathered in Orangeburg, S.C., that night. Ten Republican candidates met a week later to kick off what has become a long-running attraction of more than 45 debates.

The debate’s focus, properly, was Iraq. Violence was rising, with a growing death toll of U.S. soldiers and Iraqi civilians. Other debate points ran from gun control to $400 haircuts. There was also a brief discussion of the economy, almost a celebration of its strength. Inflation was tame. Gas prices were steady, home values were high, and on the afternoon of that debate, the Dow Jones Industrial Average closed at 13,089, then a record high.

How quickly things have changed.

In just 12 months, unemployment has risen from 4.5 percent with a growing workforce to 5.1 percent and a shrinking workforce as millions stopped seeking jobs. The average price of a gallon of gas has jumped 53 cents to $3.44, and crude oil has nearly doubled from $64 a barrel to

$115. Inflation is growing; medical costs are growing faster. Stock prices have dropped nearly 15 percent, and housing prices have plummeted more than 10 percent, part of a spiral of delayed payments, defaulted mortgages and home foreclosures. Banks and lenders around the world are in full retreat.

The U.S. trade deficit and the federal budget deficit continue to mushroom, and the national debt is $9.4 trillion—up 10 percent in a year. And the value of the dollar has fallen another 15 percent, driving the cost of imports ever higher and shaking the confidence of foreign investors.

If there is turmoil in the markets, there is chagrin and anxiety at home. Amid all the statistics, it is workers, home-owners, spouses, children and grandparents who feel the impact of this wrenching sequence of events—in lost jobs, postponed retirement, reduced wealth, delayed medication, lower confidence.

Such a sudden reversal should not be a surprise. We live in a volatile, complicated world that is instantly connected, global and vulnerable. For everyone, this puts a premium on financial security. Individually, we should plan ahead, be prudent and avoid panic. We should encourage employers to explore phased retirement initiatives. We should urge lawmakers to find legislation that encourages saving and avoid laws that protect special interests.

Former Federal Reserve Chairman Paul Volcker assessed the problem clearly several weeks ago: “The bright new financial system—for all its talented participants and rich rewards—has failed the test of the marketplace.” In an election year, we must demand clearer answers from our candidates. They must be deft enough to recognize the speed of change in a dynamic world. And they must be creative enough to craft effective responses. This is a pivotal moment, the consequence of the very economy that the candidates celebrated when they gathered a year ago.