Recession, and what the candidates need to do..
David GergenSenior Political Analyst
I am pleased that candidates on both sides have started paying more attention to the growing economic challenges the country is facing -- it's about time. Today's announcements of Bank of America's purchase of Countrywide and of at least an additional $3 billion in write downs from Merrill Lynch, are the latest reminders that we are only at the end of the beginning of the mortgage crisis.
The most immediate problem is clearly the danger of slipping into a recession. Hillary Clinton has been smart to quickly promise a new stimulus package. A good model to draw from would be that of Larry Summers, the former Treasury Secretary, who has proposed an immediate package in the range of $50-75 billion. President Bush is coming forward with his own proposal in the State of the Union in late January -- just a few days before Super Tuesday. The way the candidates respond to the threat of recession and the need for a stimulus package could well play a role in the voting on February 5th.
But the bigger problem is that which awaits the next President upon taking office. Just yesterday, as reported in the Financial Times, Moody's, the credit rating agency, warned that the US is at risk of losing its top-notch AAA credit rating within a decade unless it takes radical action to curb the rising costs of social security and health care. The US has had a AAA rating since 1917 -- its loss would be a serious blow to the US and global economy. Moody's warning echoes that of our Comptroller General, David Walker, who has compared the country's current situation to the dying days of the Roman Empire.
This next four weeks before Super Tuesday, while we still have competitive races in each party, is a critical time for candidates and voters to wrestle must more deeply and candidly on the challenges facing the next President.