Just when you thought the economy had hit rock bottom. The Conference Board, a non-profit global business organization has reported that its consumer confidence index has dropped to its lowest point since the last recession in 1992. The New York Times paints the grim picture:

Tuesday’s data suggested a nation struggling with expensive gas and devalued homes, where people are fearful for their jobs and wary about where the economy is headed.

Any positive signs that economists and forecasters may have cited need to be thrown out the window. Even with the consumer confidence index at 50.4%, down a whopping 7.7% from May, the worst may still be yet to come. This report should be a wake up call to legislators across the country on behalf of a nation in desperate need of more help.

As the economy worsens, more and more key players are getting on board with the idea of a second economic recovery package. But not everyone’s where we need them to be to get something done in time to matter. For example Rep. David Obey (D-WI), powerful chairman of the Appropriations Committee free associated to Congress Daily (subscription only) and revealed that he doesn’t quite get how urgent doing something to stave off this recession is:

“People use all kinds of terminology; I don’t care if you call it a second supplemental or a second economic [stimulus] package — to me there are all kinds of things that we need domestically — but we need finish this job [war supplemental] before we can start thinking about the next one”

This pains me. Not only are House Democrats punting on telecom immunity, they’re putting war spending ahead of domestic spending.

As I wrote on myDD, Bush’s first economic stimulus package just didn’t work. We didn’t get the big sweeping surge of economic growth we were promised. Even what good news we’ve gotten was drowned out by a chorus of  story after story of bad economic news. The costs of living are growing rapidly as employment becomes harder to find. Food is getting more expensive as food bank lines grow longer. The longer Congress waits to act, the worse things will get.

And the states can’t wait for the aid that Democratic leaders say must be included in a second stimulus package either. State spending is the last prop holding up the economy and is at a tipping point. More than half of the states are facing crippling budget shortfalls that total $48 billion for the upcoming fiscal year. In the absence of aid from the federal government, states have been forced to cut vital services for many of our most vulnerable citiznes. The Center on Budget and Policy Prioritiesgives outlines the chopping block:

At least 12 states have implemented or are considering cuts that will affect low-income children’s or families’ eligibility for health insurance or reduce their access to health care services.

At least 10 states are cutting or proposing to cut K-12 education; three of them are proposing cuts that would affect access to child care.

At least 11 states have proposed or implemented reductions their state workforce. Workforce reductions often result in reduced access to services residents need.

And when states are forced to do things like cut their state workforce, the economy suffers even more. According to CNN/Money:

With falling revenue from sales and income taxes, and property-tax declines looming, states, cities and towns have already laid off tens of thousands of government employees. Many expect more job cuts ahead as public officials struggle to balance their budgets.

Economists say that cutbacks in jobs and spending by local governments could be a major drag on the overall economy.

It’s cool that Obey recognizes the need for a  second stimulus package. But he also needs to understand that each day he lets pass without doing something means the economic hole we’re in is that much deeper and is going to require that much more federal spending to help us get out of.

Cross posted at myDD.

CQ Politics is reporting on the Democratic leadership's desire for a second package to strengthen the economy that largely lines up with Barack Obama's plans. But are Congressional Dems omitting aid to state governments, one of the key planks of Obama's plan?:

Democrats have been contemplating a second effort to inject money this year into the faltering economy. The idea appears to have gained traction, particularly among congressional leaders, since Monday when presumptive Democratic presidential nominee Sen. Barack Obama of Illinois outlined a $50 billion stimulus proposal that will serve as the centerpiece of a two-week economic tour of battleground states.

Though the prospects for a second stimulus package are slim, the debate gives congressional Democrats an opportunity to rally around Obama.

The massive economic stimulus package enacted in February focused on tax breaks for businesses and rebates for individuals and families.

Obama has proposed a second round of rebate checks, an extension of unemployment insurance, aid to state governments and a new $10 billion fund to help stem the tide of home foreclosures.

He also proposed increasing investment in infrastructure such as roads, schools and bridges.

“There’s a need for additional targeted stimulus,” said Senate Budget Chairman Kent Conrad , D-N.D.

Schumer said infrastructure investment and a second round of rebate checks could be part of the new package, which Democrats are likely to unveil after the July Fourth recess

State government spending is a key prop holding up the economy during a recession. Dem leaders might want to check out the NYT, which pointed out earlier this week:

At $1.8 trillion annually in a $14 trillion economy, the states and municipalities spend almost twice as much as the federal government, including the cost of the Iraq war. When librarians, lifeguards, teachers, transit workers, road repair crews and health care workers disappear, or airport and school construction is halted, the economy trembles.