At first blush, the phrase "the real economy" seems jarringly redundant. As opposed to what? The surreal economy? The fictional economy? But after several weeks of obsessive coverage of the rolling crisis in domestic and now international credit markets, the phrase is useful to distinguish from the financial economy, that sector of American capitalism that has received nearly all of the media's attention since the staggering events of mid-September. And the real economy is cratering.

There are two problems at hand. The first is a recession in which much of the country is already mired (a recent New York Times graphic showed that 14 major cities are in recession). The last recession, in 2001, was mild. This one won't be--a point on which there is near unanimous agreement. The second problem is that the expansion that preceded this recession was not very bountiful, to put it mildly, for the vast majority of working people. According to nearly every metric--median wage, household income, household debt--the nonrich are worse off now than they've been at the end of any previous expansion in the postwar period.

Which brings us to the $700 billion. Already, establishment consensus is hardening around a deceptively simple assumption: that the passage of the Paulson bailout plan means that the next administration will have to cut back on its spending. In the two presidential debates and the vice presidential one, the moderators asked variations on the same question: in these lean times, how will you tighten the government's belt? While Barack Obama has responded by emphasizing the need to "prioritize," John McCain has gleefully promised cuts, cuts and more cuts.

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