Rebuilding confidence in the U.S. economy

Faith: Individuals and government share responsibility for stimulating economic revival.

September 20, 2001

AMERICAN resolve in the war on terrorism must be strong, not only in pledges of patriotism and military response but in determination to bolster a shaken economy.

Confidence and optimism in the economic future will depend on actions and attitude here at home, the heart of the global financial system.

Admittedly, the immediate dollar costs of last week's attacks are staggering.

The $40 billion in federal emergency spending to aid recovery and to fight back is just a downpayment on the nation's needs, as officials emphasized.

Insurance claims alone are estimated at $30 billion, the most costly single disaster in history.

The Defense Department's requirements will jump $20 billion this year, only a bit of that to rebuild the damaged Pentagon.

The already reeling U.S. airline industry projects a $15 billion loss in revenue this year from the terrorists' blow to air traffic.

Economists now predict losses in the nation's economy stretching through the first quarter of next year, heightening fears of a recession that had begun before Sept. 11 due to weakening employment, production and business spending figures.

Patriotic rhetoric aside, investors displayed little confidence in the economy when the stock market resumed trading Monday after being closed four days. The Dow Jones industrial average suffered its largest point-loss in history.

That downturn came despite a major cut in interest rates here and in Europe designed to stimulate the economy.

Last week, the Federal Reserve loaned record amounts of money to U.S. and foreign institutions to meet cash demands and to bolster the dollar.

The market did not crumble. It continued to function. Sellers were in the majority, but buyers were cautiously finding reason to participate.

Both are needed in a free market, the engine of our economy.

Though hit hard, the insurance industry appears in no immediate financial danger. Some relief measures may be necessary later.

In contrast, the nation's airlines are terribly vulnerable, with $26 billion in debt, losing many millions a day, facing an ongoing 20 percent cut in daily flights and a frightened, wary public.

Most important for this region is the fate of US Airways, the second-largest carrier at BWI Airport and a major employer.

With Reagan National, its main terminal, closed indefinitely, the failing airline has virtually no borrowing power left. It laid off 11,000 employees and cut a quarter of its flights.

Massive federal loan guarantees, emergency aid to laid-off workers (whose toll could exceed 100,000) and government takeover of tighter security systems will be necessary to stabilize -- not to bail out -- this vital economic sector.

More federal money must also flow to improving alternatives to air travel, including strengthening the passenger railroad system.

With decisive, united and prompt action, the nation's policymakers can lay the foundation for reviving public security and confidence.

Individual spending is crucial to a strong economy.

Americans have shown their readiness to respond to such reassuring signals.

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