Friday, January 11, 2008
Recession, and what the candidates need to do..
David Gergen
Senior 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.
Posted By CNN: 9:06 PM ET
  8 Comments
David

It is a scary time economically. My mortgage is with Countrywide but I got a fixed rate VA loan for it and I bought within my means. I just hope now that staying within my means at purchase time will be to my advantage now and I won't have to worry about losing my home.

It seems like every election in the past decade or so start out about one issue or another but they always wind up being about our pocketbooks. I hope we don't have to wait until the next President takes office to see some help this time. Perhaps Bush or Congress will do something effective now before the recession gathers steam and gets worse.

Its always nice to dream that will happen but in the end it may be a pipe dream.

Annie Kate
Birmingham AL
Posted By Blogger Annie Kate : 10:02 PM ET
David:

Personally, I think it is great that the candidates are focusing on the economy and it will be interesting to see what emerges or what options come from each candidate's camp now. However, I can't help but think that too much focus could, in fact, cause consumers to lose confidence or see the future to be uncertain so they will then withhold their spending. This, obviously, will then drive the economy into what we want to avoid and that is a recession. Sounds like a never ending circle.

Here in Michigan, the economy is a big issue and I'm sure it will be a big factor in who gets the vote in next week's primary. Take Care.
Posted By Anonymous Jolene, St. Joseph, MI : 10:13 PM ET
Sounds like yet another reason that we need to bring our troops home from Iraq. It's a war we cannot continue to pay for indefinitely. The comparison to the dying days of the Roman Empire is quite poignant.

I'm glad Senator Clinton has begun speaking of her proposals to improve the economy. Here's hoping all the candidates do the same.
Posted By Blogger Barbara in Culver City, CA : 12:55 AM ET
Every great society that came before us is now laid low. It seems to follow that one reaches an apex and then slides.

Centuries ago there were advanced civilizations, we keep digging them up. We need to learn from the past so we are not doomed to repeat it.

I don't think that cutting social security or health care spending will fix the problem with our AAA rating.

ABC noted that America ranked last in the industrialized nations for preventable death. This is because we lack access to health care for the poor and middle class.

We were the greatest nation but if we keep on this track we will go the way of the Roman Empire as you stated.

We need real reform and to learn what causes those other great nations/civilizations to fall so we do not succumb to their fate.

Proverbs - There is nothing new under the Sun.
Posted By Anonymous Sabrina in Los Angeles : 6:01 PM ET
David:

I'm glad you mentioned Larry Summers' package. There is so much focus I'm surprised people still remember the words "fiscal policy". With such a huge current account deficit, the US cannot afford pushing interest rates too low; it may risk losing its largest buyer of government securities: China.
Posted By Anonymous Anthea, Beijing, China : 8:13 PM ET
I would like to think that President Bush would do everything in his power to restore that rating. He is running close to being the worst President in US history. If he wants the GOP to even have a chance, he really has to get a move on. As always, thanks for your wisdom on 360!
Posted By Anonymous Kathy Chicago,Il : 9:34 PM ET
Money is always the bottom line regardless of the issue. What do the candidates think about the awesome destruction annihilating parts of WV in a mining practice called Mountaintop Removal? It replaces huge numbers of miner's jobs. Robert Kennedy Jr said it is the worse environmental tragedy of our time; that if another country did this to us, it would be called an act of war.

All the candidates except John Edwards is for Coal to Liquid technology, a practice that is being subsidized by county, state, and federal governments because the cost is prohibitive to build prototypes for testing; therefore, we the taxpayers will build actual plants to test these companies's software theories. They will just exacerbate the horrors of MTR and all the devastation it causes.
Posted By Anonymous christine hayes, west richland, wa : 7:31 PM ET
Pundits are saying that the economy has become a bigger issue than the Iraq war in the minds of primary and caucus-goers, but how can the two issues be separated given how much the war is costing financially (not to mention the human cost)?
Posted By Blogger Kay, Chicago, IL : 11:50 AM ET
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