As the Economy Screams

This morning I had the opportunity of attending the "As the Economy Screams" discussion hosted by the New America Foundation. Focusing on the current problems of the United States economy, the senior economic advisors for presidential candidates Barack Obama, John Edwards, Hillary Clinton, and John McCain explained their candidate's economic agenda in a few short minutes and fielded questions from the crowd and press. I've bulletpointed some of the remarks made by the advisors below.

Austan Goolsbee
Senior Economic Advisor, Barack Obama for President

- In order to maintain the status of richest and most productive nation in the world, it is essential to focus on long-term investments in the areas of education, energy, and technology.
- Many of the economic fears that we are now facing are a result of a troubled healthcare system, college becoming less affordable, and a distribution of income that cannot promote a healthy economy. As a result, savings are falling and consumer debt is rising.
-In the short run, it is essential to have tax relief for the middle class and invest in the long term issues enumerated above in order to provide a light at the end of the tunnel for many struggling American workers today. In increasing savings by setting up an automatic enrollment program, and not just tax cuts alone, workers can immediately begin to save for their future.
- "ipod" style of government, where everything works easily, smoothly, and responds fast to problems can bring our country to new heights

Leo Hindery
Senior Economic Advisor, John Edwards for President

- "John Edwards feels like Paul Revere in search for a horse."
- The United States economy is falling and the only ones not feeling it are those sitting on the top.
- First off, it is unfair to label the sub-prime crisis as a misfortune brought about in America by the poor failing to live up to their responsibilities. The credit crisis in general was brought about not only by people struggling to make their payments, but also by irresponsible lenders, so this problem ranges widely across the economic spectrum.
- There are about 90% of Americans living in stagnant growth and this period of time has the most unequal economy since 1928.
- When it comes to the effects of globalization, America needs to look at trade as a fairness issue, similar to many environmental practices. Overall, the economy severely needs quick action and cutting Americans small checks that won't arrive until June will not benefit anyone.

Gary Gensler
Senior Advisor, Hillary Clinton for President

- There is currently a huge disconnect between the debates in Washington and the people of the United States. Many Americans are living a single pink slip away from foreclosure and have virtually no savings to assist them.
- If America can have long-term optimism for universal health care, addressing the needs to get students from kindergarten through college, and creating a savings program, short-term drops will be eliminated.
- The American people need to find a plan to be dependant on our own resources because it will help the economy and reduce serious national security threats.

Kevin Hasset
Senior Advisor, John McCain for President

- If you add up all the promises that the United States makes versus the revenue that the country has coming in, we are about 50-60 trillion dollars short.
- Foreign countries continue to buy up American securities, but if the American government cannot address the long-term problems facing the country, the foreign investors that the United States relies upon will begin to question their investments.
- There are many opportunities to fix stimulus problems, but the United States can't and shouldn't continue to "borrow money from the Chinese to drop from helicopters" in order to provide short-term relief for workers across the country.
- Restoring the competitiveness of US corporations by giving companies more room to function will help businesses create a more competitive edge in the future. In short, helping firms will help the people.

Some interesting Q & A

Question: If in office starting Janurary 20th, what specific aspect of a stimulus package would immediately be put forward first?

Hindery (Edwards): There needs to be a reformation of the current health care system and implement ideas from the "green economy" that is constantly in the news. Take resources at the disposal of the federal government and put them into domestic needs like heating costs. It is important to realize that putting cash in hands of the consumers will only pay off their amounting bills, not encourage them to go out and spend more.

Goolsbee (Obama): The biggest criticism of fiscal stimulus is that the government can't get money into the hands of the people in time. If you apply an optimistic view, looking at America's history, recessions typically last for about eleven months before turning around. If the first checks can't get in the hands of the consumers until June and additional checks might be needed, there is possibility of the market correcting itself, and then the influx of $150 billion or more, then actually leading to further inflation. The only solution to this problem is immediate cash in hand to the people who are in most dire need.

Gensler (Clinton): Stimulus package announced last week is the United States' best option with $40 billion dollars given in immediate tax rebates in addition to money to help people facing foreclosure. Then a large portion of the package will be given to the states so that each state can analyze and implement a plan that works best in their specific citizens.

Hasset (McCain): Stimulus packages will most likely not work unless it is associated with permanent tax cuts to dispel the fears of the American people of further recession and give them the opportunity to spend more money. In addition, by lessening restrictions on corporations, they can adapt to the economy and respond today, not in June when checks might be written. By allowing companies to act more freely, everyone will benefit from their productivity and gains.

Question: How should the government deal with growing debt?

Goolsbee (Obama): Openness and transparency is a problem. America needs to regain a trust in credit rating agencies and all other forms of government. Establishing a more critical review process for agencies is not anti-business or anti-market. Furthermore, Americans need to realize that losses from the mortgage crisis are large, but not huge when compared to the economy as a whole. By starting with correcting the problems with homeowners and lenders on a micro level, losses then further up the chain to large corporations can be minimized or avoided.

Hindery (Edwards): As seen in this mornings increase, European and Asian markets are better at recognizing the long-term effects of the United States economy on the world. The United States problems arise from 25 years of trade, state, consumer, and corporate fluctuations and often-regulatory responses have been neglectful. If we can reform these systems, the chances of this kind of economic downturn can be side stepped in the future.


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