On Monday when the stock exchange opened the Dow dropped by 5 percent. The economy was deteriorating even before the September 11 attack.
The stock market was already reflecting this underlying deterioration. Three major financial industries will be directly hurt by last week's tragic events - financial services, airlines, and tourism. There is also an incalculable blow to confidence, and markets live or die on confidence.
On the other hand, military expenditures and relief outlays are a form of economic stimulus. Right now, it's hard to know which effect will predominate.
One fortuitous side effect: Last Tuesday, the bipartisan conceit that government should never run deficits was also blown away. That entire framing of fiscal debate went up in smoke.
But a lot of important debate lies ahead. There is a tradition that partisanship stops at the water's edge in times of national crisis.
Leaders of both parties are united on one thing. Global terrorism must end, and that may well take acts of war against terrorists, even against national leaders that harbor them.
But, look beneath the national show of solidarity and there are great differences on details of domestic and even foreign policy.
This is no time to pretend that such differences don't exist. Debating the details of national policy, even in crisis, is what makes us strong as a democratic nation.
It would be one thing if the Bush administration were setting an example of constructive bipartisanship in this hour of national resolve. But the administration is using the crisis to prosecute the rest of its political agenda.
The White House wants to appropriate more money to fight terrorists, as it should. But you don't see the administration offering to rescind the more foolish parts of the tax cut. Indeed, White House officials are cynically using the crisis to redouble efforts to press for a capital gains tax cut.
With the stock market falling and investors experiencing losses, it's hard to make the case that a capital gains cut would be much of a stimulus. A more sensible policy would be to take some of the tax cuts for the very wealthy scheduled to take effect after 2004 and give them to ordinary people this year.
Although the top priority right now needs to be fighting terrorism, all of the debates about other pressing issues are still live questions. It would be appalling if the Democrats just wrote the administration a blank check on everything.
Before the attack, the administration was in some trouble on its plan to spend tens of billions of dollars on a missile defense. Last Tuesday's outrage should have been the coup de grace for that untested idea. The threat was not a rogue state launching a nuclear missile, but a fanatic group of suicide hijackers flying beneath the radar. Nor will a missile defense protect against car bombs, much less chemical or biological threats.
Fiscally, money programmed for other defense needs should be reprogrammed to better intelligence, better airport security, and, quite probably, military strikes. But the advocates of missile defense are now frantically arguing that the terrorist attack proves that the United States must arm itself against any and all threats, even if there is no proof that missile defense works. To their credit, at least some skeptics in Congress are still willing to publicly oppose the president on this one.
This is war, of a kind, but it is not World War II.
Despite the grief and the rage, public debate about important questions must not be stifled, either by flag-waving or by self-censorship.
Big and important public questions about the economy still loom. If the economy continues to falter, do we revive it by cutting taxes or increasing spending? If we cut taxes, do we give most of the breaks to the rich or to ordinary working people? If we increase spending, does it go for missile defense? Or maybe it should go for better airport security and more reliable inter-city trains to take some of the pressure off over-crowded airports?
Remember Social Security? It was Topic A until last week. But the same baby boomers will still retire in a few years, and the same dilemmas still apply, terrorist threat or no.
What makes this a nation worth rallying behind is not just that America is our homeland, but that it is a free country.
Even in this new, awful age of terrorism, we should never forget what we are defending.
