Bear politics.(THE ECONOMY)(homeownership bill)

WE remain stubbornly unconvinced that the United States is in an economic crisis. For all the talk of foreclosures, the homeownership rate is higher than it was in 2000. The Dow, meanwhile, has dropped all the way to--where it was in April 2007.

Washington could yet make our economic problems into a crisis. The Federal Reserve has probably loosened monetary policy too much, generating inflation both at home and abroad and weakening the dollar. If it does not tighten, it should at least make it clear that it will not loosen any further.

The Senate has passed a mostly worthless bill to stimulate the housing market. It includes a $7,000 tax credit for purchasers of foreclosed property. One would think that falling property values provided sufficient incentive for buyers. People who have been faithfully making their payments and are now trying to sell their homes should cry foul. Not only do they have the bad luck of selling in a buyer's market; they may also have to cut their price an additional $7,000 to match the deal on the foreclosed house down the block.

The bill is a bipartisan fiasco, but the Democrats have made two uniquely bad contributions to the economic debate. They have blocked a trade deal the chief effect of which would be to cut Colombian tariffs on our exports. And they have suggested that trouble in our housing market is somehow the result of the Iraq War. (Get ready for it: "Bush lied us into recession.")

Higher-toned Democrats are blaming the financial deregulation of the late 1990s for the present ...